15 May, 2014
1

•
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

•
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
4

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
6

•
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

Jun Jul Aug Sep Oct Nov Dec
Previous
Plan
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
8

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

•
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

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 consumption and production
Nonperishable Perishable
• 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.

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

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
14

Source: SBP
Service Sector 2009-10
Transportation 1,279
Travel 286
Construction Services 15
Insurance Services 42
Financial Services 89
Computer and Information
187
Services
Royalties and License Fees 6
Other Business Services 535
Personal, Cultural, and Recreational
Services
4
2010-11
(Million US$)
2011-12 2012-13
Jul-
March
2013-14
1,648 1,503 1,269
351
225
18
53
69
369
211
24
88
53
298
508
29
41
56
216
5.6
780
3.4
2,394
248
7
813
294
4
795
4 5.7
1,710 3,428
5,767 5,035 6,732 3,722 Total 5,229

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
971
175
82
1,367
178
62
1,232
205
9
146
Insurance services
Total
147 279 260
6,919 7,707 8,227 8,202 5,757
16

16000
14000
12000
10000
8000
6000
4000
2000
0
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
17

Country FY11 FY12
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
148
103
57
178
43
57
62
30
1250
5768
2286
430
441
271
218
53
142
121
105
102
83
75
61
60
39
1553
5035
1308
452
336
242
221
151
126
% Change % Share in
FY12
-18.4
2.5
79.9
-53
74.5
7.5
-3.7
27.9
24.2
-12.7
-42.8
5.1
-23.8
-10.9
1.5
184.3
-11.1
2.4
2.1
2
1.7
1.5
1.2
1.2
0.8
30.8
100
26
9
6.7
4.8
4.4
3
2.5
18

7
8
5
6
3
4
1
2
9
10
Amount in USD Billion
S. No Country 2008 2009 2010 2011 2012
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
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

•
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

•
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

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

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

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

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

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

•
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

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

Contd…
–
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

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

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

•
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

•
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

35

Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Back
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
36

Back
BPM5 BPM6
•
Transportation
•
Manufacturing services on
•
Travel physical inputs owned by
•
•
•
•
•
•
•
Construction services
Insurance services
•
Transport
Financial services
•
Travel
Royalties and license fees
•
Insurance and pension services
Communication services
•
Financial services
Computer and information services
•
Charges for the use of intellectual property n.i.e
Other business services
•
Telecommunications, computer, and information
•
Other business services 37