• Saturday, May 25, 2019

Options to Improve Foreign Exchange Reserves

Discussion in 'Pakistan Economy' started by CrazyZ, Mar 15, 2019.

  1. CrazyZ

    CrazyZ FULL MEMBER

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    How can Pakistan improve its Foreign Exchange Problem in the short and long terms.

    Short Term Options:
    Curb import of non essential items such as cars, consumer electronics and gold. Cars are particular bad from a forex prospective. Time to slap big tariffs on imported cars and parts, I recall reading another member's post ridiculing Bangladesh for this but the Bengali's are right... cars are high value items that will require continued import of oil or fuel. There a forex killer.

    Currency devaluation and rising of interest rates. Undesirable but the free market solution. It will slow down growth but make items made Pakistan cheaper.

    Rationing goods out of the local market and exporting them. Fuels for example. This may cause shortages locally but should improve the forex situation when coupled with import curbs.

    Long term Options:
    We have to get our house in order. Going to the rest of the world asking for a hand out is embarrassing. We are perceived as militarily competent but economically weak. Why can't we have guns and butter? The Rasul was a goods trader by occupation but Pakistan barely has trade strategy. Why? Mind sets must change from the top to the bottom of society.

    Time to focus on exports of low cost manufactured items and garments in addition to textiles. China will soon be the largest consumer market even in $$ terms and is transitioning up the value chain into producing higher value goods. The low end manufacturing will move to other locations. Why have a direct land connection to the largest consumer market in the world. Why we can't the low cost manufacturing move to Pakistan? The USA will give Pakistan a free trade agreement if can get a peace deal with the Taliban done. We can get preferentially access to the no 1 and 2 economies in the world. We have a weak currency and cheap labor. If we get our energy and investment industries straightened out... I see no reason why we can't have an export boom.

    Longer term we have to pursue a policy of import replacement especially in the energy sector. Oil is our number one import...we need to focus on energy independence with renewables, shale oil/gas and Thar coal. Develop out domestic mining sector. Reko Dig has $200-$500 billions worth of copper and gold yet its just sitting there. Chiniot has big iron ore deposits but it just sits there unexploited so we import steel.
     
    Last edited: Mar 15, 2019
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  2. Wa Muhammada

    Wa Muhammada FULL MEMBER

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    This govt is struggling badly atm... they need to turn this around quickly before we become broke

    If need be speed up privatisation
     
  3. CrazyZ

    CrazyZ FULL MEMBER

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  4. Peaceful Civilian

    Peaceful Civilian ELITE MEMBER

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    We need to impose taxes. You can't move forward without paying taxes. Also we need to impose ban on imports of unessarry items . Need to decrease gap between import & export. Also privatize any company in loss. Goverment should not bear burden on PIA, metros, railways etc
     
  5. My-Analogous

    My-Analogous SENIOR MEMBER

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    I increased sending money to Pakistan by 80% to help my nation. This is my small contribution. Please send even extra dollar Pakistan and it do help Pakistan. Make forign currency account in Pakistan and deposit money
     
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  6. nahtanbob

    nahtanbob SENIOR MEMBER

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    without cars how do you plan to move ? Ditto with fuel
     
  7. R Wing

    R Wing FULL MEMBER

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    Great foundation.

    But nothing's possible without focusing on four major areas:
    -tourism (non domestic)
    -agri export
    -textile export
    -software/IT export

    Everything you said + the above = bye bye IMF.
     
  8. Syed1.

    Syed1. SENIOR MEMBER

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    Nothing will happen until you start exporting more. Why is it that 5 million overseas Pakistanis send remittances worth $20b, but 220 million Pakistanis have export earnings of only $25b. Why is it that Singapore which is smaller in size than just Karachi exports $300b worth of goods and services?



    For 70 years we have focused on one industry for export and have not even managed to export a substantial amount in it. Need of the hour is to move away from textiles and start exporting autoparts, electronics and IT services.
     
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  9. QasimTraveler

    QasimTraveler FULL MEMBER

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    There are no short term actions here that can improve reserves, only a very long term, holistic, integrated, inclusive policy that caters to institutional reforms, capacity building and strengthening rule of law could maybe benefit us. We are still playing with fate of this nation based on whims of selected few. Power should not be concentrated among few, see what is happening with many suo motu notices of ex-CJP, life time of good work undone by only few notices.

    I pay my taxes, I am a tax filer, I try not to cheat or bribe, I remit money. What else I can do?

    As per my experience of starting a venture, a single person cannot take a business uptown without a good team. When I observe the team of the rulers, I am not quite filled with confidence.

    I am not sure if a single thread could come up with viable solutions to our problems.
     
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  10. CrazyZ

    CrazyZ FULL MEMBER

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    Your right but we have start somewhere. At some you have to stop talking and start acting. I myself am committed to act and not just talk.

    If I have to flee the west because of right wing crazys, I want a strong prosperous Pakistan to go to.
     
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  11. QasimTraveler

    QasimTraveler FULL MEMBER

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    Things won't go bad in many years to come, what ever the situation is developing there, their justice system is still strong. Not sure for how long though, the human nature never changes.

    You are already doing your part in remitting forex, see if you can invest in Pakistan Banao certificates.
     
  12. nahtanbob

    nahtanbob SENIOR MEMBER

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    electronic manufacturing is a low margin business
     
  13. ziaulislam

    ziaulislam ELITE MEMBER

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    [​IMG]

    Reserves will go up automatically if you keep the CAD at 2% this is what Bangladesh and india did

    What Pakistan did was to borrow to keep the reserves up which caused more problems

    Current drop to 356M$ Will probably go up in summer again but regardlessly it seems CAD for next yr might fall to 2% of gdp(500m/month on average) which will lead to 4-5b$ reserve increase per year automatically (if govt maintain same debt increase level rather than decreasing it)