LAHORE - The business community has said that high trade deficit, surging by almost 39 percent to high of $23.39 billion in nine months of this fiscal year along with the massive debt burden, is the toughest challenge for the country, requiring extra efforts and prudent policies to boost exports, taking the economy out of the present mess.
They said the trade deficit was the result of soaring import bill, increasing because of the largest-ever rise in power generating, construction and agriculture machinery, which has risen by more than 85 percent and this gap could be bridged with foreign inflows and selling of non-liquid government assets from which it was earning nothing. Exports would ultimately pick up after adjusting to new realities, they added.
Lahore Chamber of Commerce and Industry (LCCI) former vice president Kashif Anwar said that major hurdles responsible for the decline in exports include energy crisis, lagging competitiveness, outdated machinery, inadequate investment growth and government inconsistent policies. The government will have to enhance exports in a short term by focusing on other than traditional exporting industries, including horticulture, rice, halal meat, gems, agriculture and food sectors etc.
Kashif Anwar said that despite several achievements of the government, including huge foreign reserves, better GDP growth rate, low inflation, speedy infrastructure development, people were finding it hard to believe the government declaration in respect of high GDP growth rate and increase in foreign exchange reserves because they were finding it hard to make both ends meet on account of unchecked increase in the cost of living.
He said the Rs180 billion export package announced by the government had not yielded any results to halt deteriorating export trends, as not a single penny had been released so far. The LCCI former VP said that due to low level of exports, the country’s external debt to export ratio had been projected at 440 percent by 2019-20, which is highly unsustainable. He said the doomsday scenario must cause alarm bells because economists’ projections were mainly based upon stagnant exports which would continue hovering around $25 billion by 2020. With increasing exports and maintaining reasonable pace of remittances, the country can avoid its woes on front of external accounts, he suggested.
GCCI former president Samee Ullah Chaudhry said the government should ensure availability of electricity, gas, diesel and water to industry and agriculture at low rates to facilitate reduction in prices of foodstuff and industrial products. He said the government should pay special attention to poverty alleviation and job creation because class hatred was likely to increase on account of growing poverty and unemployment.
Samee Ullah said the government should allocate funds for starting work on at least one big dam in the forthcoming budget to generate cheap hydle power for agriculture and industry to make them competitive for boosting exports. If this trend continues, deficit will reach $30bn by the end of June this year, which will be the highest-ever trade deficit in the country’s history.
Pakistan Readymade Garments Manufacturers and Exporters Association chairman Ijaz Khokhar has called for a new, aggressive marketing plan to enhance exports and get the maximum benefit of GSP Plus status.
He observed that the industry has been competing in the global market without support or a proper plan while major competitors like India and China were utilising all channels and resources. According to him, the association has already engaged the Japan International Cooperation Agency for technical assistance to develop technology to improve productivity. He demanded a reduction in input costs to keep the industry going.
Noted economist Dr Ashfaq Hassan Khan said the country had touched almost dangerous level of external balance of payment, forcing Pakistan to exceed its export to $50 billion for the first time in its history. He said that exports were hovering around $20 billion, touching trade gap to the level of $30 billion at the end of the year. It is unfortunate that the government has never taken notice of this dangerous situation and economic managers, including the finance minister, are responsible for widening external balance of payment, as government is not taking any serous measure to control this. This requires a long term strategy.
Former SBP governor Dr Ishrat Hussain said the industrial production base in Pakistan had remained unaltered for several decades. He said that Pakistan’s export structure had remained the same since 1990. Consequently, Pakistan’s share in the markets is declining while that of India and Bangladesh has doubled and tripled. He said that extracting concessions had become commonplace for the industry. Innovation and new start-ups are missing while R&D institutions and academic-industry interactions are almost non-existent.
FPCCI former president Mian Idrees expressed concerns over country’s increasing trade deficit and urged the government to take local stakeholders into confidence and remove the hurdles hindering the exports. The government should immediately implement the textile package, as exports are witnessing a continuous decline due to uneven policies, high cost of doing business and taxation. Former finance minister Dr Salman Shah observed the supply of electricity and gas had yet to be improved to increase industrial productivity to a desired level. He said the govt would have to play a major role to increase exports. He said the cost of doing business was very high in Pakistan and the govt should support private sector by giving services, essentially power and gas, on reduced tariff to boost the declining exports.
SALMAN ABDUHU
