SHAMSUL GHANI (shams_ghani@hotmail.com)
Dec 7 - 13, 2009

The trade policy (2009-12) statement reads:

"The endeavor of Ministry of Commerce is to provide medium term policy framework with focus on improving supply side to achieve sustainable export growth. The policy thrust would be to enhance quality, improve business processes through structural transformation and transferring resources to achieve production and export of a more sophisticated and diversified range of products."

While enlisting the challenges, the policy document categorizes them into external and domestic factors.


Economic downturn in major markets

Buyer's perception of Pakistan as a supplier of low quality products and inability to deliver bulk and in time

Negative travel advisories


High cost of finance
Energy crises (gas and power)
Law and order situation
Decline in investment
Decline in large scale manufacturing growth

In fact, the external factors are the bye-product of domestic factors. The first three of the domestic factors have stifled our economy on both external and domestic sides, and unless effectively taken care of, they are not going to allow any significant turnaround in the near future. The lack of international competitiveness is directly related to these factors, which increase the cost of doing business on one hand and compel the producers to churn out low quality produce on the other.

The competitiveness index table exhibited in the policy document records a comparative downslide over the previous fiscal in all key areas namely overall competitiveness, infrastructure, labor market efficiency, financial market sophistication, technological readiness, innovation, and sophistication factors. Trade policy's thrust on export-led growth is devoid of any long-term policy measures.

To achieve this objective of export-led growth, we will have to start from our domestic markets by subjecting them to the demand and supply forces and lifting any bureaucratic controls, whatsoever. Pakistan is a nation with abundant supply of young labor (uneducated and unskilled though).

Serious investment in human capital, through compulsory education and training can transform this ore of young generation into pearls and gems of economy. By engaging the deprived and disgruntled youth in pursuits of economic benefit, we can create immense opportunities in agriculture, mining, fishing, and energy sectors.

Land, river water, sea, coal, mineral resources all are in waiting for purposeful exploitation. By supporting the domestic producers and letting the fair competition to play its role, we can generate domestic demand and see local markets buzz with activity.

Given these opportunities, the local producers will learn how to be genuinely competitive in the international markets. They simply need a workable environment with cheap and ample power supply, a globally - or at least regionally - competitive interest rate, sustained and supportive economic policies and better law and order situation.







2000-01 9.2 - 10.7 -
2001-02 9.1 -0.7 10.3 -3.6
2002-03 11.2 22.2 12.2 18.2
2003-04 12.3 10.3 15.6 27.6
2004-05 14.4 16.9 20.6 32.1
2005-06 16.5 14.3 28.6 38.8
2006-07 17.0 3.2 30.5 6.9
2007-08 19.2 13.2 40.0 30.9
2008-09 17.8 -6.7 34.8 -13.0
2008-09 (July-Oct) 6.7 NA 14.3 NA
2009-10 (July-Oct) 6.1 -9.0 10.6 -26.0

Trade policy envisages promotion of agricultural development through exports. We have read and heard much criticism of the previous government's policy of consumption-led growth. The critics of the policy offered production-led growth as an alternate model.

The policy offers yet another model namely export-led growth model. All three models essentially encompass production. Export necessitates value-addition to the domestic or imported goods and material. Every country produces what it can and should be in line with its resource base and technological competence.

A predominantly young nation, immense agriculture potential, and coal and water resources are our strengths. We can produce surplus food and energy. Focus on these two sectors will give us a push after which we can create huge export surpluses. In the absence of these surpluses, our focus on exports will take us nowhere.

Cotton and yarn producers will keep on exporting their produce leaving the domestic value-added textile high and dry. We can promote export through agricultural development, but not the other way round.

The table of export and import statistics shows that our current account balance is largely dependent on global oil prices. Any hyper-inflationary trend in oil prices subverts our efforts to control our external economy. Further, a sizeable downturn in oil prices gives us a false sense of an improved external economy. We will have to get rid of this economic illusion by reducing our dependence on imported oil. The way out is there: develop hydro and coal power.