Need tor the Revival of Exports

t An economic analysis of Pakistan Pakistan ·s major expon is textiles. and it is the

only consistent induslry supponed by the government
the last 70 years. Yet. no significant improvement is
KHUSHAL KHAN visible. Pakistan·s export is about Sl2 billion and
globally he industry is $600 billion. Apparel exports
in Bangladesh were S8.8 billion in 2006 and S24.6
billion in 20 17 and in Pakistan it was SJ.8 billion and
do we really think 1hcsc motorways and infrastructure
will change the game? No. for CPEC Pakistan must
increase its trade dramatically othernise these roads
and infrastructure will be liabilities on Pakistan. and
Pakistnn will be paying lhc debts and interest to
C hina. Special Economic Zones (SEZs) will only
work if Pakistan encouraged domestic and intcma•

E
CONOM IC challenges 10 P11kiston arc con•
now it is S6 billion. Despite its huge population and tional investors to locale manufacturing in Pakistan
tinually rising and their severity is increasi ng
with the recent rupee dcprccia1ion despite the
potential-possessing youth, major global brands ha\ c and re-cxpon them from Pakistan. Pakistan must be
bypassed Pakistan as a man ufa cturing b:ise for very clear in their vision and SEZs should not be-
fact that the country has the polcntial to be-
labour-intensive items such as textiles. agro-food come another rent-seeking ac1ivity.
come one or the wor ld's fastest developing

products, and footwear, all
and richcsl nations due to its abu ndance of untapped
natural resources and human resources. of which produce massive
quantities of ex ports from
Macroeconomic instability and low produc1ivity
host countries.
could call into question the economic stobility of any
The reason major global
slate. The ongoing crisis 1s perceived to be challcng•
brands arc bypassing Pak•
ing to the gamcchangcr China Pokiston Economic
istanisthat there is no suit-
Corridor (CPEC) as well. The most prominent of all
able struc1ure available to
1hcsc challenges faced by Pakis1an is the inefficient
and dysfunctional infrastructure of civil insti1tuions the investors. According to
statistics. mvcstors c11nc11s-
and lhcir outdated policies for trade. which need to
ily guess where the margin
be revised.
will be. Pakislan's electrici ty
Pakistan is on 1hc verge of economic collapse and
bill is 31.100 rupees/kWh
the country's progress is stagnant in the global supply
chain. Pakistan's exports arc foiling at the cos, of
and Bangladesh's electricity
bill is 19.954 rupccslkWh. It
higher profil in domestic production because of
can be seen that Bangladesh
higher prolection (subsidies). which iscnusing low
supplies producers/investors
producti vity in the economy.
Trade deficit and inefficient distribution of re•
wilh cheap electricity of
\ l . 146rupec/kWh.
sources arc lending 10 mncrocconomic instnbility.
Infrastructure bottle-
Pakistan's policies arc dominated by the elite: they
neck: At Karachi Po rt. it
subsidize s«tors that work in their fovor but not the
takes sc,•en days to handle
economy. Th:ll is why global markcl trends arc
changing rapidly from the last two decades and Pak-
and unload containers. but Ill
Sing11porc Port. all lhis is
istan is somehow lagging behind and not chasing
complctcd m one day. There
properly at most 1ums.
is much lo mention about the
In vestment and trade arc closely linked , and
naws of Pakistan's policy
''
We witnessed how subsidizing
production has failed, as was proved
in the case of the textile industry.
Pakistan must focus on efficiency
and competence in the international
market. It needs to give protection to
product not production, which means
Pakistan will have to spend on the
product marketing and quality.
Pakistan is providing subsidies on
electricity rates, lower interest rates
and direct subsidies for production.
On the other hand, it is recommended
that Pakistan should spend on
marketing to increase Its market
share and move up on the
global supply chain
We witnessed how sub-
sidizing production has
failed. as was proved in the
case of the 1extile industry.
Pakistan musl focus on effi-
ciency and competence in
the mtcmational m11rkct. It
needs to gi,•e protection to
product not production,
which mc:ins l'akistan will
have to spend on the product
marketing and qua lity. l'ak-
islan is pro,·iding subsidies
on clcctrie1ty rates, lower in•
lcrcst rates and direct subsi-
dies for production. On the
other hand, it is recom•
mended that Pakistnn should
spend on marketing to in•
crease its market share and
mo,•c up on lhc global sup-
ply chain.
Four major recommen•
da1ions from this policy 11re
(A) Tariff rationaliza1 ion:
Pakistan has to reduce the
1ariffratcs in order towel-

''
every plan for 1hc proposed growth should be oper-
structure. such 11s taxation, come 1hc FD!. (B) Pakistan
ated by investments in production for the global mar-
licensing. bureaucracy and should focus on the case of
ket, in placeofm:iinly fulfilling domiciliary demand,
case of doing business. Most imponantly Pakistan doing business: TI1e consis1ency environs of such a
as is the case wi1h Pakiunn. This has hindered trans-
necdsarighttariffs1ructurc(Chinalcssthan3pcrccnt. country funhcr facilitates the stan-up and operation
formation and produc1ivity enhancement for Pak-
Vietnam 3.5 percent and Pakist:in 8.69 percent ). oflocal businesses. (C) II needs 10 gel rid of subsidies
ist11ni manufaciurcrs, making them noncompetitive in
Pakis1an 's production and marke1 is import-ori- and focus on efficiency-seeking in,estments both do-
the intema1K>nal market and for that reason they arc
ented. and present 1.11riff rates may not help Pakismn mestically and internationally: FD! enters the cow11ry
impotent to enlarge and generate job opponunities.
10 grow or move up on a global supply chain. Yes. 10 make 1he most of the factors that a llow it to take
Unfonunatcly. Pakistan has not kept p:ice with
there arc export rebates and duty drawbacks, but pan in the global mark.ct . (D) Human Resource build•
globalization. where the share of total foreign direct
these mechanisms arc not efficient enough. World ap- up: it is the need of hour to focus on human resource.
investment (FD I) flowing into emerging Asia has
parels ha\'C handmade fibres in them. In Pakistan This will make CPEC function al its full potential
skyrocketed over the past two decades from 10.5 per-
handmade apparels have 32 percent du1ies on them level. will stop currency devaluation, resolve the
cent in 2000 (Sl42 billion) to about 39.5 percent in
including sales and income tax. whi le in Bangladesh issue of balance of payment and wi ll service Pak-
2018 (S5 I 2 billion). Over the past half-decade. South
it is about 5-6 percent. We arc thus simply cuning a istan's debt.
Asia's total cxpons ha\·e increased by 50 percent. FDI
25 percent margin.
to Vietnam has quadrupled a nd to Bangladesh has
While CPEC is in development stage which Plan- Khushlll Khtm is 1mrking as u Resean:h Asl·istmll
gone from S20 billion to $40 billion. while Paki stan's
ning Commission claims is a game changer. but wail. at Bulochisltm Think Tank Network. Q11et1a.
exports have remained al $20 to S25 billion.