Why Exports of Pakistani Products are Decreasing?

Some may say it is Chinese market invasion, more number of opinion makers may declare internal law and order situation as a major culprit, while most rank Pakistan’s damaged outlook due to terrorism. Business in Pakistan is failing big time at behest of failing product quality also. I put up this simple question with my LinkedIn follower to help identify some reasons due to which Pakistani product exports have seen a reported downfall of -4.761% per year. The members from communities of professors, exporters, office holders of Chambers/Federations of Commerce and Industries and scholars from Pakistan and Pakistani Embassies were invited to participate in this discussion.

These highly admissible results that I attracted were around but not limited to these reasons (and remedies):

Quality Standardization hurting Pakistan Exports

Quality Standardization is poorly handled with local manufacturers. In Pakistan, mostly businesses are being operated under the mindset of SAITH prevalance. Quality certification and adherence to health, labor, and environment standards is still a problem for exporters. Low quality of education is the very reason the quality of any unique product is poor. Quality Control and Quality Assurance is one major factor. The production cost is definitely high compared to India and China in addition to the supply chain issues; lot of time delays, wastages, quality isn’t up to the mark.  Most of our products are not complying the IEC, ISO/PSI Standards. CE marking is missing to cover EU member states. In this regard, big chunks of learning from China, India, Thailand, Malaysia need to be applied to our export business. UL is missing to cover the USA market. Testing Reports are not bothered against ISO 17025 as an evidence of compliance of products. Certifications like ISO, OHSAS are taken just for display, our exporters simply don’t understand the concept of PDCA cycle, 6 sixma etc. There is no concept of labor laws, lack of trained and skilled labor and thus lack of professionalism and standardization. Many companies don’t have R&D department, they lack of skills in manufacturing products.

 

Our production cost is on higher side in the international market. Cost of production is on the higher side due to increasing energy cost and Government policies. We are at about 150 position when considering ease of doing business. Pakistani exporters need export oriented friendly Government policy. Electricity is too expensive. Corruption in customs has lead to overheads. Slow processing of customs for clearance introduces exporters to adopt much disliked malpractices. Exchange rate is even a bigger issue. Rupee is overvalued therefore exports are always dwindling. Use of outdated technology also leads to inefficient production. Thus, manufacturing errors in products and industrial down falls. Poor land, road, or rail transportation service also become a hinderance when it comes to reducing logistic costs. High Fuel costs also put a heavy burden on firms and can adversely affect their competitiveness. The availability of cheap fuel, especially electricity, is essential to boost exports.

Understanding Import and Export of Pakistan

Our commercial sections of Pakistani Embassy in various countries are not effectively working to promote Pakistani Products. One remedy is to create export culture. The main problem lies in the planning; no one really planned for the future. Very hard to see things moving in the right direction in terms of making Pakistan an export oriented country. Bureaucratic hurdles, corruption, injustice, bribery and political interference is helm of affairs. Many documents required for exports. In most common opinion poor management structure, at every level, is to be held responsible for decreasing exports. We lack at Physical infrastructure and compelling Export zones. Embassies ought to play an important role to represent country’s products in respective markets. Exporters need facilitation from embassies with regards to successful trade missions. Involvement of successful export companies in each sector is necessary. These successful export companies must be engaged in policy amendments of trade missions. Respective Chambers of Commerce need to educate local SMEs to come out of their contentment and look for global markets.

Cotton and Mango Pakistan

In 2010 and 2011 the cotton world has been taking a hit. Pakistan, the fourth largest producer of cotton saw devastating floods affecting the cotton crops. Shezan International Limited is a Pakistani beverage corporation and manufacturer. It has various products including soft drinks, juices, ketchups, and jams. The company is also the single largest grower of mangoes in Pakistan. Two industries, Agriculture and Overseas Pakistanis are hope at this stage to large number of intellectual; unfortunately, these are not our priority. I am a strong believer that Pakistan can do better in terms of agriculture. For example Pakistani mangoes have a lot of demand over seas but almost 40% produced gets wasted during the due to inefficient supply chain. Entering in this value chain makes sense if one has the resources and know how. We have huge potential and mostly success is obtained on individual efforts more Collective wisdom and efforts to be applied and learn from our mistakes and look to future. By addressing lot of these factors with short term policy setup to encourage exporters, by ensuring improvement around power sector, by having detailed review of tax policy; and technology up gradation on regular basis, exports could be improved and bill of imports of pakistan could be countered. The best part is they know everything. We just need to keep pushing and highligting these issues day in day out.

Related: What are the Economies of Scale?

Any other point about this discussion you may like to raise please share.