PBC questions govt 'ambitious' export plans

The Pakistan Business Council (PBC) has expressed surprise over the government’s ambitious plan to boost exports by 113% to $65 billion within three years. The PBC raised concerns that exporters were not consulted and questioned the measures taken to achieve this target.

In a letter addressed to Federal Minister for Commerce Jam Kamal Khan, Ehsan Malik, Chief Executive of PBC—a business policy advocacy platform representing leading corporate and business groups, including foreign ones—doubted whether the three-year export target is achievable without developing new export products through fresh investments and finding new markets.

The letter states that the government, including the Ministry of Commerce, has set an ambitious export target of $65 billion to be achieved in three years, representing a 113% increase over FY24 and contrasting sharply with the International Monetary Fund (IMF)’s much lower $37.2 billion forecast. “We at the Pakistan Business Council have significant concerns with the target-setting process, which we believe are crucial to address,” the letter reads.

According to State Bank of Pakistan (SBP) data, the country’s export of goods surged 11% to over $30 billion in FY24, ending June 30, 2024. However, PBC argues that sustainable growth in export earnings and import substitutions is essential to reduce reliance on foreign debt and address the recurrent balance of payment crisis. “We firmly believe that exports are the most sustainable way to manage the balance of payments,” Malik wrote.

As a leader of the business advocacy platform, Malik raised 11 points on the export target before the minister and the federal government. The letter highlighted that the export target does not assess the impact of the federal budget 2024-25, high energy tariffs, and regional uncompetitive exports.

The letter indicates that to the best of PBC’s knowledge, exporters were not included in the group that deliberated on the export target.

“We also understand that the group did not comprehensively review export competitiveness with Bangladesh, India, and Vietnam. In particular, concessional funding and export incentives were not factored.”

The letter questions whether the quantum of investment required to broaden the export basket and geographic reach was considered and whether ways to incentivise and fund this investment were discussed. The information available to the platform lacks clarity on the aspiration to add value to existing export lines, develop new lines, and achieve geographical expansion. It is unclear if the $65 billion target is gross or net exports, the latter accounting for imports required to generate exports.

PBC wonders if the export target envisions the indigenisation of presently imported materials or incentives for new exporters or exports to new markets. It remains unaware if the need for an industrial policy was considered to sharpen the focus on comparative advantage.

The letter further raises questions about renegotiations of the China-Pakistan Free Trade Agreement and other ways to secure improved market access. It also questions whether Pakistan’s carbon footprint was factored into the export ambition, given the reliance on fossil fuels and the EU’s border carbon tax. Additionally, it inquires about plans to meet the EU’s conditions for the continuity of the GSP Plus Programme.

Malik stated that PBC would be grateful if the government and the ministry could share the basis on which the export target has been set, outline how the government expects to support this ambition, and what it realistically expects the private sector to do to achieve it.

In particular, the Council seeks to understand how the policy framework will differ from the past and how and when the government intends to take exporters into confidence on the export strategy.