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Energy crisis, war on terror main reasons for slow growth rate of exports

Energy crisis, war on terror main reasons for slow growth rate of exports

ISLAMABAD: The Commerce Ministry has said energy crisis and the ongoing war on terror are major reasons behind slow growth rate of Pakistan’s exports.

“It is a fact that there was imbalance between imports and exports of the country during the last two years,” a ministry source told Customs Today on Saturday. He added that the magnitude of imbalance shrank over $1 million in the fiscal year 2013-14 as compared to the fiscal year 2012-13.

“The imbalance between imports and exports was $20491 million in fiscal year 2013-13 which shrank to $ 19981 million in previous fiscal year 2013-14,” the source said, adding that the country’s exports were $24,461 million while imports were $44,952 million in 2012-13, however, imports increased to $25,132 million while exports also soared up to $45,113 million in the last financial year 2013-14.”

He said the country’s exports were on the rise, showing positive growth of 2.7% during the year 2013-14 as compared to exports of 2012-13.

“However, ever worsening energy crisis is the main reason of slow export growth rate as exports are not increasing at a faster rate as the major industrialists and exporters are complaining about the severe shortage of energy supply,” he said.

The source also added that the energy shortage had badly affected the production and the growth rate of exports was merely 2.7%.

He said that Pakistan’s involvement in war on terror had created law and order issues which resulted in decline of investment and slowed down the growth of exports.

“On the other hand, there is a huge gap between imports and exports i.e. about $20 billion. The reason for higher imports is the fact that most of our imports are inelastic,” the source said, adding that the country had to import crude oil, edible oil, machinery and chemicals, industrial raw material which accounted for 67% of imports.

The source said the country’s export base was extremely narrow and about 63% of export earning was contributed by the cotton group alone while other three items, leather, synthetic made ups and rice contributed about 15% of total exports, but unfortunately these four items were relatively low value added products.

He proposed steps for export promotion and said that diversification of product and market should be focussed because presently exports were highly concentrated in five products, cotton, leather, rice, synthetic goods and textiles.

“Exports which account for 78% of our exports are generally of low quality and low priced in the international market compared to other competitive countries.”

“Pakistan is gradually moving towards not only higher value added products in export of textile manufactures but have added 10 more sectors like engineering goods, marble and granite, fisheries, IT, finance and accounting services for increasing earning in exports,” the source added.

Diversification of products, he said, new markets for the Pakistani goods should be explored in African countries, South America, Russia and Eastern Europe.