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December 19, 2020

‘Pakistan can fetch $23bln from exports to China’

Business

December 19, 2020

KARACHI: Pakistan’s exports to China can increase to $23 billion only if the country gets one percent share in its supply chain through exporting raw materials and intermediate goods, a Prime Minister adviser said on Friday.

Adviser to the Prime Minister on Institutional Reforms and Austerity Ishrat Husain said the country needs to diversify exports and move towards new industries.

“Otherwise we will remain stuck to $25 to $30 billion exports,” Husain said addressing a webinar hosted by Karachi Chamber of Commerce and Industry. “If we can capture just 1 percent of Chinese market by providing components, raw materials, intermediate goods to Chinese supply chain, we can get $23 billion exports to China which is very favourably inclined towards Pakistan and they have allowed a lot of room through the FTA [free trade agreement].”

Husain said Pakistan is currently not taking advantage of the Chinese market and “we are only focused on chasing the European Union and United States where rates of growth are either negative or 1 to 2 percent while China and Asia are growing 5 to 6 percent and China has become the largest single exporter in the world.”

“We have to create incentive structure not only for five export-oriented sectors but also for any new sectors,” he said. “We have to diversify our incentive structure in order to encourage the new comers, new industries, new businesses and startups particularly in the IT sector which has huge potential.”

PM adviser said Pakistan has a very low investment and very low saving rates as 15 percent of investment can only result in 3 to 4 percent of growth rate but if the investment rate goes to 20 percent, the growth rate will improve to 5 percent.

Husain said industries must focus on improving productivity level which is very low compared to other countries around the world and that is also a reason for high cost of doing business.

Zubair Motiwala, chairman of Businessmen Group urged the government and political parties to segregate politics and businesses that is the need of the hour.

“Stop politicising businesses as whenever the businesses are politicised, they don’t bring fruits to anywhere. The economies that have made remarkable progress have actually done this by completely segregating politics and businesses,” said Motiwala.

Motiwala said frequent changes in policies kill the economy. Taxation, industrial, trade policies must be kept intact at least for five years.

“Consistency in policies and government’s support along with provision of an enabling and conducive atmosphere to investors are very necessary while the attitude of the bureaucracy also needs to be changed.”

Motiwala lamented over the non-implementation of energy tariff concessions to the industrial sector in Karachi.

“The decision has not been implemented in Karachi to date despite assurances given by lawmakers from time to time,” he said.

“The government gets 68 percent revenue from Karachi and 54 percent of exports take place from this city. There are no roads, no sewerage lines, no storm water drainage system, no cleanliness, poor law and order situation and many other problems and yet no attention is paid to resolve the most serious issues.”

Motiwala said exports from Sialkot stand at 4.5 percent, Faisalabad exports 18 percent and Lahore’s share stands at 22 percent and all these cities are receiving attention “but Karachi is ignored”.

“What happened to that Rs1 trillion {allocated for Karachi development], where it will be utilised, who are the partners, how the funds would be utilised and what would be the modus operandi,” he said. “We really don’t know.”