Pakistan’s exporters say they are losing market share because of loss in competitiveness. These issues include the high cost of doing business, including high withholding and indirect taxes, and a distorted import tariff structure; weak implementation of export promotion measures; lack of coordinated support from formal institutions at federal and provincial levels; the relatively high cost of energy vis-a-vis regional economies; and an exchange rate regime that hurts exporters.
Another problem exporters face is in getting their duty drawback. The country’s falling competitiveness is also driven by poor trade facilitation, infrastructure gaps, inefficient logistics and poor investment climate.
Export competitiveness can be improved by making use of the country’s GSP Plus status and bilateral and regional trade agreements, for example with China, Malaysia, and Sri Lanka. Exporters say an export-oriented industrial policy is needed with a focus on broader institutional support to exporters along with a duty-free regime for inputs and a strategic collaboration between public and private sectors. Small and medium enterprises need to lend financial and technological help with a focus on operational management skills, financial assistance, innovation, and technological upgradation. What’s also needed is capacity building through education and training along with agreements to ensure transfer of foreign technology.