Export growth won’t be easy from now on – Opinion


Since the rupee-dollar parity was allowed to be determined by market forces, the rupee has depreciated dramatically and as a result we have become competitive in our exports and they have started to grow at a gratifying rate . The only impediment to growth in the first year of the PTI government was sales tax refunds to exporters. Once this was resolved, exports were restricted.

We have now reached a plateau where we are once again the cheapest and most efficient source in the world for our core exports. The export markets that India and other countries had taken away from us during the long period of almost fixed exchange rates of the Ishaq Dar era have been clawed back through our lower prices. The disruption caused in India by the clumsy way of dealing with Covid has also helped. Now the easy part is over and more difficult terrain awaits us.

Gohar Ijaz, one of the favorite leaders of the All Pakistan Textile Manufactures’ Association (APTMA), promised us that $50 billion in exports could be achieved if the government followed “the right policies”. Dr. Reza Baqir, former Governor of the State Bank, wrote in Dawn that all is not lost and current high commodity rates will decline and oil prices will halve. Maybe not half, but they will come down. Brent Crude prices are down 20% from a year ago and edible oil prices are down 33%, but winter cold looms and Russian energy is banned. There is no doubt that the very high prices we pay for oil, electricity and other imports will lead to import substitution and demand suppression. But will that be enough?

On the other hand, the floods have caused huge damage to crops in Sindh and Balochistan. The cotton crop will be affected and we may have to import an additional two million bales this year just to support last year’s activity and exports. On top of that we will have to import wheat and maybe also some of the destroyed cattle. Home remittances may not increase as much as a global recession looms. There is therefore little chance that the huge deficit will turn into a surplus. If the deficit persists, will the rupee continue to erode? Especially if the State Bank persists in not using its reserves to stifle speculation? As always, the answer is in “export-led growth”.

Export-led growth will now require more than just being the cheapest in the world. The demand for the basic bed sheet, towel or t-shirt has already been met and there is a finite limit to the number of these items needed in the world. Most likely, this request has already been met. In recent decades, as our textile industry grew, that of the first world contracted; so we took the released capacity. Now this phase is over. There are very few textile mills left in the United States, Europe, or Japan that make commodities like we do. These few remaining factories in the developed world are producers of such high quality and design that we are unable to match them. The market has changed and the $850 billion global trade that Gohar Ijaz talks about is in clothing. Bangladesh realized this a long time ago, and without growing cotton, they mastered this market. So now we have to make our way to a much more competitive market, dominated by India, Bangladesh, Vietnam and China. All of these countries have an inexpensive and highly skilled workforce. They have invested billions in their education and skills development.

U.S. too. Not only in skills development and education, but also in technology. The first priority is to build on our strengths. Why can’t we get the same yield for cotton and wheat as in India? The fundamental lack is that of good seeds adapted and developed to the conditions of our soils. Better agricultural practices, better inputs and better harvest collection and conservation are needed. If we get better yields from our cotton and wheat, we will save about five to seven billion dollars directly per year. In addition to the billions we save on imports, we will supply cheaper raw materials to our textile chain, making them even more competitive.

Likewise, better quality seeds and practices will help our farmers grow more fruits and vegetables that can be exported. The largest and most lucrative market for these items is the Middle East, particularly Saudi Arabia and the Gulf States. They import these items from as far away as New Zealand, so why not Pakistan? The Saudi fruit and vegetable import market was estimated at $12 billion in 2020 and is expected to reach $17 billion by 2028. The overall market for our agricultural sector, especially in labor-intensive areas work, is vast, but we are not able to exploit it. .

Coming to basic textiles, here we have to adapt our industry to clothing. It is the area in which the world spends the most money. An average consumer will be reluctant to spend thirty dollars on a bedding set but won’t think of a hundred dollars for a dress they like. This despite the fact that the bedding will consume four times more fiber than the garment. The amount paid is for the color, design, stitching quality and brand. Clothing exports, especially trousers, jeans and similar garments, are already growing rapidly. We need to establish many institutes to provide the industry with skilled manpower and management. Now we need to help them modernize and make good quality clothes. For this, we need not only skilled seamstresses, but also good designers, cutters, packers and marketing personnel. A quick look on the internet will tell you that although there are 132 universities and colleges offering an MBBS program (for doctors), there are only 9 universities and colleges offering graduate degrees in textiles . Although we can argue that doctors are more important, it is equally important to earn a good salary to pay doctors. While we get sick from time to time, we have to wear clothes and earn our living every day. I searched for colleges or institutes where qualified personnel are trained for the sporting goods industry, but I couldn’t find any. All I’m trying to say is that support for the industry is so limited that it’s run by experienced but untrained artisans. Therefore, they lack innovation and new developments. We only copy what others have done rather than creating our own product lines.

There are huge idle funds in the Government of Pakistan’s Export Development Fund. This fund was created in the 1990s to establish such educational institutions. Only a few have been set up and the rest of the money is used for trips abroad for export promotion. We in industry need to make proposals to create more institutes to develop the skills we need. There is a huge mass of young men and women who crave such training and knowledge and will surely jump at such opportunities. According to Nestlé Pakistan, around five million babies are born in Pakistan every year! Where are these babies going to find schools, colleges, jobs, and eventually homes? It’s not just the lack of resources that is holding back our growth, it’s also a lack of vision, and totally misplaced priorities.

(The writer is also the elected president of the Towel Manufacturers Association of Pakistan for the year 2022/23)

Copyright Business Recorder, 2022


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