The Strategic Trade Policy Framework 2009-12 announced by commerce minister Makhdoom Amin Fahim last week is focused on export promotion.

Understandably, the framework has everything that the government wants to or does not want to boost exports over the next three years. But it has nothing on how to unleash the huge potential of domestic commerce and trade.

This is in spite of official claims made before the announcement of the strategic trade framework that it would contain crucial initiatives to remove snags that stunt the growth of domestic commerce and trade. That was what commerce secretary Suleman Ghani had told me weeks before the trade policy was announced.

Economists have long been calling for focusing on the underdeveloped domestic commerce - which includes retail and wholesale trade, hospitality, entertainment, construction, transport, storage, warehousing, communication, real estate, financial and personal services, etc - for sustainable economic growth, job creation and poverty alleviation.

The strategic trade policy framework has also disappointed many businessmen.

"The framework is anything but a strategic policy. Whatever initiatives have been announced in it are certain incentives," says Akber Sheikh, a leading businessman from Lahore.

He resents the official stress on "policies". "We have too many policies: energy policy, fiscal policy, industrial policy, labour policy, trade policy, monetary policy, textile policy, etc. That's not something we require. What we need is an integrated approach to the economic problems and challenges we are faced with," he says. How can a strategic framework for the promotion of trade miss to take initiatives for domestic commerce?, he asks, saying it is a very pertinent question.

The critical importance of domestic commerce can be guaged from the fact that it employs 35 per cent of the total labour force and contributes above 50 per cent to the GDP.

Economists like Dr Sohail Jehangir Malik, who carried out a detailed study on the state of domestic commerce for the ministry of commerce in 2006, believe that the government can obtain one to two per cent GDP (gross domestic product)growth every year by creating enabling conditions for domestic trade.

In addition, the development of domestic wholesale and retail markets could also help build up brands and later push value added exports.

Dr Nadeemul Haq, a former advisor to the ministry of commerce who has written extensively in favour of promoting domestic commerce, firmly believes that Pakistan will remain an exporter of low value products unless it develops its local markets.

"The domestic markets are the testing ground for products that we want to sell to the outside world. Brands are also developed in the domestic markets before they expand into global markets," he argues.

We have heavily subsidised our industries and exports for foreign buyers, spent billions of rupees on organisations like the Export Promotion Bureau and Trade Development Authority, he says, but are still struggling with low quality, low value exports. Similarly the successive governments protected the inefficient local car assemblers and in doing so, the import of trucks and construction machinery etc was discouraged, Dr Haq says.

The result is that we don't have an efficient freight transport system. Trade policies are useless documents, he says, adding no policy has ever delivered. "What's become of previous skill development initiatives? Have they overcome shortages of skilled labour? None of the initiatives announced in the strategic trade policy framework is going to work," he insists. You cannot increase exports without unleashing domestic commerce and markets no matter how many millions and billions are squandered by organisations like TDAP, he maintains.

A leading retailer in Lahore says the skewed government policies, bad taxation, poor infrastructure, official bias against imports and energy shortages are hampering growth of retail markets. He says the consumers are forced to use low quality products at high cost because of the issues hindering the expansion and development of wholesale and retail markets.

The growth of domestic markets and trade remain distorted in spite of the years of economic expansion and consumption boom during 2002/07. The only time when the ministry of commerce exhibited any interest in boosting domestic commerce was during the last years of the previous government under General Pervez Musharraf. Though some parts of domestic commerce like construction recorded good growth during those years, nothing changed in the rest of the areas -- transportation, retail, wholesale, hospitality, etc.

The 2007/08 trade policy points out that a vibrant domestic commerce is a pre-requisite for innovation, entrepreneurship, quality assurance and product development. It stimulates private sector led growth and positions countries to effectively tap international markets.

But its growth and development continues to be stunted by a number of factors - poor infrastructure, high land prices and rentals, unclean land titles, costly utilities, over-regulation of the markets, absence of enough and efficient transportation, lack of space for commercial activities even in major cities, missing links in the distribution chains of agriculture and industrial products, deteriorating law and order conditions, weak contract enforcement, paucity of warehousing and storage facilities, a visible official bias in favour of industry against trading activity, lack of access to formal finance, inequitable and cumbersome taxation, etc. The policy pledged to undertake projects and put in place policies to improve this vital sector.

But in spite of his 'commitment' the then minister, Humayun Akhtar Khan, did not or could not do anything worthwhile to unshackle the domestic markets and trade from bureaucratic control except ordering a study, which is gathering dust in the ministry.

The study had underlined several factors constraining the growth of domestic commerce and proposed to remove snags hampering its smooth functioning.

Dr Haq insists that the bureaucracy is biased against domestic commerce and trade for fear of losing its privileges and control over the economy.
The development of domestic commerce requires extensive civil service reforms to dismantle official controls on the economy and unleashing market forces. That is not acceptable to the bureaucracy because it will have to give up its controls over sprawling residences like the Government Officers Residences (GOR) on expensive, prime land in Lahore and elsewhere, cars, and several other benefits if the markets are strengthened, he argues.

He insists that that vibrant domestic commerce will create "space" for the poor, who are being pushed to the peripheries of major cities, from the city centres.