It becomes a real challenge to craft an export-led economy for a country
suffering from limited exportable surpluses, that too mostly raw materials,
like cotton and leather and very low value-addition products such as yarn
and at best towels and bedwear.
Pakistan is an agriculture-based country so there should be no doubt that
majority of the exports made by the country would be agriculture based:
Fruits, cotton fibre, raw cotton, yarn, thread, knitwear, bedwear textiles,
clothing, carpets, sports goods, leather goods including belts and shoes,
carpets, rugs, white and red meat, chicken, milk, wheat, seafood, vegetables,
processed food items and, rice and maize.
All the incentives both monetary and financial that the government
periodically allows to the export industries, especially to the textile sector,
have so far ended up making no difference to export promotion but have
enriched a handful of exporters without having had any positive impact on
export – volume-wise as well as in value terms.
After surrendering a significantly big part of international textile clothing
market to its regional rivals, especially Bangladesh, since the abolition of
quotas, Pakistan is now fast losing its cotton spun yarn markets to the much
cheaper products from Vietnam.
Vietnam’s net yarn export of over 40pc in recent years is paralleled by the
large rise in China’s investment in spinning in Vietnam alongside wholesale
relocations of some firms.
Cotton consumption for Vietnam’s domestic yarn utilisation has also shown
impressive growth, more than doubling. Thus, more yarn is being exported
to China by Vietnam, eating into Pakistan’s share of yarn export to our big
northern neighbour. The International Cotton Advisory Committee
estimated that Vietnam’s cotton consumption had surged by 22pc to 1.1m
tonnes in 2015/2016 and Bangladesh’s by 13pc to 1.1m tonnes compared with
the 12pc decline to 2.2m tonnes in cotton use by Pakistani factories.
The increasing cotton consumption in Vietnam and Bangladesh — both the
countries grow very little cotton, and heavily rely on imports to meet their
industry’s demand — is attributed to the lower cost of production due to
cheaper energy and labour in the two countries.
Pakistan needs to diversify its exports not only in terms of commodities but
also in terms of markets. Heavy concentration of exports in few commodities
and few markets has led to export instability. Other issues which need to be
addressed include low value added and poor quality, obsolete use of
machinery and technology, higher wastage of inputs adding to the cost of
production, low labour productivity, little spending on research and
development, export houses lacking in capacity to meet bulk orders, inability
to meet requirements of consumers in terms of fashion and design, nonadherence
to contracted quality and delivery schedule and lack of marketing
techniques.
Pakistan also needs to do some original thinking on the issue of exports by
studying the needs of land-locked western part of China linking Pakistan and
the western neighbour through border regions of Xinjiang and GilgitBaltistan.
China’s western region contains 71.4% of mainland China’s area, but only
28.8% of its population. The main components of the strategy chalked out to
develop the region include the development of infrastructure (transport,
hydropower plants, energy, and telecommunications), enticement of foreign
investment and increased efforts on ecological protection.
Pakistan needs to explore this market rather closely for improving our
exports to the region as well as for relocating low-tech textile units from
western China to Pakistan.
Source: The Pakistan Today, Pakistan Monday, 29 October 2018