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Saturday, October 8, 2022
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Export potential

There is a good news that Pakistan’s exports of goods and services to Germany have witnessed an increase of 15.40 percent during the six months of the financial year (2021-22) as compared to the corresponding period of last year. The State Bank of Pakistan (SBP) has reported that overall Pakistan’s exports to all countries witnessed an increase of 28.96 percent in six months, from $11.814 billion to $15.236 billion.

Undoubtedly, it is good development and in order to keep the trend upward, the government needs to give more incentives to the exporters of the country. While it may be a moment to rejoice for the exporters, however, looked at from a holistic perspective, it betrays a fundamental flaw with the over-arching policy of the country’s exports; the costly electricity. The exports industry, by and large, has been suffering from the monstrous price of electricity provided to the industrial sector which jacks up the costs of manufacturing goods. By the time the end product comes out of the factories, it already is cumbered with an exorbitant cost, making it more expensive for the consumers within the country and importers without, making indigenous products highly undesirable. The goods coming out of China, for example, leave the Pakistani products in their wake due to their low costs. Pakistan, despite its proverbial abundant natural resources, has a tremendous cost of electricity. The statistics are harrowing if the cost of labor is taken into perspective. The minimum wages of workers in Pakistan, as things currently stand, are amongst the lowest in the world. Globally, China has been able to send the US job market into a meltdown by making US companies outsource their manufacturing to China due to the cheap labor available there. While conditions for Pakistani wage workers are similar to, if not worse than, those in China; the volume of Pakistani exports is still incomparably low. Apart from the poorly skilled labor available in Pakistan, the single most significant factor in this difference is the cost of manufacturing goods. The government needs to decrease the price of electricity to fully utilize export potential of the country.

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