Which industries to target for export?

[American Pakistani]

Pakistan's export condition is very ugly. All those northern areas like Swat, Chitral, GB etc can grow fruit farms and easily export their fruits to neighboring Central Asia, China and Afghanistan (where foreign troops are stationed) and also Middle East. These areas mostly rely on tourism $$ but they don't realise with little more efforts of few years they can easily make a good future for themselves and their generations.

Similarly Punjab and Sind can learn from Bangladesh and start competing with it which will help advance their economies. Both provinces are rich with fertile land and have huge population and similar land mass. If Bangladesh of similar size can export 40 Billion why can't Sind and Punjab do at least 25 & 30 Billion each?

 

[AZADPAKISTAN2009]

Pakistan missed

• Electronics Age (90's : Cell Phone, Computers, Chip Manufacturing , Computer Parts , LCD)
• We already were Lacking behind in Industrial Revolution, as our Large Industries were suffering from lack of modernization beyond 80's
• Pakistan used to manufacture our own Medicine and had laboratories in 70's that trend reduced over years and not sure how well we are doing in that sector

1. World is now Discovering Nano Technology
2. Laser tech has now being applied in Projects in various fields
3. Computer knowledge is being restricted in hand of few Mega Corporations
4. Solar Tech is widely acceptable across Europe
5. New research is discovering new particles knowledge and Physics laws are ever changing

In Pakistan our text book is still covering 1900 scientist like Niel Bohr

We need to start by capturing our own Local Market first

a) Auto Manufacturing should be first (Easiest if done in collaboration with HIT)
b) Steels Industry Need Revitalization (Easiest with Russian assistance , and with HIT)
c) Need country's First Dedicated Electronics Manufacturing Hub (With China)
d) Existing Textile Sector needs Modernization (With China)
e) Medicine Manufacturing needs Support as well (With China/Europe)


Once we capture the Local Markets , get 60% status or 80% then we can think about export of these goods outside of Pakistan

High Import Bill in Pakistan is due to neglected Industries

1. We Export 20 Billion in Goods
2. We Import 40 Bilion in Goods This need to be reduced to 5 billion mark with in 12 months

So at Borders if we simply restrict incoming goods to 1 to 5 Billion imported goods that should fix our trade deficit, most of stuff we are importing into country are none-essentials

 

[war&peace]

Nah man. I would need to write a dissertation to cover this subject. Pakistan will not be able to do what East Asians have done for variety of reasons.

• The only geographic location we have that can connect with the global trading order is Karachi. Rest of the country is significant distance from ports and with inefficient transport it adds costs/problems which do not help with export industries.
• Karachi had the geographic potential but it has instead turned into a large mob city ran by a mafia. This is how it works. Every single rupee of exports and imports goes through Karachi. Various mafias in that city have become proficient at basically acting like gangsters that take their cut from this flow and make billions out of it. The culture in that city is how to scalp rather then how to export. A small elite there have made and make billions out of this extortion.
  
• Pakistani culture is driven by religion and it works against modern economic practices.Nothing in it develops the qualities needed of a modern worker. The stress is piety or pretend piety not hard work or competence. We saw example of that recently with appointment of Atif Mian a Ahmedi and how that turned into a drama. That should have been only involved economic criteria but religion exploded into the scene and sent the government scurrying.

It's going to take at least a generation before education and hyper pretend piety are sorted out.

Mr. TTA it is the easiest job to tell someone you can't do this, you can't do that. It a lot more difficult to tell how you can do this and that.

 

[AZADPAKISTAN2009]

The Risk associated with Agriculture only is that World Powers are constantly degrading value of Goods / raw material to dirt cheap level , while boosting prices of own "Products"

Buying our stuff for cheap (Eatable , consumable , raw material .....)
Telling us to buy their stuff at Exaggerated rates.....Premium rate for auto , LCD, computers, cell phones , video games

 

[Cybernetics]

Because you need to educate and train your workforce much more...and have good business environment with fair standards applied (so you get good quality investment and long term gestation/cultivation of such). But Pakistan has too much corruption still and there is big perception problem....and most political elite seem to be more concerned with optics and short term fixes rather than deep much needed reform.

Wheres East Asian countries by and large were able to project stability, good worker training, good bargaining power for businesses (not worried about being shaken down by whichever political thug)....and basically variant versions of the model of Japan (the original) which was proven.

Nah man. I would need to write a dissertation to cover this subject. Pakistan will not be able to do what East Asians have done for variety of reasons.

Some Chinese scholars have reflected on the factors that contributed to China's economic development. The main elements are the qualitative factors of the work force and the attitudes of the the elites. Other issues will be adjusted accordingly over time.

For the workforce you need two main types of people, a disciplined and motivated workforce along with a technically proficient group.

Discipline is drilled into you in Chinese schools at a young age, even those that only completed middle school are able to follow orders though the tasks they can complete are basic. I think this is under appreciated and is an important factor in pushing for or against economic convergence. They can follow orders, complete a basic task correctly, and work consistently for long hours. In a modern factory environment, discipline and ability to follow orders are very important to the process's success. Each process is not necessarily difficult but consistency is needed. Labour costs are only one factor, by itself it is useless.

The previous group is only good for attracting industries but it won't drive sustained economic development. The other group of workers are the technically proficient. Republic of China government basically moved the scientific and technical elites of Mainland China to Taiwan at the end of the civil war in 1949. They had a strong and concentrated technical base to start from and it is apparent in the industries they produced decades ago.

PRC was left with only 12,000 trained engineers for 540 million people in 1949. By the early reform period in the 1980s the PLA demobilized millions of soldiers to focus on economic development. What is different about China's massive military at the time compared to a Western one was that it's main task for much of the forces was nation building. They were for the construction of infrastructure in difficult places and development of technically difficult industries. The soldiers were also distributed around the nation in 3rd tier cities and beyond so the soldier's characteristics were not geographically concentrated. Once these soldiers demobilized they transitioned into civilian industries without much trouble, many went on to start their own businesses.

The technical and scientific proficiency of the PLA was vital in economic development. It trained a large cohort of engineers and capable workers in a short amount of time, compensating for China's originally weak knowledge base. Huawei's founder for example formerly worked in the PLA's IT research unit, today it is one of China's most competitive firms. The country could easily absorb knowledge and had a capable work force to fuel industry due to this group of people. Without the technical and scientific proficiency of the PLA I doubt China could have had as rapid of development as it did. Industry is not as simple as having some machines, hiring some workers and letting it run. Margins are razor thin, problem solving and constantly improving is vital to survival as you have competitors in the market. To be able to problem solve and constantly improve the work force must be technically capable and understand the fundamentals or would face eventual economic stagnation.

 

[AZADPAKISTAN2009]

Pakistan suffered a massive brain drain during late 70's and 80's when huge population (educated left for Middle East) and the Educated class , did not had chance to Train the next generation. So we have visible Gaps.

This was further complicated by Merit less hiring in Large Industries of Pakistan
This reduced the Productivity and Innovation , and problem solving capabilities of these Companies which is why these companies became less productive. Any reforms were met with Strikes and hurdles.

• These strikes and hurdles are still common in all institutes in Pakistan which are facing financial crisis. In China such dissent is met with a Hanging by Rope

The one area China has been success is to handle "Dissent" with Stern Force .... in order to move country forward , it created an ideal environment to keep moving forward.

Corruption / Dissent was not acceptable in Chinese model and Merit was valued.

Most corporations were running on "FOR Profit" basis and that involved the Hiring Managers to Hire Best Educated candidates for their companies.

In Pakistan, our hiring practice focused more on the regional quota system, this tunnel view has resulted in destruction of competitive nature of our Industries as once in Corporations these less equipped hiree rely on Corporate politics instead of talent to remain relevant

It is widely acceptable in Pakistan to hire their own family relatives first instead of hiring the PHD expert, when this behavior becomes wide spread across country slow down in Innovation is expected behavior


In order to achieve China's efficiency , Pakistan need to have open mind to Hang Corrupt Corporate workers


CLEAN HOUSE = FRESH NEW START


The need for Country needs to come first , above the individual disire for Glory

If Pakistan can Introduce Death Penalty for Corporate Corruption or Mega Corruption , it would be a massive reform in Pakistan

a) Corruption over 10,000 USD = Death Penalty
b) Anti State Activity in News Channel = Death Penalty
c) Sabotage of National Interest = Death Penalty
d) Any Corporation Head involved in Corruption = Death Penalty
e) Any Corporate Level Bribe to State official = Both Parties Hanged in public
f) Strike Against State , Against State corporation intent to harm it = Death penalty
g) Money Laundering over 100,000 USD = Death Penalty
h) Contractor stealing from Government , over billing , delayed project = Death Penalty
i) Any Worker who damages State Company over certain % financial = Death Penalty

China attained it's great status , because Universally people in China know 100%
Corruption and Anti China Behavior is not acceptable

In Pakistan the behavior is , if I do corruption I can get away ...... and it is what every one does and that Mindset kills our Innovation and National Spirit

Power of state needs to be felt , respected and feared in order for State to progress

And Pakistan needs to have similar mindset

 

[Kambojaric]

IT, textiles and agriculture are the most realistic options at the moment. The electricity situation needs to be sorted out before any tangible sector growth can be focused on. Cement companies have also been doing good business home and abroad lately.

 

[django]

Because you need to educate and train your workforce much more...and have good business environment with fair standards applied (so you get good quality investment and long term gestation/cultivation of such). But Pakistan has too much corruption still and there is big perception problem....and most political elite seem to be more concerned with optics and short term fixes rather than deep much needed reform.

Wheres East Asian countries by and large were able to project stability, good worker training, good bargaining power for businesses (not worried about being shaken down by whichever political thug)....and basically variant versions of the model of Japan (the original) which was proven.

It is all about getting that first chunk of 100 - 500 billion dollar capital investment over a decent spread of years and then using the buffers generated from that to invest more dynamically into new growth sectors....but you need the leadership and bureaucracy that is able to deliver that.

@Indus Pakistan @django @farhan_9909 @That Guy @Chak Bamu

Since our internal security situation is moving in a favourable direction the potential for both greater domestic and foreign investment has definitely been enhanced however their are still many shortcomings which you rightfully highlighted ie lack of trained human resources, corrupt business practices, lingering energy crisis etc and to the credit of the new administration they are working tirelessly on these deficiencies which when improved even at an adequate level will hopefully lead (CPEC aside) too much greater foreign investment, the more significant the foreign investment we receive the greater the sustainable economic growth we should experience, foreign investment will provide us with economic globalization, capital needed to improve domestic economic growth as well as access to investors expertise, experience, and networks. It will also brings jobs and build value chains stretching across the entire nation.The energy, construction, oil and gas sectors continue to be the primary recipients of foreign investment moreover if reforms which make privatisation easier, generous tax incentives and transparent business practices then surely we will be seen as a major attraction by foreign CEOs,,,,,,,In regards to indigenous investors, the government must persuade investors to keep their money in the country by ensuring a healthy business environment conducive for growth, with very stiff penalties for corruption (we could learn from our Chinese friends) however if this is not achieved and significant amount of capital is being transferred overseas then substantial drain of assets will depress our currency exchange rates which in turn will lead to rather excessive inflation and not to mention the depletion of tax revenues from the escaped wealth etc, also serious efforts need to be made in order trace and recover any looted wealth (which by all accounts is off an astronomical magnitude) , this needs to be bought back to the government coffers ASAP all means at our disposal should be utilised to achieve this objective, even the "dark arts" of state craft
In conclusion Pakistan is blessed with an ideal geopolitical location and with the CPEC infrastructure project in rapid progress, the present government could perhaps consider opening up the routes to other regional nations (ONLY IF SECURITY DYNAMICS PERMIT) besides China. Pakistan can then generate a substantial amount of income while providing trade routes to Iran, Afghanistan, and Bharat. This cooperation will also be helpful for stability in the region and will possibly lead toward greater reconciliation between distrusting neighbors, if all this can be achieved in synchronisation with the necessary business/taxation reforms then I have no doubt in my mind that "PAKISTAN CAN BECOME THE INDUS TIGER". no question about it.Kudos bhai
@war&peace @Zibago @Moonlight

 

[jupiter2007]

What industries can Pakistan target to improve capacity for exports?

Finished goods markets need to be targeted. Too much low end raw material industry at the moment.

What can Pakistan do?

Look at this. Motherboard manufacture in Taiwan.

Taiwan shipped US$317.7 billion worth of goods around the globe in 2017

1. Electrical machinery, equipment: US$141.5 billion (44.5% of total exports)
2. Machinery including computers: $36.6 billion (11.5%)
3. Plastics, plastic articles: $20.3 billion (6.4%)
4. Optical, technical, medical apparatus: $16.4 billion (5.2%)
5. Mineral fuels including oil: $10.9 billion (3.4%)
6. Vehicles: $9.7 billion (3.1%)
7. Iron, steel: $9.7 billion (3%)
8. Organic chemicals: $9.6 billion (3.0%)
9. Articles of iron or steel: $7.7 billion (2.4%)
10. Copper: $4.7 billion (1.5%)

If Taiwan can do this or Vietnam, why not Pakistan?

We are bunch of lazy people, we can’t Comparing ourselves with Vietnam and Taiwan. Let’s stop this khayali pulao. Let us compare Pakistani education system and skill workers to these countries.

My suggestions is to focus on basics, education, water issues, and electricity.

1) Eliminates electricity thief.
2) No industry can survive without electricity. we must increase electricity production (Hydro, solar and wind power).
3) New Agriculture technology should be introduced to increase production and best use of water.
4) Increase the minimum wage
5) Convert unskilled workers into skilled workers by offering free vocational training.
6) Improve dairy farming and milk and related products for both domestic use and export.
7) Improve Seafood farming, packaging and export.
8) Focus on Auto industries by introducing more completion by making JV with China and other countries.
9) improve Tourism

 

[Chak Bamu]

IT, textiles and agriculture are the most realistic options at the moment. The electricity situation needs to be sorted out before any tangible sector growth can be focused on. Cement companies have also been doing good business home and abroad lately.

Ditto.

For now, just do what works. Pie-in-the-sky type of solutions are not needed.

If GOP just provided credit & lower electricity prices to textile exporters, a lot can be added in a short time. This can be done at less than the cost of borrowing foreign exchange.

In the long-run, it all boils down to HDI. That takes time, but is the surest way of improving economy. Sadly, Pakistan has always prioritized security over everything else, including HDI.

 

[ziaulislam]

Ditto.

For now, just do what works. Pie-in-the-sky type of solutions are not needed.

If GOP just provided credit & lower electricity prices to textile exporters, a lot can be added in a short time. This can be done at less than the cost of borrowing foreign exchange.

In the long-run, it all boils down to HDI. That takes time, but is the surest way of improving economy. Sadly, Pakistan has always prioritized security over everything else, including HDI.

textile is realistic when looked at untrained labour..but textiles are destroyed, our labour is expensive, gas is expensive and electricity is expenisve

even though we make whole chunk of our gas our self, raw material ourself, we make are huge chunk of power through cheap hydro but given poor policies especially in last 10 years first due to lack of power than overtly expensive power meant that export industries in textile are virtually killed off

solution is simply to fix power and gas sector and give exporters their liquidity but i doubt this can be fixed in year or even in couple of year

 

[VCheng]

textile is realistic when looked at untrained labour..but textiles are destroyed, our labour is expensive, gas is expensive and electricity is expenisve

even though we make whole chunk of our gas our self, raw material ourself, we make are huge chunk of power through cheap hydro but given poor policies especially in last 10 years first due to lack of power than overtly expensive power meant that export industries in textile are virtually killed off

solution is simply to fix power and gas sector and give exporters their liquidity but i doubt this can be fixed in year or even in couple of year

The problem here is simply international competition. Whatever Pakistan can produce for export, it must be able to compete in the global markets where buyers have a choice of very competitive suppliers vying for their business.

 

[Menace2Society]

The problem here is simply international competition. Whatever Pakistan can produce for export, it must be able to compete in the global markets where buyers have a choice of very competitive suppliers vying for their business.

It can be done. As long as you position yourselves properly in the space.

I was in Slovenia a few months ago. Lovely little country, developed and middle class. I was expecting eastern european jungle. Had a look at their data and they specialize in heavy machinery and parts. In competition with major euro zone countries but still managed to carve out a slice. I know India and China are swallowing all the trade but there is always a way. Do it cheaper, do it faster and better quality than anyone else.

 

[VCheng]

Do it cheaper, do it faster and better quality than anyone else.

That is the key to compete in the global market. You are correct that it can be done, but it is an exceedingly difficult task for Pakistan in the present circumstances..

 

[Chak Bamu]

textile is realistic when looked at untrained labour..but textiles are destroyed, our labour is expensive, gas is expensive and electricity is expenisve

even though we make whole chunk of our gas our self, raw material ourself, we make are huge chunk of power through cheap hydro but given poor policies especially in last 10 years first due to lack of power than overtly expensive power meant that export industries in textile are virtually killed off

solution is simply to fix power and gas sector and give exporters their liquidity but i doubt this can be fixed in year or even in couple of year

Last 10 years only?

Loadshedding started in 1985. The problem was not constructing Kalabagh dam that would have produced cheap electricity. The stop gap measure in Benazir years was to allow IPPs and that condemned Pakistan's industry for the next two decades. Musharraf did absolutely nothing and in fact ignored warnings from OGDC, SSGC, & SNGPL about looming natural gas shortages. CNG should never have been encouraged. The focus on consumer goods during Musharraf years was another blow to our industry that was already experiencing acute energy shortage.

Today's Pakistani economy is built on unaffordable consumption financed by foreign exchange deficits. This is unsustainable. The first step was to have enough electricity. Yesterday the 1230 MW coal fired power plant in Hub started feeding the national grid. This and such other improvements were to be followed up with other projects until Pakistan emerged from this trap. Industry needs continuous power and that is the first and foremost requirement. Efficiencies and economies are built on uninterrupted work. Cost would come down as gradually Pakistan eliminates expensive Furnace Oil as fuel and more low cost projects (nuclear, coal, hydro) joined the grid. Pakistan's exports can not be revived until and unless we improve power availability and the cost is driven down. But this is not enough. There have to be other policies that feed off an improved environment to accelerate the growth and exports.

Last five years' policies were built on premise that improving growth rate will attract FDI. But a country with security-obsessed policies can not be an investment destination because people who make and enact such policies exist in a comfortable cocoon, unconcerned with the sweat, toil, & tears required to produce economic growth. It is the common people who must pay for both the cost of said policies and the privileges that sustain the policy makers' follies.