PAGE Blog Business Weekly Magazine
Boundaries between services and industry are changing fast, and about half of all services in modern industrialized economies are sold and bought while embedded in the form of goods. While the content and function of goods remain important, the designing, marketing, consultancy and advertising services claim a share of the value added to goods.
Manufacturing, too, has important contribution from services, such as resource planning, warehousing, value chain analysis, financial services and inputs, after sales services, and the logistics of transport and communication. In the modern globalized economies, it has been shown that not just manufacturing, but designing can also be done anywhere. This has resulted in much greater significance for engineering design and consultancy.
Apart from services to business and industry, an important class of services relates to public services by government, which are an indicator of good governance as well as human development. These include access to and quality of services related to education, health, environment, transport and communications, and law and order. Many financial services such as financial regulation are also expected of good governance and the modern tool of good governance, namely, e-governance contributes towards providing public information to people so as to reduce time and transaction costs, and increase quality and transparency of government functioning.
The private sector is now also perceived as an important partner in provision of even those services, which were the traditional preserve of government. Public private partnerships, when forged properly, can supplement government activities and programs.
The World Trade Organization (WTO) has identified 12 areas with 161 sub-sectors from the perspective of international trade in services and further aims to liberalize services sectors in member countries under the General Agreement on Trade in Services (GATS).
Pakistan has the most liberal policy for investment in services with respect to its competitive neighboring countries. Many services sectors have been opened for participation of investment by the foreigners.
Despite huge potential, Pakistan’s export of services witnessed a decline of over 20 percent in the first 11 months of 2013-14 from a year ago.
In absolute terms, export of services fell to $4.947 billion in July-May 2014 as against $6.249 billion over the corresponding period of the preceding year, reveals data of Pakistan Bureau of Statistics (PBS).
However, a reverse trend in exports of services was witnessed in the past few months. On monthly basis, export of services witnessed an increase of 98.81 percent in May 2014 over the same month last year. Annual export of services reached $6.618 billion in July-June 2013-14 compared to $5.035 billion in the corresponding period previous year.
The services sector emerged as the main driver of economic growth. The share of services sector increased from 56 percent of the GDP in 2005-06 to 57.7 percent in 2013-14. Major sub-sectors are finance and insurance, transport and storage, wholesale and retail trade, public administration and defense.
Pakistan has opened up its market to foreign service providers, particularly in banking, insurance, telecommunications and retail. Still the import of services dropped to $7.016 billion in July-May 2014 from $7.571 billion over the corresponding months of last year, reflecting a decline of 7.33 percent. Last year, import of services declined to $7.758 billion in July-June 2012-13 as against $8.227 billion in the same period last year. On a monthly basis, import of services also witnessed a decline of 15 percent in May 2014 over the corresponding month of last year. As a result of higher dip in exports, services deficit also witnessed an increase of 56.48 percent to $2.069 billion in July-May period of previous fiscal year as against $1.322 billion over the corresponding period of last year.
There is a need to explore new markets for export of Pakistani services which can help earn substantial forex for the country.
