1. Services Trade Development Council 2. Trade in Services Wing

Transcript 1. Services Trade Development Council 2. Trade in Services Wing

Services Trade Development Counci l (STDC) Ministry of Commerce Govt. of Pakistan

15 May, 2014 1

Sequence of Presentation

• • • • • • • • Introduction Aims/ objectives of STDC Work plan/ Road map Present status of STDC Trade in services – – Segregating Goods & Services GATS Mode Of Services – – Sectoral shares of World’s GDP 2012 Pakistan’s services exports Issues and Challenges Conclusion Recommendations 2

Introduction

• Services Trade Development Council (STDC) & Trade in Services Wing were established under STPF 2012-15 – Services sector included in Trade Policy document for

the first time

– STDC will be

an autonomous , consultative , advocacy

and

research think tank

with major participation of private sector 3

Proposed Composition of the STD Council

CHAIRMAN MINISTER OF COMMERCE EX-OFFICIO REPRESENTATION FEDERAL GOVT PRIVATE STAKEHOLDERS PROVINCIAL GOVT, SELECTIVE REPRESENTATION HEADS OF ORGANIZATIONS FINANCIAL INSTITUTIONS A CADEMIA

Organogram of STDC Secretariat

Director General (BPS 20)

( JS Import & Export

) Director (BPS 19) Deputy Director (BPS 18)

Deputy Director (BPS 18) vacant

Assistant Director (BPS 17 ) Assistant Director (BPS 17) Assistant Director (BPS 17) Assistant Director (BPS 17)

SO Admn-I SO AP-II

Aims & Objectives of Council

• • • • • • To initiate and lead the service sector exports

reforms

aiming at domestic liberalization and facilitation for enhanced To provide

policy guidelines regulatory/legal framework

for harmonizing existing in the services sector To support/develop forums for creating

awareness

on the potential of services and opportunities at the global level To

finalize/implement periodic development promotional plans

for expansion of services sector and To oversee

coordination

among the stake holders for implementation of policy initiatives To consider

financial proposals

for development and expansion of various sectors and sub-sectors 7

Revised STDC Work Plan- 2014

Jun Jul Aug Sep Oct Nov Dec

To make STDC fully functional body Engaging stakeholders on composition of STDC Initiate preliminary working on holding First Meeting of Council Organization of First Council Meeting Engaging donors/stakeholders on development of service sector Plan Implementation of the decision of First Meeting of Council Launching awareness programmers: meetings/seminars/workshops Engaging private sector in development & promotional plans through sect oral Committees Developing TORs for selected studies under technical assistance programmes Designing publicity plans to project service sector Coordination of activities of the identified sectors

Previous Plan

Strengthening of key institutions

Roadmap of Council

Institutionalizing support and technical assistance To develop competitive edge of Pakistan’ service sector to increase export’s potential GOAL Initiatives on improving Regulatory framework environment, facilitation and elimination of barriers.

Helping disaggregation of major sector in services sector in Pakistan To formulate policy for post Doha Round

Issues faced by STDC

• • • • • • • • STDC

lacks logistics / accommodation

for officers Non-release of initial

funding

of Rs. 70 million Need acquisition of

autonomous status

Non-approval of STDC

functions/ objectives/ ToRs

cause delay to carry out various activities such as: – – – Identification of relevant stakeholders from public and private sector Identification of important services sectors/ areas Identification of various regulations affecting services sector Designing of road map/ work plan for STDC

Capacity building

/ training & skill enhancement Provision of

services data

analysis software Establishing

linkages

with local, regional and international bodies involved in services promotion 10

Services are Different

Goods Services Resulting Implications Tangible Standardized Intangible Heterogeneous Production Separate from consumption Similarities in consumption and production Nonperishable Perishable

• Services cannot be inventoried • Services cannot be patented • Services cannot be readily displayed or communicated • Pricing is difficult • Service delivery and customer satisfaction depend on employee actions.

• Service quality depends on many uncontrollable factors.

• There is no sure knowledge that the service delivered matches what was planned and promoted.

• Customers participate in and affect the transaction.

• Customers affect each other.

• Employees affect the service outcome • Decentralization may be essential.

• Mass production is difficult.

• It is difficult to synchronize supply & demand with services • Services cannot be returned or resold.

GATS Modes of Services

Modes of Services Definition of “Traded” Service: World’s Export Share Pakistan’s Export Data Cross border Consumption abroad Commercial presence Presence of natural person Service moves Consumer moves Supplier moves permanently Supplier moves temporarily 25 -30% 10-15% 55-60% Less than 5% 13 Source: WTO

Sectoral Shares of World’s GDP 2012

90,00% 80,00% 70,00% 60,00% 50,00% 40,00% 30,00% 20,00% 10,00% 0,00% 63,60% World 79,70% USA 56,90% India 67,20% Brazil 78,30% UK 57,50% 71,40% 53,70% Agri.

Indus.

Serv.

S. Korea Japan Pakistan

The World Economic Outlook (WEO) database

Export of Services from Pakistan

Source: SBP

Service Sector

Transportation Travel

2009-10

1,279 286 Construction Services 15 Insurance Services 42 Financial Services Computer and Information Services 89 187 Royalties and License Fees 6 Other Business Services 535 Personal, Cultural, and Recreational Services 4

2010-11

1,648 351 225 18 53 69 216 5.6

780 3.4

2,394 (Million US$)

2011-12 2012-13 Jul March 2013-14

1,503 1,269 369 211 24 88 53 298 508 29 41 56 248 7 813 4 1,710 294 4 795 5.7

3,428

5,767 5,035 6,732 Total 5,229

Import of Services by Pakistan

Source: SBP

Service Sector 2009-10 2010-11 2011-12 2012-13

(Million US$)

Jul March 2013-14

3,576 Transportation 4,071 3,509 3,288 878 Travel 158 Communication services 29 Construction services 146 Insurance services

Total 6,919

971 175 82 147

7,707

1,367 178 62 279

8,227

1,232 205 9 260

8,202 5,757

16000 14000 12000 10000 8000 6000 4000 2000 0

Pakistan’s Trade in Services

7 487 6 919

(

Amount in Million US$) 7 707 8 227 8 202 4 105 5 229 5 767 5 035 6 732

Import of Services Export of Services 0 FY09 0 FY10 0 FY11 0 FY12 0 FY13

Data Source: State Bank of Pakistan

Pakistan Exports to Major Countries

Country

U.S.A

U.A.E

U.K.

Singapore Saudi Arabia Switzerland Thailand Germany France Japan Denmark Hongkong Netherland China Afghanistan Others

Total Export of Services FY11

2286 430 441 271 218 53 142 148 103 57 178 43 57 62 30 1250

5768 FY12

1308 452 336 242 221 151 126 121 105 102 83 75 61 60 39 1553

5035 % Change

-42.8

5.1

-23.8

-10.9

1.5

184.3

-11.1

-18.4

2.5

79.9

-53 74.5

7.5

-3.7

27.9

24.2

-12.7

% Share in FY12

26 9 6.7

4.8

4.4

3 2.5

2.4

2.1

2 1.7

1.5

1.2

0.8

30.8

100

Export Performance of Regional Economies

Amount in USD Billion S. No Country 2008 2009 2010 2011 2012 1 2 3 4 5 6 7 8 9 10 China India Turkey Thailand Malaysia Indonesia Iran Pakistan Sri Lanka Bangladesh 147.11

107.13

35.24

33.03

30.32

15.24

6.92

3.58

2.00

1.99

129.47

92.62

34.11

30.15

28.76

13.15

8.00

4.1

1.89

1.97

162.16

124.04

35 34.32

31.72

16.76

6.77

5.22

2.47

2.41

176.42

137.67

38.98

41.57

35.85

20.69

8.28

5.76

3.08

2.42

191.43

141.2

42.78

49.51

37.61

23.14

8.81

5.03

3.78

2.02

Source: ITC

Available Research/ Studies on Services in Pak

• • • •

Trade Related Technical Assistance (TRTA) Studies

Statistical System of Pakistan for Reporting on International Trade Statistics. (2006) Pakistan Services Road Map. (2007) Promoting Pakistan’s exports in Professional, Computer and Transport Related Services 2008 Assessing Pakistan Export Potential for Professional Services. (2008) 20

STDC interaction with Trade Missions

• • • • Identified potential sectors/sub-sectors Highlighted market specific constraints Stressed export of skilled labour/manpower Suggested need for enhanced coordination (NAVTEC, TUSDEC & other stakeholders) • • Proposed for bilateral arrangements to capitalize on opportunities and removal of NTBs Recommended interaction among relevant host authorities and regional organizations 21

Challenges in Services Sector

•

Supply side constraints

• Lack of capacities to supply the expansion of internal markets • Lack of identification of export opportunities in key services sectors • Lack of important prerequisites such as coherent development and services strategies • Lack of physical and technological infrastructure, knowledge and availability of capital 22

•

Challenges

Contd…

Market Access Issues

 Sensitivity of sectors or modes of supply where Pakistan has interest and potential   Mode-1 (cross border movement) in the case of outsourcing Mode-4 (temporary movement of persons) in terms of qualification and licensing requirements for different skill levels  Business and professional services are sectors where diverse regulations such as lack of recognition of foreign credentials may impede the affected service trade.

Challenges

Contd…

Interplay with Domestic Services sector and Regulatory Framework

• Association of social, environmental and economic factors with services liberalization • Lack of fast track licenses granted to small services suppliers • institutional Lack of supportive regulatory and framework • • Interagency coordination Institutional and administrative capacity building 24

Challenges

Contd…

•

Human Resources Gap

• Lack of knowledge intensive and solid educational reforms that can enable the creation of a capable and skilful work force.

• The human resources gap is manifested by low literacy rate • Small number of highly qualified professionals 25

Challenges

Contd…

•

Financial Services and security

• Lack of designing and implementation of specific macroeconomic, regulatory and supervisory mechanisms • • Lack of financial support mechanisms Reliability, affordability and safety of remittance transfers, a key challenge for Pakistan •

•

Under reporting of remittances in the services area

BPM-5 and BPM-6

Challenges

Contd…

•

Statistics and Data related issues

• Need for gathering up-to-date, disaggregated and quality data on domestic output, consumption and trade in services • Lack of data limits the use of potential positive approaches to improving services efficiency and quality • Lack of reliable data required for regulatory assessments; information necessary to weigh the value of negotiation proposals and potential commitments in trade liberalization.

•

Opportunities in Services Sector

Facilitation and promotion of services sectors can provide a series of positive catalysts for a whole economy

– – – Enable sustained economic growth Generate employment, facilitate diversification Enhance the supply side capacities of the primary and manufacturing sectors – Bring investment and trade opportunities •

Related infrastructure

– Investing in the development and expansion of technological infrastructures such as broadband networks – – – – Contribute to lowering the cost of using internet Communication services for a vast number of people. Increasing the possibilities for transactions Leading to the creation of new services and online businesses 28

Opportunities

Contd…

•

Contribution towards Environment Management

– Challenges related to environmental protection – – Introduction of new environmental regulations Climate change mitigation and adaptation creating a growing demand for environmental goods and services – Creation of new business opportunities in clean energy generation – Diverse services environmental and pollution control – – Low emissions transport systems Water and sanitation services 29

Opportunities

Contd…

•

Improvement in Governance

– Setting fast track licensing procedures – Providing targeted technical assistance to fulfill relevant standards – Setting targeted procurement rules that favour small and medium services providers, – Government can encourage new entrants and enable their integration into value chains 30

Opportunities

Contd…

•

Contribution towards Financial Services

– Provision of products to providers specific address Finance the middle and insurance class services – Remittances can be better channeled for capital accumulation and creation of local business – Access to credit, expanding services coverage, and creating special savings and credit products needed by the Diaspora 31

Opportunities

Contd…

•

Opportunities in Tourism Sector

– Tourism contribution to global GDP is recorded to exceed 5 % – Tourism has to promote economic diversification and to strengthen linkages with related services, food production and manufacturing – Emerging services such as tourism, ecotourism, medical and health tourism services, traditional and niche hospitality services 32

Conclusion

• • • • • Pakistan has the potential for broadening of its services exports and outreach to global marketplace.

In STPF 2012-15, there has been a recognition and focus on export of services, yet the practical actions on part of Ministry of Commerce are not visible.

Different public/ private entities are involved in services trade promotion on individual basis. Four separate bodies are working in Ministry of Commerce for services sector without any coordination among them.

Lower level of awareness and recognition with the most important player, i.e. private sector. 33

Recommendations

• •

Trade and related Policy tools Regulatory Environment

– Detailed mapping of domestic regulations – Regulatory reforms to create enabling environment • •

Public Private Partnership Linkage to international Markets

– Implementation of Services Export Strategy 34

THANK YOU

STDC Work Plan- 2014

Mar Apr May Jun Jul Aug Sep Oct Nov Dec

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• • • • • • • • •

Classification of Services Sector

BPM5 BPM6 Transportation

•

Manufacturing services on physical inputs owned by Travel Construction services Insurance services

•

Transport Financial services

•

Travel Royalties and license fees

•

Insurance and pension services Communication services Computer and information services

• •

Financial services Charges for the use of intellectual property n.i.e

Other business services

•

Telecommunications, computer, and information

•

Other business services