The potential is tremendous which we so far failed
to harness
From Shamim Ahmed Rizvi,
Islamabad
July 23 - 29 , 2001
Although the export target of 10 billion dollars
could not be met during the outgoing (2000-2001) financial year, it
has certainly registered a significant increase. Exports touched the
figure of 9.4 billion dollars against 8.56 last year. The crossing of
psychological barrier of 9 billion dollars has been described as a
milestone in the history of country's export. A very cautious target
of $10.1 billion has been fixed for the current (2001-2002) year.
The export receipts however, continued to be
relatively meager as compared with the achievements of the South East
Asian countries over the last three decades, for which they are now
rated as the newly industrialized countries (NICs). Their economic
growth marked with rapid strides in industrial development was almost
entirely led by rising export earnings. Pakistan's exports in terms of
value remain about one-third of the exports of any of newly
industrialized countries in South East Asia which also made a
beginning, like Pakistan, in development pursuits in 1960s.
Last year's breakthrough in the country's export
earnings nevertheless may be seen as a significant achievement which
marked the end of stagnation in our exports at around $8 to $8.5
billion annually over the last four years. The actual growth in
exports in the last fiscal year worked out to 6.77 per cent over the
previous year's figures of $8.56 billion. It may be recalled here that
the export target at the beginning of the year was set at $10 billion
or a growth of about 15 per cent, but the target was reduced after
about six months as the progress of exports month-wise during this
period fell short of the targets. Ultimately, the annual target was
reportedly an indicative estimate as proposed by the IMF mission.
While speaking at the inauguration of an exhibition
in Karachi in March last, the Chief Executive Gen. Pervez Musharraf
had said that he was very keen to see that Pakistan crossed the
barrier of 10 billion dollars export this year. He remarked he was not
happy with 8/9 per cent increase in our exports as the potential was
tremendous which we have so far failed to harness.
He said that he expected an annual increase of 25
to 30 per cent until we doubled our export volume. He rightly observed
that Pakistan's export target of 10 billion dollars was too small. He
compared Pakistan's export with Malaysia of $70 billion and other
Asian countries having still higher level. Keeping in view of the size
of the country, in terms of both territory and population, and its
resources its exports are disappointingly low, he had observed.
Being a highly consumption-oriented society with a
high degree of mal-distribution of income, we concentrated primarily
on import substitution in our development efforts. The area of
consumption continued to widen from textiles to a variety of motor
vehicles. Since these industries grew behind the high walls of
protection and nurtured with heavy doses of subsidies in a variety of
ways, these have not grown out of their infancy yet. Today our main
industries like cement, sugar, engineering, pharmaceutical,
fertilizer, chemicals, metal, tire and tubes, etc, are not in a
position to compete in the open market.
Though the budgetary projected export target of $
10 billion looked difficult from the very beginning, the $9.3 billion
export target as agreed with IMF appeared feasible. The relatively
flexible and accommodative approach of IMF, though reassuring as far
as the future relations with donors are concerned, but points towards
the bleak economic scenario in the days to come. Deficits of budget
and balance of payments are the mother of all economic ills and
particularly so for a country like Pakistan whose prolonged dependence
on economic aid has badly shattered the macroeconomic balance, with
the result that the debt servicing has become the largest signal
strain on the national resources.
A cursory look at the exports of Pakistan reveals
that textiles industry holds the key for maintaining the future
balance of imports and exports. DFIs role of providing credit to the
textile industry cannot be overemphasised in this context. But, as
they are reluctant to advance credit in huge amount the revival of the
textile industry, which alone can boost Pakistan exports looks quite
difficult. It is estimated that the textile industry would need Rs.
333 billion besides exemptions on import of machinery to redouble
textile exports in the next four years. The reluctance shown by DFIs
in advancing loans to textile industry, through not without any
reasons, has been the biggest impediment and need to be taken care of
more sysmathetically. Furthermore the demand for concessionary credit
does not fall in line with the donors demand for uniformity of
interest rates and elimination of subsidy. It remains to be seen as to
what extent the government can succeed in impressing upon the IMF the
necessity of the revival of textile industry.
The balancing, modernising and replacement of the
industry, which is necessary to compete in the modern markets, need
huge investment and unless the concessionary credit is arranged, there
is hardly anything to suggest that the industry which is the backbone
of Pakistan's economy, can revive in the foreseeable future. It is all
the more necessary to increase production and overcome recession which
alone can boost exports and generate revenues for the government.
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