However, independent economists do not agree with the government and maintain that one of the major reasons for declining exports is that Pakistan does not have surplus production and at the same time there is no real diversification of products and their value addition. The government had fixed its export target at $17.1 billion in 2006-07 but could not achieve it as it was short of about $1 billion. Similarly, imports target was set at $28 billion and it ended up with huge over $30 billion. Now for 2007-08 the government has set an export target of $19.2 billion while imports target was announced to be $32 billion. And this will again create problem as tough competition was being given to the Pakistani products by those of the Chinese, Indian and Sri Lankan because of being meeting the i n t e rna t iona l qua l i t y standards. Unfortunately, Pakistani products especially those of textiles sector have not been able to make their place in the international market. The business community is partly blamed for this situation. However, the government too is being criticised for not ensuring quality control with the result the country’s exports are falling. The government does not tire claiming all the time that Pakistani exports which could not cross $10 billion psychological barrier during the last 40 years, have ultimately risen to over $17.1 billion in the last financial year. But its critics maintain that unless both the exporters and the government do not fulfil their responsibilities, the country’s exports cannot be enhanced substantially.

Commerce Minister Humayun Akhtar Khan says that since the Trade Promotion Authority has been set up, a number of issues including diversification of products and value addition will be ensured during the current financial year which will help the government to achieve its export targets. The government officials also say that Pakistan has recorded a laudable export performance during the last several years, with export growing at an average rate of almost 16 per cent per annum over the last four years (2002-06). Beside sound macroeconomic policies pursued by the government the strong and sustained growth in world economy also contributed to the impressive export growth. Despite further improvements in the international trading environment, Pakistan’s export growth witnessed abrupt and sharp deceleration to less than four per cent in the last financial year after growing at an 16 per cent up till June 2006. Pakistan’s import growth on the other hand, slowed to a normal level in 2006-07 after surging at an average rate of 29 per cent per annum during the last four years. Four years of strong economic growth strengthened domestic demand which triggered a consequentional pick in investment. The rise in investment demand led to a massive surge in imports. Though Pakistan continued to maintain its strong growth momentum in the last financial year, import growth has decelerated to a trend level for variety of reasons including the pursuance of tight monetary policy during the year. The s lower growth imports are likely to improve trade deficit as percentage of GDP compared to last years.

Generally, it is said that Pakistani exports are highly concentrated in a few items namely cotton, leather, rice, synthetic textiles, sports goods and surgical instruments. These five categories of export accounted for 77.2 per cent of total exports during 2006-07 with cotton manufacturers alone contributing 61.5 per cent, followed by leather (4.5 per cent), rice (6.6 per cent), synthetic textile (3.0 per cent) and sports goods (1.6 per cent). The degree of concentration has changed little from last financial year. Pakistan’s exports are highly concentrated in few countries including the United States, United Kingdom, Germany, Japan, Hong Kong, Dubai and Saudi Arabia. These countries account for onehalf of Pakistan’s exports with U.S alone accounting for 28 per cent. Therefore, Pakistan needs to diversify its exports not only in terms of commodities but also in terms of markets. Heavy concentration of exports in few commodities and few markets can lead to export instability. Like exports, Pakistan’s imports are also highly concentrated in few items like machinery, petroleum and petroleum products, chemicals, transport equipment, edible oil, iron & steel, fertiliser and tea. These eight categori es of imports accounted for 75.5 per cent of total imports during the last financial year. Among these categories, machinery, petroleum & petroleum products and chemicals accounted for 57.7 per cent of total imports. Concentration of imports remained, by and large, unchanged over the last one decade. Pakistan’s imports are highly concentrated in few countries. Over 40 per cent of them continue to originate from just seven countries namely, the USA, Japan, Kuwait, Saudi Arabia, Germany, UK and Malaysia. Saudi Arabia is emerging as a major supplier to Pakistan followed by the USA and Japan. The need of the hour is to increase exports and reduce imports by striking certain balance and by introducing innovative policies by the government. Exporters generally maintain that Pakistani rupee is overvalued and needs to be lowered to increase exports. However, the government is not ready to accept this argument and asking them to improve their products so that they could get better price in the international market.