Ayesha Mudassar

Diversifying exports or removing commodity concentration is the need of the hour. The overreliance on the textile sector has significantly increased the country’s vulnerability to economic shocks. Talking to WealthPK, Chairman Engineering Development Board Almas Hyder said focusing on a diverse sector would enable Pakistan’s exports to reach new heights, as diversification had a knock-on effect by opening industries, encouraging employment, and raising new avenues of investment.

He said diversification was the key to curtailing trade deficit, maintaining a satisfactory level of foreign exchange reserves, and reducing exchange rate volatility. As per the statistics of Trading Economics, the country’s trade deficit widened by 3.1% year on year to Rs0.62 billion in January 2023 from Rs0.60 billion in the corresponding period of the previous year. Moreover, foreign exchange reserves slipped to an alarming level of $3.19 billion in the week ending on February 10, 2023.

Concerning the avenues for export diversification, Pakistan has a huge potential in the IT sector. The IT and IT-enabled services exports have witnessed a phenomenal growth of 225%, increasing from $800 million in the Fiscal Year 2013 to more than $2.6 billion in the Fiscal Year 2022, the SBP data shows.

Muhammad Shoaib Malik, Domestic Business Facilitation Officer at the Pakistan Software Export Board (PSEB), informed WealthPK that the sale of telecommunication, computer, and information services was the largest contributor to the country’s service exports. Efforts must be made to burnish Pakistan’s image as a lucrative tech destination and enhance its international presence, he added.

“IT exports need to be encouraged through all reasonable incentives, as our potential is much higher than what we currently export. Moreover, the oil refining industry can also help in achieving a substantial amount of foreign reserves. The weak demand for furnace oil and Letter of Credit (LOC) restrictions have caused low utilization rates in the oil refining industry. Enabling refineries to operate at maximum capacity would significantly reduce the need to import energy products,” he added.

Mobile manufacturing is another industry with significant potential. Secretary of Mobile Device Manufacturing Committee Asim Ayaz told WealthPK that substantial benefits to the economy would be realized once the assemblers started investing in the localization and export of mobile phone components. Furthermore, Pakistan’s engineering sector has the capability to attain a significant place in exports. To boost foreign exchange reserves and address the current account deficits, the departments concerned need to explore other sectors beyond textiles.

Credit: Independent News Pakistan-WealthPk