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EDITORIAL: Caretaker Commerce Minister Gohar Ijaz’s interaction with the business elite the other day — to hammer out ideas and seek proposals that will help push exports from the current $25-30 billion band to $100 billion in five years – didn’t identify anything everybody didn’t already know.

But it did go to show that some things cannot be put off any longer if the economy is to be turned around; like FBR (Federal Board of Revenue) reforms, ease of doing business, dismantling illegal imports through ATT (Afghan Transit Trade), mis-declaration, under-invoicing, compliance, etc.

Such debates invariably open with laments about “tax reforms” and “tax net”, quite naturally, since expanding the exchequer is central to growing the economy, which will push up production and exports.

But this is easier said than done. According to the ministry’s own calculation, the economy would have to grow from its present size of about $350 billion to $1 trillion over the next half decade to achieve the ambitious $100 billion export revenue.

That will require a substantial increase in tax revenue just to feed the growth. And the way the government is going about meeting stiff IMF (International Monetary Fund) revenue targets, by relying almost exclusively on indirect taxes, it’s not at all clear how any reforms would be instituted or even if there is any space or time for them under the strict glare of the Fund.

Also, the industry is quick to point to the need for tax reforms, but often becomes the biggest hurdle in their way when its time to cough up the money. Indeed, the minister made several references to times when specific industries were the first to throw up their arms in frustration when they were delivered the reforms they had asked for.

That’s why the economy is never put on the road to growth. Tax reforms never see the light of day, there is never any additional fiscal space, and production and exports remain stifled.

All that goes a long way to explain why the businessmen’s other main demand, incentivising industry, has also become something of a non-starter.

The government could not afford to sprinkle any subsidies even if it weren’t forbidden by the IMF. It is caught in a vicious dilemma where it needs to help businesses grow and feed the economy, but there’s nothing in the bank to help them with.

The best it can do, for the moment, is restore confidence in the local economy. And it’s done that by cracking down on smuggling, especially illegal dollar movement, which put a floor under the collapsing rupee and brought welcome optimism to the capital market.

Perhaps one important point that nobody made during the exchange was about the need to turn to production strictly for exports; framing production policies according to international market demand instead of simply exporting excess production.

Such textbook initiatives are essential to diversify the export basket, which, as of June 2023, was still $17 billion textiles and just $5 billion non-textiles and agri products. Unfortunately, such smart thinking was never incorporated into policy and Pakistan’s export trends remained more or less the same for more than half a century.

There’s no denying that just about everything about the export policy needs to change. Yet the commerce ministry must be careful about the targets it sets.

Clearly, there’s still room for manoeuvre, despite all the constraints, and the government must help businesses identify fresh markets and products to sell into them. It must also be realistic about the results. Therefore, while it is hoped that the country achieves the $100 billion export target very soon, it’s unlikely to happen in the next five years.

Copyright Business Recorder, 2023

Comments

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Khan Asad Dec 11, 2023 09:18am
Please read the article before posting it, there is hardly any data and it’s just a wish list.
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NXT Dec 11, 2023 10:18am
Don’t confuse us with critical thinking, just let our leadership to construct castles in the sky!
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Aam Aadmi Dec 11, 2023 03:21pm
.....is hoped that the country achieves the $100 billion export target very soon, it’s unlikely to happen in the next five years....? With these sort of people at the helm of affairs, this is not going to happen in the next 100 years.
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SAAZ Dec 11, 2023 10:16pm
The writer of this article mist be a high school dropout. The article doesnt mention Pakistan except in the third last paragraph. It kept me wondering which Country is this article about. In the first paragraph, the reference to ATT(Afghan trade transit) got me thinking. Why would you refer ATT when the article is about Malaysia?When I reached the 9th paragraph, the mention of 'Rupee' made me certain, this is an article about India. Only when I reached the third last paragraph does it allude to Pakistan. The writer of this article certainly needs to be sent for training. Can't even write a clear headline.
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Muhammad aumair Dec 11, 2023 10:54pm
DLTL scheme big corruption and due to manupulate government for APTMA textiles sector and amount investment in money market
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Sagar Baloch Dec 12, 2023 01:49am
Sheikh chilli's with Degrees of corruption.
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Az_Iz Dec 12, 2023 05:33am
IK used to talk about $70 billion exports target. This government has upped it to $100 billion. Which will compel the next government to fix the target to something like $130 billion.
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Fatima Dec 12, 2023 07:42am
China at peak came nowhere near this, typical nonsense ‘ According to the ministry’s own calculation, the economy would have to grow from its present size of about $350 billion to $1 trillion over the next half decade to achieve the ambitious $100 billion export revenue.
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Fatima Dec 12, 2023 08:04am
24% growth rate for 5 years ! With structural reform maybe a fraction of this could be achieved, but none on the horizon. According to the ministry’s own calculation, the economy would have to grow from its present size of about $350 billion to $1 trillion over the next half decade
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Haris Dec 12, 2023 09:37am
It would be best if the caretaker and their caretaker aka "Caretaker+", just call free and fair elections and let the truly elected government do their damn work. The Caretaker+ shouldn't get involve in economy or politics.
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Haris Dec 12, 2023 09:39am
@Az_Iz, at least in IK's time the GDP was growing 6.4%, exports were up, the treasury had $ 20 billion and business confidence had restored after COVID-19 recovery. Pakistanis deserve this. It's their karma coming back on their faces. When you drive out able people and give the keys to powers in the hands of thugs, then such disasters happens as we saw under PDM government.
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hilarious Dec 12, 2023 09:44am
The only 100 billion exports that will take place is the laundering of funds from Pakistan by these politicians, the armed forces, the judiciary, the police, a majority of the bureaucracy and any one and every one that has the means to steal and plunder the nation and it's poor people. That's the only 100 billion in exports this country will ever see, unfortunately. But hey, we have nukes, let's enjoy them with the 40% inflation, massive devaluation, lack of power, lack of natural gas etc. we haven't been able to come up with a cohesive plan to collect trash from any major city since conception, but we'll soon turn to Paris or whatever country they're mouthing now, and we the people eat those false narratives like the most delicious haleem ever, when it's not haleem but what the color and consistency of haleem reminds one of. Diarrhea
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Azam khan Dec 12, 2023 10:06am
I think Gohar was adviser in Imran Khan government. If he is capable enough he could have done it then
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