Should worry pro-industry government
This, of course, is not something Ishaq Dar’s rhetoric will be able to gloss over easily. Textiles take the lead in our export mix because we have never been able to add value to manufacturing and industry. That is one reason, among scores of others, that the rest of the region grows faster than Pakistan. Most economies are more diversified precisely because of the value-add feature; once exports increase the burden on the deficit is more evenly spread, and there is a wider range of options, including a more dynamic human resource band, to restructure the economy.
Pakistan runs on a very different mindset, economically at last. Decade after decade, despite repeated calls, there have been practically zero efforts aimed at a thorough overhaul of the export basket. Adding value to production would require big investments and a long gestation period – the requisite lag-time between investments and results. And probably because nobody wanted to make investments that remained invisible for too long, we are still where we were decades ago, dependent on clothes and fruits for the bulk of our export earnings, hostage to a host of factors beyond anybody’s control.
But APTMA’S decision now to voluntarily shut down units across the country is going to hurt the government like it does not even see coming. The main reason is that the government is unable to fix the other arm of revenue generation either – tax collection. And now, because of the ‘burden of incidental taxes, provincial cess, system inefficiencies and punitive withholding tax regime’, the cost of business, at least for APTMA, has ‘gone through the roof’. Expanding the tax net was another of Nawaz Sharif’s core promises during the election campaign, just like facilitating industry in every way possible. But now that failure on the tax front is crippling industry, where does the government stand? Do they even realise the impact of loss of core export money on currency stability, current account deficit, etc? Are they even aware of the combined economic/financial, political and indeed social impact of such unforeseen disasters? Instead of devoting further time and money to hiding oversights and incompetence, the government is urged to finally put a workable plan in action, and rejuvenate the earning regime, lest the people take notice and, subsequently, take things in their own hands.