Indigenous Resource Mobilization

Export Promotion & Value AdditionPakistan

Why Value Addition

• South Korea and Japan were two main countries in the world which had only human resources and not mineral resources but still they became developed countries only due to value added exports.

• On the other hand, Pakistan is blessed with both human and mineral resources and has the potential to be listed among developed countries within a short span of time but unfortunately, the potential is not being used properly.

• The primary need to make Pakistan an industrial state is to give emphasis to export of value-added items rather than exporting raw material.

Why Value Addition

• It is right time that Pakistani businessmen and manufacturers should work on the production of only value-added items so that they could earn more profit margins.

• producing value-added products involves a lot of processes including educated and skilled human resources as well as latest technology.

• But when an entity successfully uses both of these resources properly, its margin of growth becomes incredible.

Why Value Addition

• Earlier, it had been a custom that Pakistani businessmen preferred to export only raw material and get their profit and never tried to export value-added products.

Why Value Addition

• A factory produces only billet of iron ore that has tag price of $100 per ton.

• Another factory, by using the same quantity of iron ore, produces boilers that can be exported up to $1,000 per ton.

• If a manufacturer produces a cog of aircraft engine from the same metal, it could fetch $10,000 because of value-addition

Textile Export – A Case Study

• Government’s restrictive import policies are blocking access to new raw materials, which are required to diversify product lines to take full advantage of the duty-free access under the EU’s Generalized Scheme of Preferences (GSP) Plus.

• The country could utilise only three textile categories out of the total of 73 that it was given duty-free access to under the EU’s limited, unilateral trade concessions.

Textile Export – A Case Study

• We do not have access to finer, synthetic fabrics used to make products like ladies’ garments, sportswear, etc., which involve high value addition to fetch higher prices. Our garment industry is still forced to produce low value added garments.

• Government must relax the import policy to allow the value added textile industry to get the maximum benefit from the GSP Plus scheme, as the country has no raw material, except for cotton.

Textile Export – A Case Study

• Bangladesh is enjoying duty-free import of every raw material and, hence, have increased their value added textile exports to $26 billion, compared with Pakistan’s garment exports of $4.5 billion.

• Chinese investors are interested in relocating their manufacturing facilities to Pakistan because of rising labour and other costs in China but they feel impeded by our restrictive fabric import regime.

The Most Important Aspect

• It is absolutely important to substantially reduce the duties on plant and equipment to be used for value addition.

• Value addition is process intensive which can not be achieved with out encouraging the businessmen to invest more for more profits.

• We have to re-visit the duty structure for import of technology. This requires great deal of research.

ENDS