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Editorial

March 14, 2018

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Listening to the exporters

In the current context of falling exports, it would be wise to listen to what exporters have to say about the situation. While all of their demands need not be met, there is certainly a case for some of them to be taken with utmost seriousness by the government. The demands themselves seem unremarkable: caps on fuel and power prices, removal of tax distortions, expansion of finance schemes, revision of free trade agreements and reduction of the exchange rate. Emerging from a World Bank-led consultation with private sector representatives, the content itself is not too different from the WB position on all matters economic in Pakistan. What is also surprising is that exporters seem to not only parrot the WB position, but seem to not be engaged in any analysis of whether they had any shortcomings of their own. Export failure cannot simply be down to government policies. Much of the policy areas identified in the survey have been stable, and it has not been a case of the current government going out of its way to make life difficult for exporters. Apart from the very serious impediment of the power crisis in the country getting worse every year, the other factors have remained fairly stable – which makes blaming them a lopsided view.

The issue of the exchange rate of the Pak rupee keeps coming back to the table. As we have noted before, it might be to the advantage of exporters in the short-term, but it can only be worse for our import-dependent economy in the long-term. There is no magic pill through which a decrease in the exchange rate will shoot up Pakistani exports. Much of the work on making exports competitive must be done by exporters themselves. The government can at best create enabling conditions. Many of them simply have not upgraded their production processes in line with their competitors when they were reaping the profits from the boom period in Pakistani exports. Remaining competitive in the export-market requires constant innovation, which is a task that the private sector must take upon itself. Sure, power tariff caps would benefit industries and should be instated. There might even be an argument for strategic energy subsidies for certain sectors. And the concern over the tax regime is another genuine one. Constant revisions of tariff regimes in the middle of budget cycles continues to be a major concern that means exporters cannot predict what will happen once their products are leaving customs or any machinery imports are passing through. What the consultations do show is the need for a comprehensive policy to revive exports in the country. The government will have to do better than to announce a special package like it did in the last federal budget. Any revival of exporters will need proper planning.

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