THE FPCCI is rightly concerned over the burgeoning trade deficit that has widened by 18.1pc to $7.1bn in the first two months of the current fiscal year due to growing imports and stagnating exports. The country’s apex trade body has described the rising cost of doing business as a binding constraint on exports. A policy rate above regional rivals, costly and unreliable energy supply, and higher taxes on petrol are structural costs that show up directly in the price of exporters. This explains a good part of why our exports keep losing shelf space to competitors who face none of these burdens. But it is not the whole story. Start with the product mix. Pakistan’s exports have leaned on textiles and apparel for decades, and the composition has barely shifted even as competitors moved up the value chain. Bangladesh, for example, has pushed harder into higher-margin garments and diversified into pharmaceuticals and light engineering. Pakistani exporters, by contrast, have been content to ship yarn, grey cloth and low-end made-ups, and other commodities.
Value addition was always the way out of that trap. But most manufacturers did not opt for it. The market concentration compounds the problem. Exporters that have spent decades selling largely in the same markets have limited leverage when demand softens, and no cushion when a market turns against them. Product and market diversification takes marketing spend, product development and a tolerance for lower margins — costs our industry has generally skipped in favour of the domestic market for higher pricing power and thinner competition. Though understandable for an individual firm, collectively, it has hollowed out the export base. Most exporting companies remain family-run and lack in-house expertise in global marketing, compliance and product design. Modernising means hiring professionals and ceding some control. Few owners have been willing to do this. If borrowing costs are truly the obstacle, the stock market offers a way around them. Equity carries no policy rate. Yet companies show little appetite for listing due to a reluctance to open their books to regulators or share profits outside the family. Most may simply not be investment-grade enough to survive that scrutiny. The export sector needs an overhaul on both ends: a government policy that favours exports, and real diversification, value addition and corporatisation from firms themselves.
