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Problem of falling exports

Problem of falling exports

The Pakistani exports have been on downward trajectory for the last four years of the Pakistan Muslim League-Nawaz government. Former prime minister Nawaz Sharif had announced an export package of Rs 180 billion to revive the export sector but it has yet to reach an implementation stage. Meanwhile, the replacement of Nawaz with Shahid Khaqan Abbasi has turned the tables and it will take the new prime minister some time to grasp the administrative affairs. The government has so far failed to identify the areas of concerns or bottlenecks in the way of export sector. There is recession in the international market, but it affected the economy of Pakistan alone. All the other regional economies are progressing and have increased their exports despite recession. Bangladesh’s exports are touching $40 billion, but the Pakistani exports have squeezed to $20 billion in 2017 from $25 billion in 2013. According to some experts, delay in the release of duty drawback claims have negative impact on the production capacity of the export units. Involvement of various government agencies in private sector affairs could be another reason for slow and underperformance of the manufacturing sector.

According to an official of the Federation of Pakistan Chambers of Commerce and Industry, the country will not be able to increase its exports until the government reduces electricity tariff for industries. The high cost of electricity has increased the cost of production and it is difficult for the local manufacturers to compete the regional countries. The PML-N government had increased the electricity tariff by 73 percent since it took the office in June 2013. The move reflected the worse scenario, pushing exports on downward trajectory. The unprecedented fall in the exports and increase in imports have doubled the current account deficits to around $12.1 billion in the previous fiscal year ended June 2017. The trade deficit has now jumped to a record $33 billion. Some economists hold unrealistic value of Pakistani rupee responsible for the slow process of exports. But this is not a valid reason as fall in rupee value will sink the economy to the lowest ebb.

Electricity is the basic component to run the wheel of industry but there are also other factors to be taken into consideration. The tax system needs to be revised and simplified to facilitate the business community. Pakistan is also not in good position in ease of doing business index and business friendly policies are the need of the hour. A multipronged strategy is required to increase exports and reduce trade deficit.