Pakistan’s exports potential: Growth opportunities and strategy

A container is loaded on to the first Chinese container ship to depart after the inauguration of the China Pakistan Economic Corridor port in Gwadar in 2016. (File/Reuters)
Updated 22 March 2018
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Pakistan’s exports potential: Growth opportunities and strategy

Pakistan is the 25th-largest economy in the world. The country has a sound manufacturing base and well-developed agriculture and service sectors. Additionally, the country is abundantly blessed with natural resources.
It is the sixth-most populated country in the world, and 60 percent of the population is young. Geographically, it is ideally located between east and west.
All these factors make Pakistan ideally placed to become one of the world’s leading trade partners.
Despite having all the positive essentials of an export hub, annual global exports from Pakistan are only about $20 billion, much lower than its potential. This untapped potential provides the best opportunity for investors across the globe looking for maximum returns on their investments.
The following are some of the best avenues for investment in the emerging Pakistan.
The textiles sector is the mainstay of our exports sector which, together with cotton and yarn, accounts for more than half the total value of Pakistan’s annual exports.
Pakistan is one of the few countries where the complete value chain of textiles manufacturing exists. Pakistan annually produces more than 11 million bales of cotton. The cotton is domestically ginned and then spun into yarn by a robust spinning sector. Weaving, knitting and processing sectors produce a wide variety of fabrics that are stitched to produce world-class garments.
The blossoming fashion industry renders ultimate value-added products. However, some of the subsectors are not completely integrated. Due to value-chain constraints, Pakistan exports more than $3.5 billion of cotton, yarn and woven fabric each year.
These are relatively low value-added products and the proper placement of value-chain addition through investment can bring three to four-fold export proceeds and a handsome return for investors.
Similar potential for huge value-addition exists in other sectors. Gems and jewelry are one example.
Emeralds mined from the Swat region are considered some of the best in the world. Careful mining of precious and semi-precious stones through advanced equipment, and artful cutting, polishing and rendering into jewelry, immensely increases the value of finished products. There is equally great scope for product diversification, as is the potential for raising new sectors.
Pakistan has overcome to a great extent its short-term issues affecting the exports sector. The law and order situation has long been restored to normalcy. The success of the Expo Pakistan event in November 2017 in Karachi is clear testimony to this.
Hundreds of business delegates from throughout the world participated in this mega event and discussed and concluded business agreements with their Pakistani counterparts. In view of the interest of investors and businessmen traveling to Pakistan, the government has recently relaxed its business visa regime.
Great emphasis has been laid on improving energy availability. More than 10,000 MW of electricity is being added in the national grid as a result of recent initiatives. After operationalization of all energy-generating projects, there will be surplus electricity. Already the situation regarding industrial load shedding has been markedly improved. In addition to this, the State Bank of Pakistan has recently made adjustments to its exchange rate regime to make it more attractive to exporters.
These interventions have started to yield positive results. After registering negative growth over the past four years, exports from Pakistan are picking up. The first six months of the current financial year have seen a more than 11 percent increase in our exports, and the trend is continuing. February 2018 registered the highest month-on-month increase of 16 percent in the dollar value of exported commodities.
Apart from immediate measures, the government is pursuing a comprehensive plan of medium to long-term interventions aimed at realizing the true export potential of Pakistan.
To enhance the competitiveness and strengthen the manufacturing base, a number of schemes have been launched to help industry modernize its machinery; improving access to utilities; enhancing labor productivity; and ensuring quality infrastructure. Apart from schemes for the general industry, the government has incentivized the setting up of Special Economic Zones (SEZs) that additionally provide the benefits of subsectors integration, improved connectivity and economies of scale.
In addition to already notified SEZs, the government has recently announced the setting up of nine more zones along the China-Pakistan Economic Corridor to better leverage emerging opportunities in the region.
Product diversification and branding are also being given attention. Dedicated funds have been set up aimed at promoting research and development. Pakistan has elaborate laws and the necessary organizational setup for the effective protection of intellectual property rights to provide a conducive environment for promotion innovation.
Pakistan is also moving toward achieving more market diversification and improved market access. The “Look Africa” plan is a part of such efforts. Pakistan has achieved some notable successes in the field of trade diplomacy in 2018. In January, successful negotiations earned unilateral concessions by Indonesia in 20 tariff lines. In February this year, Pakistan successfully had the GSP Plus facility reviewed by the EU Parliamentary Committee on International Trade. The committee expressed satisfaction over the progress made by Pakistan and decided in favor of the continuation of the facility.
In short, Pakistan is poised and ready to become a regional hub of connectivity, investment and productivity and the coming days will witness the emergence of this nuclear power as a significant player on the global trade landscape.
“Emerging Pakistan” is the best place for all investors, specially investors from Saudi Arabia.


Global carmakers show off SUVs, electrics as China promises reforms

Updated 9 min 25 sec ago
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Global carmakers show off SUVs, electrics as China promises reforms

BEIJING: Global carmakers touted their latest electric and SUV models in Beijing on Wednesday, as China promises a more level playing field in the world’s largest auto market where domestic vehicles are making major inroads.
Industry behemoths like Volkswagen, Daimler, Toyota, Nissan, Ford and others are displaying more than 1,000 models and dozens of concept cars at the Beijing auto show.
Thousands of Chinese auto enthusiasts are expected to wander the halls of the mega exhibition center this week, with electric cars and gas-guzzling sport-utility vehicles grabbing the spotlight.
Nissan presented its first Made in China electric car produced for Chinese consumers, the four-door Sylphy Zero Emission, with a drive range of 338 kilometers.
“The new Sylphy Zero Emission is the next step in our electrification strategy for China,” said Jose Munoz, Nissan’s chief performance officer, adding that the company will unveil 20 electrified models over the next five years.
Auto executives may have their minds on the boiling trade war between Beijing and Washington, with every twist and turn fanning fears that it could bring their plans for China to a screeching halt.
But last week Beijing announced it will liberalize foreign ownership limits in the sector, a move seen as a possible olive branch to President Donald Trump, who has railed against China’s policies in the sector.
China currently restricts foreign auto firms to a maximum 50 percent ownership of joint ventures with local companies.
The changes will end shareholding limits for new energy vehicle firms as soon as this year, followed by commercial vehicles in 2020 and passenger cars in 2022.
Foreign automakers who account for more than half of vehicle sales in China have cautiously welcomed the changes, with VW saying it has “strong” local partners in their joint ventures.
“This will have no impact on our JVs. But the overreaching principle is important. Hopefully, liberalization will as well help for fair competition, and having a level playing field,” Jochem Heizmann, CEO of Volkswagen Group China, told reporters.
The show comes as China’s market hits a transition period — the explosive growth in car sales seen over the last decade slowed last year and data from early this year point to a continued slump for many vehicle types.
Chinese consumers are following their American peers toward SUVs while policymakers in Beijing push an all-electric future.
Ride-sharing is also on the up. On Tuesday Didi — China’s answer to Uber — announced it had joined forces with some 30 partners, including Renault and Volkswagen, to develop vehicles and products specifically tailored for ride-sharing.
Accounting for some 28.9 million car sales last year, the Chinese market could soon match those of the European Union and United States combined.
General Motors sold over four million cars here last year, more than in the US. Volkswagen sold more than three million, roughly six times its home market.
But domestic firms are outselling foreign firms in the SUV segment.
In the electric car market the figures are even more lopsided, as Beijing has heaped money on projects to dominate what it sees as the future.
At the auto show, the domestic upstarts have a separate exhibition hall mostly to themselves — 124 of the 174 electric car models on display are homegrown.
Government subsidies help consumers purchase the green cars, while policymakers are planning a quota system to force producers to build electric vehicles, with plans to one day phase out gas vehicles altogether.
Volkswagen announced Tuesday investments of €15 billion in electric and autonomous vehicles in China by 2022.
“China is our second home,” recently installed chief executive Herbert Diess said at a Beijing press conference, with its market set to be “the biggest” worldwide for electric cars.