Exports likely to fall $3b from last year’s level

Published: January 16, 2012
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" Exporters got a
lukewarm response
at the world’s largest
textile exhibition
recently because of
underperforming
industries due to gas cut,"
Former president of the Karachi
Chamber of Commerce and
Industry Anjum Nisar.

" Exporters got a lukewarm response at the world’s largest textile exhibition recently because of underperforming industries due to gas cut," Former president of the Karachi Chamber of Commerce and Industry Anjum Nisar.

KARACHI: The export target is under threat this year as shipments are likely to be $3 billion less than last year’s level of $25 billion because of energy shortages and resultant industry and labour inefficiency, default on loan repayments and India’s edge in the global market following around 16 per cent depreciation of its currency.

A somewhat similar scenario was portrayed by Trade Development Authority of Pakistan Chief Executive Tariq Puri last week when he said that despite performing well in first five months of the current fiscal year, exports might fall in coming months, the reasons being energy shortages and a sharp decline in cotton prices in the international market.

According to figures released later in the week, exports grew only four per cent to $11.3 billion in six months (July-December) of 2011-12. On the other side, imports jumped 19 per cent to $22.7 billion, leaving a deficit of $11.5 billion.

“Compared to last year, average exports have gone below $2 billion this year and going by the average total exports will be around $22 billion keeping in view a host of impediments faced by the industry,” said Anjum Nisar, former president of the Karachi Chamber of Commerce and Industry. Imports, however, are expected to increase to $45 billion by the end of the year in June, leaving a trade deficit of $23 billion.

Nisar said Pakistani exporters got a lukewarm response at the world’s largest textile exhibition – Heimtextil – in Germany recently apparently because of underperforming industries following suspension of gas supply in Punjab and power outages. “Some industrialists have even defaulted on loan repayments in recent months after closure of manufacturing units or running sharply below capacity due to energy problems.”

Besides the energy crisis, economic weakness in the European Union and the United States – the major export markets of Pakistan – has slowed down demand from the importers.

Nisar said the hefty depreciation of the Indian rupee had provided an edge to Indian exporters in the international market while “power outages and gas suspension have crimped our industries and affected efficiency of workers.”

The government, on its part, says it is working to cope with the energy crisis which will end in a few years. In an effort to give a boost to trade, it has signed free trade agreements with China and Malaysia and is expected to ink a preferential trade agreement with Indonesia this week.

“The government should pay more attention to reaching trade agreements with developed countries which have expertise in technology and engineering goods and can provide heavy machinery to modernise our industries,” said Khurram Schehzad, Research Head of InvestCap brokerage house. He particularly mentioned the agricultural sector which should be equipped with state-of-the-art technology and training of farmers to prop up the economy.

He pointed out that exports of the country mainly depended on outside factors, like the increase in cotton prices in the world market last year, and called for increasing competitiveness and going for diversification of exports, which mainly rely on textile. Industries like information technology, pharmaceutical products and leather goods have a potential to make great strides in the international market.

There has also been stress on lobbying and better and aggressive marketing of products in the world market to improve country’s exports. “If we improve quality of our products and export orders are met on time, then more buyers will come and rely on our products,” he said.

Published in The Express Tribune, January 16th, 2012.

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Reader Comments (15)

  • Cautious
    Jan 16, 2012 - 5:29AM

    If you had a choice between buying a product from someone you liked vs someone you didn’t like —- who would you choose? Your largest export markets happen to be the people your picking a fight with — probably not the brightest thing you can do from a pure economic perspective.

    Recommend

  • Jan 16, 2012 - 8:30AM

    Hw can this be….? We’re the textile export superpower, i’ve seen our textiles being rated the best as compared to poor quality Indian trash….our hala products are a rage in Islamic countires and dont even get me started on Indian rice….all we need is one good export year and we can easily beat Indian numbers by a long shot….that is our capability…and am not even talking of our infinte gas and coal export potential….we’re a land richer than KSA thanks to AllahRecommend

  • latif taseer
    Jan 16, 2012 - 9:02AM

    @cautious is right we shouldnt be exportin
    g cotton or finished products to US or europe.Recommend

  • khan
    Jan 16, 2012 - 9:18AM

    free trade with china and malaysia… a recipe for doom as these countries are decades ahead of us in all front of trade and they will eat us up. Already the chinese FTA have almost destroyed our small and medium industry.

    Recommend

  • Karan
    Jan 16, 2012 - 10:32AM

    I liked the sentence “INDIA’S EDGE IN THE WORLD MARKET”. :) and that edge is going to get more and more wider

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  • You Said It
    Jan 16, 2012 - 10:54AM

    @Aqeel Ahmed:
    we’re a land richer than KSA thanks to Allah

    Wow I’m impressed. What country do you live in? Can I get a visa?

    Recommend

  • India
    Jan 16, 2012 - 11:30AM

    @Aqeel Ahmed:

    India’s export is $ 300 billion. read some economics. don’t be fool.

    Recommend

  • Syed
    Jan 16, 2012 - 1:05PM

    @Aqeel Ahmed

    Sorry but you’ve been brainwashed by the likes of Zaid Hamid.

    What Pakistan exports in a year, India exports it in a month.

    Recommend

  • let there be peace
    Jan 16, 2012 - 2:10PM

    @Aqeel Ahmed:
    ….we’re a land richer than KSA thanks to Allah

    That is holy ancient land of Meluha, thanks to lord Shiva

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  • let there be peace
    Jan 16, 2012 - 2:16PM

    I meant Pashupatinath of Harappa and Mohenjo-Daro

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  • Falcon
    Jan 16, 2012 - 9:19PM

    @Cautious:
    I think you missed the point. Markets are driven less by politics and more by the bottom line. When our input costs are rising because of poor energy and institutional infrastructure, even the best relationships in the world can’t help because the goods are simply too expensive to buy for any major importer who has access to substitutes.

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  • Abu
    Jan 17, 2012 - 12:01AM

    I don’t understand how can India gain advantage from deprivation of their currency value by 16%???, one US dollar is equal to 50 Indian rupees, and one US dollar is equal to 90 PKR and still Pakistan have an huge edge over India if the value of currency is considered, because the US have to pay lesser dollar to buy products and services from Pakistan compared to India, but still India’s total export is more then 360 billion compared to Pakistan’s 30 billion, so the reason for their 360 billion export is their superior goods and services, and Pakistan can only compete with India if emphasis given to improve the standard of goods and service offered to world…But on the other hand media is feeding wrong information that India’s currency is deprecated so they sell more, so people of Pakistan live in illusion that India and Indians are useless and we are superior, one such example is the “Aqeel Ahmed” – message @ We’re the textile export superpower, i’ve seen our textiles being rated the best as compared to poor quality Indian trash…

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  • Babloo
    Jan 17, 2012 - 12:09AM

    @Abu, you are right. However if deliusional thinking makes the pain bearable for some, please don’t deny them their delusions. May be thats all there is left.

    Recommend

  • Javed
    Jan 17, 2012 - 1:00AM

    We need to move up a notch from selling raw cotton. Raw material will always be cheap, finished goods and products always sell for more.

    Recommend

  • Tony Singh
    Jan 17, 2012 - 4:43PM

    @Aqeel Ahmed:
    All gas and no substance. Isn’t it better you showed something It would be better if you worked on your products rather than calling other country’s product “thrash”. because whether you like it or not, their “thrash” sells.

    Recommend

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