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September 9, 2020

Exports declining as govt ignores industrial sector: FPCCI

Business

September 9, 2020

KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) on Tuesday expressed concern over declining exports, which have fallen around 20 percent or $1.58 billion in August 2020, and urged the government to devise long-term policies to revive trade and industry.

The FPCCI said it should startle the economic managers, who claimed that the economy was recovering from the adverse effect of the turbulent period of post-corona slowdown. FPCCI chief Mian Anjum Nisar said the drop in exports during August called for out-of-the-box solutions for economic growth, as COVID-19 has adversely impacted the world’s economy as well as Pakistan’s trade and industrial sectors. According to data, Pakistan’s exports in August fell 20 percent in dollar terms, as compared to the same period last year. This dip comes after a surge in exports during July 2020, when COVID-19 restrictions were more stringent. Nisar said flooding in the country, especially in Karachi, has also affected overall industrial operations, indicating that the exports volume might not begin to recover in September, as economic activity was not expected to return to normal immediately. “Power tripping, slowdown in business activities, delay in transportation and hampering of port operations were some of the issues faced by the exporters due to the unprecedented rains across the country,” he added.

He urged provincial governments to upgrade drainage and sewerage infrastructure in business hubs of all cities, as it was outdated and dysfunctional, and the areas were prone to flooding each time there was heavy rain. “Rainwater enters the factories, godowns, shops and basements, damaging merchandise, goods, plants, machinery and raw materials etc,” he pointed out. Contrary to regional countries, Pakistan’s exports have remained stagnant during the past 40 years, and unless attention was paid to all factors that hamper industrial and exports growth, the country might not be able to achieve desired results. Some of the impediments to industrial growth include cost of production, poor governance, obsolete technology, lower productivity, lack of competitiveness, supply constraints, and energy issues. He said the government has already missed its annual export target for the first two years. For its second year, the economic managers had set the export target at $26 billion, which it later revised downward to $22.4 billion. For the current fiscal year, the export target was set at $27.7 billion, requiring 6.0 percent growth.

Nisar said the government has to formulate long-term and consistent policies for the revival of industry and improvement in exports that have been stuck in a downward spiral for a long time. He also urged for the timely refunds of sales and income tax, issuance of income tax exemptions on utility bills and resolution of issues faced by the industrial sector. He warned that weakening of rupee could move the country towards a huge trade deficit, which would increase the current account deficit again.

In the first two months of July-August, the exports also went down by nearly 4.0 percent, however, country’s trade deficit contracted to $3.4 billion due to shrinking imports. The trade deficit, which stood at $3.7 billion in the comparative period of last fiscal year, shrank to $3.4 billion during July-August of 2020-21. In absolute terms, there was a reduction of $307 million or around 8.0 percent in trade deficit in the current fiscal year. Overall, imports dipped 6.3 percent to around $7 billion during July-August.