Session 3 - How can the EU help Pakistan to develop the SMEs export potential?
Wednesday, 8 September 2021, 11:45 (Brussels time)
Ladies and gentlemen, it is an honour for me to speak at today’s important event.
This EU-Pakistan Business Forum is framed in the EU-Pakistan Strategic Engagement Plan, which was signed in June 2019. That Plan opened new avenues for cooperation between the European Union and Pakistan in wide range of areas. It aims to contribute to the connectivity of the European and Pakistan Business communities in a more coordinated manner.
Trade and investment are indeed key components of EU-Pakistan relations. The EU is Pakistan’s biggest export partner. In 2019, around 28% of all Pakistani exports were destined for the EU.
That same year, the Government of Pakistan made bold macroeconomic reforms that has helped make impressive progress in reducing poverty. Nevertheless, there is widespread economic vulnerability amongst citizens, which has been compacted by the COVID-19 pandemic, which has led to a deterioration in the general economic outlook.
Pakistan is at a critical juncture and there is an urgent need to shift the country’s growth paradigm from consumption to investment and exports. That puts the private sector in a lead role. Increasing investment is paramount in order to scale up efforts for a green, resilient, and inclusive recovery. We have been pursuing this approach in the EU as well, as a recipe for ensuring a sustained increase in economic and social prosperity, whilst tackling the environmental challenges that face our planet.
COVID-19 has revealed inequalities in all societies. Worse, it has deepened them. Decades of important progress on the SDGs is at risk. Women and girls are in the frontline and disproportionately affected by the crisis. This fact links EU’s new gender Action Plan directly to the sustainable recovery we now need.
We have to act quickly to build back better and promote sustainable societies, in which women and men, have equal rights and opportunities.
TheEU and its Member States, acting together as ‘Team Europe’, have taken comprehensive and decisive action to tackle the destructive impact of COVID-19. We have adapted our priorities and programmes with partner countries to address the crisis.
As an example of part of this EU support, I’d like to mention the recently signed PAIDAR programme, which will support the Sindh province“Urban Economic Clusters” sub-strategy with the aim of mitigating the impacts of COVID-19 on the private sector. That means working, not only to maintain and revive job and income-generating opportunities, but to create additional ones. And in doing so, the programmes serves to strengthen compliance with international labour, production and environmental standards.
Globally, the EU has been a leading supporter of a new allocation of IMF Special Drawing Rights. This should help significantly enhance the reserves of the countries most in need, and it will serve to finance objectives in line with the UN’s Sustainable Development Goals.
The EU has also been a strong supporter of the new G20 Framework on Debt Treatments to help Pakistan and other countries to mitigate the socio-economic impact of the COVID-19 pandemic and to meet urgent economic needs.
Long-term, sustainable recovery requires comprehensive strategies and both public and private investment. The EU is working to make the call for a Global Recovery Initiative a reality at multilateral level, by linking debt relief and investment to the SDGs.
Private sector engagement lies at the heart of our development agenda. The private sector is not only pivotal for creating inclusive, sustainable growth and jobs, but also for boosting the transformation of our economics into low carbon emitting ones. This goal is a priority of the European Commission at home and is a goal that we are pursuing with our partner countries. The private sector is also a powerful partner in advancing gender equality, due to its distinctive position as a catalyst and role model for change.
In the EU, the European Green Deal is that growth strategy. It reconciles economic growth with the necessary transition to a climate-neutral and environmentally-sustainable society. It also plays an important role in the region's COVID-19 recovery. Our goal is to reconcile the economy with protecting our planet; to reconcile the way we produce and the way we consume with our planet; and to make our economic policy work for the prosperity of our people, now and for future generations. That means using an economic model that is compatible with social, environmental and health considerations; and therefore ensures that short-term, economic gains are achieved with longer-term interests, conserving such as our environment, in mind.
We are therefore shifting towards a resilient, regenerative economy; an economy that reverses climate change and environmental degradation, minimises pollution.
The measures put in place within Europe to support the recovery are in many ways mirrored beyond the EU. This is seen in our international partnerships abroad, and in our support for a global recovery that links investment and debt relief with the implementation of the SDGs.
Team Europe will continue to support Pakistan’s recovery and socio-economic development over the next 7 years, that is the timeframe of our current Multiannual Financing Framework. Together with the Government of Pakistan, we will support the development of the agribusiness sector. In doing so, we intend to target specific value chains based on a Farm-to-Fork approach to achieve food system sustainability. As we seek to achieve that goal, for example, by rationalising inputs used in value chains and by controlling the outputs that affect the natural environment, enabling factors for production, such as access to finance, energy and skilled labour, will be supported through the 7-year Indicative Programme for Pakistan.
We will support building bridges between the worlds of education and work, fill the gaps and mismatches between the supply and the demand of specific skills.
With digital technologies now at the centre of almost every business interaction, lack of access to technology often means limited access to basic needs and services. With this in mind, we will foster the use of digital technologies as an enabler for sustainable development.
The EU will also contribute to the preparation and co-financing of infrastructure investments, in particular in the areas of energy and the environment. This will be done in close co-operation with European development banks, as well as regional and international financial institutions.
Resources need to be channelled to the right investment opportunities. The EU is a frontrunner in sustainable finance. Financial instruments linked to sustainability can help significantly in mobilising private finance in support of the SDGs.
This year, after quite some negotiation, we succeeded in creating a new, single instrument to finance EU external actions. It is called the Neighbourhood, Development, and International Cooperation Instrument – NDICI, also known as Global Europe. This instrument has a facility, the European Fund for Sustainable Development Plus (or EFSD+), which is designed to incentivise private investment through public support and guarantees.
This builds on the experience that we accrued in setting up and implementing its predecessor, the EFSD, which I was personally involved in negotiating and putting into practice.
Under the new fund, we will therefore be increasing support for private sector investments, notably using public funds to reduce the risks associated with investment, thus creating opportunities for jobs and growth where none might exist otherwise.
I am in no doubt that enabling an environment for private sector engagement, and leveraging additional public funds through innovative financial instruments to further incentivise private investment, is crucial for the implementation of the 2030 Agenda and the Paris Agreement, and for Pakistan’s sustainable development.
It is also my hope that this first EU-Pakistan Business Forum will help identify ways and means to support European SMEs, and European companies in general. For example, by benefitting from bilateral trade instruments, such as the GSP+, by fostering cooperation via technology transfer, and by generating interest and competitiveness in Pakistani imports to the EU market.
This Forum will no doubt help bring EU and Pakistani industries together. I welcome the Forum for providing an opportunity for this, and I hope that today’s event will prove important to your businesses.