According to a recent press report, representatives of trade and industry had expressed their concern over the rising imports and ballooning trade deficits. According to these representatives, even those items which are produced locally such as biscuits and confectionary, shoes, ready-made garments and drinking water etc. were being imported, as a result of which Pakistan had become an import-oriented economy. According to these representatives, rising imports are hard-hitting the local industry and the same had pushed the trade deficit up to an alarming level, but the no action had been taken so far to contain the issue. The representatives of trade and industry were of the view that the government should, at least, disallow import of those goods which were produced locally, to save the local industry from total collapse.

The government’s views about the rising imports, however, appeared to be a little bit different. The economic managers had stated on many occasions that when the economy was growing, increase in imports and trade deficit was a normal phenomenon. The officials were not so much concerned over the growing trade deficit, at least, so far as the net factor income from abroad showed a surplus and the balance of payment (BOP) position remained satisfactory.

Over and above all that, the rising imports had made the achievement of the tax collection target possible in recent years. Without a sustained increase in the import duty receipts, the CBR would find it extremely difficult to meet the revenue collection target, which was being raised drastically year after year.

The government had, of course, been trying to boost the exports for which it had announced a number of incentives in the last two trade policies. However, the exports had remained sluggish and the same registered an increase between 3 and 4 per cent only in 2006-07, while the export of a number of traditional items such as leather goods, sport goods and woollen carpets etc. had registered decline during the year.

Why were the exports not picking up? According to manufacturers and exporters, this was because of the higher cost of doing business, resulting from higher cost of electricity and other utilities and higher interest rate etc. However, a number of steps to reduce the cost of doing business for the exporters had been taken, but the same failed to work so far.

While the higher cost of doing business could be partly responsible for keeping our exports at a lower level, there were other factors also, behind our inability to increase them at a faster pace. Some of these factors were lack of competitiveness, low quality and high cost of indigenous products, lack of innovation and research, lack of highly skilled workers, lack of regulatory environment and lack of aggressive salesmanship etc.

During the last few years, manufacturers and exporters the world over had worked hard to adjust themselves according to the high international standards and market requirements regarding quality and design etc., but manufacturers and exporters in this country did not take the matter so seriously.

As a result, we lag behind other countries to-day and lack the ability to compete with more competent players in the international market.

The representatives of trade and industry complain that the local market is flooded with all sorts of imported goods, which is affecting the local industry adversely. However, this is because local manufacturers are unable to meet the local demand by producing quality products at a lower cost. For the same reason, local exporters find it difficult to increase their exports to the international market.

According to a recent press report, the European Union (EU) imposed restrictions on import of fish from Pakistan, because one of our export consignments was found contaminated. The industrialised nations such as EU, US and Japan, which are our leading trade partners, attach utmost importance to hygienic standards and they do not allow any lapses in this regard, as the same can jeopardise the health of their people.

Even in Pakistan, quality conscious customers prefer to buy Nestle food products such as Nestle plain yogurt and Nestle mineral water, because of the standard quality and reliability of its products. Local manufacturers must improve the quality and reliability of their products to be able to compete with all sorts of players in the domestic market.

While the local pharmaceutical companies in have failed to establish themselves and gain a respectable position in the market, India’s drug maker, Ranbaxy Labs have become a leader in countries like Nigeria and Brazil and a top supplier in most parts of Europe. At the same time, it had about 58 generic drugs awaiting the approval of FDA in the US, sometime ago. Hard work, innovation and research and a regulatory environment ensuring the quality of drugs in India has obviously made the difference.

Business Week, in one of its recent issues, had named 25 companies from the developing world, which appeared to have the potential to emerge as new multinationals. Six of the 25 companies are from India namely Infosys Technologies, Tata Consultancy Services and Wipro (for IT services), Ranbaxy Labs (for pharmaceuticals), Mahindra and Mahindra (for tractors and autos) and Tata Motors (for autos). Seven of the 25 companies are from China (including CNOOC for oil and gas and China Mobile for telecom services), while the remaining 12 companies are from Mexico, Brazil, Russia, Turkey, Egypt and Hong Kong. None of the 25 companies is from Pakistan.

What had helped these companies to rise to their present respected status? Certainly, it was hard work, honest competition and an endless struggle to improve quality and cut costs. Many of these companies had been able to survive amid stiff competition in their own domestic markets which taught them to make profits at considerably lower prices.

As compared to the aforesaid companies, the local industry in Pakistan had mostly flourished in a protective environment marked by higher tariffs and import restrictions until a short time ago. As a result, the culture of competition could not develop in this country. Instead of competition, the industrial scene is characterised by monopolies and cartels.

Sugar and cement are well-known examples. In the circumstances, the urgency to improve quality and cut costs had never been felt by our manufacturers. Obviously, it would not be easy for the local industry and exporters to promote their products in today’s international markets, in the aforesaid situation.

A step in the right direction has been taken by formulating a plan to upgrade small and medium enterprises (SME), seeking China’s cooperation and collaboration for manpower training and initiating a programme in the country for skill development. However, these steps may not be enough and a number of other steps may have to be taken if the government is really keen to realise its medium and long-term GDP growth and export targets.

What we need most urgently today is the diversification of our export items and addition of one or two high-ticket items to the list of exportable commodities.

The dream to raise the export earnings to $50bn can not materialise by exporting agricultural goods, textiles and a few SME products like sport goods, woollen carpets and surgical instruments etc. We will have to add one or two high-ticket items to the list, in order to achieve the objective.

Utmost priority needs to be attached to the quick development of engineering and IT industries, in order to boost our exports. In particular, development of engineering industry is a necessity since local demand for machinery is also increasing day by day and we can not go on importing machinery for ever. Thus, development of the aforesaid industries will help in export promotion as well as import substitution.

Pakistan is already manufacturing a large number of engineering products, ranging from electric bulbs and fans to tractors and automobiles.

Government may develop these products and expand the list further, with a focus on export- orientation. In the same way, efforts may also be made to boost the export of IT products.