The missing ‘E’ in our exports does not represent only one element. Usually, the five E's are mentioned -- environment, energy, education, empowerment, equity. However, more pragmatically, the five E's are environment, energy, education, excellence and efficiency. Why? These five can be prime factors in boosting export figures and contributing to the sustainability of the enterprise.
EXPORTS
The missing ‘E’ in our exports does not represent only one element. Usually, the five E's are mentioned -- environment, energy, education, empowerment, equity. However, more pragmatically, the five E's are environment, energy, education, excellence and efficiency. Why? These five can be prime factors in boosting export figures and contributing to the sustainability of the enterprise.
In today’s global ecosystem, millions face the prospect of rapid changes in the way countries trade, win friends and break the traditional mould of isolation and indifference. This new normal has forced countries to move at turbo speed to gain access or protect their share in the world export regime. Pakistan is one country that has to get out of a leisurely moving export regime and focus on leapfrogging to become an important exporting nation.
Globalisation has shattered many trade barriers, eliminated high import tariffs, and crushed the policies of protectionism. The emphasis is more on concrete desires to create world-class products, with a strong emphasis on quality, respect for competitive pricing and stress on prompt and fast delivery and movement of goods. Human resource development is being accentuated and encouraged so that a top-quality and efficient production system evolves.
Pakistan, like other developing countries, will be compelled to fundamentally restructure the mode of manufacturing for the world market. Policymakers, exporters’ associations and various think tanks will have to begin a focused movement on a war-footing basis to make the country a viable world trade player.
The question is whether Pakistan can formulate a pragmatic, workable and effective export policy or whether there will be a continuation of the adherence to the present dilly-dally attitude towards exports. Of course, although exports are not the only panacea for the economic development of any country, the case for Pakistan takes on a very profound realisation of the critical need to expand the export base. There is always a call for rapid industrialisation. The question is whether this will be export-led or import-substitution industrialisation. When Pakistan is highly dependent on foreign remittances from migrants and export receipts, all stakeholders have a huge responsibility to ‘make it happen’. And that is why the five E's are essential.
The environment is rapidly becoming a debilitating factor. Pakistan is among the top five most vulnerable countries when it comes to climate change. The issue is not just recent times but has been a compounding issue over decades of neglecting the disastrous impact of climate by the government and the private sector, what to talk about most of the citizens. Major overseas brands have forced vendors to comply with all international labour and environmental standards fully. The Employers Federation of Pakistan as well as the UN Global Compact Network Pakistan are active in sensitising, guiding, and ensuring Compliance with all International Standards, ILO Conventions, including Occupational Safety and Health, etc. The EFP provides technical support and guidance through training, seminars and posters developed in local languages, along with sharing good practices and identifying areas for improvement and the environment's adverse impact on the workers' health.
Textile-related trade associations must proactively advocate for transformative changes regarding environmental management in their members’ enterprises. Of course, these efforts must ensure transparency in data sharing, promoting accountability, fostering trust and collaboration towards shared goals. At the same time, the various workers' federations have to be active too and must ensure that workers understand the consequences of non-compliance with environmental standards.
The concept of environmental stewardship is not just confined to the peripheries of the enterprises, but is about integrating environmental sustainability into daily lives. A mindset must be developed that a green environment at home or work is about prioritising energy efficiency and safeguarding people. Employers and Workers must embrace this green movement and lead by example to achieve economic success and enhance the reputation of the enterprise.
Improvements in efficiency and productivity are cost-wise beneficial, especially in the tough competition ecosystem from regional players. Enlightened exporters emphasise enhancing efficiency and productivity and so invest in consultants to mentor and guide workers and managers to achieve higher productivity and efficiency
Energy, especially the shortage of electricity and gas, is the biggest reason Pakistani exports are unable to compete globally. Regional competitors have an edge over Pakistani exporters, and despite continuous appeals and protests, the situation has become alarming by the day. Exporters who can source funds for installing renewable energy offset their energy cost to some extent, but the majority of SMEs have to suffer the ignominy of late deliveries or cancelled orders due to frequent loadshedding of electricity. Large exporters installed captive power plants to maintain production, but then gas prices for captive power plants increased substantially, making the electricity expensive.
Pakistan already has surplus electricity, but more plants are planned or under installation. At the same time, Pakistan is one of the top buyers of solar panels. Moreover, wind power structures are on the rise. Despite all these, the fundamental issue is the transmission and distribution network that should have been put in place before all these plants energised. But the planning always has been to have the cart before the horse. Hence, people suffer, industries suffer, country suffers. It is very important that electricity should be available to all with minimal outages or loadshedding. But the issue is that the menace of discretionary powers granted to electricity providers overshadows all progressions into a monumental mess.
Education is essential if Pakistan is to evolve into a mega-exporting country. Every year, the number of children out of school increases; today, 26 million are deprived of education. Unlike Pakistan, countries allocate a good part of their budget on education. Over the past decades, workers in factories were, and are, either illiterate or semi-illiterate. Hence, they have zero knowledge about information technology, cannot read manuals, and often resort to ad hoc ways to get things done. Moreover, there are relatively few vocational training institutes or skills development centres. Industries have no alternative but to impart on-the-job training to unskilled workers in order to fill their labour requirements.
Excellence in industry management is crucial because there is a lot at stake here. The executives and managers must be fully sensitised to compliance, sustainability and ensuring product quality, delivery, and price. The difference between compliant and non-compliant plants would ensure that export orders are given to the compliant enterprises. Many industries have been spending huge amounts to meet the conditionalities of the foreign buyers. Export value primarily depends on the exporters' acumen, skills, marketing ability, prudent administration, human resource management, and financial strength.
Excellence is also possible when the government has a positive attitude regarding exports and has favourable and workable policies. An example is the Export Facilitation Scheme, which was planned to facilitate exporters and exempt them from sales tax and the sluggish policy of refunds in all ways and means. However, what happened was that if the exporter imported yarn and fabric, these would not be subject to 18 per cent sales tax but if sourced from domestic manufacturers, sales tax would have to be paid.
The result is that the domestic industry is on the verge of collapsing, while at the same time, some exporters have used, misused and abused the facility. Those SMEs who are not in a position to directly import are being edged out despite whatever excellence they have achieved.
Efficiency is a key solution for industries. Although various factors hamper efficiency, workers' low productivity and inability to fully utilise machinery and equipment are foremost. Pakistani workers are already over-stressed because they face daily power cuts in residential areas, there are comparatively few means of transportation, illness and sickness are rampant in low-income families, and urban pollution is endemic. Thus, they cannot perform with zeal, resulting in lower productivity.
Improvements in efficiency and productivity are cost-wise beneficial, especially in the tough competition ecosystem from regional players. Enlightened exporters emphasise enhancing efficiency and productivity and so invest in consultants to mentor and guide workers and managers to achieve higher productivity and efficiency. However, SMEs mostly manage by relying on ad-hocism, shortcuts, and improvisation. These short-term measures should be avoided instead of making them normal.
For Pakistani exporters, maintaining sustainability and making their decisions now more than ever depends on the five Es. Sustainability is what defines economic progress, and thus it must be holistic, addressing economic, social and ecological dimensions. Uncertainty in the global marketplace continues, manifested by mounting tensions, strategic readjustments and legal challenges. There will be heightened volatility and aggressive developments in global trade, as exporters cope with the difficulties of tariff recalibration and realignment of economic pacts.
The writer is a former president of the Employers Federation of Pakistan.
