Pakistan’s exports increased in quantitative term: Dawood

[Shahzaz ud din]

Pakistan’s exports increased in quantitative term: Dawood
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APP
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May 30, 2019
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• ‘Export in dollar terms could not go up and remained stagnant at the previous year’s level’

ISLAMABAD: Pakistan’s garments, knitwear, cement, food and footwear exports increased in term of quantity, however, due to the global decline in prices, exports in dollar term could not go up and remained stagnant at the previous year’s level.

Advisor to Prime Minister on Commerce, Industries and Textile Abdul Razak Dawood said this while addressing a press conference flanked by Special Assistant to Prime Minister on Information Dr Firdos Ashiq Awan on Thursday.

He said, “There is a big recession in global exports which have decreased by 3pc as compared to the previous year. The prices of the commodities, especially in the countries where Pakistan has a major share of exports, have also declined by over 7pc mainly due to the recent trade war between China and the US.”

He explained that the quantity-wise exports of garments, knitwear, cement, bedwear, food, and footwear increased by 29pc, 16pc, 13pc, 10pc, 11pc, and 27pc respectively during the first 10 months of the current fiscal year as compared to the same period of last year.

He said the export of yarn, which was a low value-added product, had declined during the period, showing that the government was moving in the right direction by focusing on the promotion of high value-added products. “The export of yarn will gain momentum with the passage of time.”

The advisor noted that the volume of exports also declined in India, Bangladesh and Turkey during the previous year.

On the other side, he said, the imports, due to the devaluation of Pak Rupee, had declined by $4 billion during the period, which was a good sign for the country’s economy.

Dawood pointed out that unless the local businessmen were not given access to the international market, the exports would not be increased, adding that the government had achieved success from Indonesia and China from where it managed to get duty free access on 20 and 313 items respectively.

He said in the Free Trade Agreement (FTA) phase-II with China, the government had included a condition that if any local industry faced loss, Pakistan had the right to suspend the agreement for maximum 180 days.

To a question, Dawood said in order to expedite the implementation of FTA-II, a Pakistani delegation would visit China on June 17 while in July this year, he himself would visit China to further communicate the process.

To another question regarding the government’s expected decision of taking back the facility of zero-rating to five export-oriented sectors, the advisor said that the decision had not yet been taken in that regard.

He stated that underinvoicing was a big issue in the country, as it was causing major hindrance in the way of revenue collection.

“There is no doubt that the government is not receiving taxes from the local sale of various companies, therefore the government is taking special measures to discourage such practices,” he concluded.

 

[AZADPAKISTAN2009]

Yes we export more quantity because our currency has gone down so we don't make extra money

 

[xyxmt]

Yes we export more quantity because our currency has gone down so we don't make extra money

This is what my reply has been to cheer leader saying devaluing rupee will increase exports, no we sell 1.5 tons of rice for the same $$ we were selling 1 ton 8 months ago....cheers.
What these so-called economists don't understand that Pakistan has limited quantity of exportable items and even if you devalue rupee to 300 per dollars you only have 2 million tons of rice to export, now we will sell those less $$ than before.

 

[SHAH820]

This is what my reply has been to cheer leader saying devaluing rupee will increase exports, no we sell 1.5 tons of rice for the same $$ we were selling 1 ton 8 months ago....cheers.
What these so-called economists don't understand that Pakistan has limited quantity of exportable items and even if you devalue rupee to 300 per dollars you only have 2 million tons of rice to export, now we will sell those less $$ than before.

actually world don't work like that

if our product is high in price against similar price product from another country why the F* you think they will buy pakistani product who care what is pakistan they want cheap product with relatively good quality

devaluing Rupee make our product cheaper than others in relative to quality

manufacturing companies are earning more Rs and producing more product forcing them to work in their full capacity which also force them increase their capacity (means they will build more plants why because increase in demand and more Rs).

this will flourish our industry

have you ever gone to local market ? about 90% of the product are imported even fruits vegetable are imported (we are agricultural country why the F* do we need to import basic vegetable or fruits which already grows in our country) no one wants to work hard they just want to make easy money.

from 2013 - 2018 our exports drop 50%-70% textile industry shuts downed or suspended their production same can be seen to our cement, fertilizer etc we were on the verge of becoming one of the biggest exporters of these products now we can't even full fill our own demands due to the fact we don't make them any more

 

[xyxmt]

actually world don't work like that

if our product is high in price against similar price product from another country why the F* you think they will buy pakistani product who care what is pakistan they want cheap product with relatively good quality

devaluing Rupee make our product cheaper than others in relative to quality

manufacturing companies are earning more Rs and producing more product forcing them to work in their full capacity which also force them increase their capacity (means they will build more plants why because increase in demand and more Rs).

this will flourish our industry

have you ever gone to local market ? about 90% of the product are imported even fruits vegetable are imported (we are agricultural country why the F* do we need to import basic vegetable or fruits which already grows in our country) no one wants to work hard they just want to make easy money.

from 2013 - 2018 our exports drop 50%-70% textile industry shuts downed or suspended their production same can be seen to our cement, fertilizer etc we were on the verge of becoming one of the biggest exporters of these products now we can't even full fill our own demands due to the fact we don't make them any more

he genius I stopped reading after highlighted part, international trade is done in Dollars not rupee. but for your sake we assume your point is right that means you will sell 1.5 tons for same dollars as we we selling 1 tons before, as i said in my post. and what is that we are trying to bring in more Dollars? or just exporting more rice is our problem

 

[SHAH820]

he genius I stopped reading after highlighted part, international trade is done in Dollars not rupee. but for your sake we assume your point is right that means you will sell 1.5 tons for same dollars as we we selling 1 tons before, as i said in my post. and what is that we are trying to bring in more Dollars? or just exporting more rice is our problem

lol genius,

international trade is not done in only dollar

ok let me just ask you a question assume we are selling 1 ton of rice in $500 a bangladeshi is selling 1.5 ton in $500 from who you'll buy from? with same quality

for cement fertilizers etc they are sold in large quantity lesser price more margin of profit

same goes to private companies

tell why western countries buy products from indian bangladshi pakistani companies ? they can produce their own why so much trouble then why shifting production line to china ?

 

[xyxmt]

lol genius,

international trade is not done in only dollar

ok let me just ask you a question assume we are selling 1 ton of rice in $500 a bangladeshi is selling 1.5 ton in $500 from who you'll buy from? with same quality

for cement fertilizers etc they are sold in large quantity lesser price more margin of profit

same goes to private companies

tell why western countries buy products from indian bangladshi pakistani companies ? they can produce their own why so much trouble then why shifting production line to china ?

Hey Google economist lets do some math, Pakistan has nothing to do with what BD does.

you have 10 tons of rice to export, price per ton is Rs 100
at $1=Rs 100 how many dollars will you earn....yes genius you got it you will earn $10

now $1=150
you still have 10 tons of rice to export and price is still Rs. 100 per ton
you will earn how much in Dollars...yes you can do it without google, its $6.5

now you will have to sell 15 tons to make $10.

its ok don't feel bad, even Asad Umer the marketing genius did not know that. This is what happens when just read a line on Google and watch some "economists" say that on TV that devaluing currency means more export without considering ground realities. Pakistan only has two mil tons of rice to export and devaluing currency doesn't mean you rice production will go up...now you will earn less dollars for your rice.

 

[SHAH820]

Hey Google economist lets do some math, Pakistan has nothing to do with what BD does.

you have 10 tons of rice to export, price per ton is Rs 100
at $1=Rs 100 how many dollars will you earn....yes genius you got it you will earn $10

now $1=150
you still have 10 tons of rice to export and price is still Rs. 100 per ton
you will earn how much in Dollars...yes you can do it without google, its $6.5

now you will have to sell 15 tons to make $10.

its ok don't feel bad, even Asad Umer the marketing genius did not know that.

I'm a buyer
my demand is 20 ton of rice I don't care if you are a afghani, pakistani or an Martian I don't how much you are earning I only concern with how much I have to pay for 20 ton of rice or whatever if I have to pay $500 for 20 ton from you or should I buy 20 ton from an martian for $400


If pakistan is not gaining anything from selling at high no one is buying you can see from 2013-2018 our exports drops and why was that? your great mind should have anything for that.

have you ever went to a factory? full system have to be ran irrespective of 1 product or 1,000 product or 10,000 workers have to be paid full month salary irrespective he is working 2 hour a month or 200 hours

on one care how much you are earning they only care how much they are paying

lower price product is only possible if manufacturing cost is low devaluing will give a chance for our industry to breath an labor salary will still be same but profit margin will increase for industry

 

[valkyr_96]

This is what my reply has been to cheer leader saying devaluing rupee will increase exports, no we sell 1.5 tons of rice for the same $$ we were selling 1 ton 8 months ago....cheers.
What these so-called economists don't understand that Pakistan has limited quantity of exportable items and even if you devalue rupee to 300 per dollars you only have 2 million tons of rice to export, now we will sell those less $$ than before.

it is not limited quantity but different-iable items. It elementary J curve economics this always improves BoT but has mixed results on BoP. Devaluation made foreign consumers switch over to us as now we are comparably cheaper but the fact that comparables were cheaper was because of their costs were and are low. This is where the previous governments had to work but didn't. Why do you think China, Vietnam etc keep their currency weak? Because it works. The issue remains that the global economy is not doing well since 2008. For Pakistan their is no other option it needs import substitution and export oriented industries. The question is who is going to do that?

 

[xyxmt]

it is not limited quantity but different-iable items. It elementary J curve economics this always improves BoT but has mixed results on BoP. Devaluation made foreign consumers switch over to us as now we are comparably cheaper but the fact that comparables were cheaper was because of their costs were and are low. This is where the previous governments had to work but didn't. Why do you think China, Vietnam etc keep their currency weak? Because it works. The issue remains that the global economy is not doing well since 2008. For Pakistan their is no other option it needs import substitution and export oriented industries. The question is who is going to do that?

I once again emphasize that Major portion of Pakistan's exports are commodities (rice, cotton, sugar, wheat, fruits). These are in limited quantity since you production is not going up but population is hence reducing the size of exports. we can talk about Vietnam, China and BD but these countries have value added exports yes their currency value effects their exports, now in Pakistan's case devaluing of currency will have adverse effects since you are exporting more sugar, rice, fruits and cotton for same or less $ amount, which means you are taking it away from your public. Even your textiles are bedsheets and towels which is one step above raw cotton. one formula does not fit all just because book says so. This is why your commerce minister is saying exports are up in quantity but not in value...it will never be unless majority of your exports are industrial products as you washing machine gets cheaper but you can make as many as you want for exports, not the case with rice and cotton.

I am sorry but my educational background is Computer Science and did not even take Econ 101 back in University...but this to me seem like a common sense economics.

I'm a buyer
my demand is 20 ton of rice I don't care if you are a afghani, pakistani or an Martian I don't how much you are earning I only concern with how much I have to pay for 20 ton of rice or whatever if I have to pay $500 for 20 ton from you or should I buy 20 ton from an martian for $400

you are on the left side of the table and judging the effect of devaluation on the right side. make yourself seller!!
that what you are exporter, give me an example from seller's side....WTF an Afghan care how much you getting screwed he enjoying the low price

 

[Abdussamad]

Higher quantity at lower price essentially means labour productivity is going down. We are working harder to earn the same amount because our exporters don't add enough value!

 

[RIP Pak LAW]

Well atleast its not going down. We lost 1 billion dollars of exports during pmln regime every year that makes drop in $5 billions in exports over 5 years.

 

[valkyr_96]

……….

First of all countries produce in limited quantity. It really isn't a case of production vs population because the products will be diverted to the highest bidder (whether local or foreign). You export what you make in surplus and you import what others have in surplus. A concept called "competitive advantage" suggest that efficiencies within countries allow it to adjust to a portfolio where it can be competitive leaving other areas for other countries to develop as per their competency. Supposedly everyone wins.

Pakistan is not the only rice, cotton*, sugar**, wheat, fruits (assuming this is the basket of commodities Pakistan exports) exporter, there are others as well. In order for them to sell, they would either have to differentiate or sell at least on the same price level as Pakistan. For this either the cost of production has to be low, or the country subsidizes their exports leaving them open to anti-dumping duties or they have to devalue their currency. Pakistan is not selling these commodities at a loss but is being price competitive as do other countries as per the example given.

As I have pointed out J curve phenomenon is observed during devaluation which effects BoT -that is quantities improve. But BoP which is the overall Price x Quantity might or might not improve. The reason is elasticity or the sensitivity of the quantity to adjust with the change in price. Furthermore, the improvement is not sudden and will take time to improve (because of inertial resistance to change). Mr. Dawood also talks about the impact of global economy, what he is trying to say is that whatever the supply (even if the market is oversupplied) the lack of demand pressure is keeping the prices low. If the oil prices remained depressed devaluation would not have been necessary as the government has been working to improve the cost of production.

This is not a "scientific" formula but an observable phenomenon. The reason why it is undertaken (IMFs favourite tool) (Greeks wished they had their own currency which would have allowed them to devalue when they were being blackmailed for loans) is because eventually whatever a country does, needs to come out of its pocket. This is the only surefire way of preserving precious reserves and improving on them.

There are a few disconnects here and there but I don't want to start a lecture on economics here. Although I appreciate you for saying that you have never studied economics. Economics isn't a hard science, it is split between different school of thoughts, easier to formulate then to implement but it has recorded some observations which are a common and repetitive occurrence. I would also like to address your "seller" viewpoint. The seller gets paid his price which does not change except his buying power reduces provide the seller does not have a taste for foreign goods he should be alright. What he should be worried about is the inflation (cost-led) which will surely reduce his buying power as is the case right now due to high oil prices and even higher electricity prices.

Pakistan position is worse off because we borrowed money for consumption not to establish revenue generating assets. At the same time we gave generous incentives to entities to fuel our consumption which means that not only we had borrowed and at a high rate we gave away most of it by consuming needlessly expensive things. Obviously, the main beneficiary of not devaluating the currency was money laundering lest the rupee fell so low that it would not have a meaningful conversion.

*don't think we do that as well we are a net cotton importer at least
**I don't think Pakistan exports sugar as it is far cheaper in the commodity market than what it costs in Pakistan)

 

[Norwegian]

Obviously, the main beneficiary of not devaluating the currency was money laundering lest the rupee fell so low that it would not have a meaningful conversion.

Very valid point. But as we all know @xyxmt is a big supporter of those corrupt parties

 

[valkyr_96]

Very valid point. But as we all know @xyxmt is a big supporter of those corrupt parties

Whether he is a supporter of corrupt parties or not...is not the issue? The issue is that he expects that if the prices go down the quantity does not increase (which has increased). This does not require a lesson in economics maybe business but it is a common occurrence where companies reduce the prices of their goods. The do not do it out of generosity but they make back their money with the increase in quantity demanded.