By : Dr. Muhammad Farooq Afzal
President Economic Diplomacy Forum.
To rescue the country from debt Quagmire and its economic crises, Non Development government expenditures must reduce by 50% and all development projects should be halted for three years. The savings should be used to repay loans, freeing Pakistan from IMF constraints and achieving debt relief.
Unjustified and burdensome taxes are proliferating in Pakistan, causing businesses and capital to rapidly flee abroad. Such flawed policies also deter foreign investment. If this continues, the country’s economic system will collapse. The government must urgently rethink these policies and collaborate with business representatives to reform tax laws, stimulating economic activity.
To boost foreign exchange reserves, export-oriented industries require immediate facilitation measures and favorable export policies. Bangladesh’s exports have reached $55 billion, and Vietnam’s $350 billion, while Pakistan struggles to reach $30 billion.
Increasing exports is essential to reduce the deficit. Trade councilors, advisors, and attachés posted abroad have failed to deliver results. Instead, locals in host countries should be appointed to these roles with clear export growth targets. This would also enhance bilateral trade. All locally trade officers should be hired on 3-year performance-based contracts, renewable only if targets are met.
In 1986, Pakistan produced 14 million cotton bales; today, it has dropped to 8.5 million. We ranked fourth globally in cotton production but have fallen to sixth. We now import as much cotton as we produce to meet domestic demand, wasting hundreds of millions in foreign exchange. Instead of boosting cotton output, policies are reducing it.
There are 89 sugar mills operate in Pakistan, over 50% controlled by five major conglomerates. These groups manipulate every government’s import-export decisions through blackmail. “Sugar isn’t a staple; even at Rs. 500/kg, it’s no issue. We must prioritize cotton over sugarcane to strengthen the textile industry.”
Pakistan failed to capitalize on the EU’s GSP+ duty-free facility by neither enhancing production capacity nor upgrading workforce skills – critical for export growth. A 2013 textile policy exists but remains unimplemented due to official apathy, denying the country its benefits.
Pakistan’s seven traditional exports – textiles, fruits/vegetables, rice, surgical goods, sports goods, pharmaceuticals, and leather products – face stiff competition from Cambodia, China, India, Bangladesh, and Vietnam. Vietnam exports $10 billion in seafood; India’s shrimp exports alone exceed $4.5 billion, while Pakistan’s total seafood exports are just $450 million. Special task forces with strong private-sector representation must be formed for each industry to drive export growth.
Pakistan has the world’s most expensive electricity at $16cents/kWh, compared to India’s $6.5cents and Bangladesh’s $4.5cents Power is the textile sector’s lifeline; high costs make our goods uncompetitive globally. The government must slash power tariffs to $6cents/kWh and urgently pursue alternative energy projects (solar, hydro, coal) and dams to reduce prices.
Pakistan’s signature project of CPEC, its 2030 deadline appears unattainable: only $25 billion of the $62 billion pledged has been invested, and just 21 of 122 projects are complete. These include 5,500 MW power projects (solar, coal, hydro). Security concerns endanger Chinese engineers and technicians, while delays plague Phase-2 of the Karakoram Highway, ML-1, and Special Economic Zones. Currently, less than 1% of trade uses Gwadar Port. If operationalized, shipments could reach New York in 14 days and Europe in 9 days – a critical opportunity.
The Wakhan Corridor (96 km from Pakistan to Afghanistan) is vital for regional connectivity. A 20-km mountain tunnel would link Pakistan and China to Central Asia and Russia via Tajikistan, making Pakistani ports a gateway for 40+ countries and transforming our economy.
A Pakistan-Russia MoU exists to revive the steel mill, but a formal agreement is needed to expedite work.
Pakistan’s economic future hinges on regional trade. We must urgently expand commerce with China, Russia, Turkiye, Iran, Afghanistan, and Central Asia to drive national prosperity.
