$ 10.1 BN EXPORTS TARGET
The potential is tremendous which we so far failed to harness
From Shamim Ahmed Rizvi,
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.