QUESTION # 1

LOW EXPORT TO GDP RATIO AND GDP

The average value for Pakistan during last five years (2016 to 2020) was 9.21 percent with a minimum of
8.257% percent in 2018 and a maximum of 10.119% percent in 2019 which Is lowest in south Asian region.
Following are the causes:

1. High cost of doing business

2. Lack of export products and market diversification
3. Liquidity problem due to pending exports refunds
4. Non-compliance of quality standards
5. Poor Market Access
6. Poor trade infrastructure and facilitation
7. Law & order, war on terror and political instability
8. Low level of technological advancement and research and development
9. Less educated and low skilled labor

i. High cost of doing business: High cost of doing business is one of the major factors which made Pakistani
exports un-competitive in world markets. The main factors of high cost of business in Pakistan are cost of
raw material, utilities and cost of finance, lack of human resource (mainly unskilled labor), technology,
infrastructure and supporting institutions.

ii. Lack of Export Products and Markets Diversification: Pakistan’s exports consist of a few products
mainly textile, fruits, vegetable, and sports goods and primary products. It also concentrated in very few
markets mainly United States, European Union and China. If Pakistan wants to increase his products,
then it should increase their products for export and expand their market.

iii. Liquidity problem due to pending export refunds: Pending Rebates on Exports, Sales Tax refunds and
Special Incentive rebates on exports is also one of the major reasons of decline in exports of Pakistan.
The delays in tax related/other refunds hamper the competitiveness of Pakistan’s export sector.

iv. Non-compliance of quality standards: The inability of large number of developing countries specially
Pakistan to participate effectively in international standardization activities poses serious actual and
potential problems to the trade of these countries. Pakistan has to strictly follow the technical standards
under Technical Barriers to Trade (TBT) and Sanitary and Phytosanitary (SPS) standards in order increase
its exports to developed countries. Otherwise Pakistan would not be able to export its products to that
country

v. Poor Market Access: Pakistan exporter has access of in very few markets mainly United States,
European Union and China. Government of Pakistan needs to get more market access for Pakistani
exports by signing preferential and free trade agreements.

vi. Poor trade infrastructure and facilitation: According to the Global Enabling Trade Index 2019,
Pakistan ranked 114 out of 138 countries studied for the report. Pakistan requires considerably more
days to export an item as compared to other efficient countries in the regions i.e. India, Malaysia and
Thailand. This is primarily due to lengthy procedures in terms of time taken and documents required.

vii. Law and order, war on terror and political instability: Pakistan law and order situation is also the
main factor of low export. Pakistan has lost thousands on live in last 20 years. However, in recent years
the situation is going to better.

viii. Low level of technological advancement and research and development: world most export shares
consist of Pharmaceticals products, automative products, telecommunication equipment, electronic
data processing and office equipment. However, Pakistan export has few share or even zero share on
above products which is the main reason of it’s low export.

ix. Less Educated and low skills labour: The unavailability of skilled and educated labour is also one of
the major factors contributing export growth of Pakistan. The reasons of non-availability of skilled
labour includes, lack of proper training centers, workers are not well educated which makes difficult for
them to learn new concepts related to work, use new machinery, etc.

QUESTION # 2
COMPLEXITY IN EXPORTS REBATE REFUND / TYPES OF
REBATES
Rebate / duty drawback (DDB) is re-payment of customs duty paid on import of input goods consumed
in the manufacture of output goods exported.

Following are the other rebate types which are as follow:

 Exemption from excise duty

 Exemption from vat
 Exemption of GST on utility bills
 Refund of consumption tax already paid on exported goods during production

The items attracting DDB on export of goods have been notified with applicable rate of DDB vide
notifications available on the website of FBR. The exporter is required to declare on export GD that the
goods are being exported as under claim of DDB. The rebate claim is processed / sanctioned after
realization of export proceeds and proof to this effect is scanned / submitted in the form of Bank Credit
Advice (BCA), issued by banks on line.
QUESTION # 3
GIANT BUYER (IMPORTER) DEALS WITH THE GIANT SELLER ON
LETTER OF CREDIT AT SIGHT FIRST TIME
A letter of credit that pays at sight is beneficial for sellers. Payment arrives more quickly than it would
with a deferred payment letter of credit. A deferred payment letter of credit works similarly to a sight
letter of credit. The difference being the maturity date of the deferred payment LC. The nominated bank
received the presentation papers from the seller but clears the payment upon the maturity in a deferred
payment LC.

From buyer context letter of credit at sight is most suitable because buyer can check quality of goods
before making payment. However, Letter of credit is also safest way because in this when the seller ships
the products then submits the shipping documents like the bill of lading and packing bill to the bank of
buyer for examination. The bank checks the documents for any discrepancies and forwards them to the
buyer’s bank. The buyer’s bank checks the documents, and once they are satisfied, it asks the buyer to
pay the LC amount at sight to collect the document. Since the bank has issued a sight LC, the buyer, i.e.
company A, cannot collect the documents without paying the LC amount upfront. Without it, the buyer
cannot receive the goods shipped by the supplier.

In my opinion if well known company wants to import product from Pakistan and buyers want to deal on
L/c at sight. It is a good option but if buyer wants to deal on deferred L/C the Pakistani exporter should
accept the deal. Because once the well-known company satisfied with Pakistani product, they may
become the permanent buyer of Pakistan. It will increase the share of country export as well as foreign
exchange.
QUESTION # 4
PAKISTANI EXPORT BRAND IS NOT SO STRONG IN GULF
AND IN OTHER COUNTRIES OUTSIDE PAKISTAN
High cost products: High cost is one of the major reason of Pakistani product not strong. The main reason
of this high labour cost, unavailability of raw material in country in comparison with india and china.
Because of this production cost of Pakistan is high than india and china. Product of the same country beats
in international market to Pakistani products.

Improper policy and Lack of vision: The most important factor is the government’s improper policies and
lack of vision for long-term export promotion. The government's uninterested attitude is reflected in the
fact that currently there is no export policy, no industrial policy, and no measures for revival of the
manufacturing sector.

Law and order, war on terror: Our security situation has kept most western visitors out of our country.
Without their prolonged stay and intense interactions with our factories to develop fashion products each
season.

Lack of interest of exporter: The purpose of Pakistani exporters is only to make profit. In comparison giant
exporter of other countries like india have acquire companies where they export and develop the
manufacturing units for their foot prints.

Poor Trade Facilitation: The another reason is trade facilitation. Pakistan requires considerably more days
to export an item as compared to other efficient countries in the regions i.e. India, Malaysia and Thailand.
This is primarily due to lengthy procedures in terms of time taken and documents required
QUESTION #5
RISK THAT BUYER BANK FACE AS GUARANTEER
Risks:
In a letter of credit transaction, main risk factors are:
- non-delivery
- goods received with inferior quality
- exchange rate risk
- issuing bank's bankruptcy risk.

QUESTION # 6
EXPORT INTERMEDIARIES
The intermediary may perform many different types of tasks within the business relationship.
Tasks such as carrying inventory, selling, physical distribution, after-sale service and extending
credit to customers. These tasks, and the intermediary’s involvement, can differ depending upon
the situation. It is important to note that the specific character of an intermediary lies in the fact
that its role is not necessary for the business relationship as a whole. The seller and the buyer
can always choose to have direct dealings with each other, taking over some or all of the tasks of
the intermediary. It is thus possible that the intermediary does not perform any specific tasks
while still existing within the business relationship. This means that the role of the intermediary
can be more or less central for the business relationship. Especially in cases where the seller and
the buyer do not have direct contacts with each other, the intermediary is in a position to be able
to influence the character of the business relationship. The other two parties are dependent upon
the intermediary’s performance. But also in cases where the seller and the buyer have direct
contacts with each other the intermediary can impact the business relationship as a whole. Thus,
the intermediary plays an important role in the business relationship.
Not only because of specific tasks performed, but also because of the positive or negative impact
on the business relationship as a whole. In international business relationships the intermediary
can be named distributor, agent or subsidiary. Intermediary involves something different from
selling and buying, even though these two activities may be included.
The tasks of an intermediary may vary between different business relationships and also between
different points of time in one relationship. The position of the intermediary can be said to
involve one specific role which can be seen as a collection of its tasks. Another way to view the
correction between the tasks and the role is to say that the intermediary performs several roles
each of them involving specific tasks.
QUESTION # 7
FREE TRADE AGREEMENT – FTA
Benefits to Pakistani Exporter through FTA
a. FTA with Srilanka, China and Malaysia.

b. PTA with Iran, Indonesia and Mauritious due to SAARC.

c. Access to international markets

d. Opportunities to expand existing exports operations

e. removal of barriers that previously blocked entries to specific market

f. exchange of technology, expertise, skills

g. access to new business partners and foreign government contracts

More Dynamic Business Climate:

FTA offers competitive environment to enhance quality to compete with the global entrants.

Lower Government Spending:

Pakistani government subsidize local industries. After the trade agreement removes subsidies, those
funds can be put to better use.

Foreign Direct Investment:

Global investors will add more capital to expand local industries and boost domestic businesses and it
will bring US Dollar in Pakistan to enhance economy.

Expertise:
Global companies have more expertise than domestic companies to develop local resources.

Free trade agreements allow global firms access to these business opportunities.

Local firms will be trained by multinational partners to give their best resulting in enhanced exports.

Technology Transfer:
Local companies also receive access to the latest technologies from their multinational partners.

Technological advancement results in the betterment of exports.

QUESTION # 8
EXCHANGE RATE PARITY IN THE CONTEXT OF
IMPORT/EXPORT
EXCHANGE RATE (RUPPEE TO DOLLAR) PARITY
In international exchange, parity refers to the exchange rate between the currencies of two countries
making the purchasing power of both currencies substantially equal.

In exchange of ruppee to dollar, A lower-valued currency makes a country's imports more expensive and
its exports less expensive in foreign markets.

GREATER EMPLOYMENT IN EXPORT INDUSTRIES

If the value of the exchange rate is low, then the exports from the country will be relatively less
expensive and so more competitive. This in turn may lead to more employment in the export industries.

GREATER EMPLOYMENT IN DOMESTIC INDUSTRIES

The low exchange rate will make imports more expensive than they were. This may encourage domestic
consumers to buy domestically produced goods, instead of imports, and this may also raise
employment.

More exports can be brought. If the value of the exchange rate is low, then each unit of the dollar will
buy more domestic (local) currency, and so more foreign goods and services. This would encourage both
visible exports, such as technology, and invisible exports, such as foreigners’ tourism.

QUESTION # 9
COST & PROXIMITY
It is the configuration of the value chain that gives rise to the cost advantage, not the firm's ability
to source lower cost inputs or willingness to operate with razor-thin margins by matching
competitor's prices Firms often fall into the trap of confusing cost advantage with low
manufacturing costs. While this is important, it should be recognized that often a great portion
of a firm’s costs reside in activities other than production – for example, in sales and marketing,
service, product development, etc. When the focus is on manufacturing costs, these other costs
get overlooked and the firm fails to see opportunities for value chain reconfiguration that could
reduce these other costs.
QUESTION # 10
TYPES OF LC
QUESTION # 11
TYPES OF QUOTATION
Export price quotations play a vital role in marketing. Buyer in trade inquire from the number of
foreign companies regarding product or goods. Foreign companies, who are interested in
export, provide full details of the desired product along with price quotation.

1. Ex Works or Ex Factory (EXF)

This price quotation refers to floor cost of the seller. This creates a minimum obligation to the
seller. The exporter’s responsibility to deliver the goods under this price quotation is over when
he places the goods at his own warehouse. All the remaining expenditures are to be paid by the
importer.

2. Free on Board (FOB)

If the loading expenditures are added into FAS, the new price quotations will be FOB,
Therefore, all other expenditures after loading the goods on the ship will be paid by the
importer. this is a widely used price quotation in international marketing.

3. Cost and Freight (C&F)

This price quotation refers that exporter has added the amount of freight from his country’s
port to the port of importer. Therefore, if we add the amount of freight in FOB, the new will be
C&F.

4. Delivered Duty Paid (DDP)

In this price quotation, the exporter delivers the goods to the importer cleared for import but is
to be loaded from any arriving mode of transport at the specified destination. Under this price
quotation, the obligations of exporters become greater and importer’s obligations become
minimum. Under this price quotation, the exporter has to seek import clearance and is bound
to pay import duty
QUESTION # 12
SHIPMENT SCHEDULE
Shipping scheduling is a way to plan out your business’ shipments and deliveries in advance
based on your supply chain and customer demand. It is a common practice for large and small
businesses to improve efficiency and give your partners and customers peace of mind.
Operational Challenges With Shipping Scheduling Managing your business’ outbound logistics
involves planning, scheduling, working with third parties, ensuring deliveries get where they
need to at the right time and to the right place. All of this results in a few costly operational
problems for both shipping managers and clients alike.
1. Lack of proper processes
2. Adapting to last-minute orders, cancellations, and product recalls
3. Maintaining speed at every stage of fulfillment
4. Handling unplanned delays
5. Unable to coordinate reverse logistics pickups

ROLE OF FREIGHT FORWARDER

In simple terms, a freight forwarder is an agent responsible for the movement of goods on
behalf of the cargo owner. This responsibility can start from the time the goods are picked up
from the seller until they are delivered at the buyer’s specified location.
The duties and responsibilities of a freight forwarder are often carried out by a clearing and
forwarding (C&F) agent. In other instances, exporters may hire a separate clearing agent for
meeting regulatory requirements or prefer freight forwarding companies. The roles and
responsibilities of a freight forwarding agent can be quite versatile and crucial to international
trade. That said, even the freight forwarding activity involves several important functions.
The freight forwarder can act as a common carrier and prepare documents such as the bill of
lading, airway bill, etc. They can contact with overseas customs agents to ensure that the goods
and documents comply with local customs regulations. They can also track the real-time transit
of the goods and troubleshoot if required.
Using their international network, freight forwarders can also advise exporters on legislation
affecting international trade, political situation and unrest, and other factors that may affect
the movement of goods. Given this suite of services, having the right freight forwarder can give
a big boost to your export trade.
Main functions of a Freight Forwarder
Here are some important points for an exporter to keep in mind while choosing his freight
forwarder. Evaluating a freight forwarding process on these aspects will make the process of
choosing your agent much simpler and effective.

 Experience
 Network in the Market
 Tie Ups with recognized international associations
 Services Offered
 Area of Expertise
 Requirements of your Business
 Market Reputation & References from Customers
 Pricing

QUESTION # 13
BILL OF LADING
A bill of lading is a legal document issued by a carrier to a shipper that details the type, quantity, and
destination of the goods being carried.

A bill of lading is a document of title, a receipt for shipped goods, and a contract between a carrier and
shipper.

This document must accompany the shipped goods and must be signed by an authorized representative
from the carrier, shipper, and receiver.

If managed and reviewed properly, a bill of lading can help prevent asset theft.
QUESTION # 14
BALANCE OF PAYMENT
The balance of payments (BOP) is a statement of all transactions made between entities in one
country and the rest of the world over a defined period of time, such as a quarter or a year.It
includes both the current account and capital account.
The current account includes a nation's net trade in goods and services, its net earnings on
cross-border investments, and its net transfer payments. The capital account consists of a
nation's transactions in financial instruments and central bank reserves.
The sum of all transactions recorded in the balance of payments should be zero because every
credit appearing in the current account has a corresponding debit in the capital account, and
vice-versa. If a country exports an item (a current account transaction), it effectively imports
foreign capital when that item is paid for (a capital account transaction).
However, exchange rate fluctuations and differences in accounting practices may hinder this in
practice. A country's balance of payments and its net international investment position
together constitute its international accounts.

QUESTION # 15
Types of Duties
This is a descriptive list of the various trade duties and customs duties which apply in Pakistan.
1. Import duty
2. Export duty
3. Regulatory duty
4. Additional customs duty

Import duty
Custom duties are levied according to the rates determined by government, which includes:

 Goods imported to Pakistan

 Goods purchased in bond from one custom station to another
 Goods brought from a foreign country to any customs station that are transshipped or
transported without the payment of duty to another customs station.

Export duty
Pakistan does not levy an export duty.
Regulatory duty
The Federal Government can impose limitations or restrictions on regulatory duty on all or any
of the imported or exported goods through a notification in the official Gazette. Such
limitations or restrictions, according to the laws, should not exceed 100% of the goods value.
Such regulations are applicable from the day they are specified in the Gazette notification.

Additional customs duty

The Federal Government can impose additional customs duty on imported goods specified in
the First Schedule through a notification in the official Gazette. The additional customs duty
should not exceed 35% of the goods value.