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

Report
Services Trade Development Council
(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
SELECTIVE
REPRESENTATION
PRIVATE
HEADS OF
FINANCIAL
STAKEHOLDERS
ORGANIZATIONS
INSTITUTIONS
FEDERAL
PROVINCIAL
GOVT
GOVT,
ACADEMIA
4
Organogram of STDC Secretariat
(JS Import &
Export)
Director General
(BPS 20)
Director
(BPS 19)
Deputy Director
(BPS 18)
Assistant Director
(BPS 17 )
SO Admn-I
Assistant Director
(BPS 17)
Deputy Director
(BPS 18)
vacant
Assistant Director
(BPS 17)
Assistant Director
(BPS 17)
SO AP-II
6
Aims & Objectives of Council
• To initiate and lead the service sector reforms aiming at
domestic liberalization and facilitation for enhanced
exports
• To provide policy guidelines for harmonizing existing
regulatory/legal framework 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 and
promotional plans for expansion of services sector
• 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
To make STDC fully functional body
Engaging stakeholders on
composition of STDC
Aug
Sep
Oct
Nov
Dec
Previous
Plan
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
8
Roadmap of Council
Strengthening of
key institutions
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
9
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
Intangible
•Services cannot be inventoried
•Services cannot be patented
•Services cannot be readily displayed or communicated
•Pricing is difficult
Standardized
Heterogeneous •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.
Production
Separate from
consumption
Similarities in
•Customers participate in and affect the transaction.
consumption
•Customers affect each other.
and production •Employees affect the service outcome
•Decentralization may be essential.
•Mass production is difficult.
Nonperishable Perishable
•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
Cross border
Service moves
25 -30%
Consumption
abroad
Commercial
presence
Presence of
natural person
Consumer moves
10-15%
Supplier moves
permanently
Supplier moves
temporarily
55-60%
Pakistan’s
Export
Data
Less than 5%
13
Source: WTO
Sectoral Shares of World’s GDP 2012
90.00%
79.70%
80.00%
78.30%
71.40%
70.00%
67.20%
63.60%
57.50%
56.90%
60.00%
53.70%
50.00%
Agri.
40.00%
Indus.
30.00%
Serv.
20.00%
10.00%
0.00%
World
USA
India
Brazil
UK
S. Korea
Japan
Pakistan
The World Economic Outlook
(WEO) database
14
Export of Services from Pakistan
Source: SBP
Service Sector
Transportation
Travel
Communication Services
Construction Services
Insurance Services
Financial Services
Computer and Information
Services
Royalties and License Fees
Other Business Services
Personal, Cultural, and Recreational
Services
Government Services, N.I.E.
Total
(Million US$)
Jul2011-12 2012-13 March
2013-14
1,503
1,269
369
298
211
508
24
29
88
41
53
56
2009-10
2010-11
1,279
286
246
15
42
89
1,648
351
225
18
53
69
187
216
248
294
6
535
5.6
780
7
813
4
795
4
3.4
4
5.7
2,535
2,394
1,710
3,428
5,229
5,767
5,035
6,732
3,722
15
Import of Services by Pakistan
Source: SBP
Service Sector
(Million US$)
Jul2009-10 2010-11 2011-12 2012-13 March
2013-14
3,576
4,071
3,509
3,288
878
971
1,367
1,232
158
175
178
205
29
82
62
9
146
147
279
260
6,919
7,707
8,227
8,202
Transportation
Travel
Communication services
Construction services
Insurance services
Total
5,757 16
Pakistan’s Trade in Services
(Amount in Million US$)
16000
7,707
14000
7,487
12000
8,202
8,227
6,919
10000
8000
6,732
5,229
6000
5,767
Import of
Services
5,035
Export of
Services
4,105
4000
2000
00
0
0
0
0
0
FY09
FY10
FY11
FY12
FY13
0
Data Source: State Bank of Pakistan
17
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
FY12
% Change
2286
430
441
271
218
53
142
148
103
57
178
43
57
62
30
1250
5768
1308
452
336
242
221
151
126
121
105
102
83
75
61
60
39
1553
5035
-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
1.2
0.8
30.8
100
18
Export Performance of Regional Economies
Amount in USD Billion
S. No
Country
2008
2009
2010
2011
2012
1
China
147.11
129.47
162.16
176.42
191.43
2
India
107.13
92.62
124.04
137.67
141.2
3
Turkey
35.24
34.11
35
38.98
42.78
4
Thailand
33.03
30.15
34.32
41.57
49.51
5
Malaysia
30.32
28.76
31.72
35.85
37.61
6
Indonesia
15.24
13.15
16.76
20.69
23.14
7
Iran
6.92
8.00
6.77
8.28
8.81
8
Pakistan
3.58
4.1
5.22
5.76
5.03
9
Sri Lanka
2.00
1.89
2.47
3.08
3.78
10
Bangladesh
1.99
1.97
2.41
2.42
2.02
Source: ITC
19
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.
23
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
• Lack of supportive
regulatory
and
institutional
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
26
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.
27
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 environmental and pollution control
services
– 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 specific Finance and insurance
products to address the middle class services
providers
– 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
35
STDC Work Plan- 2014
Mar
Apr
To make STDC fully functional body
Engaging stakeholders on
composition of STDC
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Back
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
36
Back
Classification of Services Sector
•
•
•
•
•
•
•
•
•
BPM5
Transportation
Travel
Construction services
Insurance services
Financial services
Royalties and license fees
Communication services
Computer and information
services
Other business services
•
•
•
•
•
•
•
•
BPM6
Manufacturing services on
physical inputs owned by
others
Transport
Travel
Insurance and pension
services
Financial services
Charges for the use of
intellectual property n.i.e
Telecommunications,
computer, and information
Other business services 37

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