| Updated at: 2143 PST, Monday, December 06, 2010|
KARACHI: US Ambassador Cameron Munter said Monday that the administration of President Obama is actively working with US Congress to provide market access to help Pakistani export sector.
He was delivering his first major speech on US-Pak economic relations at Karachi Stock Exchange (KSE) here Monday as part of interaction with leading business chambers in Pakistan. US Consul General William Martin was also present on the occasion.
He said market access is much better than any assistance programme that US has for Pakistan.
"US Embassy and US Consulates are committed to work with US Congress to provide market access benefits to help Pakistani exporters," he said.
However, he said that in the long term, Pakistan must diversify its exports.
"We welcome your ideas on how US and Pakistan might work together to promote industries whether to market outreach, technical assistance, regulatory changes or other way you might suggest".
The US envoy said that the Reconstruction Opportunity Zones (ROZs) will provide a window of opportunity to produce goods and export them to the United States duty free. He said USA was committed to these ROZs and the Congress willhopefully pass this bill in the coming year.
"We want you to help succeed in increasing your sales and create jobs and expand your reach to regional markets as well as United States", he added.
The envoy said that we want to keep hearing about your ideas for improving business ties between our two countries.
Referring to Pak-US trade, he said that during 2009, Pakistan exported goods worth $ 3.2 billion to USA and simultaneously US's exports stood at $ 1.6 billion with Pakistan having a trade surplus.
Munter said that trade volume can grow and it must not be restricted to only few sectors as Pakistan has much potential in its value added sectors.
He noted that Pakistan must eliminate government subsidies in energy sector to stop revenue drain.
He said that USAID is funding to the generation and distribution companies. "Our technical experts are working closely with Pakistani officials on practical steps to solve technical inefficiencies, unsustainable tariff structure and power theft which are draining Pakistan's budget".
Munter said that US will continue to convince the government to foster a business friendly environment to welcome private investment in the power sector and added that US also needs ideas from the private sector in this regard.
He pointed out that Overseas Private Investment Corporation(OPIC) and US Trade and Development Agency (USTDA) are active in promoting Pakistani business supported by US investment, particularly, in the energy sector.
He said Americans and Pakistani partner companies have proposals pending with the government of Pakistan to build plants to import Liquified Natural Gas (LNG), power plant to generate electricity through winds in Gharo, Sindh and full range of other investments.
Referring to revenue collection, he appreciated the efforts of President Asif Ali Zardari, Prime Minister Yusuf Raza Gilani, Finance Minister Dr Hafeez Shaikh, SBP and political leadership for the commitment to address the issue of revenue collection in the country through economic reforms legislation.
"This is not easy, but we hope that with our encouragement, they will move forward. This legislation is critical to enable the private sector to grow and create jobs", he observed. Munter said that with fiscal deficit at 6.3 percent of the GDP in2010, the government of Pakistan is unable to meet its commitment to the IMF under the October 2008 standby agreement that provided $ 10.7billion in loans over two years.
The Ambassador said Pakistan's tax to GDP ratio is less than 9percent which is among the lowest in the world. US citizens pay around 18 percent to the GDP and many developed countries pay upward of 30 percent.
Talking of Reformed General Sales Tax (RGST), he said that US is hopeful that this bill will be passed by the legislators and will be effectively implemented at both federal and provincial levels.
"This will be an important first step of the government, allowing its capacity to raise revenue to boost its security and development."
He supported the idea of including agriculture sector in the tax net as it forms the one-fifth of the GDP. This, also being the political question, is not easy, he added.
He said US welcomes the open, honest and difficult debate on tax revenues.
Pakistan, he noted, is blessed with abundant natural resources including rivers, coal and untapped oil and gas and wind resources. The government needs to implement energy development plans to tap all these resources in a timely manner, he added.
He pointed out that American company AES Corporation has agreed to pursue $ 375 million plant to generate 150 MW through wind power under public private partnership. This is in addition to US's signature energy programme announced by Secretary Hillary Clinton to improve the efficiency of Pakistan's energy sector.
Referring to the privatisation programme, he noted that this should be expedited to get rid of loss incurring by state-owned enterprises which are causing huge losses to the revenue. During 2010,they have caused losses to the tune of $ 3 billion and observed that they can work efficiently in the private sector.
He said Foreign Direct Investment (FDI) has declined by 60 percent due to security environment prevailing in the country.
Talking about recent floods in Pakistan, Munter said US has provided $ 650 million for relief work and it stands for reconstruction of destroyed houses and infrastructure.
He said that in 2011, President Asif Ali Zardari will visit United States and simultaneously US President Barrack Obama will visit Pakistan afterward.
Earlier, acting Managing Director KSE Haroon Askari in his welcome address, said that the stock exchange was the best performing market in the region during November 2010.