EDITORIAL: To the surprise of many city-wise export figures for the past two years, more than 50 percent exports during both the years originated from the port city of Karachi while the so-called exporting city of Faisalabad's share is a mere 12 percent in FY21. Lahore is second in terms of exports with a share of 17 percent, while Sialkot is at the fourth place with an 8.35 percent. In terms of exporting companies, Karachi's share is 28 percent. Export per company in Karachi is $3.1 million as compared to $2.1 million in Lahore, $3.4 million in Faisalabad, and $0.4 million in Sialkot. This implies that a high number of large-sized corporates are located in Karachi and Faisalabad, while Sialkot is the hub of exporting SMEs.
In terms of large exporters, 12 exporting companies (with annual exports exceeding $200 million) have a share of 12.6 percent ($3.4 billion) in total exports, while the total number of exporting companies stands at 15,648. All are doing business in textiles, and seven are based in Karachi, three in Faisalabad, and two in Lahore. Overall exports grew by 26 percent in FY21 to $27.2 billion. There is some increase in the shares of Karachi, Faisalabad, and Sialkot while Lahore and rest of Pakistan have lost their shares to the other three.
That is a basic snapshot based on the detailed data and an important finding is that the share of Karachi in exports is predominant. Thus, the city is not only the engine of domestic economy, but its focus on exports is even higher in comparison to others. The natural explanation for Karachi's high share, of course, is that it's home to two seaports. Clearly, even in the age of fourth industrial revolution, proximity to port and resulting cost efficiencies play a crucial role in export performance. Other reasons may include the city's enviable corporate culture, competitive environment, and abundance of skilled labour. However, the infrastructure of the city is crumbling. Karachi's infrastructure largely suffers due to the urban-rural divide and skewed political representation. The ruling party in the province of Sindh is perceived to have no political stakes in the city despite being in power for a very long time. If the federal government is truly committed to the cause of growing Pakistan's exports exponentially over the next few years, it must bring an actionable plan to jump-start infrastructural development in the city on a war footing. Pakistan's exports - even after a good year - are not even half of its imports. With limited potential for remittances growth, the primary challenge will be to jack up exports in the medium to long-term. The federal government's stated focus is to usher in an era of industrial competitiveness in the country and boost exports. For the hope to transform into a reality, Islamabad must enhance its economic footprint in Karachi by executing, and not merely announcing, 'Karachi packages'.
The other need is to build port infrastructure. For exports to grow, Karachi must become part of the global and regional value chains - a few low hanging fruits are auto parts and mobile phones assembly. For these sectors and others to grow, imports must come in so that local value addition can happen, leading to higher levels of re-exports. Many industries run on Just-In-Time inventory model and timing of importing and exporting is the key. Moreover, overall volumes of imports and exports grow as economies develop. To reach the goal, spending on ports in Karachi - Karachi Port and Port Qasim - is imperative. Since ports are a federal subject, Islamabad would be required to club port development and its 'Karachi package'. Moreover, the federal government should prioritize the same with a view to boosting exports.
Copyright Business Recorder, 2021