PML-N didn’t live up its promise to make Pakistan the largest exporter in the region


Promise 

The Pakistan Muslim League-N had promised in its 2013 manifesto that upon coming to power, it would increase the total share of Pakistan’s export especially in food to become the largest exporter in the region.

Background

Pakistan is the 27th largest economy in the world. Political instability, corruption, and insignificant infrastructure development have been the bane of the development of export in the country. Today Pakistan is contributing 0.15 per cent to the total world export. Regionally Pakistan’s export figures are dismal as compared to other nations such as India, Bangladesh, and Vietnam. In spite of political instabilities besetting these countries, they have managed a hike in exports due to aggressive export policies.

In 2016 both the food and textile industries in the country registered a negative growth. Apparently, we exported more rice in term of weight in financial year (FY) 2016 than FY 2015, but not in term of value. Few of the reasons for this decline were diminishing the international price of our export material and the slow rise in the quantity that it could not translate into export progress.

The federal government announced an Export Enhancement Initiation program worth Rs 180 billion to increase the competitiveness of the export sector. Pakistan’s economic woes stem from the energy crises; however, this new program eliminated electricity and gas load shedding and, reduced the electricity price by nearly Rs 5 per unit for the industry. Even though PML-N is dubbed as a businessmen’s party, the efforts to revive an export-led growth remains glum through out the party’s existing tenure. On the other hand, the import bill of Pakistan has been on the rise.

In the first half of the FY 2016, the trade deficit has gone up to 22 per cent reaching $ 14,490 million. From July 2016 to December 2016, the total exports were $ 9912 million while total imports in the same period were $ 24, 402 million. The government had set a trade deficit target, for the current financial year, of $ 30 billion. Unfortunately, in the first half of the fiscal year that is from July to December 2016, the deficit is already $ 22 billion.

Food export

Pakistan’s food export, account for only 0.22 per cent in the global market of nearly two trillion dollars. The country exported food item of $ 3.4 billion in 2015. The reasons for this low productivity are an antiquated farming mechanism, post-harvest losses, the high cost of doing business and shortage of gas and electricity.

According to Khurram Dastagir the Minister of Commerce and Industries, the lack of growth in exports revenue is due to price reduction and economic recession.

Check

Mian Najeebuddin Awasi, Parliamentary Secretary for Commerce in the National Assembly told Truth Tracker that both the government, industrialists and, traders were to be blamed for the decline of the national exports. He said that unless the government and the trader community were on the same page, the economic issues could never be resolved. He blamed the trader community for their desire to become rich overnight and, in the process, tarnishing Pakistan’s image abroad with bad business practices.

Senator Saleem H. Mandviwalla, Chairperson Standing Committee on Finance Revenue Economics Affairs Statistics and Privatization disagreed with Najeebuddin that the traders are not cooperative; instead, he blamed the government for making business policies in isolation.

Saleem accused the government for lack of focus and planning. “Unless we bring down the input cost of farm produce, we will remain uncompetitive in the region and the world market. Last year there was 40 per cent decline in the cultivation of Cotton. Every farmer is growing sugar cane because it is a cash crop. It is the duty of the government to convince the farmers to grow wheat and cotton instead of sugarcane,” said Saleem.

 

Najeebuddin said that national economic policies are usually rigid and lack the spirit of incentivising the business community and the farmers. “Every government that comes into power does projects that provide it with quick success or projection. No body, is concerned doing things for posterity or something that would have long-term implications,” he added. Najeebuddin argued for the elimination of trust deficit between the business community and the government.

Muhammad Baqi Moulvi, Chairman Rice Export Association of Pakistan, told Truth Tracker about the declining trend in rice export in Pakistan. He said that once 80 per cent of Saudi Arabia’s rice import was fulfilled by Pakistan, which had gone down to 20 per cent. Rice export to Iran and Dubai had also diminished from 75 and 60 per cent to 10 and 30 per cent respectively.

“When Iran was under economic sanctions, it was still allowed to import food items, but Pakistan, in an effort to please the US, stopped exporting rice to Iran. This gap was filled by India with the result that India is now exporting 80 per cent rice to Iran,” said Baqi.  He told Truth Tracker that Iran had even offered Pakistan to adjust the payment of electricity Iran was exporting to Quetta against rice the latter was importing from Pakistan.

Baqi further added that since we did not have, even to date, any direct banking channel with Iran, we export rice via Dubai that pushes the cost of production further up, making our export costlier.

Muhammad Ashraf, spokesperson of Minister for Commerce Khurram Dastagir, while talking to Truth Tracker agreed that Pakistan has gone way down in exports. He said that it was in 1995 that Pakistan developed last variety of Basmati Rice named Super Basmati. Since then, he stated, our research and scientists have stopped being innovative. He informed that now Indian PUSA 1121 Basmati Rice holds the reign in the Rice market especially in Gulf.

Another official of the Ministry of Commerce who does not want to be named told Truth Tracker that the Rice Research Institute, Kala Shah Kaku, established in 1962, received funds for the first time this year for research and development. Otherwise, he told, scientists were given salaries and paltry resources to carry on with their jobs.

The solution Baqi said rest in two things. One, we need to have a government that is stable. Our governments, Baqi lamented, most of the time, are busy protecting their hold on power, leaving them with little time to concentrate on real issues. Second, technocrats should be appointed under every minister to give professional advice. Many problems, said Baqi, are due to the shortsightedness or lack of vision of our politicians.

Asad Umer, MNA from Pakistan Tahreek-e-Insaaf shared his view point with Truth Tracker and laid the entire blame for the decline in exports on the wrong policies of the government. He said the recently announced farmer package had been made useless due to corruption giving way to the influential agriculturists to get away with the significant share of the package and leaving the small farmers dry.

Asad alluded to rising unemployment in the country owing to the underperformance of manufacturing sector and worsening business environment. Taking about the food industry he said, with the agriculture sector in ruins how could we expect the international market to respond in a positive way. He stressed the need for research-based polices and programs to boost the economy.

Independent view

Salman Shah, former minister of finance and a leading economist, said that it was the low productivity of our agriculture sector that had damaged our export economy. By low productivity, he meant that the output per acre does not correspond to the input.  Elaborating on low productivity Salman enumerated the issues such as usage of substandard seeds, inefficient water management, expensive or low quality fertilizers and high cost of energy. All these factors he said had contributed into the rising cost of doing business.

World over, Salman emphasized, there is a sharp decline in the prices of food commodities but because of high prices Pakistan cannot compete and has been shunted. When asked that as to why the government had not been undervaluing the currency to make export competitive, Shah said that, in that case, Pakistan’s external liabilities would rise due to increased debt servicing, which according to Shah would exacerbate the fiscal deficit.  “Such measures could benefit the economy in short-term, for longer term we need to improve our productivity.”

Ruling

PML-N has been unable to keep up to its promise of improving exports after coming to power. In fact, there has been a sharp decline in the export.

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