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Assignment of Global Business Management

Submitted to:
Mr. Farhan Ahmad

Submitted by:

M Furqan Ali BBA-FA09-089-12C

Date:

31-05-2012

COMSATS institute of information & technology Lahore

Government influence in international trade in Pakistan

Every country government focuses on making such trade policies that enhance the political, social and economic environment. The survival and performance of companies depend upon the governmental trade policies. In order to promote some industry; Pakistan government tries to stop the entry of imports and focuses more on exports. Governmental intervention in Pakistan of trade is to promote exports are because of following reasons: To reduce poverty level To reduce unemployment level To focus on development To increase exports in textile sector, this ultimately leads to modernization of technology and investment. To execute good relations with countries where they signed free trade agreements like china, Malaysia and Srilanka. Export policy give new platform of development domestic companies of Pakistan Pakistan government intervenes in the following sectors for the formation of trade policies: Automobile sectors:
Car imports in Pakistan can only be carried out through one of the following ways: Transfer of Residence: Overseas Pakistanis coming back can bring a car with them only if they have stayed there for at least 2 years. Gift Scheme: Overseas Pakistanis (living abroad for at least 2 years) can gift a car to their blood relative.

There are no tax exemptions for either of those and only 5 year old cars can be imported. Pakistan has more liberal import policy for the used cars in the region as compared with India and Thailand that impose high tariff plus non-tariff barriers,

resulting in insignificant imports in comparison with Pakistan where used cars import is high. For many previous years government of Pakistan give support to the car industry by imposing import restriction on cars. But due to formation of monopoly of local car manufacturers and imperfection of market, government take steps to allow free imports of reconditioned cars, motorcycles, trucks, and tractors. According trade policy 20112012 prime minister of Pakistan ask to remove restriction of transfer of residence, personnel baggage and gift because of the following reasons: The prices of local car increases day by day and it is not in the reach of citizens of Pakistan. Another reason for import; is there is no proper network of public transportation. Thats why Pakistan removes trade barriers on import of vehicles in order to fulfill transportation need of citizens who can purchase the cars at low prices than the prices of local manufacturers. Other reasons are local manufacturer failed to introduce any high tech production in the country for 25 years, local manufacturers also fail in making the parts itself and also in making network of taking raw materials from local markets.

Textile sector: Textile sector in Pakistan is most important sector because its counts for 70% of export. Government has more focus on protectionist policies and exports of textile products. According to five year textile policy of government focus on giving subsidy of Rs 87 billion cash to the textile and clothing, which ultimately boost up the exports and also promote the textile industry in Pakistan. Five year textile policy focuses on to enhance the domestic capabilities and capacities for efficient use of resources with the help of proper infrastructure, up gradation of technology and skills development. Basically government wants to discourage the import of textile products, for that purpose government charge import quotas and tariffs and remove export tariff for promotion of exports.

Agriculture industry:
Agriculture is one of the most important Pakistan industries. Government intervenes in this industry because of these reasons: support agriculture sector ensure food security maintain balance of trade In order to support the agri sector, Pakistan government increases the import tariff and uses quantities restriction, so that local production increases and local consumer will trust on domestic companies.

Pharmaceutical industry:
Government of Pakistan influences the pharmaceutical industry regarding the trade policies. Trade policies focus on expansion of exports. Following are the objective of trade policy: Increasing Pakistan share in the international markets Meeting obligation of WTO Diversifying the exports Government in order protects the pharmaceutical industry, focus on following procedures; Impose regulatory duty on imports Anti-dumping to protect local industry of medicine Chemical industry:

The ratio of chemical goods exported is between 7-8% and its import ratio is 40% of total imports. Its mean government focus little on protection of high tech industry that is mostly dominated by foreigner players. Pakistan government influence on supporting the chemical industry is less. From the very start of cement industry in Pakistan, government doesnt much focuses
on this high tech sector and allows the import of cement thats why it depend largely on imports.