Shahid Iqbal | March 07, 2018
KARACHI: Pakistan’s production and earning capacity is far lower as it earns $1 billion through the products of one million cotton bales while Bangladesh and Vietnam earn $6bn and $8bn, respectively, said Asma Khalid, senior economist at State Bank.
She was speaking at a seminar on “Stimulating Firm Productivity for Growth,” organised by the State Bank in collaboration with International Growth Centre (IGC), Consortium of Development Policy Research (CDPR) and Institute of Business Administration. Research papers by economists and policy experts were presented and discussed on.
Speakers shed light on some interesting figures about the country’s production capacity, export potential, financing hindrances and technology with innovation and also discussed options to achieve sustainable growth with capacity building.
It was also revealed that Pakistani products registered 56 per cent innovation, with Sindh leading on that front while Punjab was ahead in the skills development implementation. Recent World Bank data show Pakistan’s bilateral costs to be relatively higher than those of other developing economies, said Salam Ali of IGC.
He cited a report of the Commonwealth Secretariat which said the country’s exports to Commonwealth states are worth $4bn as against the potential of $20bn. He also said that Pakistan’s trade cost has remained stagnant compared to India and China’s consistently declining costs each year. Speakers said the higher imports demand for garments in China has created opportunities for countries like Pakistan to get a bigger share. “Rising labour cost in China, growing demand for garments in major Asian economies, and the GSP+ status create new opportunities for Islamabad to increase textile and garments exports,” said a research paper of CDPR.
Speakers said that by 2019 China would be the biggest apparel market creating space for Pakistan to benefit from the developments. “Strengthening capabilities is vital to becoming part of the value chain of a global garments market estimated at $133bn, growing at 12pc annually, with China poised to vacate its share of 26pc of the market,” said Ijaz Nabi of CDPR. Naved Hamid and Nabi in their study of the garments sector manufacturing find Pakistan’s high real exchange rate to be harmful for exports. “This was in direct contrast to what other competing economies have done, which is devaluing their currency or allowing their exchange rate to depreciate.
For example, between January 2014 and December 2015, the Indian rupee and Chinese yuan fell by approximately 7pc, the Turkish lira by 26pc and the Vietnamese dong by 76pc,” they said. Zara Salman of CDPR said between 2013 and 2015, Pakistan’s garment exports increased by 10pc to EU compared to Bangladesh and India’s 13pc and 17pc respectively, indicating that Pakistan has yet not fully exploited the benefits of the GSP+ status.
Pakistan also has an opportunity to expand its share of agriculture exports. China imported $160bn worth of agricultural products in 2015, however, Pakistan’s share was less than 0.5pc. Researchers said Pakistan being next-door neighbour to China enjoys a unique advantage while CPEC provides unprecedented gains to capitalise on. Agricultural development is one of the seven areas of cooperation under CPEC with China especially interested to explore areas like cotton productivity, efficient irrigation and post-harvest infrastructure. (Source: dawn.com)