LAHORE: The confidence, with which the economic ministers of Pakistan Tehreek-e-Insaf (PTI) government boast about a turnaround in economy, gives the impression that the diminishing production, increasing inflation, and rising unemployment rate are signs of buoyancy in country’s fortune.
None of the ministers shares the plan that would boost the economic credentials of the country. Are declining revenues an indicator of better future? Or the ever increasing non-development expenditure is the recipe for higher growth? Can steep decline in development expenses be termed as a revolutionary step to spur growth or the huge domestic and foreign loans indicate self sufficiency?
It’s time our economic planners woke up to reality and face challenges head on. The government should realise the economy right now was far more vulnerable than it was seven months back.
Given the current trend in exports, in this fiscal, it is unlikely to cross even $24 billion mark that is far short of commerce adviser Razzak Dawood’s estimate of $27 billion.
The years ahead are more challenging. There are many compliance steps that this government has to take before 2020 even to sustain current export level.
We have almost lost the US market as both the government and the private sector have carefully planned to shift the orders to other economies. We are now relying mostly on the European market. The European Union has announced that after 2020 they will have zero tolerance on dirty chemicals (ZTDC) polluting the water channels and sewerage pipes. After 2020 no imports would be accept from any economy that does not treat its polluted water. To achieve this each exporting industry would have to install a water treatment plant according to the specifications of the buyers.
The foreign buyers would require that water to be treated in such a way that all injurious chemicals and substance are fully neutralised. In fact the water should be clean enough to be used for agricultural purposes.
Another point worth noting is that in the next phase that would be in vogue in a year or two the exporting industries would be required to reuse the treated water in their processes.
Have we made any preparation in this regard? The answer is a big no. Some of our larger exporters have installed water treatment plants on their premises and would upgrade them according to the new conditions of the buyers.
But these large and medium exporters are few in numbers as most of the exports are conducted by smaller exporters that lack the finances to install a water treatment plant. They neither have the money nor the space to install these plants.
The cost runs into Rs20-Rs40 million. More than 60 percent of our value-added exports are in the hands of these small exporters. If they fail to make arrangements to treat hazardous water-polluting chemicals then they will have to close the shop after 2020.
A suggestion is the government should establish a common water treatment plant near the clusters where these small units are located. All these units should discharge their polluted waste in a common drain that is finally treated by the common plant.
The exporting industries would have to bear the recurring cost of chemicals used in treated the polluted waste.
They should be charged accordingly. On the other hand those that default on payments should be denied this facility, while keeping the foreign buyers in loop. No one will then default.
It is unfortunate that the issue of effluent treatment has been known to the successive rulers for almost two decades but no attempt whatsoever was ever made to establish common water treatment facility in any industrial estate in Pakistan.
As already stated the US market is drying out for Pakistani value-added apparel sector. If the trend is not reversed the exports would slowly fizzle out in the next few years. The travel advisory on visit to Pakistan that was earlier restricted to United States is now being applied by European Union economies as well.
This has effectively stopped the buyers from coming to Pakistan. The buying houses for American brands were shifted out of Pakistan long ago, now the European buyers have also relocated their buying houses to India and Bangladesh.
India was already denying visa to the Pakistani buyers that wanted to close deals with the buying houses established there. Now Bangladesh has introduced a more severe restriction. It is refusing visas to Pakistanis even on their Canadian passports. The noose is tightening against exporters from Pakistan and it is high time that the government to intervene.
Pakistan’s salvation lies in higher exporters and higher revenue both of which currently are under cloud.
