KARACHI: The Advisor to the Prime Minister on Institutional Reforms and Austerity, Dr. Ishrat Hussain, has said that Pakistan, instead of staying confined to exporting textiles only, needs to diversify its exports and move towards the sunrise industries for which the global demand is expanding in double digits otherwise we will remain stuck to US$25 to US$30 billion exports.
Speaking at the second session of a webinar organized by the Karachi Chamber of Commerce and Industry (KCCI) to develop national consensus on the economic agenda, Ishrat Hussain said, "If we can capture just 1 percent of the Chinese market by providing components, raw materials, intermediate goods to Chinese supply chain, we can get $23 billion exports to China which is very favorably inclined towards Pakistan, and they have allowed a lot of room through the FTA.
"We are not taking advantage of the Chinese market which is so close to us, and we are only focused on chasing the European Union and United States where rates of growth are either negative or 1 to 2 percent while China and Asia are growing by 5 to 6 percent, and China has become the largest single exporter in the world," he added.
The advisor said, "We have to create incentive structure not only for five export-oriented sectors but also for any new sectors which are coming to start a business and start new ventures, and if they want to go for exports, we should try to provide them with the financing. We should provide them with tax rebates and we should give them the same treatment being given to five export-oriented sectors.
"We have to diversify our incentive structure in order to encourage the new comers, new industries, new businesses and startups particularly in the IT sector which has a huge potential," he added.
He further pointed out that Pakistan has a very low investment and very low saving rates as 15 percent of investment can only result in 3 to 4 percent of growth rate, but if the investment rate went up to 20 percent, the growth rate would improve to 5 percent.
"We are a consumption-led economy, and no consumption-led economy would ever be able to grow. Hence, we have to focus on savings and investments," he said while quoting the example of China where the saving rate is 50 percent and investment rate 45 percent, and they are actually exporting capital to the rest of the world including the United States.
He said that the Pakistani industries must focus on improving their productively level which was very low as compared to other countries.
Dr. Ishrat Hussain said that the prime minister was very keen to listen to and resolve the problems being faced by the business and industrial community, and he had practically been meeting the business community almost every month.
BMG chairman Zubair Motiwala, in his remarks, requested the government and the political parties to segregate politics and business.
"Stop politicizing businesses as whenever the businesses are politicized, they don't bring fruits anywhere. The economies that have made remarkable progress have actually done this by completely segregating politics and businesses," he said.
He noted that Pakistan was going through a very critical time as the second wave of COVID-19 had intensified the sufferings of the people while the businesses were also not doing well.
However, remittances had been improving, and textile exports had also picked up, but the upsurge in textile exports might not last long so it was really essential to devise a proper plan in order to deal with the post-COVID-19 situation when the demand was likely to go down by 35 to 40 percent.
He appreciated several measures taken by the government to minimize the impact of crises triggered by the COVID-19 pandemic.
"Consistency in policies and government's support along with provision of an enabling and conducive atmosphere for the investors are very necessary while the attitude of the bureaucracy also needs to be changed," he said, adding that although good policies were introduced yet implementation was not there because of the hurdles being created by the bureaucracy.
In this regard, he said that when it was decided that electricity to five zero-rated sectors would be given at 7.5 cents while gas at $6.5 per mmbtu, yet the decision had not been implemented in Karachi until now.
Zubair Motiwala stressed that it was very necessary to bring down the cost of doing business.
He said that though the government got 68 percent revenue from Karachi and 54 percent of exports took place from this city yet it was not getting anything in return.
He noted that the exports from Sialkot stood at 4.5 percent, Faisalabad 18 percent while Lahore's share stood at 22 percent and all these cities were receiving attention but Karachi, having the biggest share of 54 percent in the exports, was being ignored.
"We are thankful to the prime minister for allocating Rs1 trillion for infrastructure development of Karachi but what happened to that Rs1 trillion, where it will be utilized, who are the partners, how the funds would be utilized and what would be the modus operandi," he asked, adding that they really didn't know as they had not been taken on board regardless of the fact that it was the KCCI which sat on the pulse of Karachi's economy.
KCCI president Shariq Vohra said, "KCCI wants all chambers of commerce to come onboard so that we could collectively impress upon the parliamentarians and the policy makers to decide a broader level of charter of economy inside the parliament so that industrialists and businesses can have uninterrupted policies which would lead to industrial development domestically and attract foreign investment in Pakistan."
Copyright Business Recorder, 2020
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