Over the years, Pakistan’s export sector has faced numerous challenges, exacerbated by a lack of political will and strategic planning. Despite the efforts of various administrations, the country continues to struggle with stagnant export growth and a widening trade deficit. The recent insights provided by the Pakistan Business Council shed light on the pressing need for comprehensive reforms to revitalize the export sector and stimulate sustainable economic growth.

The Pakistan Business Council (PBC) has presented a five-year exports charter and import substitution plan to the commerce minister. Highlighting the crucial need for a comprehensive export policy supported by a well-defined industrial strategy under the prime minister’s leadership, the PBC emphasizes the sustainable growth and diversification of Pakistan’s exports. According to the Pakistan Bureau of Statistics, merchandise exports increased by 10.02% year-on-year in April, rebounding from a previous month’s slowdown. Export proceeds saw double-digit growth since December but slowed in March, with a 9% month-on-month decrease. However, April’s exports amounted to $2.35 billion compared to $2.14 billion in the same period last year. During the first ten months of the fiscal year, exports totaled $25.28 billion, indicating a 9.10% increase over the corresponding period last year.

On the other hand, the trade deficit surged by 180.58% year-on-year to $2.37 billion in April, attributed to a rebound in import growth while exports remained stagnant at around $2.3 billion. Nonetheless, the trade gap narrowed by 17.09% to $19.52 billion in the first ten months of the current fiscal year compared to the same period last year.

The IMF’s assessment of Pakistan’s Stand-by Arrangement projects export proceeds over the next five years fall short of the commerce ministry’s ambitious target of $100 billion by the end of FY28. The fund anticipates gradual export growth from $30.84 billion in FY24 to $39.46 billion in FY28.

During the caretaker government’s tenure, export earnings saw an increase due to various measures, including expediting sales tax refunds to exporters. The Federal Board of Revenue (FBR) disbursed Rs369 billion in the first nine months of the current fiscal year compared to Rs254 billion in the same period last year.

Despite the urgency, the commerce ministry is yet to announce a strategic framework for enhancing regional competitive energy pricing, facilitating working capital support, expediting refund payments, improving market access, and diversifying products.

Meanwhile, imports surged by 58.43% to $4.72 billion in April 2024 from $2.98 billion in April 2023, largely due to the government’s relaxation of restrictions, leading to a rapid increase in the import bill in recent months. The PBC underscores the need for a five-year national charter overseen by the prime minister, along with strong integration between export and industrial policies. While presenting a comprehensive list of initiatives and interventions to revitalize the national export policy, the council acknowledges that many of these measures have been known to successive governments over the past three decades. Nonetheless, it emphasizes the importance of trade diplomacy, competitive energy rates, a stable local currency, and import substitution strategies such as removing duties on industrial inputs, encouraging greenfield investments, and incentivizing investments in plant and industry.

The lack of political will to implement essential reforms over the past decades is a damning indictment of our leadership, particularly the political elite. Despite their claims of sacrificing for democracy, they have failed to show tangible progress in advancing the country. It’s astounding that we still lack a proper export policy, opting instead to export surplus production without strategic planning. We have yet to conduct thorough market surveys to identify destinations that align with our comparative production advantages.

The Pakistan Business Council’s emphasis on economic diplomacy for negotiating new market access is noteworthy but should not be groundbreaking. It’s a fundamental practice adopted by countries worldwide. Unfortunately, significant efforts to explore new markets were only made during periods of authoritarian rule. The challenge of financing SMEs due to banks’ reluctance to lend to them underscores a crucial issue. Despite repeated calls for formalizing SMEs, this vital sector still struggles to access credit, with little concern from the government. Revitalizing exports is a complex and time-consuming process that requires extensive market research, resource formalization, industrial restructuring, and effective diplomatic engagement.

However, Pakistan may already be running out of time to address these challenges. Even if the current solvency crisis prompts a belated realization of the importance of boosting exports, the government will likely struggle to implement necessary reforms promptly. Moreover, issues like energy costs and currency fluctuations, highlighted in the PBC’s recommendations, cannot be resolved in the short term.

While pursuing reforms is crucial, the PBC’s list of recommendations highlights the tasks left undone, contributing to the current predicament, rather than offering immediate solutions.

The recommendations put forth by the Pakistan Business Council serve as a roadmap for policymakers to navigate the complexities of the export market and steer the country towards a path of economic prosperity. However, time is of the essence, and concerted efforts must be made to address systemic challenges and unlock the full potential of Pakistan’s export sector.

The analysis of Pakistan’s export situation reveals a persistent lack of political commitment and strategic vision, leading to stagnation in export growth and a widening trade deficit. Despite occasional efforts, successive administrations have failed to address fundamental issues hindering the export sector’s development.

The Pakistan Business Council’s assessment highlights several key challenges and opportunities. Firstly, the absence of a coherent export policy underscores the need for comprehensive reforms supported by a well-articulated industrial strategy. Without such frameworks, sustainable export growth remains elusive. Additionally, the failure to conduct thorough market research and capitalize on comparative production advantages has limited Pakistan’s export potential. Economic diplomacy, crucial for negotiating new market access, has been neglected. Moreover, the financing constraints faced by SMEs reveal systemic issues within the financial sector, further hampering export expansion. Despite calls for reform, the government’s inertia in addressing these challenges has perpetuated the status quo.

Looking ahead, revitalizing the export sector demands a multifaceted approach. Long-term planning, market diversification, and investment in SMEs are essential. However, addressing systemic issues such as energy costs and currency fluctuations requires concerted efforts and may necessitate difficult reforms.

In conclusion, while the Pakistan Business Council’s recommendations offer a roadmap for reform, their implementation requires political will and decisive action. Failure to address underlying challenges risks further stagnation and undermines Pakistan’s economic prospects.