On how Pakistan can leverage President Trump’s trade policies through public-private partnerships
S President Donald Trump’s imposition of additional tariffs, especially on Chinese products, has created an unprecedented opportunity for some Pakistani businesses.
The protectionist policies have caused major ripples in the global market. However, for nations like Pakistan they have also opened up an unexpected opportunity to reposition, diversify exports and build resilient economic structures.
The solution hinges on comprehensive strategic planning, bold policy initiatives and proactive public-private partnerships. With a combination of private sector agility and infrastructure and regulatory support by the public sector, Pakistan can carve out a sustainable path ahead to cash in on the forthcoming global economic transition.
The Trump administration has imposed tariffs on more than $360 billion worth of products, ranging from electronics to steel, agriculture and textiles product. Countries like Canada, Mexico and European Union are also likely to be hit by the new tariff measures, especially with regard to steel and aluminum products.
This disruption of traditional supply chains has forced many firms to look for alternatives beyond China and initiating the so-called China plus One strategies. Companies across the globe have started diversifying their supply chains by shifting to Vietnam, Bangladesh and Indonesia.
Despite its great potential, Pakistan has missed the first wave of relocation. However, all is not lost. The global re-alignment is still going on. Pakistan can still attract investment, boost exports and modernise its industrial sector.
Pakistan has a number of competitive strengths such as:
Young workforce. With almost 60 percent of the population below the age of 30, Pakistan has a demographic dividend waiting to be harnessed.
Strategic location. Pakistan enjoys logistical advantage, being strategically located at the intersection of South Asia, Central Asia and the Middle East.
Infrastructure. The China-Pakistan Economic Corridor has enhanced road, rail and port connectivity. Infrastructure projects are also coming up in energy sector.
However, it also faces considerable challenges like:
Policy instability. Frequent changes in trade, investment and fiscal policies discourage investors.
Energy shortage. Despite recent improvement, unreliable power supply still affects industrial productivity.
Ease of doing business. Bureaucratic drag remains significant.
Addressing these challenges is not the responsibility of the government alone. It also requires efforts by private sector players.
PPPs are partnerships between government departments and private sector firms to finance, build and operate projects that have traditionally been delivered by the public sector. This model has worked globally; from the United Kingdom’s infrastructure projects to India’s energy sector expansion.
For Pakistan, PPPs can be a catalyst in:
Industrial capacity enhancement. Constructing modern industrial zones and export processing zones.
Logistics upgrade. Developing/upgrading ports, dry ports, warehouses and transport network to facilitate faster movement of goods.
Investment in technology. Setting up technology parks and innovation centres to attract electronics and information technology businesses.
Agriculture modernisation. Development of cold storage chains, agro-processing units and export grade farming clusters.
A robust PPP framework has the potential to attract international investors on the lookout for alternatives to China. Pakistan can thus emerge as a serious contender in the global supply chain.
In order to effectively utilise the opportunity provided by President Trump’s tariff measures, Pakistan has to have a multi-pronged strategy:
Policy reforms for investor confidence. The government has to establish a stable, predictable and transparent policy environment with special emphasis on:
Reducing regulatory drag
Providing tax relief to export oriented sectors
Ensuring protection of foreign investment through robust legal frameworks
Sectoral targeting. Pakistan must find and assign high priority to the sectors that were hit the hardest by the Trump’s tariffs on China. These include:
Textiles and garments. Pakistan already enjoys a comparative advantage in the sector. With minimal value addition and branding, it can replace Chinese products in Western markets.
Electronic assembly. Low-end electronic assembly can be relocated from China to Pakistan with proper incentives.
Agriculture and food processing. Chinese agricultural products are facing high tariffs. This has created room for Pakistani product in US and other Western countries.
PPP-based industrial zones. Instead of government-owned industrial estates, Pakistan can create new industrial parks through PPP arrangements, providing land, infrastructure and tax incentives in collaboration with private developers. Special Economic Zones under the CPEC may provide a model but need to be opened to more diverse private sector players.
Skill development and labour training. A competent labour force is essential for export sectors. Public-private partnership can establish technical training institutes, tailored in consultation with industry requirements, to create an employment force capable of modern manufacturing.
Marketing Pakistan worldwide. A strong marketing campaign highlighting Pakistan’s emerging industrial capability, investment opportunities and logistical benefits should be undertaken. Specialised investment road shows, trade fairs and diplomatic missions can place Pakistan on the map as a potential manufacturing centre.
Development of digital infrastructure. Supply chains today are as digital as they are physical. Public-private partnerships need to invest in fibre-optic networks, e-commerce platforms and fin-tech solutions that can seamlessly position Pakistani businesses in global value chains.
President Trump’s tariffs initiative has presented Pakistan with a unique opportunity to change its economic trajectory. A comprehensive strategy, policy consistency and effective public-private partnerships are needed to exploit its full potential.
A collaboration of the enabling role of the government and the efficiency and dynamism of the private sector can plug the void created by the changing global trade pattern and set up Pakistan for sustainable economic growth over the coming decades.
The world is shifting, the supply chains are adjusting and the markets are on the lookout for reliable substitutes. It is time for Pakistan to rise not as a fallback choice but as a global contender.
The writer, a public-private partnership consultant, can be reached atwaseemalitipugmail.com