‘Act Now Pakistan’: The World Bank suggests 4 ways to help speed up Pakistan’s export recovery
WB said that to eliminate the anti-export bias, the introduction of sunset clauses to tariff protection is necessary.
To help speed up Pakistan’s export recovery, the World Bank (WB) has suggested measures. WB recommended that the country should make use of online marketing platforms, abide by international standards, ease import restrictions, and reform the regulatory environment.
In the blog ‘Act Now Pakistan’, the World Bank said that Pakistan has also been affected economically by the coronavirus and its exports have experienced losses. During May 2020, Pakistan’s exports stood at $1.39 billion, which is the lowest in years. This is 34% lesser than the previous year.
WB further said that short-term global trade prospects limit improvement as maritime traffic analyses, forecast contractions in exports and a predictor of trade flows in upcoming months.
Why are exports important in Pakistan’s economic recovery?
Exports are very important for Pakistan’s economic recovery. This is because they provide job opportunities for Pakistanis, offer a boost to Pakistan’s productivity, help generate foreign earning, and offer Pakistani firms numerous opportunities to scale up in the global marketplace.
To strengthen exports once again, the WB has recommended 4 effective steps:
1. ‘Make in Pakistan’
Pakistanis getting a hold of the raw materials and intermediate inputs at world prices is what will make the industrial strategy ‘Make in Pakistan’, a success.
For many Pakistani producers of N95 masks, this means abolishing taxes, additional customs duties, and regulatory duties, which are currently 12%.
Import duties on goods have to be decreased slowly if ‘Make in Pakistan’ is to be followed by a ‘Sell to the World’ initiative.
Marketers in food processing are unlikely to go global due to the effective rate of protection, which is currently at 261%. They prefer the comfort of the highly protected domestic market. This means that import taxes are export taxes in disguise.
To eliminate the anti-export bias, the introduction of sunset clauses to tariff protection is necessary.
2. Finding new clients
The coronavirus also had a negative impact on buyer-seller links. Global buyers like JC Penney and J Crew, have left Pakistani exporters without clients as they filed for bankruptcy or stopped operations.
This is why finding new clients’ needs to be a top priority.
The Trade Development Authority of Pakistan (TDAP) should take notice of this problem and take the necessary actions. They should provide artificial intelligence and data to help exporters make use of online marketing platforms.
3. Abide by international standards
It is also mandatory that Pakistan helps its firms comply with international standards and get the right certifications.
Since many textile and apparel firms have shifted their production to face masks and shields for health care providers, Pakistan has an advantage in the PPE market.
However, fulfilling the strict health standards expected by international clients is quite expensive.
In global markets, testing standards cannot be compromised. This is why many producers had their products turned down at the borders of importing countries due to improper certification.
These rejections cause a dent in the reputation of both exporters and the countries of origin.
4. Upgrade regulatory environment
Since telework is becoming common, exports of services; in particular of information technology (IT) and IT-enabled services (ITeS) will grow significantly.
Pakistan needs to improve its regulatory environment in order to take benefit from this trend. The intellectual property needs to be safeguarded to help sustain growth in these departments and motivate firms to make changes in the industry.
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