THE country’s exports remained lower by $ 4.75 billion from the target of $ 26. 2 billion set for the financial year 2019-20 due to low economic activity and government’s policy of squeezing imports. According to the provisional foreign trade figures of FY 2019-20, exports stood at $ 21.410 billion as compared to $ 22.979 billion of corresponding period of 2018-29, showing a decline of 6.83 percent.
As the Ministry of Commerce is headed by a professional like Abdul Razzak Daud, who has intimate knowledge of the trade issues, there were expectations that factors leading to the country’s poor performance on export front would be addressed squarely and a new beginning would be made. However, nothing of the sort has happened so far despite some of the pro-exports initiatives of the incumbent Government. The missing of the target by about five billion dollars for the outgoing year is understandable as the country, like elsewhere in the world, was witnessing the crisis triggered by Covid-19. There was suppressed economic activity due to closure of industries and businesses and a marked reduction in export orders. The Government deserves credit for bringing down the trade deficit by curtailing imports substantially, which is important in the backdrop of tendencies witnessed during tenures of previous governments when liberal import policies widened the trade gap.
Current Account Deficit (CAD) declined by $ 8.7 billion (27.7 percent) due to a substantial decline in imports in comparison to a moderate decline in exports. It is also noteworthy that after a lull of few months, exports are picking up but more efforts will have to be made to increase them meaningfully. No doubt, the Minister has a clear vision of what should be done – on product diversification, including engineering products , pharmaceuticals, agro products and services but we have been repeatedly emphasizing in these columns that there was lack of overall cohesion in policies that hinder required progress and growth. In the first place, our industrial base is limited and our performance in agriculture is shamefully poor as is reflected in reduction in wheat production and decision to import the staple food despite being an agrarian country. However, even the industries that we presently have found it difficult to compete in the global market due to abnormal increase in rates of POL products, electricity and gas in addition to a multitude of taxes.
The Government has taken a wise decision to lower or abolish taxes and duties on a number of raw materials but the benefit that would have accrued has been nullified by other moves of the Government. We are also not investing adequately on research and development, quality improvement and packaging and marketing. IT is a promising field that could contribute significantly in increasing exports but it is also facing numerous problems especially imposition of undue taxes both by the federal and provincial governments. It is also regrettable that initiatives like establishment of special economic zones under China-Pakistan Economic Corridor (CPEC) are not getting required priority, which is evident from low allocations for the purpose in the new budget. This is despite the fact that setting up of such zones could give a major boost to industrialization and resultantly the country could be in a position of export more. If proper incentives are given, investors from China and other countries would be more than willing to start ventures in these zones and, therefore, the work on them should be expedited. Experts also rightly argue that the low value-added nature of Pakistan’s exports is due to the limited focus by successive governments on structural issues. These include the lack of focus on developing human capital necessary for high value-added production, poor linkages between high-tech defence industries and the private sector, a lack of emphasis on ensuring industry-wide standardization and the limited access to neighbouring markets.
According to renowned economist Dr Hafeez Pasha, linking defence industrial establishments like the Pakistan Atomic Energy Commission and Heavy Industries Taxila to industry players and research institutions can potentially increase industrial productivity and, in the long run, export competitiveness. Another factor that could complement export growth could be rapid operationalization of Gwadar Deep Sea Port, which is not fully connected neither with the rest of the country nor neighbouring countries due to lack of required investment on roads and other infrastructure. We hope the Minister of Commerce would, in coordination with other stakeholders and players in the Government, be able to sort out these and other problems in the long term interest of export growth.