Government urged to devise multi-pronged strategy for exports

Federation of Pakistan Chambers of Commerce & Industry (FPCCI) Regional Standing Committee Chairman, Ahmad Jawad has said that our government takes a more liberal view for export promotion; offering only the government backed loans like the youth loan scheme or offering just the policy incentives for export promotion. It should take a holistic view of the situation and should adopt a rather activist and Keynesian approach towards export promotion. The government should make a multi-pronged strategy towards the promotion of exports.
He said decreasing exports would mean an unfavorable balance of payments which would put pressure on the exchange rate causing the rupee to depreciate which would increase again the bill of imports creating a vicious cycle from which a country has to protect itself.
Talking to Business Recorder, Jawad said the exports of almost all the countries in South Asia are on the rise. Unfortunately with Pakistan, the case is opposite. In the fiscal year 2015-16, Pakistan's exports witnessed a 12pc decrease from US $23.6 billion to US $20.8 billion.
This is an awkward and embarrassing situation for Pakistan given the fact that we had been awarded the GSP Plus status by the European Union to help boost our exports. According to the economic survey of Pakistan 2014-15, Pakistan's exports remained stagnant at US $24-25 billion (and it actually decreased in the year 2016) while Bangladesh's exports surpassed the US $30 billion mark last year and is set to hit the US $34 billion mark this year.
The reasons for decreasing Pakistani exports are the sluggish growth in the Pakistan's major trading partners namely UK, USA, and China, high cost of production due to electricity shortfall and delays in order deliveries because of non-availability of energy inputs. Among Pakistan's major exports, rice, cotton, leather, jewelry and the chemical sector have been hit hard by the slump in exports. Given the current scenario of Pakistan's dwindling exports, a strategy for bolstering them becomes imperative.
One of the primary ways of enhancing exports is to support entrepreneurship and to create new avenues for growth by guiding the youth. Entrepreneurship creates a virtuous cycle of prosperity as the people not only get employed themselves and create value for the society and the economy but they also promote employment opportunities. The spectacular growth of the US economy has only been possible by promoting the culture of entrepreneurship which entails taking risks for new ventures and not fearing from failure.
Similarly our current export base is mostly limited to basic commodities which include textiles, leather, cotton and other basics like grains, fruits, etc. We should make a transition from these exports to more value added items in the global value supply chain.
Along with that, we should identify other export opportunities from Pakistan and inform the investors and the public about them so that more people can take part in the value creation process. Similarly, there are many other opportunities available in the supply chain of many finished products like in our untapped sector of horticulture which was constantly ignored.
Jawad mentioned the example of Bangladesh, which imports cotton from other countries, is now the fifth largest textile exporter in the world owing to its value added textile exports which we are lacking yet. In Pakistan, data shows that the export of cotton yarn has been down by 32pc but the export of readymade garments has improved by around 4.2pc in the current fiscal year, which tells us about the importance of value addition. Similarly, in the meat and dairy sector we can export frozen meat products, powdered milk, cheese and other value added creative products instead of exporting raw products.
FPCCI committee Chief also said Philippines, which is a country half the population than Pakistan has roughly US $25 billion of exports in the global outsourcing industry (part of service sector), even Dubai earned US $36.4bn of foreign exchange through tourism in 2015. Pakistan's work force is also skilled and it can become a major player in the global outsourcing industry if given proper attention by the government.
Pakistan also has got a lot of potential in tourism for the adventure seekers and history lovers. We have got some breath taking scenery, palatable food, and a wonderful cultural history for the global tourists. If we can develop Gwadar in a proper way and make sure the security of the beaches, then we can also show them some of the best beaches in the world. Similarly, we also need to transition from the services based model in the IT sector to a product based model where we can build IT products and sell them to the whole world which is yet ignored by the commerce ministry and IT ministry.