The performance of the export industries has been pivotal in defining Pakistan’s economic course. Export performance in the country, though promising at times in some periods, has generally remained dismal against the performance of its regional peers. A closer view will reveal that high energy costs, energy shortages, and inefficient fiscal policies are significantly dragging the progress down, particularly in the leading textile sector.

The textile industry, which accounts for over 60% of Pakistan’s exports, particularly exemplifies these challenges. Notably, despite its potential for high-value addition, the knitwear sector faces numerous hurdles that stymie its growth. These include exorbitant energy costs, delayed financial reimbursements, and a lack of modern infrastructure, creating a hostile business environment.

This is highly opposed to the successes of the neighboring countries of Bangladesh and India, which have overstepped Pakistan in textile exports because of proper government interventions and industry-based economic policies.

For instance, Bangladesh has transformed its garment sector into one of the leading economic contributors and has supported this sector with policies that have attracted major international investments.

The export sector of Pakistan requires a comprehensive strategy to tackle various barriers to reverse the declining trend and set them back on recovery and growth. One of the major factors discouraging business expansion within the export sector is the high commercial bank markup rates. The financial burden on the exporters can be minimized, and reinvestment or scaling their operations can be spurred if such rates are lowered. This measure must specifically target the sector with a high export potential and proven track record.

The major bottlenecks are the persistent and repeated power outages and unpredictable energy supply. Therefore, a gradual shift promotion toward renewable energy, particularly solar, would constitute a sustainable solution to the energy problems. This would further reduce the hindrance from interruption, particularly on the part of the firms, in adopting renewable energy, particularly in export-based industries, and in the long term reduce energy cost. The tax refunds are very late; this causes a lot of disturbance to the cash flow, which is important in keeping export operations in business. Streamlining the mechanism for the tax refund and reintroducing the zero-rating regime on exports will have the business promptly receive what is due and thus ensure businesses do not lose out on the much-needed liquidity that will keep the operations going. Most small- and medium-scale enterprises in the textile sector have difficulty accessing financial products specially designed for them.

Hence, special loan programs and financial support for such SMEs will help in the process of technological upgrading and expanding capacities to be able to compete internationally.

Pakistan’s high energy cost makes its exporters uncompetitive compared to their regional counterparts. Energy tariffs for export industries must be regulated at competitive prices with or lower than those available to the competing countries. This will significantly enhance Pakistan’s exporting industries’ ability to capture a greater world market share. Fulfilling the promises regarding promptly disbursing duty drawback claims on locally collected taxes and levies will supplement this effort as it will reduce overall production costs. Immediate improvements need to be complemented by the medium- to long-term, predictable, and consistent industrial policy design. Industry policy should focus on providing infrastructure, the availability of skilled workers, and the reduction of unnecessary bureaucratic procedures that delay business processes. A conducive policy environment will attract domestic and foreign investment in export industries. Pakistan must also increase its integration with the world market through more diversified and dynamic export promotion programs. It should maintain and strengthen existing trading partners, participate in international trade fairs and exhibitions, and exploit online platforms to promote exporting Pakistani goods and services. Such measures will open new overseas markets and reduce overreliance on traditional export markets.

Going up in the value chain can bring a marked difference in returns on exported goods. Incentivizing the industries for investment in technologies and design capabilities will put Pakistan in a position to offer higher valued and more sophisticated products in the international market, thereby fetching better prices and profit margins. Sound public-private partnerships make policymakers more cognizant of the industry’s needs and ways such understanding can be translated into pragmatic policies. Interaction of government bodies with representatives of different industries regularly would go a long way in yielding more responsive and effective policies to cater directly to the specific challenges of exporters.

The problems faced by Pakistan’s export industries are intricate but not formidable. Strategic planning and joint efforts by the government can help these industries grow and contribute substantially to the economy. The areas where efforts should be made include high production costs, energy management, and financial accessibility, apart from creating an ambiance for business development. In this way, Pakistan will improve its global trade scope, and its economy will become stable, which means a brighter and prosperous future for its industries and employees.

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