The federal government has constituted the prime minister-led National Export Development Board (NEDB). The board will act as a monitoring tool of the government’s policies to enhance exports and provide strategic guidance to the government to enhance the exports, review the implementation and progress of country’s trade policy. The members will include the finance minister, planning minister, adviser to the prime minister on commerce, minister for industries and production, State Bank of Pakistan (SBP) governor, Federal Board of Revenue (FBR) chairman, Board of Investment (BoI) chairman, secretary finance, secretary commerce, Export Development Board officials as well as the members of the energy board and national food security.
The presidents of Federation of Pakistan Chambers of Commerce & Industry (FPCCI), Pakistan Business Council (PBC) and Overseas Investors Chamber of Commerce and Industry (OICCI) will also be on the board.
The government’s concerns about sluggish export growth are legitimate and understandable. The last three years did record growth but only incremental growth. When benchmarked to exports registered by countries in the region then Pakistan, which witnessed its exports at $ 24 billion in FY2020-21, lags far behind others: Bangladesh’s exports hover around $ 40 billion, Vietnam’s $ 280 billion, Malaysia’s $ 230 billion and India’s $ 550 billion.
Whereas, the World Bank in its report of 2021 has expressed its optimism over Pakistan’s growth prospects. According to it, Pakistan can increase its annual exports to its potential of $ 88 billion and its exports can grow at the rates of Vietnam’s and Bangladesh’s for the next couple of years. The report rates Pakistan as an inward oriented economy and that it should rather target high potential destinations in Central Asia. The “missing” exports of $ 64 billion constitute a figure which cannot be ignored by any economy and needs to be worked upon.
Many emerging markets in the region have enhanced their exports by offering to foreign investors their countries as viable destinations for re-export. In the process they manage to secure both; FDI and exports through viable value addition in their countries.
Pakistan’s ranking is 92 out of 109 countries in the global ranking of countries rated attractive for investment and re-export whereas, Vietnam is at the 45, India 61 and Iran 66. Pakistan has to cover a lot of ground to emerge as an attractive destination for FDI and re-export. Multiple Special Economic Zones (SEZs) have been set up in the country in this regard. Efforts are being made to populate these economic zones. There was an understanding with China that it would move its low-end industry to Pakistan for re-export. Unfortunately, however, there’s nothing on ground yet.
The newly-constituted National Export Development Board has some serious challenges ahead of it. The institutions in the country responsible to promote exports and foreign investments in the country such as Export Development Authority and Board of Investment, are in essence non-functional entities, if not redundant. Our foreign missions abroad that are meant to be business door-openers and facilitators, too, are lethargic. Only recently, the Prime Minister, in his warning to foreign missions, expressed his mind on the subject by publicly stating: “Let me make it clear to you, we cannot go on like the way we are going on presently. The most important job of embassies is to serve their countrymen and then to bring foreign investment to their country”. The PM also said India’s embassies are very proactive to attract foreign investment into their country as opposed to Pakistani embassies.
The structure, mindset of our foreign missions and the diplomatic cadre is still stuck in the past when traditional diplomacy, protocols and social networking at gatherings constituted the prime objective of our foreign missions. Since decades, however, the whole regime of foreign diplomacy has dramatically changed to all about the nations’ economies. Today’s diplomat is more of a ‘business ambassador’, opening doors for foreign investment, exports and other business opportunities. Our foreign missions, by and large, are doing none of it.
What is required out of NEDB is dramatic restructuring and a paradigm shift in the way we have organised our exports and foreign direct investment (FDI). It is largely business as usual and out of step with the way the successful markets have organised themselves where governments have relinquished their direct indulgence in exports and FDI and have instead brought forth the private sector to manage the country’s exports and FDI in line with domestic and global market dynamics. The government’s role is limited to a mere facilitator to the private sector.
The business chambers such as FPCCI, OICCI and PBC in Pakistan are intermittently taken on board more for optics in a framework that is managed by bureaucrats. The budgetary proposals that these bodies make to in relation to exports, trade and investment policies are often sidelined in the face of country’s one-track quest for more tax collections.
The above stated board of NEDB is also structured in a way where the representation of chambers is minimal and appears symbolic. The shots will be ultimately called by the heavy representation of government functionaries.
(The writer is a former President, Overseas Investors Chambers of Commerce and industry)
Copyright Business Recorder, 2021