Comment: Strategic shift

LAHORE: Trade experts have since long been warning that an inward-looking business culture, one that is content to serve the domestic market and remain in a comfort zone, threatens the long-term competitiveness of our economy. 

They pointed out that exploring foreign markets may be uphill work as it demands perseverance, quality upgrades, branding, alliances and enduring commitment. But the reward is real and lasting. Many Pakistani businesspeople claim the economy has not yet ‘reached a stage’ to successfully compete globally. Yet, countries like Singapore, Thailand and Indonesia which were at similar or even lower development levels pursued export-growth and global brands, with value addition and reputation as their objective.

The experts point out that if our exporters continue as suppliers of global brands they would not earn much as the buyers give orders to lowest bidders. The global brands are flourishing. Without branding our products value will continue to drift away; without venturing beyond a handful of export destinations and products we remain vulnerable to shifts in global prices and competition. Moreover short-term gains through domestic sales do not substitute for the strategic gains of integration in global markets.

Pakistan’s exports of goods and services stand at around 10.4 per cent of GDP in 2024. Despite some nominal growth in export value (for example exports were $38.8 billion in 2024) Pakistan has not gained ground in the global market share; in fact the share has been shrinking. For example, a World Bank report noted Pakistan’s market share declined across manufacturing sectors over the past two decades.

Some newer sectors (e.g., non-textile manufacturing such as surgical goods) are featured in the export report for FY 2024. Pakistan and Turkey signed a preferential trade agreement (PTA) in 2022, effective from May 1, 2023, indicating attempts at expanding destinations.

Still Pakistan has lost ground in terms of global market share and competitiveness, particularly relative to regional peers. While exports in absolute dollar terms have grown, global trade has grown faster, so Pakistan’s slice of the pie has shrunk. Its exports-to-GDP ratio has declined from averages of around 16 per cent in the 1990s to about 10.4 per cent in 2024.

Regional competitors such as Bangladesh and Vietnam have achieved higher growth in export volume, value-added product mix and brand building. Pakistan remains largely stuck in basic manufacture and limited to a few destinations. We are still manufacturing predominantly commodity or low-end goods, Pakistan remains exposed. Relying mostly on a handful of exports and markets makes the economy vulnerable.

Many entrepreneurs prefer short-term gains. Changing that culture requires incentives, exposure, partnerships, and government-business alignment. Upgrading quality, supply-chain reliability, logistics, trade facilitation, and regulatory environment are critical. The World Bank flagged Pakistan’s export potential of almost USD 60 billion, limited by high tariffs, cumbersome regulation, costly energy and logistics.

There is a need to form a strategy in light of global shifts. Export strategy needs to be dynamic, not static.If our businesses remain inward-looking, comfortable in the domestic market, they forgo the long-term gains of integration, competitiveness, quality upgrades and brand recognition that global markets bring. Pakistan has not, over the past decade, gained global market share — rather, its presence has contracted relative to global trade. The concentration of exports in a few low-value goods, a narrow set of destinations and weak branding are all manifestations of the inward-looking mindset.

Yet all is not lost. The frameworks exist, there is recognition of the problem, and pockets of progress are visible. If entrepreneurs and policymakers now commit to the longer horizon, embrace global market-orientation, build brands, diversify, and take alliances, the long-term benefits that were spoken of can still be realised. The question is whether Pakistan’s corporate sector and policymakers will step out of their comfort zone and scale the uphill climb of global competition.