The Pakistan Business Council (PBC), the country’s largest corporate sector advocacy platform, has raised concerns over the government’s “ambitious export target” of $65 billion.
In a letter addressing Minister of Commerce, Jam Kamal Khan, the PBC said that it believed that exports are the most sustainable way to manage the balance of payments.
“Unlike debt, which has to be repaid, net export proceeds remain in the country. The availability and cost of debt in Pakistan’s current state are other factors that lend an advantage to exports,” it said.
The PBC said that the government has set an ambitious export target of $65 billion to be achieved in three years.
“This represents a 113% increase over FY24 and compares with the International Monetary Fund’s (IMF) much lower $37.2 billion forecast,” it said.
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However, PBC raised significant concerns with the target-setting process, which it believed is crucial to address.
“To the best of our knowledge, exporters were not included in the group which deliberated on the export target,” it said.
The PBC, citing media reports, noted that the terms of reference excluded both the implications of the Federal Budget 2024-25 and the impact of uncompetitive energy tariffs.
“We also understand that the group did not comprehensively review export competitiveness with Bangladesh, India, and Vietnam. In particular, concessional funding and export incentives were not factored,” it said.
The PBC questioned whether the quantum of investment required to broaden the export basket and geographic reach considered.
“Were ways to incentivise and fund this investment discussed?” it said
The council said that the information available lacks granularity between the aspiration to add value to existing export lines, develop new lines and geographical expansion.
“It is unclear if the $65 billion target is gross or net exports, the latter after taking account of imports required to generate exports,” it said.
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The PBC said it wondered if the export target envisions the indigenisation of presently imported materials or incentives for new exporters or exports to new markets.
“We are not aware if the need for an industrial policy was considered to sharpen the focus on our comparative advantage,” read the letter.
Moreover, the PBC questioned whether renegotiations of the China-Pakistan Free Trade Agreement and other ways to secure improved market access considered.
Lastly, PBC questioned if there is a “robust plan” to meet the European Union’s conditions for the continuity of the GSP Plus Program.
The PBC urged the government to share the basis on which the export target has been set and outline how the government expects to support this ambition and what it realistically expects the private sector to do to achieve it.
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