EXPORTS: TREMENDOUS POTENTIAL IS THERE
Unfortunately, exports have never been our prime objective
From Shamim Ahmed Rizvi, Islamabad
Mar 26 - Apr 01, 2001
The Chief Executive General Pervez Musharraf has 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.
While speaking at the inauguration of Pakistan Hand-knitted Carpet Exhibition at Expo Centre Karachi, 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.
While fully agreeing with the Chief Executive one cannot ignore the ground realities. Exports cannot be jacked up, merely by setting higher targets in various sectors unless the industry is oriented that way and the necessary policy support, back-up efforts and resources are in place to make it happen. Exports in fact reflected the stage of development of an economy and the vitality and dynamism that it had or had not gained in the process. Unfortunately, exports have never been our prime objective in developing our manufacturing sector and still it does not seem to be the case going by the policies and efforts impacting upon this sector.
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.
Not an easy target
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 does not sound easier, either. 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. The government's inability to achieve the export target despite repeated claims can hardly be overlooked. Improvement on the export front after seven months is encouraging but what is necessary is to continue with the trend. The surge in the trade deficit to $ 1.18 billion during July-February 2000-2001 has added further to the urgency to raise exports and reach as closer to the $ 10 billion exports target as possible. The exports of seven-month period have revived hopes to some extent but it can harldy be advisable to be complaisant in this highly competitive market of fluctuating fortunes.
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, though 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 in the context of boosting Pakistan exports, which again remains an important requirement for future arrangement with donors.
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. It looks in the fitness of things that these issues are first addressed in their totality before setting ambitious targets which serve no purpose. That the export target of $ 10 billion looks difficult yet again is just another manifestation of the fact that the factors for sluggish exports were not addressed properly. No wonder, the $ 10 billion mark remains as far as it was years ago.