The true objective for the country is to achieve sustained growth in exports, which can be accomplished only if the growth trend for the next 10-15 years persists at a higher level. Export sustainability is the only formula for coping with Pakistan’s economic distress, as industrial export activities in the country would help ensure maximum employment in the country, thus raising people’s living standards. Despite the adverse effects of the first and second COVID-19 waves, the country’s exports increased by 4.9 percent in the first half of the current fiscal year. Mainly due to the deadliest COVID-19 wave, the world’s major economies shrank, but it was Pakistan that showed fantastic growth in increasing exports, while India and Bangladesh’s regional rival economies persisted in the negative zone.
And even though that for the first time, certain sectors of the economy that never qualified for their share of exports became dynamic, such as the export of cigarettes. The jute industry, that has stayed servile in the past, is also exporting and has exported goods worth $7 million since then. Moreover, at international front exports to China increased by a phenomenal 92.5 percent to $260.49 million in Dec 2020, from exports of $135.31 million in Dec 2019, indicating that even in the presence of COVID-1919, trade under FTA-II has begun to produce results. In the same month, exports to the US increased by 27.2 percent, 47 percent to the UK, 37.6 percent to Germany, 37.5 percent to the Netherlands, and 151.6 percent to Indonesia. The huge increase in Indonesian exports is the result of the Indonesian government’s decision to voluntarily encourage Pakistan and to extend the reduction of customs duties on 20 items. Indonesia has been generous to Pakistan. Similarly, exports from the country to Belgium also rose by 32.8 percent, 63.2 percent from the Russian Federation, 28 percent from Poland and 31 percent from exports to Australia in Dec 2020. There were, nevertheless, some countries where exports from the country were not up to the mark and showed a negative trend.
The country’s paradox is that, in terms of exports, if one year goes well, the other year does not. And the government needs to preserve pro-export incentives, which it has applied to the industry, to deal with this very concern. This will help the nation achieve the sustainability goal for which constant export growth for the next 10-15 years is essential. There are, nonetheless, still immense problems for the government that have to be tackled once and for all in order to achieve sustainability in exports. Pakistan has low hanging fruit in the country’s economy to stimulate exports, so it needs more emphasis on the pharmaceutical, food processing, IT, and engineering sectors. Moreover, the cutlery, washing machines and surgical industries have the broad potential to increase the country’s exports.
The ruling government has also begun to reduce the customs duty on raw materials used in the manufacturing of export goods in Pakistan. While the Federal Board of Revenue (FBR) claims that it would decrease revenue, the analysis based on the study of the Ministry of Commerce explained an economic phenomenon that revenue accelerates when the duty on raw materials is decreased. By providing economic rationale that whenever the raw material duty decreases, manufacturing operations make headway and the generation of revenue also increases. The last meeting of the Economic Coordination Committee (ECC) chopped duty on 152 chemical industry tariff lines by waving off the additional duty levied on those products.
The jute industry was overlooked, but the government encouraged and expanded it to zero duty, resulting in an increase of up to $7 million in exports of jute products
In order to conclude, it is proposed that the practice of reducing the Customs Duty, which began in the two budgets of 2018 and 2019, could continue to follow exports. The jute industry, for instance, was overlooked, but the government encouraged and expanded it to zero duty, resulting in an increase of up to $7 million in exports of jute products, which is much greater than that of Bangladesh and West Bengal. The above brief on Pakistan exports especially during the Covid-19 outbreak shows a promising glance both at the end of government and other major stakeholders involved. As discussed, the key to Pakistan sustainable growth is providing prime time focus on low hanging fruits which can strengthen the local business community by increasing innovative product production lines in Pakistan and also attracting the international economy. China economy success is a living example for Pakistan and many other developing economies as Chinese put major attention on producing low hanging fruits during their reforms and opening up. Until today, the global statistics provides a fair idea that how China captured the world export with this mantra. Pakistan needs business friendly policies by the government at multiple fronts to promote the nascent and emerging start-ups to provide motivation for boosted growth patterns and aiming sustainability in the long -run. It is said a well-hydrated body is symbolic to good health likewise a highly industrialized multisectoral economy is symbol of sustainable economy.
Special Advisor (Pakistan Institute of Management, Lahore operated under Federal Ministry of Industries and Production, Islamabad) and Foreign Research Associate (Centre of Excellence, China Pakistan Economic Corridor, Islamabad)