January 2, 2020: President Karachi Chamber of Commerce & Industry (KCCI) Agha Shahab Ahmed Khan has said that due to rapidly changing dynamics globally and advanced methods of doing business particularly the technological advancements and innovations, the Pakistani export-oriented industries were finding it really hard to compete with their competitors which were the basic reason why the exports remain stagnant at around US$24 billion.
“Therefore, the policymakers will have to create an enabling environment and take steps to upgrade the industry, particularly the five export-oriented industries namely textile, leather, carpet, sports and surgical goods so that our industries could catch up with the pace otherwise we will be left behind and the exports would continue to remain stagnant in the days to come”, he added in a statement issued.
Agha Shahab pointed out that Pakistan exported goods worth $24.21 billion in FY19 compared to $24.82 billion in FY18, showing a decrease of 2.45 per cent or $0.61 billion while in the first quarter of the Fiscal Year 2020, the exports were recorded at $6.03 billion as compared to $5.89 billion in 1QFY19, depicting a slight increase of 2.37 per cent which means that the overall exports at the end of FY2020 were also expected to remain at around US$24 billion.
He said, “It has been a serious setback that we stay confined to focusing on a few huge markets only while many other small but very promising and lucrative markets have never been taken into consideration which is the basic reason why our exports remain stagnant hence it is high time to focus on the geographical diversification.
It is really heartening to see that the government has also realized the same and has prioritized the huge African market which we highly appreciate but at the same time, they (the government) must also pay attention to small markets as well.”
Identifying some of the reasons behind stagnant exports, Agha Shahab pointed out that the manufacturing sector was the worst-performing sector today because gas, a key input which was hardly available nowadays, was being supplied at exorbitant rates.
“The proposed increase of 31 per cent in gas tariff for captive power plants would have serious implications on the productivity of five leading export-oriented sectors. OGRA has proposed to increase gas tariff from Rs786 to 1,033.99 per mmbtu for registered manufacturers/exporters, which will lead to severe damage to these sectors.”
He was of the opinion that owing to the depreciation of the local currency by 12 per cent in 2019, imports of essential raw materials for exports and value-added sectors have already become expensive. The proposed rise in gas tariff would further increase the input cost, rendering Pakistani products uncompetitive in regional markets.
Agha Shahab further mentioned that heavy duties on imports have taken many a business to the verge of closure while the government has continuously adopted the monetary tightening phenomena to curb inflation, but this approach has terribly affected the economic activities and intensified the hardships for industries.
“High gas price with short supply, high electricity prices, high fuel prices, additional Custom Duties and Regulatory Duties, in addition to barriers in transactions and harassment from tax authorities have made doing business quite difficult, irrespective of the improvement in Doing Business ranking 2020, which has improved”, he added.
He was of the opinion that exporters were already going through tough times as many Pakistani products have become obsolete in the international markets whereas they are terribly suffering due to the high cost of doing business, stagnant industrial activities, the high inflation and many other issues particularly the stuck refunds.