Pakistan Trade Policy Year 2009 2012 - Presentation Transcript 1. 2.

STRATEGIC TRADE POLICY FRAMEWORK 2009 - 12 TRADE POLICY 2009 Ministry of Commerce July 27, 2009 Scheme of Presentation 2 Policy Statement Trade Review Challenges & Opportunities Synopsis of Strategic Trade Policy Framework Proposed Trade P li Initiatives P d T d Policy I i i i Over arching Sector S ifi S Specific Trade Diplomacy In line with Manifesto of Pakistan Peoples Party, the Trade Policy Aims at 3 Growth with Equity Greater Opportunities for Gainful Employment Sound Marco-economic Framework for Trade Environment Concern with Poverty Eradication and Environmental Protection Investing in Human Resource Targeting Poverty Alleviation Promoting Private Sector as Engine of Growth Focus on Small Scale Sector Particularly Agriculture Policy Statement y 4 The Ministry of Commerces e deavo is to provide e M s y o Co e ce s endeavor s o p ov de medium term policy framework with focus on improving supply side to achieve sustainable export growth. The policy thrust would be to enhance quality, improve business processes through structural transformation and transferring resources to achieve production and export of a more sophisticated and diversified range of products 5 Trade R i T d Review Imports and E I d Exports 2008-09 2008 09 Exports p 6 Exports 07-08 07- US$ 19.1 Billion 19 1 Export Target 08-09 08- US$ 22.1 Billion Actual Exports 0809 US$ 17.8 Billion* 08- WTO estimated a 9% shrinkage in Export Growth global trade - 6.7% Pakistan is less hurt than competitors- Export growth in China declined by 24%, India by 31% and Bangladesh by * Provisional 14% Exports Review p 7 Exports were 6.7% less than 2007-08 due to p Exogenous factors - demand shrinkage, financial crisis and ensuing protectionist policies. Domestic Factors - Power shortages/outages high financial shortages/outages, cost, bad law & order situation and competitiveness erosion Traditional sectors like textile (9.5%), Leather (- 29%) declined, whereas Rice ( %), Engineering g , (8%), g g goods (26%), ( %), Jewelry (35%) recorded growth in exports Exports Historical p 8 Value Change Year Y (FOB $ Billion) (%age) 2000-01 9.2 - 2001-02 2001 02 9.1 91 -0.7 07 2002-03 11.2 22.2 2003-04 12.3 10.3 2004-05 14.4 16.9 2005-06 16.5 14.3 2006-07 2006 07 17.0 17 0 3.2 32 2007-08 19.2 13.2 2008-09 (P) ( ) 17.8 - 6.7 Export of Major Commodity Groups 9 (US$ Billion) Change Product Group 2007-08 2008-09 % Food 2.83 3.02 6.7 Textile 10.57 9.56 - 9.5 Leather and Products 1.11 0.84 - 24.3 Chem. & Pharma. 0.62 0.61 - 2.1 Petroleum & Coal 1.26 0.81 - 35.5 Engineering 0.21 0 21 0.27 0 27 26.1 26 1 Other Manufactures *(Slide 96) 1.72 1.86 8.1 Others 0.73 0.81 11.0 Total 19.05 17.78 - 6.7

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10. Export Profile 2008-09 p 10 Other Mfg. Others Group G 4% 20% Food 17% Petroleum 5% Textile 54% 11. Export Destinations p 11 0.9% 0 9% 008-09 6.2% 22.3% 20 26 3% 26.3% 44.3% 0.9% 0 9% 2007-08 5.9% 23.1% 28.5% 28 5% 41.5% Oceania Africa Americas Europe Asia 12. Import Review p 12 Imports were US$ 34.8 billion in 2008-09 as 2008 09 compared to US$ 40 billion in 2007-08 , a decrease of 13 % Lower imports are attributed mainly to demand shrinkage of items in Transport Group (-41%), and g p p( ) Textile Group (-29%) whereas imports of Petroleum decreased by 17% due to drop in international prices of crude oil; imports of fertilizer were lower both in terms of value (39%) and quantity (45%) 13. Imports Historical p 13 Value Year Change (%age) (C&F US$ Billion) 2000-01 10.7 2001-02 10.3 - 3.6 2002-03 12.2 18.2 2003-04 15.6 27.6 2004-05 20.6 32.1 2005-06 28.6 38.8 2006-07 30.5 6.9 2007-08 40.0 30.9 2008-09(P) ( ) 34.8 - 13.0 14. Import of Major Commodity Groups (US$ Billion) 14 % ITEM 2007-08 2008-09 % Share Change Ch Food Group 4.21 4.14 -1.8 11.9 Machinery Group 7.37 7 37 6.59 6 59 -10.5 -10 5 18.9 18 9 Transport Group 2.27 1.34 -41.1 3.8 p Petroleum Group 11.46 9.51 -17.0 27.3 Textiles Group 2.33 1.66 -29.0 4.8 Chemical Group 5.80 5.23 -9.8 15.0

Metal group 2.71 2.75 1.8 7.9 Miscellaneous Group. 0.74 0.67 -8.7 1.9 Other * 3.07 2.92 -4.6 8.4 Total 39.97 34.82 -12.9 100 15. Balance of Trade (US$ Billion)) ( 15 Export Import Balance 40 34.8 34 8 28.6 30.5 16.5 17 19.1 17.8 2005-06 2006-07 2007-08 2008-09 -12.1 -13.5 -20.9 -17 16. Challenges g 1/3 / 16 External Factors: Economic downturn in our major markets: Consumer confidence erosion in USA and its ripple effects in EU; Economic slowdown Buyers perception of Pakistan as a supplier of low quality products and inability to deliver in bulk and in time. Negative travel advisories. 17. Challenges g 2/3 / 17 Domestic Factors High cost of finance Energy Crisis (Electricity and Gas) Law and Order Lack of International Competitiveness Investment declined to 19.7% of GDP as against 22.0% of last year % y Large Scale Manufacturing growth declined by 7.7% (Jul-Mar) as against increase of 4.8% in 2007-08 18. Challenges g 3/3 / 18 Sliding Down the Competitiveness Index (Ranking among 131 countries) Indicator Ranking 2007-08 g Ranking 2008-09 g Overall Competitiveness 92 101 Infrastructure 72 85 Labour Market Efficiency 113 121 Financial Market Sophistication 65 71 Technological Readiness 89 100 Innovation & Sophistication 78 85 Factors Source: Gl b l Competitiveness Report 2008 09 World Economic Forum S Global C titi R t 2008-09, W ld E i F 18 19. Opportunities pp Favourable market access owing to bilateral 19 trade t d agreements t Potential of doubling the value- addition of cotton of which Pakistan is the 4th largest f producer Strong resource base in many sectors (food, building stones, gems & jewelry, leather, rice, cement, light engineering) Growing Services Sectors g 20. Inference 20 Pakistan is fortunate to be less hurt by global recession and this has placed Pakistan in a position to take rebound opportunity if :- pp y Supportive & Targeted policies are adopted to help export sector increase competitiveness & improve product sophistication Supply side constraints like power shortages and high cost of finance are removed Law & Order situation is improved 21. 21 Strategic Trade Policy Framework 2009- 12 22. Main Features 22 Three years strategic framework Review mechanism Well-defined Well defined business processes Shift from Comparative Advantage to Competitive Advantage 23. Trade Policy Objectives y j 1/2 / 23 People centric : Poverty alleviation and employment generation through export led growth 1. 1 Enhance the competitiveness of Pakistans exports Pakistan s a) Increase the sophistication level of Pakistans exports by increasing the technology component and value addition. b) Trade Facilitation i. Process Improvement ii. Aligning Tax Reform with Trade Facilitation with the aim to reduce the cost of doing business g c) Address supply side constraints power shortage & high financial cost d) ) Reduce anti-export bias p 24. Trade Policy Objectives y j 2/2 / 24 2. Reducing Cost of Doing Business 3. 3 Protection and promotion of SMEs Slide 94 4. Focus on products with higher sophistication potential 5. 5 Promote agricultural development through exports 6. Enable Pakistani exporting companies overcome the negative effects of global demand contraction 25. Services Textiles Focus Sectors of STPF 2009 - 12 Support to initiatives pp Develop and implement a comprehensive export h i t in Textile Policy 25 plan Focus Sectors Policy Thrusts Pharmaceuticals Increasing overall Leather competitiveness titi Moving up the Gems & Jewelry sophistication ladder p Engineering Goods SMEs Cluster development Surgical. Medical, Creating supply and Dental, Dental Beauty care demand side linkages d d id li k instruments Improving Domestic Agriculture & food Commerce in these sectors Halal Products 26. Strategic Trade Policy Framework 2009-12 26 Linking Trade Policy 2009-12 with other development strategies by synergising the Functional Linkages between Functional Linkages trade and industry; trade and investment; trade and education; trade and science & technology technology; trade and social protection policy 27. Overarching Goals of Strategic Trade Policy Framework 2009-12 27 Ensuring sustainable energy supply Reducing cost of capital Reforming domestic commerce Promotion of Trade in Services Consolidating gender sensitive trade policies C lid i d ii d li i Greening of Exports Connecting Supply and demand better 28. Trade Policy Formulation Process y 28 Invitation of Proposals from all Chambers & Association registered under TO Ordinance, Ministries, Provincial Governments, Departments, Academia Meeting of the Advisory Council g y

Short listing of Proposals received in response to invitation or in the Council meeting Firming up the proposals in consultations with major Chambers/ Associations and relevant ministries Drafting of the Policy Presentation to the Prime Minister P i h P i Mi i Submission to the Cabinet Issuance of SROs and notifications subject to approval j pp 29. Breakup of Proposals Considered p p 29 No. of Organization O i ti Proposals Federation of Pakistan Chambers of Commerce 57 &I d Industry Chambers of Commerce & Industries 219 Trade Associations 202 Pakistans Missions Abroad 147 Provincial Governments 140 Ministries/ Federal Government Departments 397 Miscellaneous (Industrial Units/ Individuals) ( / ) 80 TOTAL 1242 30. Targets 30 Indicator Target 2012 Merchandise Exports (US$ Billion) From 17.8 to 23 5 17 8 23.5 Competitiveness Ranking From 101 75 Engineering Sector Export-Share From 1.5% 5% From US$ 1000/bale Value addition of Cotton to 1500/ bale Expansion of Regional Trade From 17% 25% FTAs EU, USA Operational ROZs 7 31. 31 Strategic Trade Policy Framework 2009-12 Proposed Initiatives P dI ii i 32. Proposed Trade Policy oposed ade o cy Initiatives Required b F d d R i d to be Funded Estimated Cost: Rs. 35.22 Billion Period : 2009-12 33. 33 Addressing Supply-Side Supply Side Constraints New Initiatives N I ii i 34. Financing at Reasonable Markup g p 34 Businesses need short to medium term certainty in the interest rate for investment. Currently, there is no p y policy instrument provided by the government or p y g private sector for providing finance at fixed interest rates for a short to medium term It is proposed that a fund may be created to hedge markup rate hikes. The fund shall be managed by an organization (TDAP/ NIC) of the Ministry of Commerce and shall be financed from EISF. 35. Reliability of Electricity Supply y y pp y 35 The electricity shortages is an irrefutable fact and is adversely affecting industrial productivity. While little can be done, in short term, to increase the quantum of supply there is possibility for introducing an element of pp y p y g predictability of power supply. It is therefore proposed that Electricity Distribution Companies (DISCOs) being bodies corporate should enter into agreements with clusters of industries whereby electricity is supplied at mutually agreed times. times The agreements should have punitive and compensation legally enforceable clauses; the compensation could be in the form of electricity charges credit etc etc. 36. Insurance Cover for Visiting Buyers g y 36 Purchasers, inspectors and sourcing agents of overseas , p g g buyers are reluctant to travel to Pakistan and the exporters have to meet them in other countries. This increases cost of doing business. It has been learnt that business apart from travel advisories that stop the purchasers/importers from coming to Pakistan but also the fact that the insurance companies refuse to cover the period of stay in Pakistan on usual rate of premium. A scheme may be launched for picking up the full cover for stay in Pakistan for valid insurance policy of visiting buyers/ buyers representatives. 37. Trade F ili i T d Facilitation Existing I i i i E i i Initiatives to be C i d b Continued 38. Facilitating Presence in International 38 Markets M k t To encourage local firms to have international presence and thereby increase the profitability following initiatives were taken in previous trade g p policies: Support for Opening Exporters Offices Abroad Support for Opening Retail Sales Outlets Abroad It is proposed that the above initiatives may be allowed to be continued throughout the period of STPF 2009-12 39. Warehousing Facility g y 39 To make inroads into non-traditional markets and / or to introduce non-traditional products in traditional markets a warehouse scheme was launched and a warehouse was established in l h d d h bli h d i Kenya. The changing patterns of trade require direct to store deliveries and thereby need of warehouse even in traditional markets. It is proposed that the warehousing scheme may be continued and its scope expanded to include traditional markets and traditional products. 40. Support for Compliance Certification 40 In the previous three years government announced 50% subsidy for various quality, environmental and social certifications. To encourage f h the l f further, h subsidy was progressively increased to 100% of the cost of certification when a manufacturing units gets four of the specified certifications*. It is proposed that the initiatives may be continued in the Trade Policy 2009 and list of certifications may be expanded by TDAP in consultation with the Industry. * (i) ISO 9000, (ii) ISO 140001, (iii) OHSAS 18001, (iv) SA 8000, (v) WRAP, (vi) EKOTEX, (vii) BSCI, (viii) BRC

41. Sector S ifi S Specific New Initiatives N I ii i 42. Compensating Inland Freight Charges p g g g 42 Extra cost on inland transportation erodes export p p competitiveness of a range of developmental products. It is proposed that a scheme may be launched to compensate inland freight cost to exporters of cement, cement light engineering leather garments, engineering, garments furniture, soda ash, hydrogen peroxide, sanitary wares including tiles, finished marble/ granite/ / / onyx products. The scheme may be funded from Export Investment Support Fund 43. Technology, Skill and Management Up- gradation Fund for Value Added Products 43 All final use products do require continuous research and development for enhancing competitiveness either by technology up-gradation, skill y gy p g , development or by improved management systems. A fund dedicated to support these activities is required. It is proposed that a Technology, Skill and Management Up-gradation fund of Rs. 3 billion may be established. 44. Brand Promotion Support for Surgical 44 Instruments, Sports goods & Cutlery I t t S t d C tl The manufacturing in these sectors is largely done under the brands of foreign companies, and that result in lower prices for manufacturers in these sectors. It is proposed that surgical instruments*, sports goods & cutlery sector may be granted 25% subsidy on brand promotional expenses lik advertisement in recognized i l like d i i i d trade journals, certification cost. * Term Surgical includes surgical medical dental veterinary surgical, medical, dental, veterinary, beauty care (manicure/ pedicure etc.) and like instruments 45. Product Development and Marketing Fund for Light Engineering 45 Engineering sector is dynamic and resilient but it is fragmented. This sector has shown promising growth during 2008-09 with an export growth of 32.1%. In order to increase the sophistication level & realize true potential of this sector, it is proposed that a special fund of Rs 2.5 Billion may be created for product development & marketing for light engineering sectorsector. 46. Enhancing Sophistication in Surgical 46 Instruments C t of Excellence I t t Center f E ll Shortage of well-trained skilled manpower is well trained impeding growth of surgical instruments manufacturing industry. g y It is proposed that Ministry of Industries and Production may establish a center of excellence for y catering to the training, designing, research & development needs of surgical instrument*s sector at Sialkot * Term Surgical includes surgical, medical, dental, veterinary, beauty b t care ( (manicure/ pedicure etc.) and lik instruments i / di t ) d like i t t 47. Enhancing Sophistication in Leather 47 Apparel A l Leather apparel industry needs to adapt to changing pp y p g g trends for which they need expert input for improving quality and efficiency. It i I is proposed that use of EISF may b allowed for:- d h f be ll df Providing on the floor expert advisory / consultancy services to leather apparel manufacturers cum exporters. pp p Matching grant to establish design studios or design centers in their factories. Establishing R&D Centers in Karachi and Sialkot by PLGMEA for providing Research & Development support to Leather Garments & Leather Goods Exporters. 48. Freight Subsidy on Export of Live Sea 48 Food F d Live sea food fetch very high prices in international markets as compared to frozen products, minimum p price ratio is 1.10. In fact, maximum value addition , is through export of live sea food. This product offers immense potential in export markets. It is, therefore, proposed to grant 25% freight subsidy if live seafood products are exported by air. This will also compensate exporters to overcome losses incurred due to mortality. 49. Support on Export of Processed Food pp p 49 Raw and semi-processed agricultural produced being semi processed currently exported can get higher values if exported as processed food. However, TBTs on processed food require compliance to more sophisticated standards and thereby higher cost of production It i I is proposed that processed food exports may be d h df d b supported initially by reimbursing R&D cost @ 6% of the exports; the quantum & mode of support to be adjusted after a detailed study but not later than May 2010. 50. Introduction of PAKGAP Standard 50 Good Agricultural practices are essential to ensure g p food safety both locally and in export markets and thereby a better acceptability; our agricultural sector i l ki recognized agricultural practices is lacking i d i l l i standards. It is proposed that PAKGAP (Pakistan Good Agricultural Practices) standards initially for five major horticultural exports (citrus, mango, date, potato and onion) may be worked out by MoST and implemented by MINFA in collaboration with PHDEB. 51. Conversion of PHDEB into a company p y 51 Pakistan Horticulture Development & Export Board is a EDF funded project of the Ministry of Commerce. Due to its undefined status it can neither seek international assistance which is

otherwise available nor contribute fully to the development of the sector. It has therefore being changed into a corporate body. It is proposed that, on incorporation, O&M expenses of PHDEB may be funded for a period of three years. 52. Improving Supply Chain of Leather 52 Sector E S t Exports Fl i M hi t Flaying Machines It is estimated that a minimum of 25% hides and skins are rendered useless from butcher cuts. There is an imminent need to introduce flaying machines in abattoirs but local governments have limited resources to install and run f flaying machines. It is therefore proposed that EISF may be used for f providing matching grants to district d h d governments for installing flaying machines. 53. Improving Supply Chain of Leather 53 Sector E S t Exports Fi i h d L th t Finished Leather Finished leather is one of the major export products & an intermediate product in which substantial value addition can be achieved by adopting modern p production processes and creating trendy finishes. There p g y is a need to encourage tanneries to upgrade production and designing facilities and to facilitate them for complying with international standards. py g It is therefore proposed that EISF may be allowed to be used for:- Sharing 25% financial cost of setting up of design centers and labs in the individual tanneries. To provide matching grant for setting up of effluent treatment plants in individual tanneries tanneries. 54. Services Export Development Fund p p 54 Services sector has immense potential for earning foreign exchange however high pre-project costs are a deterrent to g g p p j its expansion. Support to Services Sector in tendering process and preparing prefeasibility / feasibility studies shall be instrumental in helping the sector to achieve its potential. It is proposed that a Services Export Development Fund may be b established to provide assistance in the form of bli h d id i i h f f reimbursable grants, to Pakistan service exporters for Tendering or negotiating for international projects and for conducting pre-feasibility or feasibility studies for international projects. 55. Halal Products - Cost sharing of 55 Certification C tifi ti Halal Products (Food & non-food) is an over trillion non food) dollar market. Pakistan despite being a Muslim country is being left behind and one of the major y g j reason is lack of recognized halal standards. MoST is charged with working out the standards and setting up a Halal Certification Board. It is proposed that till the time the Halal Certification Board is setup, the government may subsidize the cost of certification by internationally recognized bodies by 50%. i d b di b 50% 56. Compliance with Safety Standards p y 56 Safety Standards Certification by Underwriters Laboratories (UL) increases the level of acceptability of manufactured products particularly domestic electrical appliances in international markets markets. It is proposed that 50% cost of UL certification may be subsidized subsidized. 57. 57 Sector S ifi S Specific Continuing Initiatives C i i I ii i 58. Cluster Development p 58 It was decided in last years Trade Policy that Trade y y Development Authority of Pakistan(TDAP) will establish 11 new clusters such as surgical/sports wear/gloves/leather etc to f ili / l /l h facilitate small units. ll i Since export clusters are essential f d l Si l i l for development promotion of non-traditional products, it is proposed to continue with this initiative in current trade policy to gain maximum benefit from the establishment of these clusters. 59. Support on Export of Motorcycles pp p y 59 Export of Motorcycles was facilitated through R&D support of US$ 50 (Rupee Equivalent)/ Unit. However the disbursement was started in end of FY 2008-09. It is proposed that the support may be continued till p p pp y June 2010. 60. Pharmaceutical 60 Pharmaceutical sector was given following incentives g g in previous years: Support for hiring medical representatives abroad Support for registration of pharmaceutical products abroad Support for bioequivalence certification The sector has responded well It is proposed that the above initiatives may be allowed to be continued throughout the period of STPF 2009-12 61. Matching Grant for Paddy Harvesters 61 and P dd Dryers d Paddy D A large number of export consignments of rice are being rejected due to aflatoxin infestation; a condition attributed to high moisture contents of paddy. The possibilities of aflatoxin infestation can be minimized by introducing paddy harvesters and paddy dryers which the farmers are reluctant to procure due d hi h h f l d to high cost. It is proposed that matching grants may be given to farmers / rice millers for purchase of paddy harvesters and paddy dryers. p y y

62. Zero Rating of Exports and Adhoc 62 Relief R li f @1% Exporters are forced to export indirect taxes, estimated to be around 9% of the cost of production. Trade Policy 2008 proposed a study to calculate the burden of these taxes and pending that to give interim relief to fourteen sectors in shape of additional duty drawback @1% of export value. Though the proposal was approved by the Cabinet, FBR did not allow additional duty drawback. It is proposed that the exports may be completely zero rated and till such time the decision to give additional duty drawback to specified sectors may be implemented as an interim relief measure in Trade Policy 2009; the sectors are tents & canvas, electric machinery, carpets, rugs and mats, sports goods, footwear, surgical/ medical/ veterinary/ beauty care instruments, d f t i l/ di l/ t i /b t i t t cutlery, onyx products, electric fans, furniture, autoparts, handicrafts, jewelry and pharmaceuticals 63. Assistance to Horticulture Sector 63 It was decided in trade policy 2008-09 that a farm 2008 09 to port cool chain will be established, till completion of cool chain, support for cool chain and cold , pp storages for horticulture will be given at 8% or 50% of the markup, which ever is lower. It is proposed that this facility for horticulture may be continued. 64. 64 Miscellaneous Mi ll New Initiatives N I ii i 65. Greening of Industry g y 65 Energy efficiency of the boilers being used by our industries can be enhanced by 30% thereby reduce the cost of production. Service providers for p p conversion of boilers are available but are reluctant to come to Pakistan. To encourage conversion of boilers for increasing efficiency the government should underwrite the agreement between service providers and the industry. 66. 66 Trade Policy Initiatives T d P li I i i i Process R P Re-engineering i i 67. Reducing Cost of Doing Business R d C fD B 68. Import of Used Drilling Rigs p g g 68 Oil and gas and petroleum sector companies are allowed import of second hand plant and machinery equipment required for their project in Pakistan subject to pre-shipment certification to the effect that such plant, machinery and equipment are in good working condition and are not older than 10 years years. Since drilling rigs usually have a useful life of around 20 years it is proposed that the age limit for them may be enhanced to 20 years subject to PSI certification. 69. Import of Specialized Machinery p p y 69 There are various restrictions on import of specialized p p machinery and transport equipment e.g. Concrete Transit Lorries, Concrete Pumps, Crain Lorries, Concrete PlacingTrucks, PlacingTrucks Dump Trucks, Waste Disposal Trucks, Trucks Trucks cement bulkers and Prime Movers. These conditions include age restrictions, actual use etc. It is therefore proposed that Import of specialized machinery/ transport equipment by actual users (construction companies etc ) in used condition provided etc.) they fulfill emission standards and have sufficient productive life irrespective of the age. 70. Trade-in of Machinery y 70 There is a possibility for Industrial Users to trade-in new, refurbished or up-graded machinery with their obsolete machinery. Current import and export regimes do not p provide for trade-ins whereas if allowed it could reduce the expenditure on BMR. It is therefore proposed that Industrial importers be allowed to import new, refurbished and upgraded machinery on the basis of trade-in with their old, obsolete machinery. Likewise export of their old/obsolete machinery for trade in with new new, refurbished or upgraded machinery may also be allowed. 71. Advance Remittance for Expeditious 71 Imports I t State Bank of Pakistan has discontinued the facilityy to remit US$ 10,000 per invoice, as advance payment, for import of spare parts, consumables/ raw materials etc. The di i l Th discontinuation of the facility i i f h f ili has increased the cost and time to effect urgent imports. It is proposed that facility to remit US$ 10,000 per invoice, as advance payment, for import of spare parts, consumables/ raw materials etc may be restored by State Bank of Pakistan. 72. Waiver of Size Restrictions on Import of Secondary Quality Iron & Steel Plates/ Sheets/ Coils 72 Import of secondary quality iron and steel p yq y sheets/plates / coils is allowed provided the sizes are over 48" (length) x 20 (width). The size restriction is irrational and diffi l to i l i i i i i l d difficult implement. The industrial users face difficulties in getting clearance of unsorted scrap which adds to cost of doing business. It is proposed that minimum size restrictions on import of secondary quality iron and steel sheets/plates / coils may be waived off. 73. Reducing Cost of Doing Business R d C fD B Sector S ifi S Specific

74. Reducing Cost of Doing Business Gems 74 &JJewelry Sector l S t To promote Gems and Jewelry sector, the Cabinet in Trade Policy 2008, approved waiver of customs duties and sales tax on import of Gold, Diamonds, Silver, Platinum ,Palladium and p , precious stones. The waiver was not extended to pearls and other synthetic or reconstructed precious or semi precious stones though these are increasingly being used in jewelry production. gy g j yp Further FBR didnt comprehensively implement the decision. It is proposed to exempt natural pearls and other synthetic or reconstructed precious or semi precious stones from customs duty and sales tax. Implementation of Cabinet decision may be expedited expedited. 75. Pharmaceuticals Exports - Facilitation p 75 Marketing of pharmaceutical products involve number of complexities in the international territory including need for extensive sampling at product launching stage. It is therefore proposed that limit for physicians' samples may be enhanced to 20% (current limit 10%) at the time of launch with first shipment 76. Special EOU Status to Engineering 76 Units U it Currently, units that export 100% of their production y, p p enjoy the status of Export Oriented Units and the benefits thereof. Since, engineering industry, particularly auto motive parts manufacturing industry has vast export potential but cannot export all of its production in initial stages it needs special treatment. It is proposed that engineering units may be allowed EOU facility on export of 50% of their production for the first three years After that engineering units should years. be allowed this facility on export of 80% of their production. 77. Export Related E R l d 78. Export of Edible Oil in Bulk p 78 At present export of edible oil from Pakistan is allowed in retail packs. The permission for export in Bulk should be allowed. There have been exportp demands for domestic edible oils like sun flower, canola and cotton seed. It is therefore proposed that export in bulk of these oils (sun flower, canola and cotton seed) may be allowed. 79. Export of Pulses p 79 Currently exports of all types of pulses is banned due to domestic supply reasons. There is a growing international demand for this item. Opportunities pp exist for exporting pulses obtained on processing of imported inputs. It is proposed that exports of pulses obtained on processing of imported inputs may be allowed subject to necessary safeguards against export of indigenous pulses. Regulatory duty on such exports may b waived off. be i d ff 80. Enactment of G.I Law 80 Absence of sui generis law on Geographical Indication (G.I) has exposed Pakistani G.I products p particularly Basmati rice to infringements. The draft y g G.I law is under preparation. It is proposed that G.I law may be enacted on fast p p y track basis and Trade Development Authority of Pakistan (TDAP) may be given the mandate to apply for and to hold G.I registration of Pakistani products. 81. Import R l d I Related Regulatory R l 82. Controlling Import of Poppy Seeds g p ppy 82 Presently there is no restriction on import of Poppy seeds as far as the origin is concerned. Single convention binds the signatories to import poppy g p p ppy seeds only from the countries where it is legally produced. In view of the international commitments it is proposed that source of import of opium poppy seeds may be restricted to the countries where it is legally produced. 83. Controlling Import of Scrap/Waste 83 Plastics Pl ti Presently import of waste, parings and scrap of polyethylene and polypropylene is restricted to industrial consumers while import of other plastics is p p allowed on commercial basis. To regulate import of such scrap, it is proposed to g p p p p restrict import of all types of plastic scrap to industrial consumers only and strictly in accordance with the Provisions of the Basel Convention. 84. Import of Used Computer Components p p p 84 At present old and used computers and peripherals thereof are freely importable but the import of used components (RAM, Casing, Motherboard, p ( , g, , Processors etc) is banned. Thereby depriving the low income strata of computer use. In order to encourage use of computers by low income segment of population, it is proposed that import of old & used computer components may be allowed. 85. Restricting Import of Used CRT 85 Monitors M it Second hand Cathode Ray Tubes (CRT) monitors are being imported and used as televisions thereby p g posing a threat to local television industry; excessive y; import of first worlds e-waste is also a threat to the environment. It is therefore proposed that import of CRT monitors may be disallowed unless imported alongwith used computers.

86. Protecting Local Vaccine Producers g 86 Local manufacturing of vaccines is of strategic importance and now local companies have started venturing into this high tech segment segment. Unhindered import of vaccines is a discouraging factor factor. It is proposed that to encourage local manufacturing, manufacturing import of vaccines may be allowed only from World Health Organization (WHO) approved plants plants. 87. 87 Trade Policy Initiatives T d P li I i i i Import F ili i I Facilitation 88. Import of Donated Ambulances p 88 Only such used ambulances (not more than 15 years old) that are donated by "reputable organizations" are allowed for imports by charitable p y organizations/ trusts/ hospitals. It is proposed that import of used ambulances that p p p fulfill certifiable standards and have minimum 10 years of useful life may be allowed when donated by any organization / individual to charitable or non-profit organizations, trusts or hospitals. 89. Disabled Persons Import of 89 Motorized Wheel Chairs M t i d Wh l Ch i Secondhand / used motorized wheel chairs are presently importable only by charitable institutions and hospitals whereas actual users cannot do so. To facilitate disabled persons it is proposed that import of one Secondhand / used duty free motorized wheel chair may be allowed to actual user. 90. Disabled Persons - Import of Duty Free 90 Cars Disabled persons are allowed waiver of import duty which is in excess of 10% on CKD kits that are imported for assembling of car for them. Restricting disabled p persons to use locally assembled cars limits the choice to y few makes; there have been persistent complaints of non-availability of customized vehicles among the local makes. Previously duty free import of customized cars y y p by disabled persons was allowed. To facilitate disabled persons to actively participate in economic activity, the facility to import duty free activity customized cars, not above 1350cc of engine capacity, may be allowed. 91. 91 Import R l d I Related Liberalization Lib li i 92. Transfer of Residence (TR) Rules - 92 Amendment A d t In case a passenger who brings/imports vehicle under TR scheme dies before the issuance of TR, there is no provision in Import Policy Order for p p y release of such vehicle. It is proposed that vehicle imported by a overseas p p p y Pakistani, under TR rules, may be released to legal heir(s) in case of his / her death. 93. Pakistan's low degree of Structural 94 Transformation and Di T f ti d Diversification ifi ti 94. Pakistan's exports ranked by sophistication 95 and share in total exports. All of them RCA>1 Commdity Sophistication 1985 1990 1995 2000 2005 2006 Medical Instruments and appliances, nes pp , 20814.00 1.23 0.95 0.89 0.88 0.97 1.00 other sporting goods and fairground amusements, etc 15712.00 1.22 1.87 2.00 1.85 1.76 1.94 Cotton fabrics, woven, bleached, dyed, etc, or otherwise finished 11214.00 3.46 4.11 6.02 3.61 4.78 4.48 Leather of other bovine cattle and equine leather 10168.00 2.21 2.04 1.31 0.92 1.17 1.14 Clothing accessories, knitted or crocheted, nes 9429.00 0.23 0.36 0.73 0.90 1.65 1.95 Fabrics, woven, less 85% of discontinuous synthetic fibres 8683.00 0.10 2.49 3.09 4.00 3.48 3.17 Womens, girls, infants outerwear, textile, not knitted or crocheted; 8585.00 1.24 2.59 1.90 2.44 2.59 2.77 other outer garments of textile fabrics, not knitted, crocheted Other made-up articles of textile materials, nes 8359.00 0.89 0.93 1.60 2.86 2.79 2.72 Outerwear knitted or crocheted, not elastic nor rubberized; jerseys, 8199.00 0.16 1.16 1.65 3.79 3.23 3.05 pullovers, slip-overs, cardigans, etc Articles of apparel, clothing accessories of leather 8176.00 2.11 4.49 4.80 4.61 2.96 2.73 Outerwear knitted or crocheted, not elastic nor rubberized; other, 8119.00 0.28 0.96 1.63 1.70 2.18 2.17 clothin accessories non-elastic knitted or crocheted Linens and furnishing articles of textile, not knitted or crocheted 7,345 3.66 5.45 5.94 9.30 12.63 13.38 Under-garments, Under-garments knitted or crocheted; of cotton, not elastic nor cotton 7,122 7 122 1.00 1 00 2.27 2 27 4.27 4 27 3.62 3 62 3.55 3 55 3.87 3 87 rubberized Men's and boys' outerwear, textile fabrics not knitted or crocheted; 6,798 0.28 0.64 1.25 2.75 2.96 3.15 trousers, breeches and the like Cotton yarn 5,728 10.32 16.91 18.91 13.21 10.14 10.53 Carpets, carpeting and rugs, knotted 5,309 4.57 3.86 1.82 2.33 1.93 1.74 Rice, semi-milled or wholly milled 5,060 8.63 4.64 5.55 5.71 5.82 6.46 Cotton fabrics, woven, unbleached, not mercerized 4,578 5.07 5.15 6.88 6.16 5.15 5.20 Sub-total (%) 46.70 60.90 70.20 70.60 69.70 71.50 Sophistication at the country level 7231.00 7693.00 8268.00 8362.00 8833.00 8,72a SITC R2, Aggregate 4 Slide 24 95. * Other Manufactures US$ Million 96 Item 2007-08 2008-09 Change % Gems & Jewelry 220.9 291.8 32.1% Gloves (Sports) 76.3 88.5 16.0% Cement 417 576.6 38.3% Cutlery 54.9 47.2 -14.0% Auto Parts 21.0 12.5 -40.5%

Fans 27.0 29.0 7.4% Pharma Prods. 110.5 111.0 0.5% Guar & Guar Prods Prods. 36.7 36 7 28.1 28 1 -23 4% 23.4% Electrical Machinery 38.2 45.9 20.2% Surgical Instruments 261.1 250.4 -4.1% Slide 09