According to newspaper reports, Pakistan’s exports have dropped by 12.11 percent in three years from $24.5 billion in 2012-13 to $20.8 billion in 2015-16. Unfortunately, the process of decline started since the new government took over in 2012. The exports stood at around $23.6 billion during the second year of the government in the office. In March this year, the Ministry of Commerce had set an ambitious exports target of $35 billion to be achieved in three years until 2018, but experts doubt the government will be able to achieve it. Though incentives such as rebate and zero-rated sales tax are announced for top five important textile sectors in budget for 2016-17, some basic elements are missing in the government’s trade policy and there seems no visible change in the export volume during the next two years. The country enjoys the GSP plus status extended by the European Union and trace incentives from the United States and other countries. However, it is yet to be seen how much the government is prepared to utilize trade concessions and opportunities as it is still in the office for another two years.
The country received about $20 billion remittances sent by expatriate Pakistanis during the outgoing fiscal year, keeping the current accounts at stable level. But gradual decline in exports has also been enhancing trade deficit which should be a cause of concern for the policymakers. The trade deficit increased by 8.14 percent to around $24 billion in fiscal year 2015-16 from $22 billion during the same period of last year. The trade deficit recorded an increase of 10.04 percent in June 2016 due to heavy imports.The government should have to look into performance of its officials deployed in the trade missions abroad who are pocketing heavy salaries and perks at the cost of taxpayers’ money, but showing bleak performance. Some experts also question the performance of the Trade Development Authority of Pakistan. The government should also improve power supply in industrial areas, especially Punjab which is the worst hit by electricity crisis.
The investors often complain about overlapping taxation system, poor security situation and energy crisis as the main reason of decline in exports. However, it is hoped that the zero-rated sales tax regime for value-added textile sector will bring down the cost of production. The businessmen will also have to improve quality of products and modernize their way of business to compete in the international market. The government can have hundreds of reasons to blame for the decline in exports, but ultimate responsibility of the country’s economy rests on its shoulders and it has to find solution to the problems.
