"The loss is in the gain that we could have made"

Tariq Puri, Chief Executive of the Trade Development Authority of Pakistan speaks to Aurora about the challenges of growing Pakistan’s exports in the current political and economic climate.

AURORA: What is the function of the Trade Development Authority of Pakistan (TDAP)?

TARIQ PURI: To develop trade. We try to help exporters, the business community and the manufacturers; the entire gambit of anybody engaged in trade.

A: Is the TDAP not the old Export Promotion Bureau (EPB)? 

TP: Yes.

A: Why the new name?

TP: The EPB had a restrictive connotation in terms of the emphasis that was put on the word ‘export’. We are about trade, and this covers imports and exports as well as issues such as policy making.

A: What are the challenges to developing trade for Pakistan? 

TP: The biggest challenge is to help exporters. Showing them how to get into the business of exports is primarily a hand holding process. We help them identify exportable products. Some products cannot be exported because either they are not required or they are not fit for export or there is no possibility of finding an appropriate market.

A: Surely as business people, they would already know this? 

TP: There are different categories of exporters. There are the new entrants who do not know the ABC of exports, and it is primarily for this category that we hold workshops and seminars aimed at informing them how to get into the business. The second level are the small and medium enterprises (SMEs) which are already in the business but are not big enough to get into the marketing directly themselves. Here we support them by taking them abroad as part of a delegation abroad to give them practical exposure to different markets and different products and to meet buyers. Lastly, you have the big exporters; those who are already well established. Most of today’s successful exporters have benefited in one form or another from the support extended by the EPB and now the TDAP.

A: How well are Pakistani exports doing?

TP: In 2003, we crossed the $10 billion mark and today, although we were expected to do $20 billion, we have done

$25 billion.

A: To what extent is Pakistan’s export profile being diversified in terms of products and markets?

TP: We have diversified both our markets and our product range. We used to rely on the US and the EU for at least 60% of our exports, this has now dropped to under 50%. Most of the regional markets closer to Pakistan now account for a larger share of our export volume.

A: Markets such as?

TP: Afghanistan, Australasia, China, Iran, India, Japan, the Middle East, South East Asia and Russia. These markets have shown healthy growth in terms of our exports and now that we are putting special focus on them, the incremental increase is going to be much bigger in the coming years.

We are particularly working on China, where we are holding exhibitions and business forums and taking delegations. This is a concentrated and focused effort to enter the Chinese market. China is the second largest economy in the world and our assessment is that it is going to be the largest consumer market in the world, with the highest purchasing power parity. Now is the time to position ourselves. We have a projected population of 1.4 billion, and this can be a huge opportunity for Pakistan if we are well placed in terms of our marketing and our brand recognition. Although there is a perception that China is an exporter and so why would it import from Pakistan, the ground reality is that China is graduating into different and much higher value added products. In the areas where we are strong we will not only be competitive, we will have the possibility of expanding the range of our exportable products.

A: What would these products be?

TP: Textiles; although from accounting for 70% of our total export profile textiles have dropped to 50%. The other 50% comes from mineral resources such as marble, granite, precious and semi precious gems and other minerals and then agricultural products.

A: How much do agricultural products account for in the total share of the export pie? 

TP: This year we are expecting $2.5 billion worth of exports in terms of rice. Last year, we did half a billion dollars worth of wheat exports. This year we are expecting a bumper cotton crop of 16 million bales, and as a result we expect to export cotton. In 1999, our export of chilled meat was zero, today we are doing $150 million worth and this financial year are expecting to export $300 million worth.

A: Which countries are importing Pakistani meat?

TP: Iran, Malaysia, the Gulf states and Saudi Arabia.

A: The halal market basically?

TP: Yes, and we are not only selling chilled meat, we are exporting processed meat which is the value added component; burgers, nuggets and all kinds of different products that can be produced from beef, chicken, lamb and mutton. Our mineral resources are huge. In terms of marble and granite we are exporting over $50 million worth. Another fast developing area is chemicals; plastics derivatives and petroleum products. There is a lot of value addition happening in Pakistan. Then there are the traditional exports; surgical instruments, sports goods, carpets and so on.

A: What about fruit? 

TP: Kinoo and mango exports are growing fast. The TDAP and the Ministry of Commerce are working together to gain market access for these products.

In January, Japan allowed the import of mangoes for the first time; it was a trial export and it was very successful. This is a premium market and we expect the commercial export of mangoes to fetch sizable revenues from Japan next year. We have been successful in gaining access to the US market; we were able to send promotional consignments and these too were well received. We are working on China.

We have to set up different kinds of treatment processes for these markets. For example, Japan requires vapour heat treatment, while the US requires irradiation. 

A: Treatment for what?

TP: For white fly pests and for any chemical used in the form of pesticide or insecticide. To remove their effects the mangos have to be treated and different countries require different processes to do this. We are putting together a private public partnership to set up a vapour heat treatment plant on a commercial basis. We did the same for irradiation through the Pakistan Horticultural Board, which used to be part of the EPB.

A: Is this the first public private partnership you are undertaking?

TP: Yes and no. We established the Pakistan Fashion School in partnership with the Punjab Government and today it is a degree awarding institution. We are in the process of setting up six constituent fashion schools all over Pakistan and I think they are about to advertise for admissions. We do this sort of thing in order to try and build capacity in Pakistan in tandem with providing exporters with the required exposure abroad. We are also working in partnership with various sector and sub-sector associations.

A: Are you involved with the fisheries sector?

TP: Of course, and exports have gone up despite our losing a US $50 million market due to the EU ban. We were able to find other markets in South East Asia and the Middle East.

A: Was the ban imposed because of a lack of proper facilities?

TP: The facilities are there; the peeling sheds, the landing berths, the processing units, the problem was that they did not comply with the hygiene standards required by the EU. We provided specially designed boats as well as refrigerated storage facilities. We provided financial support to improve the peeling sheds and worked with processing units in the private sector in terms of what needed to be improved. The problem is that when you do all this, there also has to be an organisation which insures implementation and compliance.

A: Is compliance a major issue when it comes to all exports?

TP: It was the EPB which helped companies to acquire ISO standards and we subsidised the cost of the acquisition of ISOs. Similarly, we helped exporters register their pharmaceutical products. The fees involved were high, so we subsidised them at 50%. Currently, we are undertaking an assessment on Pakistan’s pharmaceutical sector. The TDAP comes in wherever there is a requirement for compliance, and if the costs are high we try to subsidise them. We are involved in a whole spectrum of activities, although perhaps from the outside it seems that the only thing we do is to take delegations to exhibitions abroad.

A: Why this singular perception?

TP: It is our major activity. A major chunk of our budget goes into exhibitions and delegations because they are the most effective way of reaching out to buyers, particularly as it is getting more and more difficult to get buyers into Pakistan because of the security situation. There aren’t many countries that participate in more than 100 exhibitions; it is phenomenal. On average, we are participating in almost three exhibitions a month.

A: How do you gauge the results of such heavy participation?

TP: From the fact that exports are increasing. Despite all the issues we have been facing since 2008 arising from the global economic slowdown, our exports have registered a 30% increase.

A: How do you deal with brand recognition and the general negative perception of Pakistan?

TP: The negative perception is that the country is in turmoil.

A: Could another issue be quality control?

TP: If the quality was not there, world class brands would not be purchasing in Pakistan. All the international brands are buying in Pakistan. There is good brand recognition of Pakistan. The negative perception comes from non-business reasons.

A: Nevertheless it still affects the outcome.

TP: Naturally. People are not coming to Pakistan to buy the way they used to before. We have seen a 30% increase in our exports, yet if we had no energy crisis and no security issues, we would have increased by 50%. The loss is in the gain that we could have made.

A: To counter these perceptions why isn’t the TDAP making concerted efforts to bring business journalists to Pakistan to see the realities for themselves? 

TP: We are holding Expo 2011 in October and that is when we will bring in the foreign press as well as business people. We do this every year. The event was scheduled for February, however because of the situation we had to postpone it. I hope the present situation in Karachi settles by October and that many buyers will come to Karachi. We are working very hard to make it a world class show.

A: Do you see further export growth over the next two to three years?

TP: If the situation in terms of our energy supply improves and the security issues are eliminated, I see a huge potential of our exports going up.

A: Given that none of these are likely to be resolved in the near future, how do you see the picture shaping up? 

TP: We will be struggling the way we are struggling today. The ingenuity of the business community will lead them to find a way around these problems and chug along with the kind of export growth we have seen. There could not have been a more difficult year than 2010-11 and the business community deserves a lot of credit. No matter what we do, at the end of the day, it is the business community’s resilience and hard work that has produced these results. We can only support and facilitate.

A: Given the potential for trade with Afghanistan, don’t you think that there being only one flight from Peshawar to Kabul is a deterrent to growth in that market?

TP: You are right. If we had direct flights to the Central Asian States as well, I am sure we would increase our exports to those countries.

A: Then why not?

TP: It is a question of availability of planes and of how PIA looks at different routes. They have to look at them from a commercial rather than a developmental angle. We only do a developmental job; it doesn’t matter whether we achieve the right kind of return on our investments, we will still make them if we believe they may yield positive results in the coming years, which is what we are doing in China. If we don’t invest today, we will miss the bus. As a trade development authority we have to be futuristic; if we fail in that, we fail the businesses it is our mandate to support.

Tariq Puri was in conversation with Mariam Ali Baig. For feedback, email aurora@dawn.com