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Low investment hampers Pakistani exports

Since 2013 all major exporting sectors of Pakistan have seen a decline, including textiles. The decline in textile exports has been attributed to insufficient investment in upgrading technology and innovation. And this in turn is a result of non-accumulation of savings and investment owing to low profitability, high costs of production, liquidity and cash flows being soaked up by the Federal Board of Revenue and the State Bank in delayed refunds/drawbacks, and continued overvaluation of the currency for five consecutive years making exports uncompetitive.

Export performance can be improved by tapping into the textile industry’s exportable surplus, which can help reverse the trade account deficit. A viable business environment can promote competition through an open economy which brings trade opportunities and protects domestic industries through tariff and non-tariff barriers. Market forces should be allowed to work; any greater role of the government that interferes with market forces creates bureaucratic delays and inefficiencies.

Pakistan’s poor trade performance in recent years is an outcome of diminishing export competitiveness. The reason for the loss of competitiveness is the increased cost of doing business. A country with a regionally uncompetitive business environment cannot be expected to compete with regional players like India, Vietnam, Indonesia and Turkey.

 
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