The State Bank of Pakistan (SBP) report indicates steep fall of 73 percent to $579 million in the current account deficit in the month of July as compared with $2.13 billion in the same period last year. The exports have shown an increase of 10 percent to $2.233 billion compared with the value of exports of $2.012 billion in July last year. It the trend of falling imports and jumping up of exports continues during the current fiscal year, it will help the government to slash short term borrowings from multilateral donor agencies, banks and friendly countries to avert balance of payment crisis. It will also help achieve exchange rate stability.
The trade bodies are critical of the restrictive import policy as in their view it would impede economic activity and impact growth in exports. The point of view of business community is correct to greater extent as export products producing industries consume imported raw material and intermediate goods. Over the past five decades successive governments had no interest to work out comprehensive industrial policies to promote establishment of industries that produce raw material for export industries and import substitute manufacturing industries. In fact the industrial sector could not come out of shock of nationalisation of industries of 1970s in Z.A Bhutto government. A discouraging environment was created for the introduction of new technologies, their indegenisation by institutions of Research and Development, neglect of skill development, abnormally hiking tariffs of energy inputs moved away Pakistan from becoming a manufacturing economy and turned it into an importing economy, faced with bulging current account deficit.
The PTI government has completed one year of its tenure but formulation of industrial policy is still out of priority list. The composition of exports is heavily tilted towards primary commodities. Only four industries including textiles, leather goods, surgical items and sports goods export bulk of the value added products. The economic diplomacy is largely focused on acquiring short term loans and not on exploring new markets for the exports of primary commodities and value added goods. A few months ago a Malaysian trade delegation vested Pakistan and had meetings with trade bodies to apprise them of the available big opportunity of “Halal” red meat export to their $2.5 billion meat market. But no forward movement for the export of meat to Malaysian market is insight. The commercial councilors and trade ministers posted in the embassies abroad are not doing their job of exploring new markets for exportable goods and commodities from Pakistan.
There seems no rationale to delay the privitisation of 56 hemorrhaging public sector entities, which devour Rs.1600 billion every year from taxpayers’ money. If these white elephants are privitised then the savings thus made can be utilised on technology advancement of private sector industries which will enhance the comparative advantage of exports in the international market. Growth in exports cannot be sustained without technological advancement, skill development and provision of energy inputs at affordable price. These essential ingredients for the next phase of industrialisation to boost exports are still missing.