'COST OF MONEY IS SUITABLE FOR EXPORTERS'
TARIQ AHMED SAEEDI (email@example.com)
Jan 26 - Feb 01, 2009
While total exports from Pakistan in first half of current fiscal year are showing sign that annual export target of $22 billion will be achieved increase in imports in the country is widening gap in balance of trade. Until trade deficit is controlled benefits of rise in exports will definitely be gloomed. It is a teamwork of import and export that stimulates reduction in trade deficit, otherwise buildup in exports become worthless if imports go unrestrained. This is on what Chief Executive TDAP, Syed Mohibullah firmly believes. He says import of non-productive and non-essential items should be banned to give freedom to exports that he is sure is moving in right direction to yield economic contributions. Rupee value depreciation proved an important export stimulant. That made him utter that annual export target was practically attainable. But there have to be corrective measures to equilibrate external trade, he emphasized.
Chief Executive expressed his satisfaction over the role TDAP is playing to promote external trade of Pakistan. While talking to PAGE, he said the authority was facilitating development of level playing field for exporters as well importers. At present, we are trying to explore new markets for Pakistani products. "Unfortunately, Pakistan has extremely narrow base exports and earns 80% export revenue from five exportable goods. A strategy is needed to broaden basket of exportable products therefore," he said when asked in which areas exports should be expanded to shorten trade imbalance.
Despite that import in July-Dec, 2008 increased by 12.9% to $19 billion against $16.9 billion in the same duration preceding year, he says "by end FY09 import will go down". It was the resilience of the economy that despite many handicaps exports went up by 10% to $9.5 billion from $8.6 billion in first half, he highlighted when questioned about prospects of export growth. "Given issuance of advisories to foreigners on avoiding travel to Pakistan, this was a remarkable progress."
What are the potential in new markets and how could that be hampered by Pakistan's international image? Not hampering at all, he sarcastically replied. Business is a hardboiled thing. We are trawling importers in Russia, Australia, and East Europe. If they will find profit margins in trade transactions with Pakistan outclass than perceptible divergences then they won't consider country's international image. Prospect of profit is cross matched with prospective cost of any risk in business. "So, I am not worried about Pakistan's image derailing foreign trade anyway," he reiterated.
It is said that global recession impact has spilled over exports from Pakistan as recoiled exports orders from western countries may not only unleash unemployment but hit local textile industry at worst given the fact that textile forms 65% of total exports and 80% textile is destined to European and North American markets which are reeling under contracted consumer buying power presently. How do you see it? "I have concern if textile constitutes such a substantial percentage of total exports from Pakistan. The proportion has now changed and come down to 52%. Non textile is as important foreign exchange earner, which is evident in growing exports of non-textile products," he states. Yes, we understand that slack in demand in US and western markets will affect national exports. Therefore, we need to explore for our products other markets worldwide. "Aggressive marketing is needed in Asian region." He said TDAP was sending trade delegation in Asian markets. In addition to external problems which emerged out following demands of goods declined in international markets, there are various other internal problems creating compounding depression, he hinted while bringing in limelight issues pertaining to energy crisis and high interest rate which he accepted was highest. Although cost of financing for exporters is suitable under export refinancing, he added. "Export refinancing rate is very cheap."
There is a little difficult situation when we look around energy production and supply. Despite structural weaknesses short term solutions can be formulated to meet electricity and gas problems. Enhancement of production capacity of power plants can overcome electricity shortfalls forthwith. System of production should be improved. More gas production will increase gas volume actually required for the country, he said and adding alternative energy sources can be harnessed as a long term solution. "Coal presents an incumbent solution. Currently, Pakistan utilizes only one percent of coal for electricity generation, which is abysmally lowest in comparison to regional countries such as India and China and many other successful developed economies around the globe where coal combustion accounts for over 50%.î In Pakistan, at least 50% electricity should come straight from coal-fired plants, he wished. Cost effective method of power generation pulls down cost of industrial production at end to make outputs price competitive within and across border.
Nationwide trade associations are in favor of injecting boosters in the economy through package for exports sector and incentives typically in shape of tax exemptions and premium plus rate of exchange. That China's contagious economy to global economic metabolism propped up textile industry with weighty rebates might one of inferable references. Can the demands be compatible to Pakistani economy's dire need of tapping revenue sources and a practical equilibrium be maintained in between? If it is to availability of capital, as said cost of money for exporters is good, he answered. However, I think there is no justification of R&D to industries with low value addition, he added. 'R&D to industries should be linked to their capacity and engagement in value addition of products. That is too when macro economic stability returns and indicators improve,' he maintained. "Subsidies and R&D are not tenable at the cost of widening budgetary gap."
One of the purposes of organizational restructuring of present TDAP was to establish specialized departments to collect market specific data and know importers' needs based on particular demographic and psychographic fundamentals. Full knowledge of markets where one wants to sell products is essential and requires to be acquired in pinpointed manner to avoid possible mix-up. Now, divisions in TDAP are more focused on assigned territories and having proficiency to devise plan and better strategy accordingly, he asserted. "Earlier there was no focus." He said upon joining TDAP first task he took up himself was to mobilize internal financial and human resources to get them utilized productively.
Syed Mohibullah Shah, Chief Executive Trade Development Authority of Pakistan (TDAP) has over 30 years of working experience and rich educational background.
He has been Commissioner of Sukkur Division, Head of Karachi Development Authority, Head of Board of Investment of Pakistan, Chairman Balochistan Development Authority, and Chairman Port Qasim Authority.
He has done his MBA in international investment from MIT's School of Management. He studied the interaction between finance and law, major in mergers and acquisitions and corporate governance at Mc. Gill. From Sindh and Karachi Universities he was graduated in faculties of physical sciences, law, and political science.