Pakistan’s ‘$88bn’ export potential

The World Bank in its report published recently has assessed Pakistan’s annual export potential at $88.1 billion. With the current exports hovering over $ 20 billion, the potential works out to be about four times the current level. The size of missing exports is therefore quite a startling disclosure. It brings into question the government’s awareness of the potential, export policy, strategic planning, vision and innovation, competitiveness of its products, effectiveness of its marketing channels and customer reach, to say the least.

The reference benchmarks for Pakistan in the region are Vietnam with exports of around $300 billion and Bangladesh with exports of around $47 billion. Their exports grew exponentially in the last decade. They carved out for themselves sizable market shares in the global market, notably, in the textile sector despite the fact that they are cotton-importing countries. Whereas, Pakistan’s market share dropped. In 1990, Pakistan served 0.19 percent of the world’s imports. By 2019 it dropped to 0.12 percent, which is nearly a 40 percent decline in the market share.

One must fairly evaluate what Vietnam and Bangladesh did differently and what we have missed out.

What is apparent is that these two countries are more competitive, their spectrum of export commodities is on a growing trend, their market reach driven by the private sector and liberalized by their governments is a successful model. Some of the impediments to Pakistan’s exports, as identified by the exporters, are well known. The foremost being the competitiveness of our products in global markets. With rising energy costs, our products are losing their competitiveness. Although we have improved in the last few years in ease of doing business, we are way down in global rankings.

The power tariff structure is high, unstable and subject to frequent change. According to one analysis, the average tariffs on final goods in Pakistan are 50 percent higher than the average for South Asia, and almost three times higher than the average for East Asia.

The innovation in technology and product diversification is limited. Our key export remains textile since decades. Our market channels and customer reach are inward-oriented and passive. The Trade Development Authority of Pakistan (TDAP) and our commercial missions abroad are not much of door opener to business nor are they of any meaningful help to exporters.

The World Bank report is a document that the country’s policymakers should carefully look at and work on it.

According to a fair analysis, an additional export of $ 60 billion could generate around 893,000 jobs and $ 1.74 billion in taxes in the agriculture and manufacturing export sector. These are the numbers that every government should seriously look at and work on, particularly the incumbent government that is looking for some out of the box solutions to turn around the economy.

(The writer is a former President, Overseas Investors Chambers of Commerce and Industry)

Copyright Business Recorder, 2021