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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
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Government influence in international trade in Pakistan
Every country government focuses on making such trade policies that enhancethe 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,
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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 importsof reconditioned cars, motorcycles, trucks, and tractors. According trade policy 2011-
2012 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.
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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 followingprocedures;
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 governmentinfluence 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.