Naveed Miraj
Industries are in dire straits as a result of a serious liquidity crunch which is all set to further compound the troubles of an economy trying to avert a debt default. Bloomberg, one of the world’s leading financial news organizations, in its recent report has painted a very grim picture saying a bunch of Pakistan’s biggest companies have halted operations in the past few months as they ran out of raw materials or foreign exchange, or both.
The critical position of foreign exchange reserves which stand at around $3.19 billion as of February 10 reflects the miseries of the $350 billion economy struggling to fund imports as thousands of containers of supplies are stranding at its ports stalling production and putting jobs of millions of people at risk. The Bloomberg report alludes to the closures of operations by auto manufacturers, textiles, fertilizers, steel and so on.
For a long, the textile industry has been resorting to hue and cry over their predicament because of which their exports are witnessing a consistent decline. According to the data of the Pakistan Bureau of Statistics, the exports of textiles and clothing fell 14.83 percent in January to 1.32 billion dollars compared to 1.55 billion dollars in the same month last year. The overall export proceeds of textiles shrank for the fifth consecutive month in a row.
The drop shows the government would find it difficult to achieve the export target this fiscal year leading to more pressure on foreign exchange reserves of the country. As a result of the closure of textile units, about seven million people have also lost their jobs. The situation in the auto sector is also dire where about two hundred and fifty thousand people have been laid off in recent months. The Pharma industry is also reportedly considering closing down its operations because of the non-availability of raw materials.
It would not be wrong to say that the economy is in a state of near paralysis as one has not seen such an extent of shutdowns amongst the listed companies. Financial experts believe that these closures will impact growth as well as increase unemployment levels in the country.
Exports proceeds are the most important source of earning dollars and if this source dried because of the closure of our industries, then even the IMF deal and loans from other financial institutions and friendly countries will not be able to save us from a total collapse- the consequences of which will be horrendous beyond our imagination. Hence needful should be done and that too immediately to avert such a situation.
The current crisis has brought to the fore the fact of the over-dependence of our industries on imported raw materials. Hence, we need to pay more focus to develop this capacity to meet the requirements of our large-scale manufacturing sector. Had we pushed for local manufacturing of auto parts, the auto industry would not have faced closures today as not only this would have ensured the availability of parts at reasonable rates but the very prices of vehicles would also have been within the range of the middle class.
Similarly, if we had also focused on enhancing the local production of cotton, the textile industry would not have found it difficult to meet export targets and considered shifting their units abroad. Domestically meeting the raw material requirements of industries will not only help generate more job opportunities for our youth but also save our precious foreign exchange reserves.
The authorities concerned must realize that it is only through enhancing the productivity of our important sectors such as industries, agriculture and IT that we can enhance our exports and permanently steer the country out of the current quagmire. With a focused approach and the right kind of interventions, we can achieve the desired results.
