Challenges for our exports The principle reason for growing disconnect between the evolving global market

structure and our export performance is the erosion of the competitiveness of Pakistans traditional exports in general and the countrys weakness in diversifying its product and market mix. The challenges faced by Pakistan exports include: -Infrastructure deficit, particularly in energy. -Poor innovation and technological infrastructure. -Low labor productivity. -Low levels of manufacturing value addition. -Little Foreign Direct Investment in manufacturing and exportable sectors. -Anti-export bias in taxation. -Increasing costs of exports as compared to imports. -Lack of product and geographical diversification in exports. - Absence of economies of scale in the production processes, especially in the Small and Medium Enterprise sector which accounts for a vast majority of the enterprises in the country.
Our Imports Imports registered a negative growth of 1.5 percent in July-February 2009. The imports stood at $ 23.8 billion as against $ 24.1 billion in the comparable period of last year. The growth in imports reflects impact of substantial fall in oil and food imports in monetary terms and these two items were responsible for 80 percent of additional imports bill last year. Import compression measures coupled with massive fall in international oil prices have started paying dividends and imports witnessed marked slowdown during the last two months.

The monthly import bill on account of petroleum has lost one-third of its value. The additional import bill during the period July-February 2008-09 on account of petroleum and wheat was just above the $1.0 billion. This massive addition is neutralized by massive negative contributions from non-food and non-oil imports. Other positive contributors to additional import bill are power generating machines which have added $435.2 million, agricultural chemicals other than fertilizer ($213.4 million), and electrical machines & appliances ($92 million). The non-food and non-oil imports showed negative growth of 7.8 percent which implies on drastic import compression. The unit value of import of crude oil is still depicting 45 percent increase in the period JulyFebruary 2008-09. The unit value of soya been and palm oil are also showing massive increases of 62.9% and 22.8%, respectively in this period. This clearly reflects the time lag involved in translating the benefit of lowering of prices in the international market into the import bill. The consumer durables, transport group and telecom sectors are responding positively to the import compression measures. The current growth in imports is coming from only a narrow range of products and corrective measures are needed accordingly in these items.