Achieving its annual exports target had been a struggle for the government due to the diverse problems the country is currently facing. The target of $27 billion for the financial year 2012-2013 was a difficult target for the government to meet, and is made worse due to the power shortages in the country and the present global economic situation.
It was estimated that Pakistan would be likely to miss the exports target which the government had set for itself, which appeared to be a little too ambitious with the industrial sector not receiving the adequate amount of power and gas required to meet the demands of production and fulfill the target set out to achieve.
During the period of July 2012-April 2013, the country had managed to export goods worth $20.147 billion, however, in the remaining months of the fiscal year, a $7 billion target had to be achieved in order to meet the annual exports target, which turned out to be a challenge as the power and energy shortages in the country were only deteriorating further.
Apart from lack of energy playing its part in preventing the industrial sector from achieving its goals, the global demand for products is of no help causing Pakistan to lose 1.65 percent of its GDP on an annual basis, which amounts to a loss of $4 billion worth of GDP.
The textile sector of the country is the largest earner of foreign exchange reserves, which has also suffered from the energy crises severely thus leading to the sector having lost a major share in the global market.
However, despite the bleak hope that prevailed in achieving the export target and the weak demand in the global economy, Pakistan’s trade deficit reduced to $16.52 billion (6.75%) from the $17.71 billion figure, which had been recorded in the same period of the previous fiscal year. This figure was achieved during the July-April period in which a growth in exports was witnessed while at the same time, a decline in imports was being experienced.
While the exports were valued at $20.147 billion during the 10 month period of the 2012-13 fiscal years, the import bill was valued at $36.665 billion which resulted in a trade deficit of $16.52 billion. Imports were recorded to have experienced a decrease of 1.02% in comparison to the figure of $37.042 during the same period last year while exports increased from $19.329 billion thus causing the balance of trade to increase.
Pakistan certainly has a large amount of potential to increase its exports and once again, make them a dominant part of the global economy, however, this can only be made possible if specific changes were to be brought about. The government has plans of increasing the production of energy, efforts of which can be seen through the Prime Minister, Nawaz Sharif having flown to China to not only strengthen the friendship between the two neighboring countries but to seek assistance to develop infrastructure projects in the country in order to overcome the constant power crisis being faced which is subsequently leading to the slow economic progress of the country.
With the crisis large at hand, the Nawaz Sharif approached China North Industries Corporation, which is state owned to help in combating the energy crisis by installing solar power plants and explore other available options in the country. Once the official visit to the neighboring country is brought to an end an official energy policy will be announced by the government which would hopefully counter the power shortages and put an end to the subsidies being provided by the government to the power sector.
The Finance Ministry has stated that by July 2013, dues of the power producers in the private sector are likely to be cleared which will further help in the reduction of load shedding by 25 percent. At the same time, the government needs to focus on resolving the circular debt issue, which could help in achieving confidence of investors who would then be willing to invest in the power sector and hopefully bring an end to the dark days the country has been going through.
Due to the energy crisis and the country not being able to achieve its export target, economic policies ought to be revised to find ways of diversifying exports rather than relying on the textile sector for instance. There are a number of other nontraditional items which have the potential of increasing the export volume of Pakistan and every sector could look for new markets to increase the supply in order to cover the high costs of production resulting from lack of energy.
Other items which Pakistan could look into exporting consist of jewelry, agricultural and dairy products, fisheries and livestock products, which have a large market share in the global economy. This can be seen through the example of India which exports jewelry and related products amounting to $20 billion. There is however a need for the infrastructure to first be improved and for technology to be provided to the sectors requiring it the most in order for them to play their role in contributing to the country’s exports.
Rice exports, particularly to China have recently emerged as a new market for Pakistan as demands in China have increased rapidly. It is estimated that the export has the potential to grow to a value of $1 billion to China alone, however, for this to be achieved the government needs to make trade with China a priority. During 2012, Pakistan exported rice to China worth $268.69 million which experienced a 6000% increase in comparison to $4.278 million in 2011. Pakistan and Vietnam have replaced Thailand as the leading rice exporters to China and with China and Pakistan already facing a trade imbalance, the export could help in bridging this gap.
According to Naeem Mir, the General Secretary for the APAT (All Pakistan Anjuman-e-Tajiran Central), regional trade needs to be promoted which at present is only 17 percent, however due to its low costs and logistics, trading within the regional would prove to be more effective for Pakistan. The possibility of Pakistan to transform the region and to make it into a hub for manufacturing and trade is certainly high and the country can play a vital role in ensuring this happens, however, constant effort and changes will have to be implemented and an active role would have to be played by the respective sectors rather than simply focusing on doing their routine jobs.