Pakistan plans to boost exports to $61B by 2023
The Strategic Trade Policy aims at pushing the exports to $61.03 billion in 2023 from the present low base of $20.79 billion.
With an eye on tripling its exports to $61.03 billion and expanding the trade to the UAE-CPEC-Asean region, as well as its buyers in the US, UK and EU, Pakistan is going to launch its new Strategic Trade Policy 2018-23 in the days to come.
The new policy for next 5 years is now getting finishing touches at the Ministry of Commerce. It is planned to be launched in the next few days.
The Minister for Commerce and Textiles Mohammad Pervez Malik said the Strategic Trade Policy aims at pushing the exports to $61.03 billion in 2023 from the present low base of $20.79 billion.
"Our plans and hopes are based on the facts of tomorrow. If you look around the regions extending from UAE-Saudi Arabia to the Asean countries, these are the areas which are bursting with rising standards of living and rising personal incomes. The result is a booming foreign trade. The $61 billion China Pakistan Economic Corridor (CPEC) will connect these regions to Central Asian Republics and on to Turkey, EU, and ending at UK," he explained.
"These are the regions, we hope to cash in on. We will be offering still better quality and value to our foreign importers. When I say this, I mean all the expanding and innovative range of our exports from high-tech jet aircraft for foreign air forces to the latest and innovative fashions," he added.
The government announced a big export subsidy plan that will cost $1.8 billion, but now the amount is expected to be raised further in order to compete with other exporting countries, including China and India.
"Prime Minister Shahid Khaqan Abbasi is all set to help exporters of textiles and other products all the way to food and farm products by offering the Pakistani producers, business and industry, attractive tax cuts to cheaper supply of electricity and natural gas," Malik said.
Alongside these concessions and offers to the exporters, Pakistan will have to try hard to win back their lost business contacts and importers and find new ones to push exports up.
The success in foreign trade expansion will also required to adjust the value of its currency against the US dollar, euro and other hard currencies. The exporters insist that the government is keeping rupee at an artificially higher value. This, they say, is one of the reasons for the Pakistani exports cannot compete against other foreign exporters.
A spokesman of the State Bank of Pakistan (SBP), the central bank, said: "We partly agree with the argument for officially down sliding the rupee, which has already been done in the last several weeks but there are other steps which the government and other agencies, including the business, producers and the industry itself should take to make their exports competitive. These include some tax cuts, but more steps to reduce the cost of production and easing up the cost of doing business."
The irony of the present foreign trade situation is that while exports have begun to rise from their lowest level of $20.79 billion in 2016-17 and the expected turn around to $22 billion in 2017-18, the imports are rising again - and quiet fast this time.
The import push is identified, and is associated with he rising prices of imported international oil and commodity prices, but the new element of a quantum jump in imports is an increasing of and growing preference of Pakistanis for Western packaged food. The result of these pro-import elements is a big strain on the balance of payments - widening to an all time high. Add to this, is the fact that a fast-track implementation of CPEC and imports for the project, especially power generation and transmission equipment, are widening current account deficit.
The trade deficit during ongoing financial year 2017-18 is projected to widen to a record high of $40 billion. The actual trade deficit in 2016-17 was $32.4 billion.
Keeping all these fact in focus, will the proposed 5-year target of exports being pushed to $61.03 billion during 2018-23, is a realistic or achievable one? The new ambitious target, though high, but it can be reached. Pakistan will have to work very had to get it.
The outgoing Strategic Trade Policy Framework (STPF)) for the past 5 years 2015-18, was set at $35 billion by former Prime Minister Nawaz Sharif. The actual exports in 2016-17 were $20.45 billion. The exports were $25.11 billion in 2013-14, $23.67 billion in 2014-15 and $20.79 billion in 2015-16. The first six months of 2017-18 - July-December - saw an exports up-tick to $11.77 billion, as compared to $10.62 billion in the like period of 2016-17. On this basis, the exports can rise to $22.66 billion, or somewhat more, in 2017-18.
What should be the size of export task to achieve the ambitious target of Strategic Trade Policy 2018-23? Over the next five yeas, if exports are raised by 10 per cent, the amount Pakistan will get will be $36 billion. If these are to be raised by 15 per cent, the amount will be $47.28 billion. But the exports will have to be pushed a straight 20 per cent to achieve the target of $61.03 billion by June 2022-23.
The writer is based in Islamabad. Views expressed are his own and do not reflect the newspaper's policy.