Instead of staying confined to exporting just textile products, Pakistan needs to diversify its exports and move towards sunrise industries as demand for their products is showing a double-digit growth, said Adviser to Prime Minister on Institutional Reforms Ishrat Husain.
Speaking at a webinar hosted by the Karachi Chamber of Commerce and Industry (KCCI) on Friday, Husain said failure to diversify exports would keep them stuck at $25-30 billion per year.
“If we capture just 1% of the Chinese market by providing components, raw material and intermediate goods to the Chinese supply chain, our exports to it will alone amount to $23 billion,” he said.
The adviser pointed out that China provided Pakistan with a lot of room to enhance trade through a free trade agreement.
According to him, Pakistan is not taking advantage of the Chinese market, which is close to it and instead it focuses on making space in the European Union and United States where growth rates are either negative or just 1-2%.
“On the other hand, China and some other Asian countries are growing at 5-6% and China has emerged as the largest exporter in the world,” he added.
Husain stressed that Pakistan had to create an incentive structure not only for the five major export-oriented sectors but also for emerging sectors as industries related to them were gearing up to start business and new ventures.
“If such businesses want to export, we should try to provide them with financing and tax rebate,” he said.
“We should also treat them in the same way as the five export-oriented sectors.”
The PM aide emphasised that diversification of Pakistan’s incentive structure would encourage new industries, businesses and startups, particularly in the IT sector, to enter the country.
“Pakistan is a consumption-led economy and such economies do not grow, hence the country has to focus on savings and investment,” he said.
In that regard, the adviser quoted the example of China where the savings rate stood at 50% while the investment rate was 45% and it was exporting capital to the rest of the world including the United States.
He pointed out that Pakistan had a low investment rate of around 15%, which could only result in 3-4% growth.
He was of the view that if the investment rate climbed to 20%, the growth would improve to 5%.
Moreover, he called upon Pakistani industries to focus on improving their productivity level, which was lower than other countries and also a reason for high cost of doing business.
Husain said that Prime Minister Imran Khan was keen to listen and resolve the problems being faced by the business and industrial community and in that regard he had been meeting businessmen almost every month.
Speaking on the occasion, Businessmen Group Chairman Zubair Motiwala said that frequent changes in policies killed the economy, hence business, taxation, industrial and trade policies must be kept intact at least for a period of five years.
“Pakistan is going through a critical time as the second wave of Covid-19, which is deadlier than the first one, has intensified sufferings of businesses,” he said.
“However, remittances have improved, textile exports have gained pace and performance of large-scale manufacturing industries has picked up, which are positive signs.”
He feared that the upsurge in textile exports might not last long, hence it was essential to devise a proper plan of action in order to deal with the post-Covid situation, when demand would go down by 35-40%.
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