Finally, the government has bowed to the pressure of local industrialists and importers, whose consignments were held-up at ports due to a ban imposed in May on the import of “non-essential and luxury items”. Now, the ban has been lifted and the government has allowed the entry of all withheld consignments (except items which still remain in the banned category including automobiles, cell phones and electronics. Previously, the two-month ban had created a lot of difficulties for traders and those whose jobs were dependent on the business of imported items. The intricacy of the matter kept the government undecided on how to deal with the situation created due to the ban as the import bill was drying up national coffers as all payments were made in dollars. Moreover, a lull in Pakistani exports and a relative spike in imports had led to a shortage of dollars in the economy, putting pressure on the local currency and dwindling foreign currency reserves. The worrisome factor is that Pakistani manufacturing industries have failed to increase the level of export, which is considerably low compared to the import of different items.
The scenario gives an insight into two aspects of the country’s economy related to the import of various luxury items. It has been ascertained that automobiles, cell phones and other home appliances are major contributors to ballooning the import bill. The reality was established when the figures were reported in the media. Reportedly, the ban had helped cut the imports of automobiles and mobile phones, which shrank by around 70pc from $399.4 million to $123.9 million between May 20 and July 19. It reveals that there is a need to give a boost to the local production of these main items, whose demand is high in our society. Investors need to be given incentives for establishing production plants for local assembling of cell phones and vehicles. It is also the responsibility of the general public that it should rely more on local products than insisting on the use of imported vehicles, home appliances and phones.
The government should not be complacent after relaxing the ban. Rather it should take some concrete steps for improving the standard of indigenous items so that the customers, who mostly rely on imported items, can turn to Pakistani products. Moreover, by improving the standard of locally produced items, the same can also be exported to the international market bringing in the much-needed foreign exchange. Increasing income through the trade of locally produced items is one way the government can increase the country’s cash earnings.
The exercise can be applied in phases as it will not be easy to change the habits of the people who consider it a part of their lifestyle to use these imported items. Besides, local products still have a quality issue when compared to their imported counterparts. There is a need for a long-term action plan to convince local consumers to use domestic products by bringing their quality standards on par with the international brands. At the international level, the government needs to engage experts in the branding of its items to make them more acceptable. Surely these measures will help decrease the existing trade deficit. The real way to maintain a balance is to increase productivity and focus on subsidies on selective export items besides controlling imports to live within the means the nation can afford. In this regard, the government can abolish GST on certain export items for making them affordable in the international markets.
