Dwindling Import Businesses in Pakistan and Way Forward.

Let me give you a brief recap of history, it is not the first time Pakistan has had this opportunity to introspect and put each step in the right direction to achieve sustainable growth. Following are four major points in history where Pakistan could set its course in the right direction.

1. 1947, Pakistan appeared on the map with no state bank and its own bureaucratic structure to sustain itself. Pakistan was also lacking infrastructure in health, education, and many other important sectors. Pakistan Leaders of that era eyed to the US which helped it to have another ally in the region to counter the Soviets. Hence the very start of the progress of Pakistan was externally funded. A first chance of self-reliance path missed.
2. In 1971, a part of Pakistan became Bangladesh which used to provide the majority of food, cotton, and foreign exchange. This was the time to correct the path of food security and achieve self-reliance. But it chose the other way out and again reached to IMF.
3. 1999, Pakistan faced restrictions and sanctions due to the execution of nuclear tests. Due to this Pakistan fall into deep trouble with Budget settlements. The chance was again missed initially because of overwhelmed friendly nations and secondly because of the 2001 US/Afghan war.
4. 2022, after huge efforts Pakistan is likely to dodge the default with IMF agreement finalization expected. But how long it would sustain this way is not clear. this is again an opportunity but no one considering it.

For the last year, the newspapers have been filled up with the headlines of the currency crunch in Pakistan. Consequently, panic is evident among government personnel and general masses equally due to steep inflation owing to import bans and a decline in foreign reserves. Businesses especially the import sector have been hit quite drastically by the situation. But as Former US President John Adams is reputed to have said “Every problem is an opportunity in disguise”, Pakistan is no different situation either. In the context of Pakistan, it's the fourth time in its history that it gets the opportunity to stand on its foot. It would be a matter of coming months and years that would decide how it would come out of the situation.

This is the first time in recent times that Pakistan faced massive hurdles even in the imports of necessities. Government officials were seen to fly to various friendly nations which ended up in vain as the International monitory fund was not convinced by Pakistan's measures to bridge its gaps in payments. The situation still continues with no easy fix in the near future.

From the last quarter of 2022, it was evident that Pakistan was about to face a serious foreign exchange crunch where the government would be forced to take extreme measures. We saw stuck containers on ships and problems in LCs retiring. All this led to a major blow to the once healthy growing import industry. Pakistan's total imports amount to around 80 billion USD while it exports around 30 billion USD yearly. The deficit is partially countered by Pakistani ex-pats with around 20 billion USD in remittances. Still, Pakistan has to finance additional 20 billion USD each year through loans. alternatively, Pakistan needs to improve its exports significantly.

Now let's talk about the solution. Most of the countries that have a better ranking from financial rating agencies generally have very good balances of payments. They are selling more than they buy. This means they are getting much more business from the outside world. This is only possible when a country is selling products and services which are compatible with the international market. Secondly, these countries are self-reliant of the products they produce. This is only possible when people are making and producing the best products with competitive market rates.

There was a time when Pakistan exported cotton, rice, wheat, and many commodities. Now we are net importers even in commodities. We have a lot of assembly units but no real technology transfer which means a lot of screwdriver jobs. Such stuff brings no real net positive exchange. Similarly, the magic of the internet has not been monetized the way it should. There is a very slim community in Pakistan which are using the internet to earn the right amount of money. Local machine manufacturers have not supported the way that they would able to compete with international machine suppliers. Start-up loans are not very easily available at cheap rates. Software services are not earning to their potential or they prefer to roll their money outside Pakistan due to serious problems in tax structures. I believe, Following are the steps that can be taken to achieve self-reliance in the next ten years.

1. Tax-free zones for foreign industries for five years who transfer technology to Pakistan.
2. Export duty waivers for five years for foreign companies who invest significantly here with its manufacturing hub.
3. Avoid importing commodities by importing high-yield seeds. Research them and reproduce them.
4. Focus on the evaluation of mechatronics, IT, and AI. Assist start-ups who can support building quality machines with features normally available in imported machines by using emerging technologies.
5. Cheap or interest-free loans for the service industry that ensure export-related business services.
6. Tax waivers for software companies to make them feel comfortable to bring their money here without not complexities of local banks.
7. Utilizing emerging technologies to produce skillful youth that are relevant to the modern world.
8. The ease of doing business (EODB) ranking for Pakistan is 108th which means 107 more countries are available, providing better services for investors. Pakistan needs to improve in this matter a lot to attract the right investors.

There is no quick fix for countries like Pakistan but 1000 miles journey starts with a single step.