ARTICLE: In July 2020, the export proceeds grew by 5.8 per cent to $1.998 billion as per the data released by the Ministry of Commerce this week. Whereas, the import bill fell by 4.2 percent to $3.54bn, over the corresponding month of last year. The start of the fiscal year, with exports up by 5.8 percent and imports down by 4.2 percent is a positive start in view of the fact that COVID-19 has severely hit the exports of all countries around the globe and majority of them are still struggling for a comeback. Accordingly, the country's trade deficit also dipped by 14.7percent in July from a year ago, mainly due to a fall in imports and growth in export proceeds. In absolute terms, the trade gap narrowed to $1.542bn in July, as compared to $1.808 billion over the corresponding month of last year.
However, imports may spin out of control in the coming months following abolishing of regulatory duties on imports of raw materials and semi-finished products meant primarily to support the industry. If this trend is maintained over the next 11 months, the country may achieve export target of $ 25 billion in the current fiscal year compared to the actual of $ 21.4 billion against a target of $ 26.2 billion in the last fiscal year. The challenge is to maintain, if not improve, this growth trajectory.
However, Pakistan's volumes of exports are still nowhere near other countries' in the region.
Bangladesh's exports for last fiscal year stands at around $40 billion of which $ 34 billion comes from textile and clothing and the country is rated as the second largest exporter in the said sector - with China being No 1.
India exports 7500 products to 90 countries with export value of $ 320 billion of which $ 5billion is in rice exports. Pakistan's exports in value are low even by its own benchmark of having achieved export value of over $ 40 billion in FY 2007-8. The country's export focus, in all these decades, has not moved out of textile and apparel. The export volume and business segments need to be diversified to position the country in the ranks of noticeable exporters.
Pakistan's strongest competitor in textile and clothing is Bangladesh, although the latter, unlike the former, imports cotton. Bangladesh must be doing something right. India, last year, exported around $ 5.3 billion worth of rice as against over $ 2 billion by Pakistan, which is rated as one of the largest growers of quality rice. The country can do better than this.
These are few sectors, among many, where we have lost out and whose answers the taxpayers of the country need to know. One is unsure whether or not our export industry or planners ever sincerely conducted the competitive analyses of our competitors in textile and commodities and worked out gap analyses and a meaningful strategies to be at least at par with our competitors . What one sees and hears in media are the endless bouts of negotiations and disputes between government and exporters, year after year, on subsidies, duty concessions, export rebates which eat away government's meager revenues and maximize exporters' bottom line.
These best of concessions by former governments or their withdrawal by the incumbent government did not have a significant effect on exports in either case. There is something more than the regime of incentives that matters and drives the performance of exports. This is what needs to be truly identified and addressed. Furthermore, the competing countries in the regions have significantly supplemented imports with local produce - limiting their exports largely to high end technology and products. Pakistan lags behind in this field and our imports are liberal.
In the early 50s, Ministry of Science and Technology was established with the mandate to supplement imports with local produce. Pakistan Council of Scientific & Industrial Research (PCSIR) was established to conduct research and development in support of the budding industry. With hundreds of PhDs on its payroll and many complexes across the country the entity has not delivered. For decades the ministry went into oblivion and only recently surfaced in the media after developing a ventilator and working out a lunar calendar.
Be that as it may, the country has tremendous export potential - someone committed has to put its act together. And now is the time to do so. Due to Coronavirus, there is a supply gap and the ones equipped with smart strategies and innovative mindsets can fill the gap.
(The writer is former President, Overseas Investors Chambers of Commerce and Industry)
Copyright Business Recorder, 2020