Pakistan’s exports keep on declining
ISLAMABAD: Pakistan’s exports are on declining path for the last couple of years especially during the year 2017, when the exports registered a decrease of over four billion US dollars just in last few years and the trend is still continued.
According to data available from the Ministry of Commerce , the exports of the country were US dollars 25.11 billion when this government took over the charge in 2013 following the general elections and since then there has been no improvement in the exports level, rather it remained on the path of downward trend.
The data showed that at the start of financial year 2015-16, the exports of the country were around US dollars 25 billion but just in six months of the current fiscal year, the exports decreased and reached to US dollars 20.44 billion.
According to estimates of the Ministry of Commerce and Textile, the exports by the end of the current fiscal year will be les than US dollars 20 billion. On the other hand the imports which were US dollars 44 billions in the year 2013-14, has been continuously increasing and at the start of financial year 2015-16, it was US dollars 44.95 billion and at the end of the year it reached to US dollars 47 billion.
The trend of increasing imports continued in the first six months of the current fiscal year 2017-18 and according to estimates of the Ministry of Commerce, the imports of the country will cross the critical mark of US dollars 55 billion thus creating a gap in import and export to over US dollars 35 billion if the government did not take daring steps to boost exports of the country and Pakistan will be a very difficult position to meet the gap in the export and import.
Pakistan’s major exports communities are textile, rice and leather but their contribution in export has been decreasing due to various factors including the increase in the prices of inputs, shortage of energy, load-shedding of power and gas, increasing in taxes, political crisis in the country and corruption of the political leaders and strong competition at the international markets.
The share of three products, textile, rice and leather is more than 70 percent in the exports of the country so when there is less export of these products, the overall export targets will not be achieved.
Pakistan has also failed to improve its share in the international market and the only exports to already available markets in USA, China, UAE, Afghanistan and European Union were declined in the last four years due to lack of interest by the government and for taking adequate measures to boost exports in these markets as more than 60 percent of the total exports destinations are in just these few countries.
Sources at Ministry of Commerce, while highlighting the factors affecting the cost of production in Pakistan said that increase in energy tariff, increase in interest rate which is at 7.5 percent, highest in the region, highest corporate taxes in the region, highest rate of duties, taxes, surcharges on export and less installed capacity utilization in the region.
The economic experts were of the view that slowdown in the economies of many countries and over all 3.3 percent decline in the international exports also affected Pakistan’s exports.
Referring to Free Trade Agreements with some of the countries, the sources at Ministry of Commerce said, these FTAs have also negative impact on Pakistan’s exports as all these agreements were in favour of other countries instead of Pakistan due to the concessions given under the FTAs. Pakistan has presently Free Trade Agreements with Sri Lanka signed on Juse 12, 2005, with China signed on July 1st, 2007, and with Malaysia signed on January 1st, 2008 but trade balance with all these three countries is not in favour of Pakistan and these three countries are getting benefit from these FTAs and their exports to Pakistan have been increased while Pakistan’s exports to these three countries reduced after signing the agreements.
Pakistan has also signed South Asian Free Trade Agreement, but due to presence of India in this agreement, there has been very limited scope for Pakistan for improving its trade in the South Asian region. Pakistan has also Preferential Trade Agreement (PTA) with Indonesia, Iran and Mauritius but due to lack of proper and comprehensive negotiations, these three PTAs are not helping Pakistan to boost its trade especially the export to these three countries.
Despite the announcement of Prime Minister’s Initiative for Enhancement of Exports, like duty drawback, zero rating of sales tax for exports and removal of import duty on cotton, Pakistan has failed to increase its exports in the last couple of years.
Regarding top five imports sectors of the country, according to the data available are, petroleum products, machinery, food, metals textile and transport sectors are at the top in the list of the imports of the country. The share of these six products has over 75 percent in the total imports of the country. Maximum increase was seen in the import of the machinery as it was Rupees 6 billion in 2014 and increased to Rs. 11.5 billion during 2017 indicating over 82 per cent increase.
Highlighting the reasons for the increase in the imports of the country, the sources in the Ministry of Trade said there has been increase of 184 percent in the import of machinery for the power sector, 105 percent increase registered in the import of machinery for construction and agriculture sector that has increased the total import bill of the country in the last couple of months.
The increase of petroleum products by over 27 percent in last just one year has also increased the import bill besides shortfall of supply of pulses and cotton in the local market also forced the country to import these two important products for local consumption that also increase the imports.