Pakistan is experiencing server economic conditions at the start of the New Year.  The country is still struggling with the basics of economic growth. The country’s Exports have fallen considerably and the imports have risen. It has led to trade imbalance that is causing many problems including the rise in the costs. The poor condition of the country’s economy is largely due to its falling exports.

Given the importance of the exports of a country, the condition of Pakistan’s export sector is abysmal as compared to its neighbors. The country is struggling with many problems related to export growth and issues that are hindering its progress. Keep reading to know about the issues concerning Pakistan’s export sector and the solution of these problems.

Export Challenges of Pakistan

Dearth of High Technology Exports and Market Diversification

It is evident that Pakistan’s export base is concentrated and the technological content is also lower in the exports. While technological exports in the world are on the rise and today they account for more than 50% percent of world exports.  The condition in Pakistan is abysmal. In today’s competitive world, the secret to fast attracting the Market is through adoption of new technologies.

Pakistan ‘export markets are also concentrated in few markets and these markets named the USA, China, United Kingdom, Germany, Afghanistan, and others. Even though these are big markets, Pakistan is missing more lucrative dynamic markets like Africa, Latin America, Central African Republic and Russia.

Image Source: The observatory of economic complexity

Lack of Planning in Agro-Based Exports

Pakistan is an agricultural country and agro-products make major share of its exports. But it has not reached to its potential due to lack of ago-based exports strategy. Pakistan produces rice and wheat and other agricultural commodities including fruits. But the lack of proper management and the use of rudimentary storage techniques are hurting the export potential. It also applies to fish, meat and other such things.

Transportation Constraints

The road condition of Pakistan has improved in the recent years but still there is a lot of work to do. The condition of the roads in Pakistan is not good and that affects the time taken to reach the market and causes wear and tear to the vehicles. The rail system is not efficient as well. It is proving to be a major export barrier in Pakistan.

Low Skill Development

Pakistan is one of the ten largest countries in the world by population. The labor force in Pakistan is in huge numbers. But the lack of skilled labor is a major obstacle in the proper utilization of such a huge labor force. The skills required are changing rapidly in the world.

The Legal Constraints

The legal system of Pakistan is flawed with high litigation costs, complex procedures and lengthy delays. The legal system is unable to provide effective contract enforcement that is necessary for the trust of the businesses. Due to this , many small businesses and enterprise prefer to deal only with trusted parties and that leads to inefficiency in the market like segmentation. It takes many days for cases to be solved due to the inefficiency and ineffectiveness of the justice system of Pakistan.

Recommendations for Enhancing Exports  

More Products Diversity:

Pakistan should formulate strategies to decrease dependence on the traditional exports like agriculture products, cotton and rice. There needs a shift in the composition of its exports that means promoting exports of high/ medium technology products whose participation in the world trade is increasing.

Search for New Dynamic World Markets

Currently top exports destinations for Pakistan are United States, china, Germany unite kingdom and Afghanistan. These markets are bigger but Pakistan can take the advantage of developing dynamic world markets like Central African Republics, South America and Russia. Pakistan has an important geographical location and it can increase its trade ties with the neighbor countries.

Work Force Development

Today’s competitive work markets require skilled labor force that can adapt to the new technologies. The engineers and mangers should be trained in a way to manage complex production processes. Moreover the advanced marketing skills are also necessary to market the developed products. It can be achieved by investing in public education while imparting technical and general education in them. It would be better if international certification system is implemented.

Research and Development

The importance of research cannot be neglected in today’s fast changing world. Especially in the high technology products the need for research and development is to a greater extent. It will make the government more efficient in terms of production up-gradation and opportunities that arise from increasing technological export base. The relations between research institutions and the firms should be established and firmed.

Improvement in Transport Services

The rail system of Pakistan is inefficient and due to this many businesses prefer road transportation that has also many problems. The special focuses should be paid to the business through rail by creating an efficient rail service. Similarly the air service should be improved as many products require an efficient air system.

Agro-Based Export Strategy

The commodities and products related to agriculture require special attention and Pakistan can do so by improving the existing infrastructure. With improvement in quality testing, storage facilities and improving packing Pakistan can strengthen its agro-based exports base leading to increased revenue generation.

Improving Legal system

The legal system of Pakistan requires overall improvement. The appointment of judges should take place after the assessment of their knowledge about the issues concerning businesses like taxation. It is better if there are systems for arbitration between the disputing parties.

Reforms in the Taxing System

Sometimes the taxing system of Pakistan becomes confusing that couples with inconsistent taxing schemes and proves to be a major barrier in smooth progress. The taxing system should be improved by clear and efficient procedures. Moreover, there should be proper tax refund system.

Sources:

An Assessment of Pakistan’s Export Performance and the Way Forward

Roadmap for Export Enhancement and Diversification in Pakistan

Pakistan (PAK) Exports, Imports, and Trade Partners

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