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ISLAMABAD, Dec 20 (APP):The Pakistan Institute of Development Economics (PIDE) here on Wednesday launched its latest research report titled “The State of Commerce in Pakistan – International and Domestic,” highlighting challenges and opportunities shaping the landscape of the country’s commerce sector.
“As a premier institution dedicated to fostering economic development, PIDE’s report serves as an invaluable source of information and statistics on the state of commerce in Pakistan,” a news release said.
In his opening remarks, PIDE Vice-Chancellor Dr Nadeem ul Haque said his institution had compiled the report for the Ministry of Commerce and Industries so that it could explore all facets of internal and external trade in Pakistan. “The primary objective is to gain a profound understanding of markets, growth and international and domestic trade.”
He emphasized that despite the vibrant sector, it faced challenges stemming from the various governments’ indifference, regulatory problems, and various other problems.
The PIDE VC highlighted the growth potential of several entities within sectors such as construction, retail, chain stores, food, franchises, and transport.
Dr Haque said PIDE’s research showed that the government’s footprint on the economy was at over 70 percent of the economy, with its involvement in trade and markets, stifling market development and growth.
The cost of regulation, estimated at over 60 percent of the Gross Domestic Product (GDP), particularly affected segments larger than 50 percent of the GDP, turning regulation agencies into a burgeoning industry in Pakistan.“Our current approach is to fragment out the markets and segment ourselves from the global value chain.”
PIDE has presented proposals to the government for deregulation, specifically targeting markets such as real estate, and improvements in tax documentation to foster the creation of large multinational businesses.
More specifically the report recommended a broader discussion on an immediate cessation of absolute policies on import substitute and export promotion could be discontinued. “Our Commerce and Industry must develop as part of the global value chain.”
The report suggested diversifying across manufacturing, exports, and domestic markets.
Despite the significant contribution of domestic commerce to formal and informal employment and GDP, this sector has been historically overlooked in policymaking, with the first domestic commerce policy formulated only in 2021, it added.
On the international trade front, the report highlighted obstacles such as high tariff cascading, minimal progress in moving up the export product value chain, and limited destination diversification.
It said urban design, zoning regulations, and city planning negatively impacted businesses in Pakistan, particularly in domestic commerce.
The prevalence of the “Seth” culture, characterized by family-owned businesses dominating the stock market, raises concerns about market efficiency.
Deputy Chairman of the Planning Commission Dr Mohammad Jehanzeb Khan attended the event as the chief guest, while Special Secretary of the Ministry of Commerce Sarah Saeed participated as a special guest.
In his address, Dr Khan underscored the paramount role undertaken by PIDE and appreciated it for spearheading cutting-edge research crucial for the nation’s immediate requirements.
He said a fundamental tenet of effective governance was the government’s responsibility to generate revenue and ensure its judicious utilization through enhanced public expenditure.
Emphasizing the need for improvement in public expenditure, he said “We are committed to optimizing the impact of public funds for the betterment of our society and fostering sustained economic advancement.”
In her remarks, Sarah Saeed commended PIDE’s efforts in highlighting the importance of domestic commerce in Pakistan.
She said the Ministry of Commerce acknowledged the significance of domestic commerce in Pakistan, as rightly emphasized and consistently advocated by PIDE.
Consequently, she said the Ministry had established a separate domestic commerce department.
While domestic commerce has become a provincial subject after the 18th Constitutional amendment, she said coordination and collaboration among the federal and provincial governments were essential to set the direction of policies supporting the external trade sector and domestic commerce.