Over the last five years Pakistan has increased its exports to some non-traditional markets and has also diversified its export base, raising hopes that the momentum may be sustained by opportunities offered by fast growing economies despite shrinking demand growth in major export markets.

Thanks to diversification, the countries of Europe and Asia equally share the ten top positions as importers of Pakistani goods with US and UAE retaining their first and second place. (see table 1) China and Turkey have emerged as top ten export destinations while Hong Kong and France are no more on this list. Business leaders admit they have not fully exploited export potentials in the Chinese market. China is now the third largest economy and is about to overtake Japan to become the second. Penetrating deeply into Chinese market is very important from a strategic point of view.

In the last few years hundreds of Pakistani students have graduated from Chinese universities. Businessmen with trade links in China say they occasionally use such students as interpreters and trade promotion officers in Chinese markets.

In the last fiscal year, Afghanistan became our third largest export market with earnings at $1.396 billion, exceeding exports to the UK at $874 million. But businessmen ponder how can we sustain the surge in exports to Afghanistan after the withdrawal of the US and NATO forces from there? The ministry of commerce has not even bothered to hold discussions with the private sector on this subject let alone preparing a policy paper on it.

“Exports to Afghanistan can touch two billion dollars mark within three to five years if we facilitate opening of Afghan banks in Pakistan,” says Mr Zubair Tufail, former FPCCI vice president. Three Pakistani banks have opened their branches in Kabul but no Afghan bank operates in Pakistan. Lack of proper bilateral banking facilities also mars the prospects of enhancing trade links with China, Iran and India.

Enhancing trade relations with India and increasing our exports there also requires resolution of some key political conflicts including Kashmir. Thus despite the fast economic growth of India Pakistan might not benefit from it in the short- term. But trade relations have improved significantly with China and Iran and so have our exports. Exports to Iran stood near $400 million in the last fiscal year—only a few million dollars lesser than our exports to the Netherlands.

“We need to set up warehouses in the areas bordering Iran. That will be a great incentive to Iranian importers willing to buy Pakistani goods. If we do this, I am sure, our exports to Iran would reach a billion dollars within a few years,” says Mr Zubair Tufail.

The desperation with which the world is looking for food security should motivate stakeholders to enhance food production and exports. Till FY04, rice, fish and fish preparations and fruits and vegetables were among top ten export earners for Pakistan. But by FY09 the picture changed rice became the second largest export earning item but the other two categories of food items lost their respective slots.

Diversification of export markets and export items is possible only when the government and the private sector work in harmony. “Top officials of the Trade Development Authority of Pakistan (TDAP) must make themselves available to business leaders so that the irritants to export growth can be identified and fixed on time,” suggests Mr Fawwad Ijaz, ex-chairman of Pakistan Leather Garments Manufacturers & Exporters Association.

TDAP officials say the private sector must also put its house in order. “Look at the Federation of Pakistan Chambers of Commerce & Industry (FPCCI). They do not have enough research and analysis facilities to give us informed inputs in policy making,” said one of the officials who declined to be named.

“Export diversification strategy needs to be evolved at three tiers,” opines chairman of a large group of companies with diversified export business in textiles, chemicals and dyes. “In the first tier, you have individual exporters and in the second fall their groups or associations. Finally, it is the third where the public private sectors join hands.”

Businessmen like him admit that strategising sectoral exports or export destinations is not a priority at the first two tiers. And they complain that whatever public private partnership exists at the third tier is not cohesive and result-oriented.

Product-diversification has helped boost exports of cement, petroleum, chemicals and pharmaceuticals, gems and jewellery etc but Pakistan needs to move towards value-addition in the areas where it exports raw materials or semi-finished goods. For export of finished and value-added products, higher value-addition needs to be targeted.. This applies to both non-traditional and traditional exports.

Food exports can fetch far more foreign exchange than they do now only if we can focus on producing value-added food products instead of merely exporting food grains. In textiles, leather and footwear we need to catch up with the latest global trends in fashion designing and product development.

Cement and gems and jewellery have occupied a place in the list of the top ten export items during the last five years. Export earnings through surgical instruments and engineering goods have increased significantly. Cement exports can be enhanced further by improving trade relations with India. Gems and jewellery exports would swell if greater attention is paid catching up with the new trends in designing. New markets for gems and jewellery and surgical instruments can be explored in the US and the Europe as well as in Middle East. The European Union looks willing to give greater market access to our quality export products.

To increase exports of engineering goods, it is logical to look towards developing Asian and Middle Eastern countries to get advantage of rising demand in those countries and relatively low freight. Setting up a materials bank to help exporters of engineering items can also be beneficial.