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Performance of the Ministry of Commerce during 1989.

In a mixed economy like that of Pakistan, both public and private sectors operate. Major objectives of the two differ from each other. While former aims at social gains for the society, the latter strives mostly for profitability. Public sector agencies throughout the world in general and in developing countries in particular are not necessarily profitable. Frequent losses might be partly due to some socio-economic obligations including employment of greater number of workers, efforts to develop various regions on equitable basis, to help weaker sections of the people against stronger, control of inflation, provision of physical infrastructure for overall economic development and others but the element of inefficiency is also there.

The gains of the private sector on the other hand are partly due to maximisation of personal profitability, efforts for livelihood and efforts to survive in the competitive market. Socialism all over the world is on the decline. Its back has been broken in Eastern Europe and the struggle is on in the USSR itself, the birthplace of this system between communism and the market economy system and the signs are there that socialism may not survive.

In Pakistan, the public sector agencies emerged in various sectors soon after independence due to acute shortage of infrastructure basic facilities, lack of private capital and inexperience of the emerging Muslim business community. The public sector agencies have done some very useful work, although complaints of inefficiency and losses have been there. At the same time, this is the first time that the Government has been disclosing the annual performance of its Ministries, departments and autonomous commercial bodies. The booklet under review is the performance of the Ministry of Commerce in 1989, the first full year of the PPP Government.

This step should be welcome as the public knows the performance and efficiency of the administration of an elected Government. This booklet shows the performance of various public sector agencies objectively operating under Ministry of Commerce. No effect has been made to conceal the inefficiency or shortcomings of any agency. Several shortcomings are there and there is a need to reduce or even avoid such deficiencies. This may require several administrative steps including action against and change of inefficient and unsuitable officials.


First 12 pages of the booklet cover the Trade Policy 1989-90 which has been commented upon in this journal elsewhere. As far as information is available the exports and imports of Pakistan are not proceeding according to the Growth rates envisaged in the Trade Policy for 1989-90. For the year 1989-90, the Trade Policy envisaged that exports should increase by about 8.8 per cent from $ 4.661 billion in 1988-89 to $ 5.071 billion in 1989-90, while imports should come down by 3.3 per cent from $ 7.034 billion to $ 6.801 billion and the deficit balance of trade should decline from $ 2.374 billion to $1.73 billion. However, preliminary estimates for the first 7 months of the year show a different trend. Following table shows the preliminary estimates for the period under review: [Tabular Data Omitted]
 Balance of Trade - First 7 months of
 1988-89 and 1989-90
 $ million)
July-January 1988-89 1989-90 % Increase
Exports 2,470 2,565 (+) 3.8
Imports 3,805 3,917 (+) 2.9
 Balance (-) 1,335 (-) 1,352 (+) 1.3

Second part of the publication shows the performance of the Corporations and Departments of the Ministry of Commerce. There are no less than 11 such agencies. Cotton Export Corporation is one of the most important agencies and handles procurement, storage, distribution, and export of cotton. During the last two years, there has been Government policy of privatization and deregulation regarding procurement and export of raw cotton. In 1987-88, the private sector exporters were allowed to export cotton out of CEC stocks. In 1988-89, the private exporters were allowed to purchase cotton directly from the open market to meet their exporter commitments.

The Cotton Export Corporation is supposed not only to export cotton but also to ensure that the cotton growers and ginners receive minimum prices and during the last two years there has been satisfactory development. During the year 1989, the activities of the Cotton Export Corporation exhibited a declining trend as shown below:

Some distribution of cotton by the CEC to national cotton mills also took place in 1989. Construction of cotton storage is also proceeding for the last few years. Most of this construction is taking place in Karachi. Under phase I of the programme, 47,000 cotton bale capacity has already been completed; the work on 88,000 bales capacity is in full swing and phase III of unknown capacity is scheduled to be completed in 1989-90. The CEC is also implementing some cotton ginning projects to improve ginning and grading of ginned cotton.

Rice Export Corporation is another very important agency under the Ministry of Commerce. The performance of the Corporation with regard to procurement, export sales commitments and actual exports is given below: [Tabular Data Omitted]

The Rice Export Corporation of Pakistan is undertaking a number of development projects about construction of storage capacity for rice at Karachi and establishment of modern rice cleaning plants. Performance of the Corporation needs improvement.

The performance of the Trading Corporation of Pakistan has also not been very encouraging. The Corporation has been authorised to export and import a number of commodities. In 1989 exports as well as imports handled by the Corporation decline as shown below.
 Trading Corporation of Pakistan
 Exports and Imports
 (Rs. million)
Year Exports Imports Balance
1988 413.436 5,488.885 (-) 5075.449
1989 346.864 4,067.308 (-) 3720.444
Increased/decrease (-) 66.572 1,421.577

The T.C.P. is supposed to handle countertrade/special trading arrangements of the country under a decision taken by the Economic Coordination Committee of the Cabinet. Accordingly the TCP concluded countertrade agreements with 4 multinational Corporations in 1985-86 envisaging a turnover of $ 50 million each way with each countertrade party. The flow of imports has seen satisfactory but exports have been below the target.

Another important task entrusted to the TCP has seen the handling of transit trade through Pakistan for Iran. The negotiations appear to be still going on. The TCP has future plans for import of goods and commodities for some public sector agencies and to export products of some other state enterprises.

Pakistan Tobacco Board is another very important agency under the Ministry of Commerce. Its job is to manage the production, processing and export of tobacco and tobacco products. Tobacco enjoys a very important position in the national economy of Pakistan. With extremely limited cultivated area under tobacco it is an important source of employment, totalling from 165,000 to 170,000 which includes about 30,000 workers engaged in cultivation, 35,000 to 40,000 in tobacco-based manufacturing and about 1 lac in trade and other commercial activities connected with tobacco. Only 0.3 per cent of irrigated area is under tobacco while it yields about Rs. 8.2 billion to Government exchequer through excise duty and sales tax.

On the whole, production and yield of per hectare of tobacco was satisfactory and better in 1989 than in 1988. The Board's activities improved in 1989 over 1988 with regard to prices, seasonal credits, research and development, and other development activities.

Export Promotion Bureau, as it appears from its name is meant to promote exports to Pakistan. The Bureau improved its activities in 1989. It participated in 1989 in no less than 21 International Trade Fairs and Exhibitors. In these fairs the Bureau concentrated more on long-term objective of "order booking" rather than short-term advantage of "spot sales". Efforts were made to increase the exports of handicrafts. Within the country three exhibitions were held of leather, carpets and fashion apparels. No less than 34 trade delegations' of various countries were invited to promote exports and some Pakistani trade delegations were sent abroad. Inter alia efforts included to hold Textile Conference in Rawalpindi export training, product development, textile quota management and streamlining cotton exports.

There are three Corporations to handle Insurance namely: (i) State Life Insurance Corporation of Pakistan, (ii) Pakistan Insurance Corporation, and (iii) National Insurance Corporation. At present, there are 52 insurance companies in Pakistan - 42 indigenous and 10 foreign. First year premium of life insurance increased by 33.4 per cent from Rs. 678 million in 1988 to Rs. 905 million in 1989. Target for 1990 is Rs. 1221 million. The renewal premium improved by 23 per cent from Rs. 1515 million to Rs. 1864 million and target for 1990 is Rs. 2292 million. Group premium obtained by the Corporation increased by 15 per cent from Rs. 490 million to Rs. 563 million and target for 1990 is Rs. 648 million.

Investment income increased by 19.4 per cent from Rs. 1323 million in 1988 to Rs. 1578 million in 1989 and target for 1990 is Rs. 1899 million. Life Fund increased by 18.4 per cent from Rs. 11,327 million at the end of December 1988 to Rs. 13,410 million at 1989 end. The target for 1990 end is Rs. 16,270 million. Similar improvements were recorded in the activities of National Insurance Corporation and Pakistan Insurance Corporation.
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Article Details
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Author:Khan, Abdul Majid
Publication:Economic Review
Article Type:Book Review
Date:May 1, 1990
Previous Article:Pakistan's Trade Policy: 1989-90.
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