Pakistan sets $35 billion exports target to boost industry

Domestic power shortages, weak external demand and a subdued business climate are dampening Pakistan's exports.

Pakistan has decided to straighten up its sinking exports, push them to $35 billion a year and stem the country's foreign trade turmoil. It's a Herculean task. But let's see how it pans out in the current global business and economic environment.

Two key markets - the UAE and Saudi Arabia - will be explored and targeted to multiply the export volume. Latest fashionwear, mangoes, high-tech electronics and top-grade pharmaceuticals are some of the exportable products.

The UAE's current share of exports from Pakistan is four per cent, the Ministry of Finance said.

"Efforts will have to be made to multiply this share. Our hope is that as the UAE not only imports a large number of items for its own use, but also serves as a transit point to import goods from Pakistan and several countries for sale and shipment to other countries in the Middle East, Africa and even South East Asia.

"In fact, even Pakistan imports a large number of raw materials and consumer goods through the UAE, particularly Dubai, because it is an excellent transit point, has low-cost shipping tariff and efficient banking and communications," a Ministry of Finance official said.

The government estimates Pakistan's exports at $20.9 billion in FY-16, which ended on June 30. It was 12.4 per cent, or $4.9 billion, short of target. The target for the year was $25.5 billion. The exports have stagnated around $20-21 billion for the last four years.

The reason: lower domestic output and smaller exportable surplus, plus international crises, which came on the back of low international oil and commodity prices.

"The statistics of volume and the dollar value of exports are being processed and expected to be unveiled in the next few days," said an executive of the State Bank of Pakistan (SBP), the central bank.

The industry, business and exporters now have the latest version of the Strategic Trade Policy Framework (STPF) 2015-18.

The government was compelled to freshen up its foreign trade plans in view of the continued decline in exports, which are now additionally hit by Brexit. At the same time, the already fragile economy is facing depreciating foreign currency rates, including those of the British pound sterling, US dollar, euro and the Japanese yen.

The Ministry of Commerce has issued five key initiatives to increase exports as part of the Strategic Trade Policy Framework 2015-18. These initiatives cover: (1) creation of technology upgradation fund, (2) support for branding of Pakistani products, (3) support for value addition, (4) support for product diversification and (5) repayment of industry's withheld local taxes.

Commerce Minister Khurram Dastgir said: "We expect these new initiatives will significantly increase Pakistani exports. The government has allocated Rs6 billion to finance these plans this year."

Implementation of these plans, through government funding for various industries and industrial units and training by foreign trainers, will enlarge output and offer high quality products to attract global consumers.

"The government plans to spend Rs18 billon over three years to market a larger range of new consumer goods, raw materials and intermediary products, and multiply the volumes, as laid down in the STPF," Dastgir said.

As of now, 60 per cent of Pakistan's exports go to 10 countries. These are: United States, China, the UAE, Afghanistan, UK, Germany, France, Bangladesh, Italy and Spain. The US is the biggest buyer of Pakistani exports with its 17 per cent share. European Union countries account for 22 per cent. Exports to China are down to 8.7 per cent in FY-16 compared to 10 per cent in FY-14. Exports to the UAE are down to four per cent in FY-16 from seven per cent in FY-14.

Why are Pakistani exports stagnant for the last four years? The International Monetary Fund attributed this to: the global commodity crisis, domestic power shortages, poor business climate, low external demand and exchange rate appreciation against the rupee.

The Standing Committee on Commerce of the Senate is worried over the sinking state of Pakistani exports. Its chairman, senator Shibli Faraz, presided over a hearing on this issue. Senator Faraz urged the government and the industrialists to "do their utmost to raise output and to produce and export more to save the Pakistani economy."

Views expressed by the writer are his own and do not reflect the newspaper's policy.