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Economies of scale, efficiency keys to boosting
exports
Staff Reporter
Lahore—Government policymakers are struggling to bring about a
change in the exporters’ mindset, who demand concessions instead of
favourable policies to compete in the international market and put
the country on a sustainable growth path. Commerce Minister Shahid
Khaqan Abbasi is in constant touch with all export and trade
associations of the country. Last week, he spent five hours in a
meeting with all major exporters in Islamabad, but the input he got
was disappointing which gave an impression that the cost of doing
business in Pakistan had gone quite high and exports without
government subsidies would not be possible.
Surprisingly, they claim the factors that have added to their cost
include increase in petroleum prices, hike in gas and electricity
rates, high interest rates and rise in wages. But economic experts
say except for one or two factors all others are a global phenomenon
which has impacted the cost of doing business in all countries that
compete with Pakistan’s exports. In fact, the energy rates in
Pakistan are lower than many of its competitors.
They say the negative factors affecting exports have been offset by
some positive areas where Pakistan has an advantage. Minimum wages
in Pakistan are still lower than those in Indian and Chinese textile
industries. Petrol and electricity rates in these countries are
higher or the same as in Pakistan. Gas tariff in Pakistan is lower
than these two countries. However, interest rates are somewhat lower
in India and China because their inflation is 3 to 4 per cent less
than Pakistan.
Local export industries, particularly textile exporters, have over
the years lost markets not only to India and China but to newcomers
like Bangladesh and Vietnam. What contributed to the decline in
textile exports, the experts say, were lack of innovation, inability
to improve skills, poor marketing and non-professional management.
Had the depression in exports been due to government policies, they
point out, it would have been reflected in the performance of all
companies in that particular sector.
However, in the textile sector there are some high-performing
exporters operating in the yarn, fabric and clothing sub-sectors. It
seems, they say, planners and entrepreneurs tend to ignore the fact
that they are operating in a liberalised global market and economies
of scale and efficiency are essential to compete in these
conditions. Time is now ripe for mergers and acquisitions in all
industrial sectors of the country to stay competitive both in export
and domestic markets.
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