ENGINEERING GOODS: POTENTIAL & EXPORTS

Engineering vision and the defence products would help boost exports by over 25 per cent during the current year

From SHAMIM AHMED RIZVI, 
Islamabad

Nov 11 - 17, 2002

While revealing that Pakistan's exports have registered an increase of over 15 per cent during the first four months of current fiscal, the Commerce Minister, Abdul Razzak Dawood has expressed the confidence, that the engineering vision and the defence products export organization set up by the present government would help boost exports by over 25 per cent during the current year. We can fetch additional 1.5 billion dollar by adding these two items on our exports list, he added.

While presiding over a meeting of engineering Development Board (EDB) in Islamabad, the Minister reviewed the progress so far recorded in the implementation of various measures recommended within the framework of engineering vision. He advised the entrepreneurs engaged in the engineering industry to make concentrated efforts to penetrate into the markets of Malaysia and Thailand which had a potential demand of over $30 billion of engineering goods and Pakistan with little initiative and drive can claim a reasonable share. He lamented that presently Pakistan's share in export of engineering goods was only $ 275 million on a worldwide market of over $ 6000 billion.

For the first time in decades the government seems to be in the right direction for export diversification. Throughout our history, we have been depending on the textile sector to increase our exports and no doubt the sector did play its role well as it is presently contributing about six billion dollars to our export earnings of around 9 billion. There is still some potential to increase our textile exports if we succeed in growing more and clean cotton and concentrate on value addition. According to the Finance Minister, the country imported textile machinery worth one billion dollars during the last two years, which is reflective of balancing and modernization going on in the sector and hopefully expansion of the capacity would lead towards more exports. However, no genuine breakthrough in exports is possible without diversification of our export base and production. Experience of Malaysia, Thailand, Indonesia, Singapore and South Korea is good example that Pakistan too can achieve the goal by focusing on the engineering sector. Production of steel, ships, aircrafts, tractors, bulldozers and different types of vehicles shows that the country has a reasonable and sound base to prosper in this field. Pakistan also has a strong and vibrant defence production base and its products have a vast market due to their quality and competitive prices. What we need is necessary investment and introduction of latest technologies. For this, the government has already announced a number of measures to provide level playing fields to investors but a lot more has to be done to improve law and order and ensure continuity of policies. We hope the new government would pursue this objective more vigorously so as to create right kind of environment both for local and foreign investors.

Meanwhile, another important area has been identified as the potential export earners recently. The Commerce Minister said in Karachi that the country's sugar industry was emerging as a major exporter. In the last two years, he said, there was a bumper sugar crop and sugar production more than the domestic requirement. However, in order to consolidate this trend, it will be necessary to improve the quality of the sugarcane. Incentives should continue to be provided to the sugar industry. The other potential area for augmenting exports is engineering goods.

While the recent high export growth seems to have been lent by greater accessibility to European markets and the turnaround in textile industry, there are some other areas also which have done quite well. The increase in industrial output by 5.1 per cent in the first quarter of the current financial year and the increase of non-food, non-oil imports indicates that domestic economic activity has started picking up. The encouraging export performance could be a matter of satisfaction but the fact is that for an economy as large as that of Pakistan, the total annual export of around ten billion dollars is rather low. It needs comprehensive diversification both in terms of exportable goods as well as the markets. For long it has been argued that the country's export can be substantially increased provided exportable surpluses are available, exchange rate is stable and quality control is maintained. With these conditions either already there or around the corner, the country's export sector should be ready to give still better performance.