An open policy

Pakistan has always followed a liberal import regime. It imports almost every finished product – from non-essential items to luxury items. An amount of $8 to 9 billion is wasted on these frivolous imports. The focus of many economic experts seems to be solely on the export sector. In the short-term, exports cannot be significantly enhanced owing to paucity of exportable surplus. Gradual deindustrialisation over the years has made the country’s production capacity inelastic and cannot be quickly increased. The modernisation of farming, availability of sufficient water and quality inputs are indispensable to augment farm output. Manufacturing will increase when industrialisation is accelerated and right incentives are offered. Both are, however, time consuming process.

Exports can increase by a maximum of $4 to 5 billion if huge subsidy and other fiscal incentives are offered to make the products competitive by reducing the cost of production. A review of the liberal import regime is the key to reducing the large trade deficit and balancing the external account. With the threat of sanctions by the US, Iran has taken import curtailment measures and its government has very recently imposed a ban on 1,300 items to protect its balance of payment and its currency. Can’t we follow suit?

Arif Majeed

Karachi