Prime Minister’s Advisor on Commerce Abdul Razaq Dawood last week reported a slight increase in the country’s exports for September.
The exports have shown improvement since the lockdown was lifted. This rise was largely attributed to the clearance of backlogged orders placed before the advent of the coronavirus, which were stuck because of the pandemic.
In August, there has been a downward slid in exports apparently because of the excessive rains in Karachi, which had virtually paralysed the port.
According to Dawood, the exports in September rose to 1.872 billion dollars posting an increase of six percent over last year’s exports in the corresponding period.
In August, exports posted 15 percent decrease compared to the exports in the corresponding period of last year.
“I still feel that with significant backlog of orders we can do much better,” the PM’s aide said. “Besides executing current orders, I urge the exporters to pursue more orders from existing markets and reach to untapped markets. I am hopeful that in October 2020 we will have further growth.”
The growth in exports, however minimal it is, is a welcome sign, but given the kind of economic challenges we face this trend needs to be boosted in a significant way. The present as well as previous governments have announced several incentives as well as hefty financial packages for the exporters in order to give impetus to the exports.
But most of the financial packages have landed in the pockets of big industrialists, while very little amount was spared for value-addition and other measures needed to make our exports more competitive in the international market.
The government as well as exporters need to launch concerted and joint efforts to explore new markets for their commodities and also diversify their exports and move away from producing traditional commodities.
Energy shortages were the main reason behind stagnant growth of exports in the past few years, but that crisis has been overcome. Now, it is the test of the government as well as exporters to adopt innovative ways to boost exports.
It is too early to talk of any substantial increase in exports as the United States and Europe have not yet fully recovered from the Covid-19 pandemic.
The government as well as exporters need to keep a close watch on the situation, and should prepare a strategy to secure a significant foothold in the international export market once the situation returns to normal.
Pakistan has traditionally focused its attention on exports relating to the textile industry, but the health related industries offer lucrative profits for investment in the post-Covid 19 era.
The government needs to persuade industrialists to put in their capital into production of health related materials and also explore international markets for their exports to earn the much-needed foreign exchange.
Pakistan badly needs to boost its exports and other sectors, to increase its foreign exchange earnings such as remittances from expats as well as investment to decrease its reliance on expensive foreign debts.
In a shocking disclosure, the yearly Debt Review and Debt Bulletin by the Finance Ministry for fiscal year 2019-20 has revealed that the share of the foreign currency in total debt has shot to 36 percent of the total debt.
Before the Pakistan Tehreek-e-Insaf (PTI) came into power, the foreign currency component in the overall national debt was 32.2 percent. It increased to 34.8 percent in the first year of PTI, and has now shot up to 36 percent.
“Around 36 percent of the total public debt was denominated in foreign currencies at end-June 2020, exposing the government to exchange rate risk,” the report maintained.
The government has left the exchange rate to market forces, meaning that if the exchange rate increased further it would make exports more expensive and less competitive, while if it decreased it could increase the debt burden on the country.
Pakistani currency shed its value by 39 percent over the last two years after the PTI government was formed, causing a steep rise in the foreign debt.
If exports were not significantly raised or if foreign remittances did not show a robust increase or if foreign investment remained insignificant then Pakistan has to fall back on foreign loans to shore up its foreign reserves to avoid yet again a balance of payment crisis.
This poses a serious challenge for the Pakistani economic managers, who need to devise a viable and innovative strategy to explore ways for earning more foreign currency.
Prime Minister Imran Khan and his ministers have for long been boasting of slashing the current account deficit from the whopping 20 billion dollars to three billion dollars, though this high amount was mainly caused by the one-time import of machinery for the China-Pakistan Economic Corridor projects. And much of that import bill had automatically slashed while the government also reduced it further by curbing imports of luxury items.
Ideally, the current account deficit should have been controlled by boosting exports which so far have not registered any significant progress.
The government, therefore, now needs to give its complete attention to substantially increasing exports to a level that ultimately reduces chances of borrowing expensive foreign currency loans.
The industrialists and business community have been urging the government to find an out-of-box solution to the problems faced by them, so they can work on increasing the exports.
Undue reliance on old and traditional methods and lack of innovative incentives are unlikely to spur any improvement in the existing export situation in the country.
The government needs to initiate wide-ranging talks with the exporters and take their suggestions into account while devising a strategy. Unless all stakeholders are taken on board on policy as well as during planning stages, one cannot expect any change for good in the current situation.
One of the ways to boost exports by the government is to give incentives to industrialists and exporters who want to diversify their products and introduce innovative methods to make these products more competitive in the international markets.
Moreover, young and talented entrepreneurs should be encouraged to try their luck in new ventures. They should be given priority in getting government incentives. The status quo has to be broken to allow fresh and new blood to use their talent for the development and progress of the country.
The writer is a senior journalist based in Islamabad