Realising export potential

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AS imports are surging at an alarming rate creating huge trade deficit, experts as well as different stakeholders mulled over prospects of increasing exports meaningfully at the launching ceremony of a book on ‘Trade Connectivity’ with the support of Friedrich Naumann Foundation (FNF) Pakistan by the Economic Advisory Group (EAG) and Policy Research Institute of Market Economy (PRIME).

The International Monetary Fund (IMF) Resident Representative, Esther Perez Ruiz said that Pakistan needs proactive policies — exchange rate flexibility, efficient allocation of resources, elimination of untargeted subsidies and creating a conducive business environment in the country to realize the export potential.

And strangely enough, while supporting the idea of free trade agreements, Minister for Commerce Syed Naveed Qamar opposed the recent decision of the coalition government to ban import of some luxury items claiming that the move has pushed the country away from the ‘direction’.

There is no denying the fact that a significant increase in exports is the only solution to the economic woes of the country, especially the chronic paucity of foreign exchange reserves forcing the rulers to spread begging bowls here and there.

However, the formula so far devised and applied for the purpose at the instance of the IMF and other donors has not borne fruits and instead multiplied problems of the country.

The term ‘exchange rate flexibility’ was coined to devalue rupee massively on the plea that it would help increase exports but so far there is no evidence that this objective has been realized despite depreciation of rupee from Rs 112 a dollar in 2018 to 206 in 2022.

Instead, the policy led to an increase in national debt and an unbearable increase in imports as Pakistan has been turned into a dumping ground by some countries for their products, majority of which are not needed by the common man.

The term ‘conducive business environment’ is sweet to ears but donors are not allowing the Government to do so as pressure is applied for continuous increase in electricity and gas tariffs and elimination of subsidies that are otherwise considered a lifeline for a weak economy.

Increase in exports is directly linked to production of exportable surplus but our goods are becoming uncompetitive in the international market due to rapid rise in energy and POL prices besides an increase in taxation.

Free trade mechanism benefits only when you have a competitive industry, otherwise such agreements lead to an increase in unnecessary imports putting more burden on foreign exchange reserves.

A policy change is needed as the country has also suffered due to criminal negligence towards transfer of technology, research and development and absence of a vibrant programme for imparting professional skills to the manpower.

As pointed out by the Commerce Minister, it is a fact that politics has been the biggest impediment for trade with the South and the East as sanctions on Iran and security situation in Afghanistan are some of the issues.

Energy security is of prime concern to our economy but the country could not materialize a highly viable project of gas pipeline from Iran due to sanctions.

Similarly, another pipeline project (TAPI) is not progressing at a satisfactory pace due to instability in Afghanistan.

Assumption of power by the Taliban brightened prospects for durable peace and security in the troubled country but the powerful countries are adamant not to allow Afghans and the region to move towards stability and prosperity because of their vested interests.

Pakistan had a vision to bolster its economic cooperation with the Central Asian Republic but it could not be materialized mainly because of turmoil in Afghanistan.

Wealth creation and industrialization should have been the focus of attention but the successive governments could not do so because of the country’s vulnerabilities caused by almost total dependence on foreign loans.

CPEC is one of the major initiatives aimed at improving trade connectivity but regrettably progress on vital projects including those related to Gwadar remained slow during the last four years.

The new Government should pay priority attention to the establishment of all special industrial zones under CPEC as they have the potential to play a significant role in increasing the export base and creating employment opportunities.

 

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