ECONOMIC decision-making can either lead to progress or stagnation. A delay in taking a right decision can be as bad or even worse as making a wrong choice, and will often heavily cost the people and the economy.
Little wonder then that as the head of the government agency tasked to increase the country’s exports, Trade Development Authority of Pakistan (TDAP) Chairman S.M. Muneer is deeply worried about Pakistan becoming less efficient and more expensive in the international markets because of the inordinate delay in the announcement of the promised package to bring down the industry’s cost of doing business and boost exports.
“The falling exports and closing factories are giving me sleepless nights,” Muneer told Dawn. “If a factory closes down once, it becomes very difficult to revive it.”
Pakistan’s exports have fallen by over 10pc to $3.432bn during the first two months of this financial year from $3.825bn in the same period last year, as the manufacturers reel under rising energy prices; electricity shortages; influx of cheap, subsidised goods from China and India in the domestic market; heavy taxes on manufactured exports; an unrealistically strong local currency; and the non-payment of tax and other refunds to exporters.
The fall in the country’s exports is across the board and has hit the textiles, leather, sports goods and carpets businesses hard. The declining trend has been holding for the last several months, with Pakistan’s merchandise exports dropping 3.5pc during the last fiscal year.
Manufacturers and exporters blame government policies for the present situation, saying factories are closing down and workers being retrenched. “At least 30-40 member mills of our association have completely shut down because of losses. Others have cut down production,” a spokesman for the All Pakistan Textile Mills Association said.
‘The initiatives to be announced for export promotion are not going to be sector-specific; they will be for all exporting industries’
A manufacturer of leather products claimed that leather exporters have been suffering heavy losses for the last couple of years because of consistently falling exports as “we have become uncompetitive in the global market”.
Many small- to large-scale manufacturers this writer spoke to in Sialkot, Gujranwala, Faisalabad and Lahore were disappointed that the government, which had promised to resolve exporters’ problems through a special incentives package, continued to drag its feet.
“The prime minister had himself assured us that our problems will be taken care of in a few days. But nothing has been done even after the passage of one month after our meeting with him,” said a leather exporter.
Muneer, who had arranged the meeting after hectic efforts, is also not sure if and when the promised package for exporters is going to be announced. “Commerce Minister Khurram Dastgir was in Karachi a few days ago and he told me that it will take another one week before the package is announced.”
An Aptma delegation that had met the prime minister’s advisor Haroon Akhtar Khan in Islamabad last week was told not to expect the package’s announcement before the end of this month.
“It is quite surprising that no one in the government is aware of the timeframe for the announcement of the incentives that the prime minister had promised to boost exports, create jobs and attract new investment in the manufacturing industry. Besides, no one is aware about the contents of the package, which the government says has already been finalised,” a textile exporter said with a loud tinge of frustration in his words.
An official source in the commerce ministry told this writer that the proposed incentives and initiatives for boosting the country’s exports will be part of the three-year Strategic Trade Policy Framework 2015-18.
“I am not aware if there is a separate package being prepared for the textile industry or any other sector. The initiatives to be announced for export promotion are not going to be sector-specific; they will be across-the-board for all exporting industries,” he added.
He also refused to say anything on the reasons for the delay in the announcement of the incentives and initiatives for the export sector.
Many suspect that the government does not want to announce the promised relief package without sharing it with the International Monetary Fund because it includes certain initiatives that are likely to impact its budget.
“I wonder what is taking the government so long to announce the export promotion package,” said a Faisalabad-based home textile exporter.
“The policymakers must realise the gravity of the situation. The delays have already cauwsed enormous damage to our exports. If we want to protect whatever share we are now left with in the international markets, we must act now.”
Published in Dawn, Business & Finance weekly, October 12th, 2015