Add some value, please
Commerce Minister Khurram Dastagir was spot on at the 14th Annual Textile Asia exhibition in Lahore the other day when he expressed concern at Pakistan’s inability to convert its natural cotton endowment into value-add export earnings. He was right, again, that it was this inability that led to losing precious markets to competitors like India and Bangladesh. Being the fourth largest cotton producer is not helping Pakistan in the international market, and the government is squarely to blame.
Perhaps the commerce minister should express similar views in meetings with government leaders. Unfortunately, the prime minister’s kitchen cabinet does not accord value-addition economics much respect. It is happier devoting time and investments to mega projects like highways and power plants. They look good and bring votes. But dipping export earnings point to far deeper problems that the government ignores only to its peril. No value addition means exports are not competitive. And with low earning the deficit widens, of course. That is a serious problem because the other natural avenue of revenue collection – tax earning – is also badly compromised. And no matter how loudly the N-league campaigned in favour of tax reforms ahead of the general election, it has not been able to make any improvement, nor is it likely to in this cycle.
There are, of course, structural matters to be considered as well. Even if there is a spirited effort towards adding value to exports, the existing production climate would not support such ambitions. The commerce minister heard loud calls at the exhibition about how more than a quarter of the total production capacity of the already inadequate value added sector could not be utilised because of gas and energy crises. Unless these necessary steps are taken, production, manufacturing, and exports will remain below par, which means the deficit will be a lingering problem, as will be slow growth.