PBC urges policy shift to boost manufacturing-led exports
January 7, 2020
January 7, 2020
KARACHI: Without a strong manufacturing-led export sector, no nation of the size and at the stage of economic development in Pakistan has ever progressed and the time is high for a policy shift that favours these industries, Pakistan Business Council (PBC) said in a report on Monday.
“Yet the country has deindustrialised and lost its share in world exports and as an import-reliant and consumption-led economy, it has suffered from macro-economic imbalances which have led to 22 IMF (International Monetary Fund) programmes since 1958,” said PBC in a report titled “Contours of a National Charter for Exports”.
The report said as part of its “Make-in-Pakistan” thrust, the PBC had been advocating fundamental reforms to create jobs, promote value-added exports, and encourage import substitution.
“There is a dire need to conduct fundamental reforms to restructure the economy and strengthen domestic industry. Besides, the country needs to generate 2-3 million jobs for the youth who reach the age of employment every year,” the council said in its report.
It said Pakistan was deindustrialising prematurely, while the role of manufacturing in the economy had been declining and its rate of growth lagged far behind its neighbors in South Asia.
“Manufactured goods represent a lower percentage of Pakistan’s exports than of Bangladesh, primarily because we export commodities and relatively low value-added goods,” the report said. High energy and labour costs also impeded the competitiveness of relatively low value-added and heavily textile-reliant exports, it pointed out.
“About 70 percent of Pakistan’s value added exports are concentrated on the US and European markets, while energy shortfall, high cost and generally anti-manufacturing policies also discouraged the broadening of exports beyond textiles or of import substitution.”
The PBC report outlines the directions that a long-term export policy must take, “do nothing new” is not an option, and a “business unusual” approach is called for. The council recommended the export policy must be owned and monitored by the Prime Minister to give exports the importance they clearly deserve.
“And this policy or charter should be empowering rather than controlling, as many of the policies impacting business in general, and exports in particular, have been in the past.” The PBC in the report also stressed that Pakistan needed to invest to grow exports.
“This requires a shift from retrospective investment, meaning a percentage of realised export proceeds being utilised for this purpose, to prospective investment, requiring up-front investment in the well-premised strategies of higher and more diversified exports,” the council said. The report added that it also meant a more enlightened policy on buying and developing brands as also in allowing exporters to warehouse goods abroad and not being prosecuted for delayed remittances and bad debts.
Certainly, it said integrating into the fast growing online portals abroad would require a totally different approach than hitherto. “In a nutshell, there is need for a quantum change from a suspecting, doubting, untrusting, and controlling to an empowering and more risk-taking approach.”
There is a dire need to conduct fundamental reforms to restructure the economy and strengthen domestic industry. Besides, the country needs to generate 2-3 million jobs for the youth who reach the age of employment every year At the same time, the PBC said it recognised that in the past some unscrupulous exporters had misused policies. “It is a sad fact that “Made in Pakistan” carries a negative perception abroad,” it said adding, “this is not just due to poor and inconsistent quality but also unethical behavior of some exporters”. The PBC in its report strongly advised an in-depth engagement with responsible exporters to develop checks and balances leading to high standards of governance and accountability.
“Denying the formal, responsible, and accountable sector benefits of an empowered policy because of misuse by others in the past is not valid,” the PBC maintained.
Published in The News InternationalDownload