Daily Times

In June 2021, I wrote an article titled “Sustainability Mantra: Exports, Exports and Exports.” I was convinced back then that the only salvation for Pakistan’s growth was a dramatic increase in exports. But unfortunately, all previous governments and institutions have only ignored and misunderstood the real power, and the impact exports can have on a country’s economy. They have all focused on imports and on methods to pay the enormous import bills.

As identified earlier, Pakistan’s exports stood at 4.9 percent in January this year. However, I truly wanted to understand the current export dynamics and decipher the code that was changing the country’s export landscape. Who better to indulge in a commerce conversation than the undisputed guru of business and trade, Mr. Abdul Razak Dawood. I call this the Abdul Razak Dawood Exports Mantra or the ARD Exports Mantra.

He explained to me the true wisdom that has helped Pakistan in gaining its export momentum. Firstly, like any astute businessman, it was essential to catch the pulse of the business and identify the gaps that could be filled immediately. Thus, making the most of the US-China trade war, Pakistan was able to fill the void left by American exports. By only reacting to this situation intelligently, the government increased exports with China up to a staggering 34% $2.33 billion during the fiscal year 2020-21 compared to $1.74 billion in the previous financial year, going up by $586 million. A primary motivator behind this increasing export number is precise, achievable, and realistic export targets. The export target for FY2020-21 is $35 billion.

The government has decreased tariffs on raw materials to make Pakistani products more competitive in the international market.

Secondly, the Ministry of Commerce started reviving the stale or non-existing relationships with various trading partners. Consider the case of Central Asian countries, the fact that no previous government realized that by offering trade routes or using the most basic of commodities exchange formula, Pakistan would gain access to this landlocked region and benefit its industries. The cherry on the cake is the access to Russia; with our improving relations with CA5 states and Russia, Pakistan’s exporters can venture into business heaven. Pakistan-Russia bilateral trade witness a growth of 46% to $790 million. Now with the lifting of the ban on Pakistani Basmati rice, Russia’s interest in the Belt and Road Initiative, and Russia’s commitment to investing $1.7bn in the Karachi-Lahore gas pipeline – healthy export relationships are simply around the corner. Similarly, Uzbekistan has proven to be yet another trade win-win for Pakistan; $ 34.3 million worth of bilateral trade took place between the countries in 2020 as Pakistan’s exports to Uzbekistan went up from $17.4 million to $25.2 million in the last three years. Apart from the Central Asian states, Abdul Razak Dawood and his team have revived trading relations with the Netherlands, Indonesia, Bangladesh, Poland, Germany, and United Kingdom with bilateral trade worth $1.2 billion, $2.5 billion, $644 million, $308 million, 1.3 billion and 2.025 billion respectively.

Thirdly, tariff rationalization was a major milestone towards improving the ease of doing business and opening avenues for the business community. The government has decreased tariffs on raw materials to make Pakistani products more competitive in the international market. Another part of this strategy was the intentional control of “Intermediate Capital Goods,” Additional custom duty, and Regularity Duty and the formalization of tariff decisions through the Tariff Policy Board (TPB). The TPB team is responsible for analyzing export products’ complex structures and compositions and making effective recommendations to the National Tariff Board to ensure informed decisions are taken on the governmental level. The skeptics and the critics of this move must understand that Pakistan’s weighted average mean tariff of 12.7% is the highest amongst the top-70 exporting countries in the world. Compare this to the data of top-70 exporting nations, which revealed a weighted average tariff of 2.7%, the global average tariff of 2.6%, and the South Asian average of 5.9%.

Lastly, for the first time in the country’s history, I heard about boosting the trade through Graphical Indication (GI) tag items. Most people are unaware of the term GI tag, let alone the economic benefit for businesses and countries. GI Tag products are considered unique due to their geographical, cultural, or historical background. Fortunately for Pakistan, GI tag products are abundant and can be sold at a much higher price in the international market. These include Multani Mangoes, Swat peaches, Kashmiri Pashmina, Khewra pink salt, Sialkot sports, surgical goods, Sahiwal cattle, Sindhi Topi, and Ajrak, truck art, Chitrali embroidery, Gujranwala pottery, Multan blue pottery, Peshawari Chappal (sandals), Kalash dress and much more. It was only in 2020 that a GI Registration and Protection Act was introduced to protect these products. According to an estimate, the export earnings from only the top 21 GI tag items will increase to $3.5 billion per annum. The Geographical Indication tag can help revive the SME sector and put Pakistan on the world map for its uniqueness and exclusivity.

I remember penning down Pakistan’s export paradox, where it does well one year and completely misses the mark in the second year. However, my conversation with Abdul Razak Dawood reassures me of a positive outlook for exports, and if we can stick to the ARD Exports Mantra, who knows, Pakistan might turn its luck around.

The writer is a Special Advisor (Pakistan Institute of Management, Lahore operated under Federal Ministry of Industries and Production, Islamabad) and a Foreign Research Associate.