Case studies

Pakistan trade project

US Agency for International Development

Deloitte helped to adopt a three-pronged approach to Pakistan’s trade-related challenges focused on infrastructure and physical assets, trade policy, and human capital.

Abstract

The Pakistan Trade Project is designed to focus and harness the power of trade as an engine for sustainable economic growth and stability. Through targeted technical assistance, Deloitte supports the improvement of trade-related policies, and helps to build the capacity of Pakistan’s people and institutions, and supports the implementation of trade-oriented industrial zones in some of Pakistan’s most challenging environments. The main work components are:

  • Improve customs and trade facilitation to improve transit trade and enhance trade and transport facilitation;
  • Improve trade policy and export promotion;
  • Enhance economic zones regime, focusing on areas of conflict and vulnerable populations; and
  • Promote women in trade, through gender mainstreaming and dedicated capacity building.

By reducing the time and cost of moving goods across Pakistan’s borders, increasing formal cross-border trade, and promoting opportunities for women in trade-related occupations, this project is accelerating Pakistan’s trade-related capacity building and integration into the global economy.

The challenge

Pakistan faces significant challenges around trade and exports, ranging from policy issues to physical infrastructure challenges. Pakistan’s exports are dominated by the apparel sector, lack diversity, and are in decline. There is little foreign direct investment, and the country imposes high costs on doing business. The government is inconsistent in its approach to trade policy and has a weak track record in implementing free trade agreements. Adding to these challenges, local businesses struggle to access timely, factual market data, and trade chambers and associations lack the capacity to effectively promote business interests. Moreover, women are underrepresented in the economy, and gender-based discrimination is widespread. Compounded by a tenuous security environment and poor human and institutional capacity, these challenges pose a significant roadblock to Pakistan’s economic growth and integration with the global economy. 

How we helped

Deloitte helped to adopt a three-pronged approach to Pakistan’s trade-related challenges focused on infrastructure and physical assets, trade policy, and human capital.

This project has achieved measurable progress in trade facilitation at Pakistan’s border crossings, for example, by enabling an estimated 300 percent increase in the volume of cargo processed each day at the Chaman border post on Afghanistan’s border, substantially reducing the time and cost associated with Afghanistan-Pakistan transit trade. The project has also improved the capacity for exports, through the training of more than 250 female entrepreneurs and the participation of Pakistan marble producers in the world’s largest marble exhibition.

During the project’s first several months, the Deloitte team helped the client conduct an extensive evaluation of the transit trade corridors in Pakistan. Pakistan’s Federal Board of Revenue established a working group to direct the implementation of recommendations, specifically focused on infrastructure, logistics, and policy improvements with immediate impact at select Afghan border crossing points. The improvements resulted in the immediate clearance of 1,000 backlogged trucks and sustained levels of performance which now allow processing of more than 300 cargo trucks per day.

In cooperation with USAID and the Pakistan Ministry of Commerce, Deloitte helped to establish a public-private partnership committee which commissioned a change management study to re-engineer the Trade Development Authority of Pakistan (TDAP). Deloitte’s baseline evaluation of TDAP prioritized a number of reforms, including development of new job descriptions, training, selection criteria, and responsibilities for the overseas Commercial Officer program. Deloitte is also leading the development of a TDAP-hosted online portal, which will be designed to provide a crucial direct link between Pakistan exporters/importers and commercial officers posted abroad.

Through a multi-month competitive internship program, Deloitte’s “Women in Trade” (WIT) internship program places young, university-educated female professionals in high profile trade-related positions at several of Pakistan’s leading enterprises. The internship program completed its first cycle in autumn, 2011, and is currently preparing for a second, larger cohort of interns in winter, 2012. The program is opening up a significant number of new opportunities for Pakistani women and making noticeable inroads toward diversifying and strengthening the trade-related workforce and overall size of the talent pool.

This project has also played a central role in a number of policy reforms, including the signing and ongoing implementation of the Afghanistan Pakistan Transit Trade Agreement (APTTA), which ushers in a modern transit trade system between the two countries and makes provisions for trade project-promoted standards such as a broad system of financial guarantees to facilitate lines of credit and reduce collection risk on trade between and through the two countries. Coupled with the infrastructural improvements advocated by and overseen by the trade project, these reforms help to modernize trade practices along Pakistan’s western border. This project is also focused on high profile reforms at Pakistan’s ports and eastern border, as the project works with public-private sector partners to establish a “Less-than-Container-Load” (LCL) hub in Karachi and improve India-Pakistan trade relations.

Solution

This project works to help improve the policies, procedures, people and practices that affect the movement of goods across Pakistan’s borders. Building on past achievements, it seeks to substantially strengthen the overall trade environment and help reduce the costs and time required to export and import goods. Further, the project works to enhance public-private sector capacity to implement reformed policies and procedures, and supports export promotion and diversification through the enhancement of existing market information systems. At its heart, this includes spearheading the development of a framework for a modern customs regime, aligned with international practices and World Trade Organization (WTO)/ World Customs Organizations (WCO) standards, including customs bonds and insurance guarantees. The project’s effectiveness is marked by numerous policy achievements, like the ratification of APTTA, and improvements to physical infrastructure and operations, including a Single Window approach and improved customs audit and risk assessment procedures.

To further advance reforms at Pakistan’s borders, the project works to build the capacity of officials and institutions that affect cross-border trade, including both the updating of TDAP’s human capital approach and the WIT internship program. Activities such as the WIT program endeavor to spread the Project’s impact more equitably amongst the marginalized segments of Pakistan's economy, particularly women, youth and Small and Medium Enterprises. The project also serves as a catalyst for increased government investment in infrastructure and provides support to local and cross-border business institutions to strengthen their capacity to lobby for more efficient cross border processes.

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