How Pakistan Can Increase Its Export?

[Norwegian]

Why it is important to have import and export parody?

Parody? @ziaulislam @farok84 @Patriot forever

They keep saying we should focus on exports but not explaining what to export which is not needed for Pakistan first.

Well we can start with exporting all corrupt politicians that you vote and support

 

[Norwegian]

Exporting is good only if the "sale price" is determined by you as a Country who produce the goods
If you let some shady "Group" outside of your country tell you what the price should be then you are messed up

The G8 nations expect none G8 countries to sell them resources for dirt cheap prices

Pakistan has been making Record production for Fruit and Vegetables or Meat Product , but most of it is exported out dirt cheap prices out creating shortages locally


We grow fruits
We grow Vegetables
We grow flour
We grow basmti rice high quality
We generate Milk and Dairy products
We generate Meat goods


If we are not exporting out the goods , we can solve all hunger issues locally but , we keep shipping out goods to foreign countries in return for marginal profits



For Imports we are told to pay "Higher" because the "MARKET DETERMINES" this ????? What kind of scam is that ?

It's not a scam. Pakistan must first feed its local population with all the food it grows and then export what ever is left over. Over the years Pakistan has become net importer of food too thanks to Pmln experienced team

Appetite for food imports grows

PAKISTAN’S food imports have been growing fast with an increase in economic growth rate and a consequent rise in...

www.dawn.com

It is most worrisome situation. The country has to back to IMF every now and than.

I fear that exports aren't genuinely rising. Businesses are replenishing their depleted stocks disrupted by covid. Once things return back to their baseline only than we would know the what the fact is. Like, BD exports for the month of October grew by 60%.

Keep fearing while Pakistan's exports are growing for the first time in 10 years

 

[Paul2]

Let's not just confine to electronic sector, but expand the scope more, a lot more. Deng Xiaoping kicked off industrialization by personally bringing Nippon Steel to renovate steel industry, "mother of all industries", and by now Baosteel is a world top player. Hong Kong FDI employs over 30 million jobs in Guangdong province alone at its peak. Today FDI in China Mainland is led by HK which accounts for 60% of total, then Singapore, Taiwan, Japan & South Korea rounding up the top 5 sources. In fact a significant portion China exports is driven by these FDI investors (especially during the earlier years), say Taiwan/SK/Singapore PCB/electronics, HK garments/apparels, Japanese machinery/mechanical.

Steel is extremely unprofitable today. Blast furnaces are working at loss, or no profit in a lot places in the world, and China as well.

If Pakistan will commit to restarting PSM, the buyer will never recoup the investment at current prices even at near full utilisation I believe.

Right now, the price of scrap steel is quite high because of Covid, but I see it will return to below $200/t very soon as it is very flexible market. And then, again, blast furnaces will idle for a decade. Short, and to the point: primary iron making makes no sense when there are so many idle blast furnaces in the world.

Second, Pakistan has world's cheapest scrap because of huuuge shipbreaking industry, seemingly flooding the market.

Pakistan has been making Record production for Fruit and Vegetables or Meat Product , but most of it is exported out dirt cheap prices out creating shortages locally


We grow fruits
We grow Vegetables
We grow flour
We grow basmti rice high quality
We generate Milk and Dairy products
We generate Meat goods


If we are not exporting out the goods , we can solve all hunger issues locally but , we keep shipping out goods to foreign countries in return for marginal profits

Profits for exported are marginal, because Pakistani Rupee is not valued fairly. Pakistani government barely changed its FX policy since Sharif.

The government of Pakistan needs to stop subsidising the FX rate for once, now matter how painful it will be politically. Imran should've done that in the first year of his reign.

 

[Norwegian]

I give you a clue to ponder over. Find three Muslim countries that have done well [one of which you alluded to] and then look at their script please.

UAE, Malaysia, Turkey and Indonesia.

 

[Paul2]

Can somebody look up the price of high grade steel scrap in Pakistan?

 

[Shotgunner51]

Steel is extremely unprofitable today. Blast furnaces are working at loss, or no profit in a lot places in the world, and China as well.

If Pakistan will commit to restarting PSM, the buyer will never recoup the investment at current prices even at near full utilisation I believe.

Right now, the price of scrap steel is quite high because of Covid, but I see it will return to below $200/t very soon as it is very flexible market. And then, again, blast furnaces will idle for a decade. Short, and to the point: primary iron making makes no sense when there are so many idle blast furnaces in the world.

Second, Pakistan has world's cheapest scrap because of huuuge shipbreaking industry.

Profits for exported are marginal, because Pakistani Rupee is not valued fairly. Pakistani government barely changed its FX policy since Sharif.

The government of Pakistan needs to stop subsidising the FX rate for once, now matter how painful it will be politically. Imran should've done that in the first year of his reign.

Well that's true, like all industries there are cycles and moreover steel is definitely over-capacity (China produces and consumes more than rest-of-the-world combined). But the key takeaway from Deng's reform is that we need to start a pillar industry, it may take the nation's top leadership to personally design the framework, invite outside help if needed and execute the plan down to every details. It's just like now one national priority of China is to buildup aero industry, and won't be bothered by financial report of Beoing or Airbus in the last quarter. The vision matters, as well as unrelenting action.

I haven't see very strong domestic industrial capital in Pakistan yet, there is only one source: FDI. It's upto Pakistan top leadership to design a framework, and get to the bottom of it.

UAE, Malaysia, Turkey and Indonesia.

Yes I thought of the same. That's why I think Pakistan could economically becoming more like them.

 

[Paul2]

I haven't see very strong domestic industrial capital in Pakistan yet, there is only one source: FDI. It's upto Pakistan top leadership to design a framework, and get to the bottom of it.

Strong domestic capital in Pakistan will just put cash into fancy Internet companies — the new favourite after old ones: cement, sugar, cotton faded.

Internet businesses are draining capital markets dry across the world.

Big direct foreign investments will only come for triple digit returns in case of domestic companies, and for manufacturing outsourcing, there are still so many other clearly better locations in SE Asia. Pakistan has no industries to promise 3 digit growth.

Only internal money will do.

 

[Norwegian]

Well that's true, like all industries there are cycles and moreover steel is definitely over-capacity (China produces and consumes more than rest-of-the-world combined). But the key takeaway from Deng's reform is that we need to start a pillar industry, it may take the nation's top leadership to personally design the framework, invite outside help if needed and execute the plan down to every details. It's just like now one national priority of China is to buildup aero industry, and won't be bothered by financial report of Beoing or Airbus in the last quarter. The vision matters, as well as unrelenting action.

I haven't see very strong domestic industrial capital in Pakistan yet, there is only one source: FDI. It's upto Pakistan top leadership to design a framework, and get to the bottom of it.

Yes I thought of the same. That's why I think Pakistan could economically becoming more like them.

Problem is strategic advantage. UAE is strategically located in the gulf, Malaysia and Indonesia are strategically located in South East Asia near the economic might of Singapore, Turkey is strategically located in the Mediterranean Sea / Black Sea. What about Pakistan? Both of its sea ports are still in their infancy. Pakistan cannot grow its exports unless it becomes a trading nation and tap fully into its geo strategic location. Just being an oil and gas transit for Central Asia won't help grow its own exports via CPEC route.

 

[Shotgunner51]

Strong domestic capital

Strong domestic industrial capital, industrial is key word, names like Nippon Steel, Hyundai Heavy Industries, TSMC, Volkswagen and tons load of these, not hot money chasing for 3 digit growth or quarterly reports.

Internet businesses

That's not even industrial, see the stark difference bro

Pakistan has no industries

Exactly, then let these FDI come in and build their factories on Pakistani soil, hire/train Pakistani people and do their exports. Only in the process you will see domestic industrial capital learning, accumulating and ultimately become strong like them. You guys are building ports and all infra now, environment will become increasingly attractive to FDIs. Pakistan top leadership should make a hit list of potential FDI sources, go sell them the idea, one-by-one, face-to-face. It's like you build a shopping mall, then you go find ideal tenants to fill the space.

 

[Indus Pakistan]

UAE, Malaysia, Turkey and Indonesia.

Not quite. UAE still uses Arabic script. The Muslim countries that made a decision to change their traditional scripts which were Arabic/Jawi to Latin script or Roman as used on PDF are -

• Turkey
• Malaysia
• Indonesia

I did not include Azerbaijan, Turkmenistan, Tajikistan etc because they had Cryrilic script imposed by Russians and since then have just slipped over to Latin/Roman. Members should be aware the issue is not script. You could do as well using Chinese or Ancient Indus script.

The point here is the ability of countries to change themselves so as to progress. One could argue and make valid point that changing scripts is not going to do nothing. But my oint here is societies that can overhaul themselves in such ways will have developed a mindset. Thus here the changing of script is manifestation of mindset that can accept change. If any such change is quashed it means those societies are still trapped in the past and not suitable for modern world.

For instance try changing the script in Pakistan see what would happen. The river Indus would turn red with blood. This shows the massive grip of retrogressive forces in Pakistani society. You saw them recently wreaking havoc and wanting Pakistan to commit suicide by banishing the French Embassy.

Ps. UAE, Qatar, Oman, Saudia etc are still primitive societies and their rise is purely on back of hydrocrabons energy exports. They simply import everything. Only Muslim countries that have built up indigenous resource base and technology/economy are Turkey, Malaysia and increasingly Indonesia although the latter does have vast natural wealth.

 

[Pak Nationalist]

How Pakistan Can Increase Its Export?

Exploring reviving economy with imports and exports with the senior economist of World Bank, Gonzalo Varela. How did he end up being a senior economist for the world bank? What is the difference between the real exchange rate and the one we see? What is the world bank’s latest report on Pakistan’s imports? In the last decade, what’s going on with the exchange rate in Pakistan? Why it is important to have import and export parody? Tune in to know more on how to increase Pakistan’s exports and what are some of the export opportunities for Pakistan!

00:00 Tonight’s guest: Gonzalo Varela
00:31 How did he end up being a senior economist for the world bank?
02:39 What’s the real exchange rate mean?
05:13 World banks report on Pakistan’s imports
13:31 What’s going on with the Exchange rate in Pakistan in the last decade?
24:25 Why is it important for imports and exports to have parity?
29:00 Why Pakistan hasn’t been able to increase its exports?
39:19 Are we seeing the investments going into exports?
45:06 What are some of the export opportunities for Pakistan?

@ghazi52 @araz @The Eagle @The Accountant @That Guy @Irfan Baloch @PanzerKiel @AgNoStiC MuSliM @Imran Khan @PAKISTANFOREVER @waz @Windjammer @WinterFangs @KaiserX @niaz @farok84 @AZADPAKISTAN2009 @MastanKhan @krash @FOOLS_NIGHTMARE @Bilal Khan (Quwa) @Cookie Monster @Bratva @Foxtrot Alpha @Rafael @Rafi @Trango Towers @TNT @Indus Pakistan @Falcon26 @Norwegian @LeGenD @Iltutmish @notorious_eagle @Akh1112 @mingle @Dazzler @AZADPAKISTAN2009 @Tipu7 @Horus @Ark_Angel @SQ8 @Goenitz @messiach @TaimiKhan @SecularNationalist @farok84 @Blacklight @Meengla @Ahmet Pasha @White and Green with M/S

@Norwegian would be most pleased with the advocacy for the idea of an unabashed free float here, on a lighter note.

Brilliant interview. The guest has talked about things everyone with a habit to read the business pages of quality publications in Pakistan know about. The point about exportable surplus was particularly stinging. Are we protecting our manufacturing and making it look inwards rather than outwards? Should tariff relaxation only be provided at intermediate or raw material input level rather than the finished product? Should we not touch the existing structure right now and rather focus on raising costs for keeping the capital locked in speculative sectors so manufacturing becomes the way to make money? Another crucial point pertained to disallowing money to move both ways. It is criminal (on the government's part) if the hard currency we are starved of is being kept at offshore locations by exporters/freelancers, etc just because they fear that bringing all their money back to the country would strip them of the freedom to use it at will. Money earned for producing goods and services should land back in Pakistan in its entirety. Government must do away with regulation/control at this level which spooks exports/freelancers.

Exporting is good only if the "sale price" is determined by you as a Country who produce the goods
If you let some shady "Group" outside of your country tell you what the price should be then you are messed up

The G8 nations expect none G8 countries to sell them resources for dirt cheap prices

Pakistan has been making Record production for Fruit and Vegetables or Meat Product , but most of it is exported out dirt cheap prices out creating shortages locally


We grow fruits
We grow Vegetables
We grow flour
We grow basmti rice high quality
We generate Milk and Dairy products
We generate Meat goods


If we are not exporting out the goods , we can solve all hunger issues locally but , we keep shipping out goods to foreign countries in return for marginal profits



For Imports we are told to pay "Higher" because the "MARKET DETERMINES" this ????? What kind of scam is that ?

The answer to this has been given already in the interview itself. Our producers have not achieved scale. Vendors could arm twist them to sell goods and services that are worth more for lower prices. If you get large enough (gain scale), you would have more options in terms of who you want to goods and services to be sold to (the one who offers highest price).

 

[Pak Nationalist]

Problem is strategic advantage. UAE is strategically located in the gulf, Malaysia and Indonesia are strategically located in South East Asia near the economic might of Singapore, Turkey is strategically located in the Mediterranean Sea / Black Sea. What about Pakistan? Both of its sea ports are still in their infancy. Pakistan cannot grow its exports unless it becomes a trading nation and tap fully into its geo strategic location. Just being an oil and gas transit for Central Asia won't help grow its own exports via CPEC route.

India is critical for us in our quest for attaining high-quality, sustainable growth as well. It is a fact one must grudgingly admit. However, forget India, we still have not been able to leverage our strategic relations with China to capture a significant (in our context) share of the Chinese market in select areas. FTA was poorly negotiated. The second stage has just started yielding some dividends but these are very moderate considering the potential of the Chinese market. If I were in Razzaque Dawood's place, my entire focus would have been getting to somehow capture a major share in a handful of sectors in the Chinese market. Low hanging fruit as stated in the interview. Then, there is the issue of CPEC 2.0 where the pussyfooting of the current government has cost Pakistan dearly in terms of the opportunity (cost). The development of SEZs went on at a snail's pace. One cannot expect Chinese investors to show up with us not even readying the SEZs. It is questionable that we would even be able to make the Chinese investors set up shop in these SEZs and export from here once these are set up.

1- We need to double down on our investments in the iT sector. IT is our fastest growing Exports at a growth of 40-50% annually for the last decade. Currently at around 2-3 BN. This can easily match/surpass our textile exports within 5-10 years with IT exports alone.

2- We need to seek investment from China/Japan/Korea/Malaysia/ East Asian tiger economies into the electronic sector. Settup cell phone/computer/laptop/ electronic production plants in Pakistan along the CPEC corridor. Export whatever is left over from the demands of the local population. We have a huge huge demand for such products and a 100+ million middle class that is more wealthy than any other middle class in south asia (taking into consideration land/properties/assets)

3- We need to cooperate significantly more with KSA/DUBAI/GCC states in setting up refineries in Gwadar/Karachi/Port Qasim. We can refile/reprocess gulf oil at a much cheaper rate than the Indians and re-export it adding surplus dollars very easily. Infact 30% of india's exports are refined/processed petroleum products from Gujrat. Our ports/refineries would be far close to the Gulf and our labor/land costs are also much lower than the Gangis. I am surprised we have not taken advantage of this in the last 50 years.

4- Double down on exports to Europe/China/America while focusing on new markets in Central Asia/Middle East/Africa/ South America.

5- Lastly we need to change the whole concept of CPEC. I strongly dislike the name CPEC because it makes it seem like the corridor is ONLY CHINA SPECIFIC, when in reality it is connecting our whole nation/region together. We need to reorient our thinking from CPEC to NATIONAL PAKISTAN ECONOMIC CORRIDOR (NPEC). We should invite other foreign investors into new infrastructure projects. Top of my list would be the Japanese/Koreans/US/Europe/GCC. Many new projects should be conceived and financed. Chief among them would be a bullet train from Karachi to Islamabad. Train would also run through major population centers ie Hyderabad/multan/Faisalabad/Lahore/Rawalpindi. Sure such a project may cost 10-15bn USD. But the economic impact would be beyond significant with over 100+ million people having access to this new form of transportation. 70% of our population would have the potential to take a bullet train rather than domestic airlines.

The costs in itself would be payed for within a few years. Eventually the concept can easily be expanded to Peshawer/China/Gwadar/Kabul and beyond.

Nice comment. You got a bit dreamy towards the end though with the Bullet train. The price tag might be even higher (much higher) than what you listed considering the distance between Isl and Khi. PS. what do we need the BT for other than transportation? It would only be a prestige project, one we cannot afford.

 

[Norwegian]

@Norwegian would be most pleased with the advocacy for the idea of an unabashed free float here, on a lighter note.

I am not an advocate of free float. I am rather a strong opponent of fixed exchange rate as it has caused havoc in Pakistani economy since 1947. I welcome and support any alternative to fixed exchange rate regime that has destroyed Pakistani finances over and over again. Thanks ❤

Keep the dollar flying

The fear of flexibility in the exchange rate has been shared by most, if not all, our finance ministers.

www.dawn.com

 

[Wood]

India is critical for us in our quest for attaining high-quality, sustainable growth as well. It is a fact one must grudgingly admit. However, forget India, we still have not been able to leverage our strategic relations with China to capture a significant (in our context) share of the Chinese market in select areas. FTA was poorly negotiated. The second stage has just started yielding some dividends but these are very moderate considering the potential of the Chinese market. If I were in Razzaque Dawood's place, my entire focus would have been getting to somehow capture a major share in a handful of sectors in the Chinese market. Low hanging fruit as stated in the interview. Then, there is the issue of CPEC 2.0 where the pussyfooting of the current government has cost Pakistan dearly in terms of the opportunity (cost). The development of SEZs went on at a snail's pace. One cannot expect Chinese investors to show up with us not even readying the SEZs. It is questionable that we would even be able to make the Chinese investors set up shop in these SEZs and export from here once these are set up.

Pakistan's FTAs with China may not necessarily be poorly negotiated. It is just that even with no tariff exports, Pakistan may not be able to manufacture goods that China is actually interested in procuring. In general, my observation is that China imports the following:

a) Raw resources
b) Luxury goods from International brands
c) High tech. goods and machinery from countries like Taiwan, SK, Germany etc. that China cannot make on its own.

Everything else that a normal developing country like Pakistan (or India for that matter) can produce is most likely something that China can already produce more competitively on its own. This is why I believe that FTAs with China is not an interesting proposition for any country that does not have a manufacturing capacity that can rival China.

For what it is worth, I do agree that Pakistan may be better equipped to export goods to India. Both countries are in similar stage of development and therefore Pakistani manufacturers can more realistically compete with those in India. But of course, the political situation will not allow for trade without tariff / non-tariff barriers to ever gain a foothold in this mutually antagonistic relationship

 

[Menace2Society]

electronic assembly plants with the cheap labor its win win. Make it happen.