Arsalan Ali

Pakistan can increase its export and reduce the trade deficit by value addition in the manufacturing sector to make the products more competitive, WealthPK reports. The increase and diversification in the exports will help local industries enhance productivity and create more jobs for absorbing unemployed youths and skilled workers. The reduction in the cost of production will also help the country to control the bulging trade deficit.

Enhancement in productivity, reduction in production cost, increase in exports and creation of jobs will have very positive and long-lasting effects on the overall economy of the country. Usman Qadir, a senior research economist at the Pakistan Institute of Development Economics, told WealthPK that an increase in exports could help to overcome the issue of trade deficit and stimulate economic growth.

According to the data released by the Pakistan Bureau of Statistics, the country’s exports in December 2022 stood at $2.313 billion while imports were recorded at $5.154 billion, which resulted in a trade deficit of $2.841 billion. During the first six months of the current fiscal, the trade deficit was recorded at $16.987 billion.

“Increase in exports by adopting the latest technology can lead to economies of scale for the industry by enhancing the scale of production. Industry often needs to increase its production to meet the demand of foreign buyers,” said Usman Qadir. He said that the optimal use of machinery and equipment in a large number of industrial units makes products more competitive in the global market. Exporting industries may also begin to specialise in certain products and become more efficient in manufacturing them.

He said that foreign buyers would show interest in the products manufactured at a low cost. The textile sector has a major share in Pakistan’s exports. Value addition in the textile sector will help exporters to explore new markets. According to WealthPK research, the total export during the first six months of the current fiscal was recorded at $14.249 billion and the share of the textile sector in it was $8.73 billion.

Usman Qadir said that value addition in manufacturing could play a key role in increasing export as it would improve the quality of the products. It will help to diversify the export market as industries will be able to offer a wide range of products to different countries.

He said that Pakistan’s export was limited to only the USA, China, and European countries. According to the Trade Development Authority of Pakistan, the USA, China and the UK remained the top export destinations for different Pakistani products in December 2022.

The expert said that an industry that adds value to its products by introducing updated features and designs might be able to market its items in a new geographical region that it previously could not reach. He added that it would also help industries to comply with the regulations and standards of the importing country.

He said that the government should chalk out effective policies to enhance export. Consistency in policy would also help to increase exports. “The policies of the government should be consistent so that investors and industrialists can predict the future of their businesses. The frequent change in policies will create uncertainty among investors and traders and they will be unable to make timely decisions,” Usman Qadir told WealthPK.

Credit : Independent News Pakistan-WealthPk