An ex­port econ­omy

The Pak Banker - - 4EDITORIAL - Yusuf H Shi­razi

BE­FORE In­de­pen­dence in the ar­eas now con­sti­tut­ing Pak­istan, sports goods, in­stru­ments and ap­pa­ra­tus were the only goods ex­ported. Earn­ings from these tra­di­tional ex­ports ex­panded con­sid­er­ably, par­tic­u­larly un­der the in­cen­tive schemes. Their rel­a­tive share in Pak­istan's ex­ports was con­sid­er­able. How­ever, these ex­ports can­not still be termed as the coun­try's pri­mary ex­ports. The ear­lier pe­ri­ods had given high hopes about the ex­port prospects of man­u­fac­tures. Pa­per was one of them. Its share in to­tal ex­ports was quite con­sid­er­able. Plans af­ter plans had es­ti­mated the value of pa­per and newsprint ex­ports to rise. The in­dus­trial pro­duc­tion pro­gramme for pa­per and pa­per board, how­ever, did not come to fruition. For writ­ing and print­ing pa­per, pro­duc­tion was ex­pected to rise. In newsprint and me­chan­i­cal pa­per, the out­put was ex­pected to rise an­nu­ally. But the ac­tual pro­duc­tion has al­ways been short of the tar­get.

The ex­port of sim­ple ma­chin­ery and trans­port equip­ment has been, how­ever, far­ing quite well. The value of ex­ports had orig­i­nally gone up but de­clined later. The main ex­port mar­kets for these items were the neigh­bour­ing Afro-Asian coun­tries, par­tic­u­larly the Mid­dle East. With the set­ting up of oil re­fin­ing ca­pac­ity in the coun­try, an ex­port mar­ket for petroleum prod­ucts also de­vel­oped. Ex­port earn­ings from these items in­creased. In fact, they formed one of Pak­istan's ma­jor ex­ports.

The ex­port of hides and skin was once a ma­jor ex­port. It, how­ever, has con­sis­tently de­clined. The de­cline in ex­port earn­ings from raw hides and skin has been com­pen­sated by growth in the ex­port of leather goods, in­clud­ing footwear. These ex­ports re­ceived great im­pe­tus from the Ex­port In­cen­tive Schemes. Leather is ex­ported mainly to the de­vel­oped coun­tries, and leather goods to the neigh­bour­ing Afro-Asian coun­tries.

The de­vel­oped coun­tries pro­vide the main mar­ket for these ex­ports and ac­count for the to­tal quan­tity ex­ported. Among the de­vel­oped coun­tries, the big­gest buy­ers have been Italy, United King­dom, France, Ja­pan, Ger­many, Swe­den and United States.

One of the main items that Pak­istan ex­ports is woollen items. Wool­lens in­clude car­pets and rugs for which the main ex­port mar­ket has been the United King­dom and EU coun­tries. Nearly nine-tenths of woollen car­pets are be­ing ex­ported to the de­vel­oped coun­tries and the rest to the de­vel­op­ing coun­tries. The share of the so­cial­ist coun­tries is neg­li­gi­ble.

In ear­lier years, the United King­dom used to be al­most the sole buyer of Pak­istan's woollen car­pets due to tar­iff pref­er­ence there. The United King­dom still ac­counts for a lit­tle less than one-third of Pak­istan's ex­ports. Over­seas sales have now been diver­si­fied a great deal. Switzer­land's pur­chases are just a shade lower than those of the United King­dom. The other sig­nif­i­cant buy­ers are Ger­many, the United States, Bel­gium, Italy and Den­mark.

Cot­ton and textile is the main ex­port com­mod­ity from Pak­istan. The value of these ex­ports has seen phe­nom­e­nal growth. The ex­port ori­en­ta­tion of Pak­istan's cot­ton textile in­dus­try has been con­stantly im­prov­ing and over one-third of the in­dus­try's to­tal out­put is now ex­ported. A high ex­port tar­get had been set for cot­ton man­u­fac­tures. Much ahead of sched­ule, the ex­port tar­get ex­ceeded when cot­ton prod­ucts ac­counted for ma­jor ex­port.

The ex­port per­for­mance of the cot­ton textile in­dus­try is all the more cred­itable in the con­text of the sub­stan­tial lag in its pro­duc­tion pro­gramme, re­sult­ing from short­ages in some of its crit­i­cal im­port in­puts. Ear­lier plans an­tic­i­pated the cot­ton yarn out­put to in­crease. The value of cot­ton textile ex­ports, on the whole, in­creased at an im­pres­sive an­nual rate. At times ex­port was faster than the growth of pro­duc­tion ca­pac­ity.

Due mainly to un­favourable ma­nip­u­la­tion of ex­port in­cen­tive en­ti­tle­ments on cot­ton yarn, the an­nual rate of growth in the value of cot­ton tex­tiles ex­port has been de­clin­ing. Even then, ex­ports are keep­ing far ahead of pro­duc­tion, which had ex­panded in the case of cot­ton yarn and cot­ton fab­rics. In­stalled ca­pac­ity had also ex­panded at a more or less uni­form rate of spin­dles and looms. The re­sult is that cot­ton yarn ex­port is the fourth high­est in the world and textile fifth largest in the world.

The so­cial­ist coun­tries mainly have been buy­ers of the cot­ton yarn. On the whole, the bulk of Pak­istan's cot­ton yarn ex­ports have been to the de­vel­op­ing coun­tries, over 60 per­cent in quan­tity and value. Among the de­vel­oped coun­tries, Hong Kong has been the main mar­ket for Pak­istan's cot­ton yarn.

Pak­istan ex­ports cot­ton fab­rics of high value. The quan­tity amounts to the coun­try's ma­jor pro­duc­tion. This in­cludes ex­port di­rectly in the form of yarn and the to­tal ex­ports of cot­ton textile in­dus­try. Out of the coun­try's to­tal yarn pro­duc­tion, over 30 per­cent is be­ing ex­ported. This large per­cent­age gives a clear idea about the high ex­port ori­en­ta­tion of Pak­istan's cot­ton textile in­dus­try.

The de­vel­oped coun­tries have been ab­sorb­ing about half of the cot­ton fab­rics. More than half of this quan­tity again has been to the Euro­pean coun­tries de­spite their quota and tar­iff bar­ri­ers. Aus­tralia, Canada and the US have been pur­chas­ing sub­stan­tial quan­ti­ties of cot­ton fab­rics from Pak­istan as well.

Ex­port mar­kets are more im­por­tant now than ever be­fore for Pak­istan's cot­ton textile in­dus­try which ac­counts for a gi­gan­tic ex­pan­sion pro­gramme - the fifth largest in the world. The re­stric­tive pol­icy on cot­ton tex­tiles in de­vel­oped coun­tries, in­clud­ing the ap­pli­ca­tion of quota sys­tem in the UK, has been the most se­ri­ous prob­lem faced by this premier man­u­fac­tur­ing in­dus­try of Pak­istan.

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