EXPORTS
Enterprise(s) and Employment
INTRODUCTION
Pakistan’s previous approach to maintaining current account balance via import substitution has ledto repeated cycles of crashes. To keep the economy growing on a stable path, the country needs to move towards an export-led turnaround leading to economic growth, like the East Asian Tigers. To
achieve this goal, the government has launched several initiatives along the following objectives increasing productivity, product and market diversification and brand development, SME development and nurturing local endowments, and fostering an enabling business environment.
SITUATION ANALYSIS
Pakistan has historically followed import-based, consumption led economic growth with the result that its reserves have always found it hard to shore up foreign currency liquidity to pay for imports.Consequently, Pakistan has had to take on foreign currency, budgetary support loans and deposits to finance its foreign currency needs. While this approach, over the past few decades or so, has managed to keep the country afloat, foreign loans and deposits themselves have a repayment burden to address, which exacerbates the predicament upon the commencement of loan debt servicing and repayment. Exports, Foreign Direct Investments (FDI) and remittances are three key avenues which cradle the solution to the country’s economic woes, with exports a standout amongst these which can help address concerns. Pakistan’s turnaround efforts and subsequently growth model must be reoriented while ensuring imports are directed toward more productive avenues. Imports of industrial raw materials and intermediate goods ought to feed into production for export. Locally produced agricultural products can specifically save precious foreign exchange and help earn export revenues. This overarching policy direction can lead toward export-led growth in order to tackle the chronic boom-and-bust cycles, provide a stable macro-economic environment which will, in turn, cultivate an environment amenable for FDI.
Last few decades have seen the rise of globalization, with manufacturing moving to developing countries. This has led to an economic integration of a number of countries into the global supply and value chains.Countries who have benefitted from economic and manufacturing globalization have increasingly become more export-oriented,which has also meant that they must remain competitive at world stage. To maintain, and to further improve international integration into supply and value chains, emphasis has been laid on productivity combined with quality, innovation and knowledge creation leading to strong competitive advantages, a prerequisite to remain relevant globally.
In the case of Pakistan, absolute exports have been largely range bound in the last 10 years, even decreased in some years. As depicted in the comparative table below, Pakistan’s absolute exports have remained largely stagnant in comparison to some of its regional peers, many of whom have shown growth over the period.



Further, Pakistan has by far the lowest Export-to-GDP ratio amongst regional competitors. Not only does Pakistan fare poorly amongst regional countries, but its own relative performance depicts a strong declining trend with the ratio losing almost six percentage points over the last 30 years. The situation clearly suggests that without a sincere attempt at course correction to turnaround the economy toward export-led growth, boom-bust predicament will continue to prevail with the country remaining marred in its usual dismal economic performance.
Another area where Pakistan needs to lay more emphasis in order to augment its exports is productivity. As per global research results, 60 percent of countries that had Total Factor Productivity (TFP) growth of more than 3 percent grew at 8 percent or more. On the other hand, lower TFP growth rates were associated with lower GDP growth rates. In the case of Pakistan as depicted in the figure, average TFP growth has averaged 1.5 percent. To improve production and consequently exports, Pakistan must improve its productive capacities, productivity and technological capabilities.

Similar trends are witnessed when it comes to investing in the economy, key ingredient for economic growth. During the last 3 decades, Pakistan’s Investment-to-GDP ratio has declined whereas other regional countries’ratios largely increased exponentially.While there may be myriad reasons for the decline,one of the salient ones is how doing business has been becoming increasingly difficult over the past decades, resulting in lack of investment in the economy.

As far as Pakistan’s major exports are concerned, majority of the country’s exports remain concentrated within the textile sector. While textiles have supported the external sector’s flows well, there is a need to nurture new avenues of export growth which should include utilizing local endowments.Therefore, there is a need to develop new avenues of exportable products which can diversify export proceeds, give access to additional markets and provide a more sustainable approach to export-led growth as the country gets more assimilated with international markets and global business risks. The economy could also benefit from better market access, especially in large global markets for Pakistani products where there appears to be a comparative advantage.
At present Pakistan’s exports are confined to a few major destinations such as US, EU, UK, and China,which together account for almost 60 percent of Pakistan’s exports. At the same time, Pakistan’s share in China’s total US$ 2.7 trillion per annum imports is a paltry 0.1 percent despite enhancement in market access under the China-Pakistan Free Trade Agreement. There is a dire need to improve Pakistan’s share in such markets.

Moreover, while Large Scale Manufacturing (LSM) sectors have played their part in augmenting exports, the SME sector remains a key driver for not only exports but also employment generation. In most countries, SMEs constitute more than 90% of all enterprises and significantly contribute toward economic growth. Nations all over the world assign great importance to this sector for the purpose of stimulating economic growth. Besides, most of the high-income nations acknowledge the importance of the SME sector in supporting their economies.
As such, growth in the SME sector contributes directly and substantially to the overall economic growth. In the case of Pakistan as well, majority of the manufacturing and business activity takes place in this sector, which also constitutes nearly 90% of all enterprises and employs around 72% of the non-agricultural labor force. The share of SMEs in GDP is approximately 40% with an estimated 25% contribution to overall exports. Arguably, the SME sector is a key cog in the country’s economy; without its development and increased contribution to exports, it would be an uphill task to achieve turnaround from import-based economy to export-led orientation and growth. Strategies for industrial expansion ought to be in sync with export development strategies, however,such linkages still have substantial room to develop for an optimal outcome.

STRATEGIC VISION AND PRIORITIES
The Government of Pakistan (GoP) will endeavor to focus and deliver on a number of specific and salient areas to address the country’s economic concerns. Increasing exports is a multisectoral process. The government aims to form an ecosystem that removes multiple restrictions to achieving the vision of exports led growth of Pakistan. To this end, the government’s key initiatives will be in line with the following priorities:

1. AUGMENTING PRODUCTIVITY
With global evidence in perspective, it becomes a case of urgency to address productivity issues across public and private domains to unlock the country’s export potential and transition toward higher export-oriented GDP growth..
2. PRODUCT, MARKET DIVERSIFICATION, TRADE FACILIATION & BRAND DEVELOPMENT
By leveraging strategic location, close proximity and excellent diplomatic relations, exports can get a major boom by analyzing and consequently negotiating better market access for Pakistani products for an improved wallet share. Focus will be to facilitate “Made in Pakistan” and help Pakistani companies and products develop into brands for augmented value proposition for the same exportable surplus. Simultaneously, targeted sectoral strategies and interventions for the Agriculture, Industry, Services will be developed to help diversify Pakistan’s product share that will subsequently lead to an increase in exports.
3. ENABLING AND CONDUCIVE BUSINESS ENVIRONMENT
The government will address enterprises’ concerns both at the regulatory and operational levels,help facilitate businesses and reduce hindrances in achieving efficiency in business related operations.
4. SME DEVELOPEMT AND NURTURING LOCAL ENDOWMENTS
The Government intends to facilitate the SME sector get plugged into the local export supply and global value chains. One of the most effective tools to address this objective will be through cluster development of certain sectors with high export potential. Further, issues relating to access to credit and inclusiveness will also be addressed. Priority of the government will be to nurture sectors with not only high export potential but which represent local endowments as well, be they capacity,developed supply chains, knowledge or natural resources.

01 NATIONAL PRODUCTIVITY MASTER PLAN
Productivity is one of the key building blocks of competitiveness. The GoP is aware of its importance and will deliver a major intervention through the introduction of National Productivity Master Plan (NPMP). The Plan, which is in its final stages of development, has been developed with the assistance of Asian Productivity Organization (APO) and Korean Development Institute (KDI). Under NPMP, a three-pronged strategic approach has been adopted with specific recommendations and interventions to be implemented across public and private sector spheres. In order to achieve consistency and and harmonization of policies, there will be a clear interface of the sectoral industrial policies with the export related initiatives contained in the Strategic Trade Policy Framework (STPF) 2020 – 2025. This will result in much needed synchronization of efforts for industrial development in line with export development strategies.


02 MARKET DIVERSIFICATION AND REGIONAL CONNECTIVITY
Market access and diversification are key elements in Pakistan’s export enhancement strategies.The following initiatives are currently being pursued to consolidate and ensure wallet share in current markets, explore new ones and diversify the potential buyer base. In addition to the afore mentioned, existing Free Trade Agreements (FTAs)/Preferential Trade Agreements (PTAs) will be further enhanced to extract maximum benefit out of them besides finalizing the following key initiatives under pursual:
1. GSP SCHEME WITH THE EUROPEAN UNION
The current GSP Scheme is going to end in December 2023. European Union is expected to launch a ten-year scheme for the period 2024-34. The Government of Pakistan has taken
measures to secure Pakistan’s interest for the upcoming GSP Scheme 2024-34 and ensure Pakistani goods exported to the European Union continue to benefit from preferential trade
terms.
2. PREFERENTIAL TRADE AGREEMENT WITH AZERBAIJAN
The GoP and Azerbaijan are working on a preferential trade agreement, for which the draft has been finalized. Under the stewardship of the Ministry of Commerce (MoC), stakeholders’ consultations have concluded and technical level of negotiations are expected to commence shortly.
3. TRADE DEVELOPMENT CONFERENCE WITH ASEAN COUNTRIES
The GoP will initiate market access activities in the ASEAN region through the first ever Trade Development Conference in Indonesia in the coming months where delegates from other ASEAN countries will be invited.
4. FREE TRADE AGREEMENT WITH GULF COOPERATION COUNCIL
Pakistan is in the process of concluding the Free Trade Agreement with Gulf Cooperation Council (GCC), which comprises of six members namely Kingdom of Saudi Arabia, United Arab Emirates, Kuwait, Bahrain, Qatar, and Sultanate of Oman. An important feature of the FTA is a separate free trade agreement in the Services Sector.
Based upon the dynamics of the Services Sector in Pakistan, emphasis has been placed on Commercial Presence (Mode 3) and Movement of Natural Persons (Mode 4) to enhance
employment opportunities for the skilled and semi-skilled human resources in GCC countries and to promote investment opportunities in Pakistan in the form of joint ventures. All of the 11 sectors of services trade have been included in this on-going FTA.
5. COMPREHENSIVE ECONOMIC PARTNERSHIP AGREEMENT WITH UAE
The GoP is also working on finalizing terms of reference to negotiate Comprehensive Economic Partnership Agreement (CEPA) for establishing a Free Trade Area with the government of the United Arab Emirates.
6. REGIONAL CONNECTIVITY
A vibrant regional trading network is essential for creating the necessary conditions for export growth. Regional Connectivity, facilitating border markets and trade is, therefore, a target area of the Ministry of Commerce. The following initiatives have so far been taken, which are expected to start showing results in the next 12-24 months:
- An Agreement between Uzbekistan & Pakistan on transit trade operational in 2022. Pakistan’s exports to Uzbekistan have increased from USD 36.56 million in July-March FY 21-22 to USD 73.12 million in the same period of FY 22-23.
- Pakistan-Uzbekistan Preferential Trade Agreement (PTA) was signed in 2022, extending market access for Pakistan in Cement, Mobile Phones, Pharmaceuticals, Chemicals,Processed food, and Confectionary sectors. Tariff concessions have been given on a total of 17 tariff lines at HS-6 level by both countries under this PTA and is likely to support Pakistan’s exports.
- Pakistan-Tajikistan Transit Trade Agreement was signed December 2022. The agreement will become operational after the notification of its rules by custom authorities.
03 PRODUCT DEVELOPMENT AND TRADE FACILITATION
1. NATIONAL COMPLIANCE CENTRE
The GoP has taken measures to establish National Compliance Centre(s) to facilitate and support sector-specific product development which require compliance / certification. These centers will be established at the federal and provincial levels serving all production sectors of the economy. The endeavor will also strengthen on-going efforts to fulfil commitments under international agreements such as GSP+ and maintain preferential market access for export-oriented industries.
2. TRADE FACILITATION AGREEMENT
Pakistan is a signatory to the WTO’s Trade Facilitation Agreement since 2015. Pakistan has effectively implemented its commitments under the agreement and currently stands at 95 percent compliance. A National Trade and Transport Facilitation Committee (NTTFC) has also been created under the agreement, to oversee all aspects of border facilitation related to trade and transport. This will remove logistical barriers, reduce transport costs, and enhance trade for Pakistan. Through the implementation of TFA, an improvement in business processes will be observed by reducing regulatory burdens. Transportation costs, on average, contribute 10% to 20% to the total cost of Pakistan’s exporters. An improvement on this aspect will translate into significant reduction in delays and the cost of doing business.
3. TARIFF RATIONALIZATION
Ministry of Commerce (MoC) is also working on improving production / export of technical textiles to help diversify into more complex production base which has high demand in global market. Tariff Rationalization study on the value chain of technical textiles is under way, ther esults of which will be implemented to improve textiles’ product diversification according to the requirements of stakeholders, fiscal space and the objectives of industrial and export development.
4. EXPORT READINESS PROGRAM
The GoP intends to implement a capacity building program ‘Export Readiness Program’ SMEs.The intervention will improve the export readiness of SMEs in promising sectors of the economy, in line with the Strategic Trade Policy Framework (STPF) and improve their export prospects through comprehensive export coaching, business development & handholding activities. The program is expected to be delivered over a period of 2.5 years and aims to assist SMEs to build and improve export readiness and knowledge about potential markets abroad. The program,which will be executed through Trade Development Authority of Pakistan (TDAP) and Small and Medium Enterprises Development Authority (SMEDA), will cover the following:
- >>Providing knowledge transfer and business information on markets, marketing, technology trends, processes, project management, competition, etc.).
- >>Identifying and benchmarking strong suppliers/ services providers and introduce them to potential markets.
- >>Facilitating development of an integrated marketing plan for participating companies; Providing matchmaking and promotion opportunities.
- >>Identification of Tariff & non-Tariff barriers hindering Pakistan’s entry into various potential markets.
- >>Review of International and regional best practices covering comparison with competing countries.
- >>Benchmarking technology levels in the competing countries.
- >>Improvement required in Institutional Frameworks for export enhancement.
- >>Improvements required in Fiscal and Regulatory Regimes.
- >>Identification of requirements for establishment of structured sales network in Potential markets.
5. GEOGRAPHICAL INDICATIONS (GI) CELL
GI Registration is critical for international branding of Pakistani products. The Ministry of Commerce has established a dedicated GI Cell for the protection of Pakistan-based GIs. Preparation of the Book of Specifications of Geographical Indications (GIs) for agricultural products and non-agricultural products has already been initiated by the GI Cell to complete the prerequisites for registration of some products, e.g. Basmati Rice, Pink Rock Salt, Hyderabad Bangles,Chaunsa Mango, Sindhri Mango, Sarghodha Kinnow. Preparation of the Book of Specifications of many other agriculture and handicraft products is underway.
6. TRADE DEVELOPMENT FAIR FOR WOMEN ENTREPRENEURS
In order to promote women entrepreneurs, Ministry of Commerce and the Trade Development Authority of Pakistan (TDAP) are hosting the ‘18th OIC Trade Fair and 11th Wexnet 2023’ in collaboration with the Islamic Centre for Development of Trade (ICDT) in June 2023. The upcoming 18th edition of the OIC Trade Fair, will be held in concomitance with the 11th edition of WEXNET (also known as the Women Entrepreneurs Network), which is a flagship event of TDAP for the capacity building of women entrepreneurs and enabling them to become part of mainstream trade. The theme of the event will be “Women Empowerment through Entrepreneurship”. The three-day event will be a distinctive initiative to promote multi-sectoral economic diplomacy at a multilateral socio-political level, while offering women entrepreneurs a unique opportunity to showcase their products to the international audience
7. DEVELOPMENT OF BARTER TRADE
The barter trade arrangement is being established by the Ministry of Commerce in order to mitigate the impact of rising imports and pressure on foreign exchange. The barter arrangement will also facilitate trade of goods where formal banking channels have not been established. This can greatly facilitate some of the businesses which face issues due to unavailability of banking channels in certain international target markets. In addition, as part of the Look Africa Initiative, the barter trade arrangement will specifically cater to African countries
8. DOMESTIC COMMERCE POLICY
Domestic Commerce constitutes a vital part of our national economy, contributing nearly 41percent to the GDP employing sizeable portion of the labor force and absorbing major share of domestic investment. Consequently, Ministry of Commerce drafted the first ever Domestic Commerce Policy based on the findings of research conducted through surveys, field visits,reports, comparative analysis of other economies and a thorough, country-wide consultative process. Draft Domestic Commerce Policy is in the final stages of approval. It is mandated to cover a wide range of key areas including enterprise productivity and modernization, SME/firm development, social inclusion and gender mainstreaming, retail and wholesale sector development, local brand development, transportation, storage and warehousing, real estate, skill development, intellectual property rights protection, and E-Commerce development and strengthening. The Domestic Commerce Policy intends to create a conducive environment for growth, and improve Pakistan’s ranking on a number of international parameters including the Ease of Doing Business, Gender Gap, Global Competitiveness Index, and other global indicators issues by various international agencies.
9. E-COMMERCE AND IT EXPORTS
- E-Commerce has become a critical mode for conducting business in today’s world. E-Commerce platforms can directly link business to consumers as well as other business across the world thereby decreasing information asymmetry issues that are normally faced by exporters.These platforms also bring customers directly to the businesses thereby cutting costs for maintaining retail outlets. Given the importance of E-commerce, the Ministry of Commerce approved Pakistan’s first E-Commerce Policy Framework, in 2019. The policy framework focuses on a wide range of things including e-commerce regulation and facilitation, financial inclusion through digitalization, consumer protection, global connectivity etc. The following interventions have been made in this regard, which are expected to further build upon its contributions to exports in the next 12-24 months:
- eTijarat Portal launched in 2022 that provides all E-Commerce related information. Since its launch, more than 8,000 visits have been recorded;
- Pakistan trade portal was launched in 2022 to showcase Pakistani products globally.1,200 SMEs have been registered and its outreach will be further enhanced;
- To facilitate small packet exports, E-Commerce Export Framework (SRO(14)/1/2021) has been introduced;
- Amazon added Pakistan to its Seller List in May 2021. More than 6000 sellers have been registered and the number is expected to increase further;
- International payment gateways have been introduced in Pakistan including Visa, Mastercard, Etisalat, Payoneer, and Hyperwallet. Over the next 12-24, the Government inteand will endeavor to bring PayPal to Pakistan. Key aim of the above efforts remains to move the country away from Cash on Delivery to digitized payment solutions.
With the general shift toward digitalization, global demand for ICT, IT and ITeS has skyrocketed The government will focus efforts and investment toward securing a greater market share in technology services exports, contributing toward GDP and creating job opportunities, especially for the youth. In addition to the above initiatives, the Ministry of IT will work to deliver the following key interventions
- Freelancer Facilitation Policy: This policy will set the outline for freelancing activities in Pakistan and pave the way for hiring of freelancers across Pakistan. Draft Policy has been prepared and in process of consultation.
- The Ministry of IT will focus on National E-Commerce Council. Given the sector’s fast-paced growth and the adoption of Pakistan’s first E-Commerce Policy, E-Commerce exports of Pakistan are expected to increase by 50%. With the support of a dedicated National E-Commerce Council, the evolution in E-Commerce will be reviewed and recommendations will be provided.
04 PAKISTAN REGULATORY REFORMS INITIATIVE
1. PAKISTAN REGULATORY REFORMS INITIATIVE
After achieving significant improvement in Ease of Doing Business Ranking, the Board of Investment (BOI) initiated second generation reforms across the country under the banner of “Pakistan Regulatory Reforms Initiative (PRMI)”. To operate in Pakistan, businesses need to fulfill regulatory requirements of three tiers of Government (Federal, Provincial and Local Governments). Many Government departments / organizations have prescribed multiple “Registrations, Licenses, Certificates and Other permits (RLCOs)” for establishing and operating such businesses. To reduce compliance burden on businesses and make necessary reforms, GoP has launched PRMI. A major deliverable of this project is the establishment of an online “One Stop Shop” by the name of “Pakistan Business Portal”. To date, a number of reforms have been implemented across ministries and departments as represented in Figure 2. While much work has been accomplished, a number of other initiatives totaling at least 119 across myriad ministries and line departments are in the pipeline and will remain a key focus under the initiative


2. ZERO-TIME-TO-STARTUP POLICY
BOI is working on the development of Zero Time To Startup (ZTTS) Policy for replacing NOCs with Compliance Verification Process (CVP) through adopting Risk-Based approach. Likewise,Business Enabling Environment (BEE) initiative is a new benchmarking exercise under development. BEE will provide a quantitative assessment of the business environment for private sector development, published annually and covering most of the economies worldwide.
In the aforesaid context, to institutionalize the reforms process and strengthen the regulatory guillotine drive, the Board of Investment has drafted Assan Karobar Bill, which is with the Ministry of Law & Justice for vetting before submission to the cabinet Committee on Legislative Cases (CCLC). Regulatory reforms can have a significant impact on investments, exports, and SMEs (small and medium-sized enterprises) growth. When implemented effectively, these reforms can create a more favorable business environment, reducing the barriers and costs associated with starting and running businesses.
3. INVEST PAKISTAN
Another key flagship initiative from BOI is “Invest Pakistan” that specializes in investment realization, sustainability, and bringing the government together to resolve binding constraints in the investment decision. BoI will register a new public-private partnership company named ‘Invest Pakistan’ with the Securities Exchange Commission of Pakistan (SECP).
The company will operate as a joint venture between the government and private sector partners and will bring together expertise and resources of both parties to promote investment in the country. The Cabinet has approved legislation for ‘Invest Pakistan’ initiative on the recommendations of BoI and ensuing legislation will help ensure provisions for investor-friendly services
05 DOING BUSINESS FACILITATION: CHAMBERS OF COMMERCE AND INDUSTRY, EXPORTERS AND TOP BRANDS
1. BUSINESS FACILITATION AND BRAND DEVELOPMENT
The GoP has engaged extensively with all major chambers of Pakistan and top exporters and brands to understand and help coordinate and resolve their regulatory and business-related concerns. Under the ambit of this government-wide initiative, working groups with all major chambers have been activated with regular interactions with private sector and relevant ministries. Ministry of Planning, Development & Special Initiatives has taken the lead to conduct extensive stakeholder consultations with around 100 top exporters of Pakistan and top brands,representing sectors which earn more than 70% of the overall exports of the country. More than 100 fiscal and non-fiscal issues and recommendations hindering leapfrogging exports have been identified, which include suggestions to overhaul export promotion services, elevating the status of exporters in the society amongst others. The government will endeavor to coordinate and act upon these recommendations to improve the business environment, recognizing top exporters and brands by offering preferential services and help in formulating interventions which facilitate local brands go global.
2. WORLD-CLASS INDUSTRIAL INFRASTRUCTURE UNDER CPEC
SEZs are envisaged to attract high quality foreign direct investment by encouraging relocation of industries not only from China but other countries, create job opportunities and transfer of advanced technologies. Successful development of SEZs will result in diversification of exports,import substitution and hence improvement in foreign exchange reserves. Industry under CPEC is expected to benefit from Pakistan’s favorable endowments in natural resources, adequate labor, improvement in ease of doing business, market access and optimal industrial policies while utilizing Chinese and other international expertise in technology, financing and industrial capacity.
Nine (09) sites for development of Special Economic Zones under CPEC are under execution.Four SEZs namely Rashakai SEZ, Allama Iqbal Industrial City (AIIC), Bostan SEZ and Dhabeji Industrial Zone are at advanced stages of development. The government will make its priority to follow through on the high priority CPEC SEZs in order to provide a conducive eco-system for businesses to relocate and thrive across the country..
06 SME DEVELOPMENT AND NURTURING LOCAL ENDOWMENTS
SMEs play a critical role in employment generation and continue to represent a substantial portion of overall exports. Private sector turnaround remains anchored in the development and improved contribution of the SMEs though enhanced competitiveness, augmented exports through an integrated SME eco-system development approach which helps them connect with global and value chains. Further, it is imperative that Pakistan realizes the full potential of its local endowments. The Government plans to implement the following key initiatives to help support local endowment sectors and the SMEs:
1. CLUSTER-BASED DEVELOPMENT PLAN FOR HIGH POTENTIAL SME SECTORS
The GoP has taken measures to establish National Compliance Centre(s) to facilitate and support sector-specific product development which require compliance / certification. These centers will be established at the federal and provincial levels serving all production sectors of the economy. The endeavor will also strengthen on-going efforts to fulfil commitments under international agreements such as GSP+ and maintain preferential market access for export-oriented industries.
- Fruits, Vegetables Processing
- Light Engineering (Fans and Cutlery)
- Musical Instruments
- Gems & Jewelry
- Sea-food
- Designer Garments
- Auto parts and E-Bikes
- Sports goods
- Meat and Poultry
- Surgical Instruments and Medical Devices
- Pharmaceuticals
- Electronics
- Salt and Salt Products
In the first phase, 5 sectors from the list above will be picked to evolve development plan for each cluster which will be rolled-out within 6 months of commencement.
2. SME FUND
SME Policy approved by the Federal Cabinet provides that an SME Fund will be established to ensure that SME development initiatives are implemented and SMEDA is able to play a robust role supporting interventions across the SME eco-system. The fund, to the tune of PKR 30 billion will, among other things, undertake the following initiatives:
- Technology upgradation of SMEs.
- SME Credit Market Development.
- Cost sharing for business development services, technology/product improvement, certi fication, market access, training, productivity enhancement etc
- Programs / projects, such as common facility centers and small interventions for SME sector development in partnership with institutional players.
- Undertake and promote equity finance, venture capital and other technology based financial solutions.
- Support entrepreneurship eco-system development, including support for digitization, automation, adoption of new technologies, incubation and start-up accelerator programs.
- Market information, marketing and exhibition support
3. WOMEN INCLUSIVE FINANCE (WIF) SECTOR DEVELOPMENT PROGRAM
National SME Policy 2021, envisions to support women owned businesses to ensure their greater participation in economic activities, acknowledging their importance and impact on economic development. To this end, SMEDA has initiated a process of developing Women Entrepreneurship Policy and Action Plan with financial and technical assistance from the Asian Development Bank under its Women Inclusive Finance (WIF) Sector Development Program. A diagnostic Study on the key barriers to Women Entrepreneurship has been conducted, that provides the baseline for formulating the National Women Entrepreneurship Policy. It is envisaged that the Policy will serve as Government of Pakistan’s framework for women empowerment, equity and enable women-led enterprises to play a role in the economic development and exports of the country.
4. NATIONAL MINERAL DATA CENTRE
Mineral sector is one of the key focus areas and remains a contender to develop with the objective of product diversification based on local endowments in perspective. However, any local or foreign investment commences with transparent, credible data to base its investments upon, without which natural endowments may remain untapped in an organized fashion. To develop the sector, the GoP is in the process of setting up a National Mineral Data Centre to facilitate investors, which is expected to be rolled out in the next 12-15 months.

Mineral sector is one of the key focus areas and remains a contender to develop with the objective of product diversification based on local endowments in perspective. However, any local or foreign investment commences with transparent, credible data to base its investments upon, without which natural endowments may remain untapped in an organized fashion. To develop the sector, the GoP is in the process of setting up a National Mineral Data Centre to facilitate investors, which is expected to be rolled out in the next 12-15 months.
THE PROJECT IS BEING EXECUTED KEEPING IN VIEW FOUR KEY COMPONENTS
- State-of-the-art Minerals Data Centre and Investment Facilitation Cell
- Minerals Information and Investment Services Portal
- Integrated GIS based Solutions/Applications for data storage and information processing
- Provision of Hardware, Software and Trainings to Provincial M&MDs.
5. AGRICULTURE EXPORTS AND OTHER POLICY MEASURES
Pakistan’s agriculture sector has not performed well especially over the last 5-7 years. Pakistan has been traditionally self-sufficient in wheat and cotton. But over the last two years, Pakistan has imported $1.77 billion worth of wheat, a trade which may continue in the short term.Cotton production crisis has also lingered on for the last 10-12 years. In the last five years alone, Pakistan’s cotton imports have exceeded $6.0. Pakistan has never been self-sufficient in pulses and edible oil. The value of annual imports of pulses, over the last five years, have ranged from $500 million to $700 million. In the same period, imports of edible oil have ranged from $2.0 billion to $3.72 billion.
EXPORT ENHANCEMENT: Over the last five years, Pakistan’s main agricultural exports have been rice ($2.0-$2.5 billion/year), fisheries ($400-$450 million/year), fruits and vegetables ($640-$800 million/year), and meat ($225-$340 million/year). Other than rice, all other commodities have much higher potential to increase export. For Pakistan, more tangible agricultural export enhancement opportunities are in China. The Ministry of National Food Security and Research (MNFSR) has been exploring these opportunities though CPEC initiatives and the platform of the Joint Working Group on Agriculture (JWG-A). China’s annual agricultural imports exceed $278 billion which include meat, fisheries, fruits, and vegetables. Annual imports of each of these commodities exceed $10 billion. Pakistan’s current agricultural export to China, over the last five years, have ranged $500-$950 million. The higher export last year was due to increase in rice exports.
For agricultural export enhancement to China, under the (Joint Working Group – Agriculture ) JWG-A, MNFSR is developing the following business models:

1.Industrial Scale Feedlot Fattening:
Over three million male buffalo calves are wasted annually in Pakistan. These claves cannot be saved and raised at the household level.MNFSR has prepared a pre-facility and now working with private sector companies of both China and Pakistan to help develop joint ventures. In three years, Pakistan could start exporting beef worth $500 million to $1.0 billion per annum. The longer-term potential of meat exports to China could range between $2.0-$3.0 per annum. MNFSR has assisted one Chinese company to establish donkey slaughterhouse in Gwadar SEZ as well. The company is expected to start operations this year with annual exports of expected around $30 million. They are also developing donkey breeding farms to expand their operations in the medium to long-term.
2.Inland Shrimp Farming:
MNFSR has already established the proof of concept that Pakistan can expand inland shrimp farming in the saline waterlogged land of Punjab and
Sindh. Like feedlot fattening initiative, MNFSR is working with private companies of both countries to workout investment models in inland fisheries and shrimp farming,
processing, and export to China. Pakistan could start exporting fisheries worth $500-$800 million per annum. The potential is much higher in the long run
3.Vegetable Exports:
MNFSR has assisted one Chinese company to expand its Chili production from 400 acres in 2021-22 to 10,000 acres in 2022-23. They are planning to set up chili processing plant in south Punjab this year. This proof of concept will lead this and other Chinese companies to establish production and processing of other vegetables and export to Gulf countries and China. Pakistan has the potential to expand its vegetable export $500-$800 million per annum in the next three years.
IMPORT SUBSTITUTION:
In the next 2-3 years, by taking policy and development initiatives, Pakistan has the potential to become self-sufficient in wheat and cotton and attain 25% to 30% import substitution in pulses and edible oil.

1.Policy Initiatives:
By announcing the profitable support price for wheat and profitable intervention price for cotton a month before their respective sowing times, as well as
expanding access to formal credit to farmers, Pakistan can achieve self-sufficiency in wheat and near self-sufficiency in cotton. It will save import expense of about
$2.5-$3.0 billion a year. For cotton, the government has announced profitable intervention price since 2021 but farmers’ access to high-yielding varieties and good qual
ity certified seed have been major impediments. Both are now becoming available slowly but can be expedited through policy actions in coordination with the private
sector. MNFSR is actively working with two Chinese companies to field-test their But cotton varieties and introduce them in Pakistan. By introducing policy of regulatory
duty on palm oil, Pakistan can attain 25%-35% import substitution worth about $500 million to $1.5 billion (depending on the international prices) in the next 2-3 years.
With similar policy actions, profitable support price and buy-back arrangement, Pakistan can attain 25%-30% import substitution in pulses saving about $250-$300
million a year. Further, share of farm credit is less than half of the total formal credit to the sector. Smallholders, who till about half the farmland and produce over 80% of the food, lack access to formal credit. MNFSR has developed innovative concept to provide formal credit to landless farmers and smallholders without collateral. Nurturing such initiatives will be critical to attain agricultural growth potential.
2. Development Initiatives:
Pakistan’s agriculture has quite low level of mechanization even on regional standards. Over 70% of wheat is sown after cotton and rice and sowing is, on average, late by two weeks. Empirical research shows that wheat sown after mid-November in irrigated areas of Punjab incurs yield loss of 26 kg/day; implying yield loss of 10 maunds/acre. Given that average wheat yield is 30 maunds/acre,this is a significant loss. About half of this loss may be averted if cotton and rice harvesting and wheat sowing were mechanized to minimize the turnaround time. This level of mechanization will require financing initiatives and incentives through subsidized interest rate with longer tenor. Studies have shown that 10%-15% wheat is shattered during harvesting because large majority of the combine harvesters are over 40 years old having outlived their efficient life span. This loss amounts to 2-3 million tons of wheat worth $700 million to $1.0 billion. Import of modern combines will also require subsidized interest rates with longer tenor. The prime minister’s Kissan Package 2022 includes these initiatives and the government will endeavor to arrange financing in order to meet the objectives.
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