Arsalan Ali

The China-Pakistan Economic Corridor (CPEC) presents a significant opportunity for Pakistan to enhance the export of engineering goods and reduce import dependency, said an economic expert. Muhammad Ali Kemal, Economic Policy Adviser at the SDG (Sustainable Development Goals) Support Unit, Ministry of Planning, Development and Special Initiatives, said while talking to WealthPK that Pakistan was keen to tap into China's reservoir of technological prowess as it has emerged as a leading global manufacturer.

He said this collaboration will provide Pakistan with access to state-of-the-art technology, machinery, and expertise, enabling local manufacturers to produce goods that meet global standards. “Consequently, Pakistan's industrial capabilities will be strengthened, reducing its reliance on imported machinery and saving foreign reserves,” Kemal said. He said that one of the key advantages of partnering with China lies in the potential for achieving economies of scale.

According to Kemal, by leveraging China's vast manufacturing infrastructure, Pakistan can benefit from large-scale production, resulting in cost reductions through bulk manufacturing and improved efficiency. As a result, he said, production costs will decrease, rendering Pakistani engineering goods more competitive in the international market. He said that Pakistan's emphasis on domestic production is an integral part of its long-term strategy to reduce import dependence.

He said that by harnessing China's technological expertise, Pakistan can develop its own manufacturing capabilities, thus reducing the need to import finished products. He went on to say that this shift will bolster the country's industrial sector, create job opportunities for its citizens, and foster economic growth and social development. Kemal said that another significant advantage of this collaboration lies in Pakistan's potential to reduce its import dependency on raw materials.

“Through the establishment of local manufacturing facilities with China's assistance, Pakistan can source raw materials domestically, thus minimising the costs associated with imports,” he added. Kemal said this strategic shift will help build a more self-sustaining supply chain, further strengthening Pakistan's engineering goods export sector. As per recent data from Pakistan Bureau of Statistics (PBS), Pakistan's engineering goods exports witnessed a noteworthy increase of 8.89% during the first 10 months (July-April) of the current fiscal year (2022-23), reaching $207.445 million compared to $190.510 million during the corresponding period last year.

Throughout this period, specific sectors demonstrated significant export contributions. Electric fans accounted for $23.331 million, while transport equipment reached $11.707 million. Other electrical machines accounted for $36.717 million, specialised machinery for particular industries amounted to $34 million, auto parts and accessories stood at $18.786 million, and other machinery contributed $82.905 million. However, in April 2023, the exports of engineering goods declined 7.85%, with total exports amounting to $20.694 million compared to $22.457 million during the corresponding month of the preceding fiscal year.

According to Trade Development Authority of Pakistan (TDAP), engineering goods are identified as a new growth driver of Pakistan's industrial development and export progress. TDAP stated that Pakistan's proximity to regional markets, ranging from the Middle East and North Africa to sub-Saharan Africa, positions it favourably in the automobile and electric fan subsectors.

The large and growing market in Africa presents a particular opportunity for Pakistani firms. In line with the government's ‘Look Africa Policy Initiative’, which aims to double bilateral trade with Africa by 2025, increasing commercial diplomacy presence in key markets will support the entry and growth of Pakistani engineering goods firms in the dynamic African continent.

Credit: Independent News Pakistan-WealthPk