Mansoor Sadiq

Pakistan desperately needs to transform its export-oriented industry into a value-added sector to steer the country out of the decades-long balance of payments crisis, WealthPK reports. According to experts, the fundamental reasons behind low economic growth and balance of payment issues are lesser value-added exports as for the last decade the volume of Pakistan’s total exports has been stagnant at an average of around $30 billion.

Adnan Akram, a research economist associated with the Pakistan Institute of Development Economics (PIDE), told WealthPK that the total volume of exports in 2022 was $31 billion compared to $30 billion in 2013. He said that economic stability was interlinked with political stability in the country. He claimed that the promotion of exports had never been a priority of the erstwhile governments in Pakistan.

He added that poor governance, high cost of production and obsolete technologies had been major impediments to the promotion of the country’s exports for the last few decades. Adnan Akram said that even the implementation of the national industrial policy could not strengthen key industries of Pakistan like automobiles and textiles to the desired level. He said that despite having abundant natural resources, the volume of Pakistan’s exports was lesser than other regional countries.

He said that even Bangladesh exported goods worth $52 billion in 2022. He added that Pakistan’s exports were lesser than the countries having fewer natural resources, smaller areas and low populations such as Vietnam and Bangladesh. As per data of United Nations Commodity Trade Statistics (UN Comtrade), Pakistan is a prominent exporter of rice, fruits, fish, cotton, leather apparel, fabric, linen, suits and antiques. All these products are included in basic manufacturing items with lower value-added items.

According to the Pakistan Science Foundation, in the current scenario, there is a growing global demand for software and IT solutions. Contrary to establishing a manufacturing unit, it is much easier nowadays to establish a software house. “In this very perspective, Pakistan is focusing on exportable services, incurring the least and minimal infrastructure,” an official of the Pakistan Science Foundation told WealthPK.

He stated that Pakistan was devising a mechanism to harness the potential for online marketing platforms and exploiting opportunities through artificial intelligence and big data. “Pakistan’s economy mainly depends on Small and Medium Enterprises (SMEs). There are reportedly 3.3 million SMEs in the country. The share of SMEs in the Gross Domestic Product of the country is almost 30%.

About 25% of SMEs are generating exports,” Chief Executive Officer of Small and Medium Enterprises Development Authority Hashim Raza told WealthPK. He said that the government was devising policies to empower SMEs through lower interest rates on loans, import of machinery and training programmes. Pakistan’s economy is primarily agriculture based and as per findings in the agri-sector, during 2022, the total volume of exports relating to vegetable products and foodstuffs accounted for $5.25 billion.

Meanwhile, animal products including hides, leather, and its products; furniture, chemical items, and allied industry; cement and mineral products; and transport items are other sectors contributing to Pakistan’s exports. Pakistan depends heavily on exports of traditional items, which are interlinked with crops. Following the climate change mayhem, Pakistan has been left with no other option but to transform its economy into a value-added and smart export mechanism. Pakistan Software Export Board Director Technical Shaukat Ali told WealthPK that the government wanted to ease regulations to boost exports and simplify bureaucratic procedures.

He stated that an effective mechanism was being designed to explore potential foreign markets for exports following value-added productivity and technological domestic goods to enable Pakistani exporters to compete globally. “Major industries of Pakistan are obsolete and have not been upgraded in view of modern technological parameters. Value-added exports can earn Pakistan additional foreign exchange and boost the national economy with added revenue and outcomes of modern facilitations,” Senior Research Economist Umer Siddiqui told WealthPK.

Credit : Independent News Pakistan-WealthPk