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January 11, 2021

Sustainable exports growth must be real target: Razak

National

January 11, 2021

ISLAMABAD: Adviser to Prime Minister on Commerce and Investment Abdul Razak Dawood has said the real target for the country is to achieve sustainable growth in exports, which can be attained only if the trajectory of growth remains at higher side for the next 10-15 years. Talking to The News here on Sunday, he said: “Sustainability in exports is the only recipe to cope with the economic miseries of Pakistan, as industrial activities for exports in the country will help ensure maximum jobs in the country, increasing the living standards of the people.”

The country’s exports increased by 4.9% in the first half of the current fiscal despite adverse impact of the first and second COVID-19 waves. World’s major economies shrunk mainly due to the deadliest COVID-19 wave, but it is Pakistan that showed tremendous performance in increasing the exports whereas the regional competing economies of India and Bangladesh remained in the negative zone. “So much so that some sectors of economy, which never performed for their share in the exports, became vibrant such as cigarettes export for the first time.

“The jute industry, which remained docile in the past, has also coming up for exports and so far it has exported products worth $7 million.” He said exports to China increased by a whopping 92.5% to $260.49 million in Dec 2020, from exports of $135.31 million in Dec 2019, showing the trade under FTA-II has started yielding results even in the presence of COVID-19.

Dawood said that exports to the USA in the same month surged by 27.2%, the UK 47%, Germany 37.6%, Netherlands 37.5%, and to Indonesia by 151.6%. The PM adviser said the massive increase to Indonesia is the result of a decision taken by the Indonesian government, which unilaterally facilitated Pakistan and extended reduction in duty on 20 items. “Indonesia has been fair to Pakistan.”

Likewise, the country’s export, he said, to Belgium also increased by 32.8%, Russian Federation 63.2%, Poland 28% and export to Australia surged by 31% in Dec 2020. However, he added, there were some countries where the country's exports remained not up to the mark, and showed a negative trend. He said the commerce ministry was currently doing an analysis as to why exports to such countries had gone down. Dawood said: “The dilemma of the country is that if one year goes well in terms of exports, the other year not. And to cope with this very issue, the government needs to maintain pro-export incentives, which it has extended to the industry.

“This will help the country to harness sustainability target for which there is a need to acquire perpetual export growth for the next 10-15 years.” However, the advisor said, there were still huge challenges for the government which needed to be resolved once and for all for attaining sustainability in exports. “Within the country’s economy, we have low hanging fruits to stimulate exports if we focus more on pharmaceutical, food processing, IT, and engineering sectors. “The industry belonging to cutlery, washing machines and surgical has the extensive potential to increase exports of the country.” The adviser said the government had started reducing the Customs Duty on raw materials, which is used in Pakistan’s industry for producing the export products. Though the Federal Board of Revenue (FBR) comes up with the position arguing it will bring down the revenue, but the study which the commerce ministry got it done, says the revenue increases when the duty on raw material is reduced. Whenever the duty on raw material decreases, the industrial activities gain momentum and revenue collection also increases.

He said the last Economic Coordination Committee (ECC) meeting slashed duty on 152 tariff lines of the chemical industry by waving off additional duty imposed on the said items. If the practice of reducing the Customs Duty goes on, which started from the two budgets of 2018 and in 2019, the export would keep going. Dawood, while quoting the example of jute industry, built his argument saying that it was unattended, but the government facilitated it and extended to it zero duty, which resulted in surge in exports of jute products by up to $7 million, which is far bigger than the export of Bangladesh and West Bengal.