By admin       2019-01-28

PTI has embarked on to incentive's export to minimise huge gap between exports and imports, referred as current account deficit. To boast export and curtail imports, different measures have been adopted. Given our economic space, can we curtail our trade deficit is an important issue of general interest.Export driven growth is currently the strategy of the government curtailing the trade gap is an ideal option if supporting by macro-economic indicator. But we find that the economy is in bad shape and its fixing will achieve economic activity, employment, increasing of remittances, and lastly attracting investment.2. To achieve above targets, export driven growth, switching over to locally produced goods, devaluing the currency and increasing interest rates have been adopted that needs through analysis to put this strategy in prospective. To begin with, recently the rupees value has witnessed 15% depreciation. This must have hit local industry being badly import intensive. Simultaneously, exporter may momentarily be happy with this windfall particularly spinning sector but value added secto depends on imported raw material may eventually feel its pinch.In different international studies, devaluation impact on export has been found marginal. USA and its protg IMF, etc emphasis on devaluation is basically China-specific. But it hurt economies where imports far exceed export as is case with in Pakistan. Many economists and analysts such as Gupta have found its impact hardly stimulating.State Bank empirical evidence lends credence to such findings. The total external debt at the start of the period under review (July) amounted to 7.796 Trillion (TN) (thats 9.13 minus 1.334) (SBP). Rupee fell by 15.5 per cent (from 121.5 to 140.3 to a dollar) in this time period. So what is 15.5pc of 7.796tr? The answer is 1.208, which is the amount by which our external debt, when denominated in rupees, shot up simply because of the devaluation of the rupee. Its just the immediate impact of devaluation.We must not forget that Pakistan was one of the earlier country-becoming member of free trade order (WTO). It least explored new avenues and resultantly share in global trade is just 0.18%. Pakistan export profile is too outdated consisting upon cheap goods. This is evident from fact textile has 58% share, followed by leathe products, sports and surgical secto. One needs to note textiles share in global trade is around 7.5% of which 60% is of made up garments. Pakistan is peisting with yarn spinning and using looms to make grey clothe which marginally undergo value addition in finished goods.Bangladesh and Vietnam, etc have no luxury of growing cotton and depend on using stitching technology for making garments. Needles made products rather from looms enabled them to export more than $35bn; almost double than Pakistan within few year.With this much share, can Pakistan com closer to meeting account-deficit? This could be wishful thinking, remarks an expert of trade economy. Will this currency depreciation attract more investment in export is yet another question. In Pakistan, textiles, leather, surgical, sports secto are considered export-oriented sector.Recently Ministry of Textile moved a summary that Pakistan, which is growing infested cotton and as such its import free of custom duty from India be allowed. In developing as well as developed countries the end consumer take care of the supply chain such as the spinne that needs to provide at subsidized rate disease free seeds pesticides, insecticides and to growe. A survey by an Indian grower got astonished to see that in cotton growing area, no standard laboratory exists to check the quality of seed or of the insecticides and pesticides.Switching over to import substitution is another component of economic growth strategy. But do we manufacture raw material for chemical good, pharmaceutical or of electrical appliances? Petroleum, LNG, edible oil and defense store constitute 75% of import and can we manage these locally? Besides, can Pakistan have fuel to run its transport and industry that has largest share in import? We have an example of local automobile sector basically is assembling plant as it imports chassis and engines. These are fit in substandard body and other accessories. Similar case is in pharmaceutical and chemical secto imported raw material are merely mixed. Under such stark realities imports substitute policy is no more than economic rhetoric admits, a progressive economist.Devaluation or suppressing own currency like China favour such countries which are heavily export oriented such as China, Singapore but where export is roughly 30% of the import the devaluing the currency is hardly an option. Pakistan has failed to develop economy at gross root level. In Pakistan exports are roughly 35% of exports. In such economies, current-account debt will continue to swell.In such economic profile way out is to patronise Small and Medium(S&E) secto but in our case these are at the mercy of bigger industries to whom they supply the goods on deferred six months payment. S&E employes work at door steps will remain unsustainable, admits one prominent president of Chamber of Trade.With host concessionary regimes, staring with duty free warehouse in 1968 for re-exportation, customs draw-back, exemption of taxes, and subsidised supply of utilities failed to fueled economy growth and if not how will be fate of export led economic different in future. This continues with every regime. Few inside confided two Bn contribution by All Pakistan Textiles Mills Association (APTMA) which resultantly is now considered growth engine.Locally sold cloth pays no tax. APTMA comes up strange logic that 40% of population who is living in abject poverty buys smuggled cloth from India, etc. One prominent selling cloth and garment found such assertion void of any substance if not ridiculous. One expert on economic growth remarked that soon APTMA would stress for more support like sharing the payment of salaries to labour. Despite host of concession, global demand of textile is more than 30$ trillions. Pakistan share in such demand Pakistan export of cotton fabric is 0.02%, made-ups is 0.18% and garments is 0.15%. Simultaneously it imported yarn on monthly basis in 2018 exports of cotton yarn decreased by 2.25 percent from $320.9 million to $313.7 million, the PBS data revealed. Simultaneously, its import of yarn on monthly basis is 710 million. Pakistan may be only country that import and export yarn and is eligible to rebate.On prime minister visit, APTMA group leader Gohar Ejaz vowed that now all closed spinning mills will resume production. So for available data not a single mill resumed operation. An expert confided that these mills are defaulting on billion of rupees loans. He further added that soon mega size advertisements will appear for writing off such loans. Another media peon confided that these ads the open secret behind media soft stance on textiles.The government should seriously stop patronising yarn based industry. In view of global textile profile, the priority should be accorded to stitching industry. It can import polyester fabrics duty free and start making quality made-up and garments .Once trend is settled it will attract lot of investment. Bonus will be jobs to females who are better in stitching technology. Not looms but needles should be consistent policy.Can Pakistan break away from shackles of yarn sector and take a plunge in its trade policies is a big question mark? Who has suffered more than Greece from debt trap? Eventually its emerging from wot kind of bankruptcy though encouragement from regional trade within European Union. We may study it thoroughly and explore trade with India, on parity basis, Afghanistan instead of transit trade and CIS states. We must also focus on incentivising other secto such as sugarcane, wheat for making all kinds of cereals. Our orchards are of high quality and if we can satisfy the European markets of meeting the industrial standard can earn reasonable foreign exchange.Not only rhetoric but our approach for economic development needs a perceptive approach, breaking away mafia and deeply entrenched lobbies and mafia. It needs bold and professional top management. Are we ready for this or will continue to wrap the economy in Yarn?

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