Exports strategy: Exports play important role in the economic development of a country. The countries (China, Singapore, South Korea, Taiwan, Hong Kong, Singapore, Thailand, Malaysia, France, etc) which have export-oriented growth are now enjoying the dividends of their strategies. Government is taking every possible measure to check or fix the declining trends of exports. Prime Minister Shaukat Aziz has recently, approved a comprehensive strategy to increase the country’s exports from $16.5-17.5 billion in 2006 to $40-45 billion by 2013. It will be based on demand-driven strategy to enhance exports which have become the lifeline and a major mechanism to drive the economy, earn foreign exchange and generate employment.

Declining trends

No doubt, exports have more than doubled in the last seven years from $7.8 billion to about $16.5 billion but declining ratios of exports demands diversified but integrated policies to increase exports from the present 13 per cent to 15 per cent of the GDP. Only improved competitiveness and enhanced productivity will be critical to increase exports. Improvement of skills and improving the logistics chain trough out the country and with other regional countries of Central Asia, West Asia and Western China would play important role in achieving the targets of exports in the days to come.

Market accessibility

One of the main pillars of new exports strategy is to increase efforts to have more market accessibility. He said the government had launched a comprehensive economic diplomacy and has recently signed an FTA with China, which is a landmark as it gives the country access to a huge market. The government is also making efforts to conclude FTAs with the US and the European Union. The government is in the process of finalising the Reconstruction Opportunity Zones (ROZs) to gain access for the goods produced in the less developed areas to the United States on preferential basis.

Salient features

* Policy environment (investment friendly and business-friendly policies to encourage FDI and joint venture to enhance volumes of exports).

* Human capital development (High volumes of exports also demand easy availability of technical or skilled labour in the country. Government is considering to initiate mega projects to prepare technical workers in the country)

* Strengthening of physical and technological infrastructure (Both the inputs would be vital for achieving high ratios of exports)

* Improvement in logistics chain (national highways, mass transit systems, shipping and aviation play very important in securing high volumes of exports)

* Investment and trade facilitation (High ratios of domestic and foreign investments can play important role in enhancement of exports in 2007).

* Production of high quality products (Value-addition mechanism and exports of high valued products rather than agro-based commodities would make the real difference).

* Marketing of products (proper marketing strategies would be essential for high levels of exports)

* Consistency, stability and continuity of economic policies (continuity of macro-economic policies would be decisive factor for pursuing of high targets of exports and no doubt we have macro-economic stability which can be utilised in the days to come)

* Higher investment in manufacturing and agriculture (influx of FDI and local in manufacturing and agriculture can play very vital role in high exports in the days to come).

* Setting up of state-of-the-art infrastructure (availability of all related goods and services in the country).

* Technology support centers (guidance or consultancy centre for exporters and businessmen).

* Simplification of labour laws (dignity of labour laws and act upon on it would increase our productivity and profitability in international markets. Because we have already witnessed the allegations of "Child Labour" which reduced our exports in 1990s.

* Building of strong confidence between government, private sector and academia (trust-deficit and hiring of professional people can change the downturn trends into bounties of upwards exports in the days to come).

Current status/conditions

Pakistan’s share in world manufactured exports at 0.18 per cent is lower than it was in 1970: Pakistan ‘s total share in world trade which now stands at 0.15 per cent and has also not changed much over the last several decades. Our country is witnessing strong growth for five years (2000-2005), textiles exports slowed down last year it is going down and down. Textiles and clothing exports are the main sectors of declining trends of exports.

Pakistan is steadily losing market for its products in the 27-member European Union (EU) (26 per cent of the total/global exports and 17 per cent of the total/global imports) the single largest trading partners. Pakistan’s trade volumes with the bloc have not been keeping pace with the country’s international trade growth. According to latest figures of Commerce Ministry (2007) that the EU’s share in Pakistani global exports declined from 28 per cent to 26 per cent per annum, as exports to European countries came down to $3.83 billion in the fiscal year 2005 from $4.20 billion in the year 2004.

Comparative study

The overall exports during 2005 declined by 9 per cent, while exports of textile and clothing declined by 15 per cent; despite the fact that the EU’s import of these items increased by 7 per cent.

Rice’s exports

Pakistan’s export of brown rice to European Union (EU) member countries dropped significantly in the last two years in the wake of adoption of an imported DNA testing protocol. The export of brown rice to EU member countries dipped to 38,000 tons during the last year as against 90,000 tons exported in the previous year

Seafood exports

Although, seafood exports of the country set a new record in the last financial year, rising by 41.17 per cent to $196.15 million from $138.94 million but the its exports to EU has been declined.

Orange exports

Due to severe diseases many countries of EU and others have cancelled our consignments of oranges.

Latest trends of trade/exports

According to the latest figures of finance ministry statistics division the country’s trade deficit has been $8.899 billion during the first eight months (July-February) of the current fiscal against the corresponding period last year. Imports, which are on the high side for the last one-year, showed a growth of 9.95 per cent to $19.797 billion against $18.006 billion adding $1.97 billion in the total volume against the corresponding period of last fiscal. The data indicates that trade deficit has increased by 18.47 per cent to $8.899 billion as compared to $7.505 billion during this period.

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Jan 2007 Feb 2007 % growth

$1.197 bn (exports) $1.293 bn 8.24

$2.330 bn (imports) $2.572 bn 10.4

Trade deficit --------------- 12.67

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Conflicting emerging geo-political and geo-strategic scenarios and exports potential

The unfriendly bilateral ties with Afghanistan and intentions of sealing 1510 mile long border may slow the in and out flows of goods and services under the Afghan Transit Trade Agreement (ATT) signed in 1965. The government’s energy demands and future projections of gas supply or import from the central Asian countries would be at stake if relationships between Pakistan and Afghanistan are not reconciled in the near future.

The start of blame game between Pakistan and Iran and sealing of border of 750 Km would badly hit our FTA in the days to come and further slow down our projections of exports in the future. The expected US attack on Iran would badly hit the economy and our bilateral diplomatic ties.

The growing diplomatic pressures from the US would be dangerous for our drive to achieve high volumes of exports in the days to come. Religious extremism would be fatal for our economic prosperity because it creates fears and uncertainties among the potential foreign investors. It also discourages the brighter prospects of domestic investments because now the US has become our biggest trade partner. And the last not the least the delay in SAFTA would not be beneficial our region. Because the regional trade volumes would be badly hit.

Conclusion