Tapping the export potential
Exports are steadily on the rise. According to the data revealed by the State Bank of Pakistan, the growth in exports has been positive over the past 11 months, showing an average increase of 11 percent. This is a reversal of the trend that prevailed during July 2014 to April 2017. The exports growth has been consistently negative over that period. All major product groups showed a positive export growth during July 2017 and April 2018 over the same period FY 17.
Exports of food group rose by 31 percent and manufactured groups went up by 17 percent. From food group one item kinnow export touched a record high at 370000 tons in 2017-18 went up by 45000 tons in previous year. It fetched foreign exchange earnings of $ 222 million. There was also significant increase in the exports of un-milled wheat and sugar. Export of knitwear and ready made garments went up by 9 percent and 12 percent, respectively. If Pakistan implements the Bangladesh model of producing the finest quality of these products with technology improvement and the best human resource application, their exports can be significantly increased both in terms of quantity, quality and value. Not a single cotton crop is grown in Bangladesh but its exports from textile products alone are $ 27 billion, $ 3 billion more than the targeted total exports of Pakistan for the current fiscal year. The export of raw cotton surged by 39 percent and that of chemicals and pharmaceuticals also showed a satisfactory growth.
The commercial councilors, trade attaches and trade ministers posted in our embassies, particularly in the Latin American region countries, Central Asia, Baltic States, East European and African countries with bright prospects of exports did no efforts for diversifying the export market. The commerce minister is still in hibernation. Top export destinations for Pakistani products were the United States, the United Kingdom, China Afghanistan and Germany. Exports to the US stood at $ 3.18 billion, while to the UK they amounted to $ 1.47. Shipments to the US increased by 5.4 percent and to the UK by 10.6 percent respectively.
Interestingly, exports to Afghanistan showed a significant increase of 34.15 percent. Exports to China are estimated at $ 1.44 billion higher by 5.28 percent. Despite the rising tend of exports, which may help achieve the target of $ 28 billion in the fiscal year 2018-19, the imports are also on the upward trajectory. Cumulatively, imports increased to 55.2 billion in the past 11 months as reported by Pakistan Bureau of statistics. The current account deficit has reached to $ 33.9 billion. The monthly import bill has reached to $ 5.8 billion.
It is imperative that Pakistani manufacturers ensure the most efficient use of inputs obtained from domestic and international markets. Bulk of the raw material and intermediate goods should have the manufacturing facility inside the country to make for the losses that may accrue in its import from international market due to currency depreciation. Rupee is constantly losing its value against the major world currencies. The interbank rate of US dollar has reached to Rs. 119.15 and in the open market the value of one dollar has gone up to Rs. 121. Producers of consumer’s goods as well as intermediate goods must participate in the global value chain. This can help competitiveness of domestic production and consequently total exports of Pakistan. A vibrant domestic manufacturing sector for the raw material and intermediate goods is necessary to promote economic growth.
The International Trade Center of Export Potential Map suggests that Pakistan has an untapped export potential of 12.8 billion dollars. Exports to the current top destinations are below the available demand in their markets. Similarly, the most commonly exported textile products still have a significant untapped potential. Exports of gem and jewelry can be enhanced by their value addition. India is earning $ 4 billion from the exports of well cut and polished gemstones. It imports raw gem from Afghanistan and with value addition it earns billions of dollars of foreign exchange. On the other hand Pakistan is producing high quality of gemstone but its exports are stagnant at $ 100 million, mostly raw gem stones. The government has not facilitated the private sector to establish the gemological centers keeping in view the Jaipur model of India. Hopefully, the next government will focus on exploiting the untapped export potential of the country to overcome the alarming trade gape and encourage exports led growth of the economy.