KARACHI: Terming decrease in exports a key challenge for the economy, particularly for stability of external financial position (balance of payment), the State Bank of Pakistan (SBP) has suggested measures to reverse the current falling trend.
Pakistani exporters need to keep pace with changing consumer preference in their key markets and adjust their product mix accordingly; the textile sector in particular should start focusing on synthetic fibre that are in high demand in the US, the central bank advised exporters in its annual report 2015-16. The SBP stressed the need for concrete steps to enhance competitiveness and ease of doing business, investments in research and development and innovation and improve quality of labour etc. About refunds issue, which exporters have termed “main cause of financial constraints and input cost multiplier”; the central bank noted that the government had partly settled refunds of exporters. “This coupled with record lower interest rates should ease exporters’ cash flow constraints.”
The structural issues affecting the export industry also need to be addressed, according to SBP. “Moreover, the SME sector – which has a major share in producing electric products like fans, light bulbs and surgical equipment – continues to largely operate on the fringes, as its share in export financing is minimal,” the report said. Given the multitude of regional and even intercontinental trade pacts that are under process or deliberated upon, it said Pakistan ought to improve its trade competitiveness, as free trade agreements (FTAs) signed with other countries could put Pakistan in a disadvantageous position.
In order to ensure adequate financing for imports of capital goods and raw material, there is a need to enhance export revenues, which have contracted for the second year in a row. “This decline primarily seems to be a function of global developments, as most emerging markets have witnessed a drop in their exports. Some of these countries actually fared worse than Pakistan; while Vietnam and Bangladesh were exceptions to this trend”, the central bank noted.
However, the role of domestic factors must not be overlooked, as Pakistan’s export performance has remained lacklustre over the last few years, even before the commodity recession set in, the central bank observed.
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