Pakistan, with its burgeoning population of around 247 million is the fifth largest country in the world, a fact that presents a compelling case for its potential to emerge as a major economic hub. The country’s vast human capital, coupled with its strategic geographic location in Asia, access to raw materials and cheap labour offers immense opportunities for trade and export growth.
Unfortunately while Pakistan is the 5th largest nation in the world, it is the 66th largest exporter in the world. It lags far behind regional countries like Japan, Indonesia, Iran, Vietnam, South Korea, Thailand and India. Despite all the advantages that put Pakistan in prime position to be a major player in global trade, Pakistan’s extremely low exports and large trade deficit poses a significant concern. The trade deficit was estimated at $38 billion in 2022, with imports far outstripping exports. The country’s exports reached a record high of $31.782 billion, but imports stood at $70.176 billion.
It is time for Pakistan, a nation endowed with immense potential, to take its rightful place in global trade by 2030 and achieve $100 billion in annual exports. Pakistan’s potential to achieve $100 billion in exports by 2030 is anchored in its rich history of Indus civilization, its people, natural resources and strategic geographical location.
In this article, we present a comprehensive and strategic approach that will drive Pakistan’s export growth and the critical steps the nation must take to achieve the ambitious goal of by 2030:
- Market Access & Expansion
Pakistan has a clear advantage in trading with some countries where it has a trade surplus and others where it faces a trade deficit. For example, Pakistan faces a major trade deficit with China but a significant trade surplus with Great Britain. Pakistan’s exports to China stand at around $2.5 billion per year but its imports from China cost $16.1 billion. On the other hand, Pakistan’s exports to Great Britain stand at £2.3 billion but imports are just £1.8 billion. Pakistan enjoys a similar trade surplus with Germany, Netherlands, Afghanistan and the United States.
This gives Pakistan the opportunity to focus, engage and expand its market with countries and regions that give Pakistan an export advantage. Pakistan must negotiate new free trade agreements (FTAs) and preferential trade agreements (PTAs) with key trading partners such as Great Britain that can open new markets and expand existing ones for Pakistani products and services. Great Britain is open to trade and looking for strong trade partners since Brexit, Pakistan is in a great position to take advantage of this mutually beneficial situation not only to expand its export market share in Great Britain but also use the country as a gateway into Europe and America. We believe that Pakistan can easily double its bilateral trade with the UK from £4.1 billion ($5.3 billion) today to £8 billion ($10.3 billion) by the year 2030.
Similarly, Pakistan’s huge exports to Afghanistan also shows that countries in Central Asia such as Uzbekistan, Turkmenistan, Tajikistan, Kyrgyzstan and Kazakhstan can also offer great markets for Pakistani goods and services. Strengthening trade relationships with these countries can diversify export destinations. Outside Asia, regions such as Africa, Latin America and Eastern Europe are major geographies that must be also explored for trade growth and exports.
- Export Base Diversification
Pakistan’s export portfolio is heavily reliant on textiles and agricultural products. To achieve $100 billion in exports, expansion and diversification is crucial. The country’s competitive advantage in textiles must be expanded into homeware, furnishing and art. Pakistan’s pottery, ceramics, marble furniture, gemstones for healing, environmentally friendly traditional home and outdoor products from regions such as Swat and Kashmir along with Gandhara art for homes can add billions to the nation’s exports.
Similarly Pakistan must also diversify and expand into high-value-added sectors such as IT services, medical tools and equipment, pharmaceuticals and supplements, electronics, sports and fashion industry items such as shoes and jewelry. These can significantly boost export earnings by billions. Pakistan’s neighboring countries are generating $100 billion from each single industry mentioned above.
- Promote & Sell Made In Pakistan
There must be an integrated effort to bring together businesses, trade councils such as UK Asia Trade and Investment Council and the government to share know-how, collaborate and get trade done. Pakistani businesses need support in accessing markets, negotiating deals, shipping their goods, getting distribution channels sorted in export markets and ensuring smooth sales. Trade councils like us in partnership with export promotion agencies can provide comprehensive guidance and support to exporters from market data to export facilitation services to ensure trade is done. The government must invest in marketing efforts and branding to create a positive image of Pakistani products globally. Developing a strong brand identity and promoting Pakistan’s unique products can attract more buyers and increase export revenues.
- Enhance Export Finance & Make Exchange Easy
Enhancing trade finance is pivotal for Pakistani exporters to scale up and compete in global markets. One key aspect is the availability of long-term financing options tailored to the needs of exporters. Apart from increasing the obvious financing for working capital requirements, financing towards capacity expansion can help businesses invest in new technologies and improve production efficiencies. Financial instruments for exporters, such as export credit insurance and guarantees, can provide a safety net for exporters against potential losses due to buyer non-payment or political instability in the importing country.
Pakistani exporters often face significant hurdles when it comes to international money transfers and payments. These challenges can hinder export growth, delay payments, and increase operational costs. While billions can be transferred to countries across Asia with a click, money transfers to Pakistan remain a major problem for businesses, especially SMEs trying to export their products. Pakistan must eliminate charges on payments for exports, reduce red tape on payments, ensure transformation of digital payment systems and partner up with international financial institutions and British fintech companies such as Wise and Revolut to ensure SMEs receive payments fast, cheap and efficiently. This will reduce costs for exporters, help them compete globally and earn billions for the nation.
Another crucial element is the role of public and private sector partnership in enhancing trade finance. Governments must partner with financial institutions to create favorable financing schemes for exporters, such as interest-free or low-interest loans and grants. Furthermore, the government of Pakistan and UK Asia Trade and Investment Council can collaborate to initiate new programs such as “Buy From Pakistan” and invest together to empower Pakistani exporters to compete more effectively on the global stage and contribute to the country’s economic growth.
- Attract FDI & Make Trading Easy
Pakistan has abundant natural resources and human capital. However, to fully realise its potential, Pakistan must address several challenges including political instability, corruption and infrastructure deficiencies. By implementing sound economic policies, improving governance, and investing in education and skills of the people, Pakistan can unlock its vast potential and emerge as a global economic powerhouse. By offering attractive incentives, simplifying regulatory processes and making it easy to do business, Pakistan can attract foreign direct investment to boost advanced manufacturing capacity, create jobs and boost exports.
Similarly, digitising customs processes, upgrading port facilities and reducing transit times can significantly reduce trade costs and help exports. The bureaucratic hurdles must be minimised and regulatory processes must be streamlined to facilitate exports. Government support to export-oriented industries through fiscal incentives, subsidies and credit facilities, and support for research and development, technology transfer, and intellectual property rights protection must become a priority.