PBC highlights issues with govt's $65bn export target

By MG News | July 23, 2024 at 03:31 PM GMT+05:00

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July 23, 2024 (MLN): The Pakistan Business Council (PBC) has raised concerns regarding the government's ambitious export target of $65 billion set for the next three years.

In a letter to commerce minister, a copy of which is available with Mettis Global News, the CEO of PBC recognized the significance of enhancing exports for ensuring economic stability, while also highlighting several critical concerns regarding the target-setting procedure.

The PBC has been at the forefront, dedicating significant time and resources to promoting exports and reducing import reliance, the letter reads.

“We firmly believe that exports are the most sustainable way to manage the balance of payments. Unlike debt, which has to be repaid, net export proceeds remain in the country,” the country’s largest business policy advocacy platform said.

The availability and cost of debt in Pakistan’s current state are other factors that lend an advantage to exports, it said.

“It has come to our attention that the government, including the ministry of commerce, has set an ambitious export target of $65bn to be achieved in three years,” it said.

This represents a 113% increase over FY24 and compares with the IMF's much lower $37.2bn forecast, PBC noted.

The policy advocacy platform expressed significant concerns with the target-setting process, which PBC believes are crucial to address:

Concerns Raised by PBC
To the best of their knowledge, exporters were not included in the group which deliberated on the export target.
It is noted from press reports that the terms of reference excluded both the implications of the Federal Budget 2024-25 and the impact of uncompetitive energy tariffs.
It is also understood that the group did not comprehensively review export competitiveness with Bangladesh, India, and Vietnam. In particular, concessional funding and export incentives were not factored.
Was the quantum of investment required to broaden the export basket and geographic reach considered? Were ways to incentivize and fund this investment discussed?
The information available lacks granularity between the aspiration to add value to existing export lines, develop new lines, and geographical expansion.
It is unclear if the $65bn target is gross or net exports, the latter after taking account of imports required to generate exports.
There is a question if the export target envisions the indigenization of presently imported materials or incentives for new exporters or exports to new markets.
It is not known if the need for an industrial policy was considered to sharpen the focus on Pakistan's comparative advantage.
Were renegotiations of the China-Pakistan Free Trade Agreement and other ways to secure improved market access considered?
Has Pakistan’s carbon footprint been factored into the export ambition, given the reliance on fossil fuel and the EU’s border carbon tax?
Is there a robust plan to meet the EU’s conditions for the continuity of the GSP Plus Program?

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