Ayesha Saba

Pakistan can position itself as a competitive player in the global economy and reap the benefits of increased trade, innovation, and economic growth by integrating into the global value chains (GVCs), Majid Shabbir, Secretary General Islamabad Chamber of Commerce, tells WealthPK. “In rapidly changing market conditions, a country’s export performance plays a vital role in its growth, competitiveness, and success. Perhaps for the first time in near history, we are facing many challenges of fiscal consolidation. Our growth rate dropped from 6.2 percent to almost 3.6 percent this year which might further go down.” “Our two fundamental issues are low productivity and lack of competitiveness. Furthermore, the exports are handicapped by the government’s irrational policies and complex incentives offered to the industry,” he said.

“Pakistan should prioritize policies that reduce trade costs and streamline processes at the borders. Introducing customs reforms and developing transport and port infrastructure is crucial to facilitate the flow of goods across borders,” he added. He suggested that providing incentives and arranging training programs to enhance labour skills and capacity were vital for upgrading Pakistan's position on the GVC ladder. For example, he said countries like Vietnam and Bangladesh had reaped substantial returns in export and economic growth over the past two decades through participation in the GVCs, while Pakistan had been unable to establish a similar presence in the global production and supply networks.

“Bangladesh has consistently expanded its garment export base – a process within the overall textile value chain where it had a competitive advantage in terms of cheaper labour, while Vietnam has an edge in labour-intensive and scale-based operations, such as assembling and packaging. This led Vietnam to become the third-largest smartphone exporter in the world, and to get highly integrated with Samsung’s value chain, producing 40 percent of the firm’s mobile devices,” he added. Similarly, countries like China and South Korea were able to focus on their core competencies and further solidify their shares in the higher-end stages of the manufacturing chain. “Pakistan stands among those economies that could not realize the maximum benefits of integrating into GVCs across different sectors.

Our manufacturing and services sectors offer vast possibilities for value chain integration. By establishing linkages with global firms, Pakistani manufacturers can access new markets, upgrade technology and enhance product quality,” said the ICCI secretary general. Talking to WealthPK, Muhammad Shoaib Zafar, trade policy expert at the International Trade Centre, said, “Integration into GVCs stimulates innovation, efficiency, and competitiveness, leading to enhanced productivity across various industries.” “Pakistan should prioritize the provisions of the WTO Trade Facilitation Agreement, digitize processes, and ensure transparency and streamlining at the border points. The country needs to enhance its market access, which can be achieved through free trade agreements and preferential trade agreements,” he emphasized.

Credit: INP-WealthPk