Afm Final Project

8/2/2019 Afm Final Project

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CONTENTS

1) Introduction

2) Geographical Location Of Pakistan3) Foreign Trade Of Pakistan4) Major Export Items Of Pakistan5) Geographical Analysis Of Export6) Major Exports Partner Of Pakistan

United States Of America (UAS)United Arab Emirates (UAE)AfghanistanUnited KingdomGermany

7) Country Wise Analysis8) Sector Wise And Product Wise Analysis

A) Textile And Garments CetegeoriesB) Other Core CategoriesC) Developmental And Other Core Categeories

9) Composition Of Export10) Direction Of Export11) Barriers12) Issues

Impact Of Inflation On ExportImpact Of Exchange Rate On Export

13) Recoumendation14) Conclusion15) Sources Of Data

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Introdution-;

In this project we try to put light on export of Pakistan since 1990 to 2010. And in thisproject we also try to understand the causes of rise and fall of our export. We also see thatWhat is the barrier which create hurdle in export and what role of government to provideor facilitate those enterprises which exports their product and able the country to earn hugerevenue. We also see that what problem they face and how inflation and other econ-mic factor affect our export. Either these economic factor i.e. inflation, exchange rate,intrest rate affect the export positively on negatively.

We also see that who our major exporter are and how much they share ourtotal export (both in percentage as well as amount ) and the export with these states arerising or falling in last two decades. Which product we export these states and we had a

potential to boost our export in these states or not.

We also try to examine that what is major reason of rise or fall our export inthese states. We also see that either our export affected due to global financial crises in late90s and in 2008-09. If our export affected due to above mentioned reason than the questionis how these crises are affected.

Geographical Location-;

Pakistan is an important country of south Asia. Total area of Pakistan is7096096 Sq Km. The geographical location of Pakistan is very idealistic because in our

neighbor two boosting economics countries are exist, one is China second largest econ-omy and other is India the growing economy of Asia and both countries has populationmore than one billion and having huge market.

In west of Pakistan Afghanistan and after that Tajikistan, Turkmenistan,Kazakhstan, Azerbaijan, are exist these states are land locked countries and Pakistanprovide access to the seas. On the other side Pakistan locate very important edge of IndianOcean. Its main way from there western countries import oil from gulf states, more over itshuge market for these western states as well as Japan Korea and India.

The economy of Pakistan is 47th largest economy in the world and in

In 30th june 2010 the export of Pakistan is Rs 2010.8 billion. Major part of our export isIs textile sector which cover 62% of our total export Inflation in Pakistan in 2010os 14.8%which cause the rise price ohe inflation rate is likely to go up to 15 percent by theend of the current fiscal year. Trade deficit declined by 2.2 percent and itamounted to $8 billion in ten months. 638 companies were listed in the stockmarket and volume of investment remained at Rs920 billion.

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The government sectors took loans of Rs342.2 in ten months,Rs472.2 were borrowed for the budget support, which included State BanksRs196.3 billion.

During the current fiscal year remained at 2.4 percent as againstthe target of 4.5 percent, agriculture sector growth rate stood at 1.2 percentagainst the target of 3.8 percent, while the services sector growth stood at 4.7percent against the target of 4.1 percent,

Manufacturing sector growth rate in the current fiscal yearremained negative at minus 0.1 percent. Electricity, gas and water supply growthworsened at minus 21 percent, large industries growth stuck to 1 percent, whilesmall industries growth stood at 7.5 percent

Tax collection fell down because of the slow economic growth,however it amounted to 12.6 percent higher than the previous year. In the first

ten months tax revenue amounted to Rs1156 billion as against the target ofRs1588 billion.

The population of Pakistan is near 180 million in 2010 and the growth ofPopulation is 2.4%. Total labor force is 55.77 million in which 43% agriculture, 36.66%service sector, 20.3% industry sector, 6.2% are unemployed. In 2010 the 24% of totalpopulation are below the poverty line.

Main industry of Pakistan is Textile industry, Food processing ,Pharm-aceuticals. Construction materials, paper products, fertilizers etc. Gross DomesticProduct (GDP) growth rate trailed almost half behind the set target, tax revenue

in the first ten months amounted to Rs1156 billion, while the rate of inflationsurged to 14 percent, according to the Economic Survey 2010-11.

Foreign trade of Pakistan-;

Export were targeted at $18.6 billion or 12.9 percent higher thanlast year. Export of food group declined by 3.5 percent. This declined is causedby a 2.6 percent and 14.3 percent decline in exports of rice and fruits. Export ofrice declined due to lesser production caused by adverse weather conditionwhich kept the domestic price higher. It was more profitable to sell within thecountry than to export. Exports of textile manufactures grew by 0.2 percent.

Prominent among these are export of knitwear 13.9 percent, readymadegarments 6.8 percent, made up articles 8.9 percent, cotton yarn 4.6 percent andtowels 2.6 percent. Exports of other textile materials registered a high doubledigit growth of 17.2 percent. Export of raw cotton, cotton cloth and bed wear onthe other hand registered a decline.

Although Pakistan trade with a large number of countries itsexports are however highly concentrated in few countries including USA,

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Germany, Japan, UK, Hong Kong, Dubai and Saudi Arabia which account forone-half of its exports. The United States is largest export market for Pakistan,accounting for 28.4 percent of its exports followed by UK and Germany. Japan isfast vanishing as export market for Pakistan as its share in total exports has beenon decline for one decade, reaching less than one percent from 5.7 percent a

decade ago.Pakistan needs to diversify its exports not only in terms of

commodities but also in terms of markets. Heavy concentration of exports in fewcommodities and few markets can lead to export instability. Other issues whichneed to be addressed include low value added and poor quality, obsolete use ofmachinery and technology, higher wastage of inputs adding to the cost ofproduction, low labor productivity, little spending on research and development,export houses lacking capacity to meet bulk orders, inability to meetrequirements of consumers I terms of fashion and design, non-adherence tocontracted quality and delivery schedule, lack of marketing techniques .

Foreign trade is important to the economy because of thecountry's need to import a variety of products. Imports have exceeded exports inalmost every year since 1950, and Pakistan had a deficit on its balance of tradeeach year from FY 1973 through FY 1992. In FY 1991, exports were US$5.9billion, compared with imports of US$8.4 billion, which resulted in a deficit ofUS$2.5 billion. In FY 1992, exports rose to an estimated US$6.9 billion, butimports reached an estimated US$9.3 billion, resulting in a trade deficit ofUS$2.4 billion. Economists forecast a trade deficit of around US$2.5 billion forFY 1993. Pakistan's terms of trade, expressed in an index set at 100 in FY 1981,were 78.0 in FY 1991 and 82.7 in FY 1992.

Although import-substitution industrialization policies favoreddomestic manufacturing of substitutes for imports, officials also encouragedmanufactured exports in the 1950s and 1960s. In the early 1980s, incentiveswere again provided to industrialists to increase manufactured exports.Nonetheless, in the early 1990s the export base remained primarily dependenton two agricultural products, cotton and rice, which are subject to great variationsin output and demand. In FY 1992, raw cotton, cotton yarn, cotton cloth, andcotton waste accounted for 37 percent of all exports. Other important exportswere ready made garments (15 percent), synthetic textiles (6 percent), and rice(6 percent). There was some diversification during the late 1980s as the share ofmanufactured goods rose. The share of primary goods fell from 35 percent to 16

percent between FY 1986 and FY 1993. During the same period, the share ofsemi manufactures rose from 16 percent to 20 percent, and that of manufacturedgoods rose from 49 percent to 64 percent.

In the early 1990s, Pakistan's balance of trade remainedparticularly vulnerable to changes in the world economy and bad weather. Sharpincreases in crude oil prices, such as those of 1979-81 and 1990, raised thenation's import bill significantly. Total exports, on the other hand, are more

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sensitive to agricultural production. The decline in cotton production in FY 1993,for instance, seriously affected the export level.

Major Exports of Pakistan1. Raw cotton, Textile products and Cotton yarn.

2. Rice.

3. Leather and leather products.

4. Carpets and rugs, Tents.

5. Synthetic textiles.

6. Surgical instruments.

7. Sports goods.

8. Readymade garments.

9. Vegetable, fruit and fish.

10. Engineering goods.

11. Chemicals and Pharmaceutical products

Sources for imports and markets for exports are widelyscattered, and they fluctuate from year to year. In the early 1990s, the UnitedStates and Japan were Pakistan's most important trading partners. In FY 1993,

the United States accounted for 13.7 percent of Pakistan's exports and 11.2percent of its imports. Japan accounted for 6.6 percent of exports and 14.2percent of imports. Germany, Britain, and Saudi Arabia are also important tradingpartners. Hong Kong is an important export market and China a significantsupplier of imports. Trade with the Republic of Korea (South Korea) and Malaysiais small but not unimportant. Trade with India is negligible.

Because of Pakistani fears of protectionism in developedcountries and the increasing importance of regional blocs in international trade,the government in the 1980s and early 1990s placed new importance ondeveloping trade links with nearby nations. In the early 1990s, new trading

initiatives were being pursued through membership in two regional organizations,the Economic Co-operation Organization (ECO) and the South Asian Associationfor Regional Cooperation.

The ECO was formed in 1985 with Pakistan, Iran, and Turkeyas its only members, but Afghanistan, Azerbaijan, Kyrgyzstan, Tajikistan,Turkmenistan, and Uzbekistan joined in 1992. Some politicians in the membernations see the ECO as a potential Muslim common market, but political rivalries,

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especially between Iran and Turkey, limit its effectiveness. In 1994 most of theconcrete measures being taken by the ECO concerned the improvement oftransportation and communications among the member nations, including theconstruction of a highway from Turkey to Pakistan through Iran.

SAARC was founded in the mid-1980s primarily as a vehicleto increase trade within South Asia by delinking the region's political conflictsfrom economic cooperation. Its seven member states--Bangladesh, Bhutan,India, Maldives, Nepal, Pakistan, and Sri Lanka--adopted the principle ofunanimity in selecting multilateral questions for debate. Despite frequentconsultative committee meetings, progress toward increased trade remainedlimited in 1994. Pakistan's trade with India, for instance is extremely limited. Atthe annual SAARC summit in April 1993, members agreed to negotiate a South

Asian Preferential Trade Agreement by 1996 that would lower or abolish tariffsamong members.

During the first four decades after independence, controls onimports were used to ensure priority use of foreign exchange and to assistindustrialization. In the 1980s, the government maintained lists of permissibleimports and also used quantitative restrictions and regulations on foreignexchange to control imports. The most extensive list covers consumer goods aswell as raw materials and capital goods that can be imported by commercial andindustrial users. A second list, mostly of raw materials, can only be imported byindustrial users. A third list covers commodities only the public sector can import.

In 1991 and 1992, the government announced variousmeasures to liberalize trade. Import licensing was ended for most goods, many

products were removed from the lists of restricted imports, and import dutieswere cut. In addition, foreign companies were allowed into the export trade. Thegovernment also promised to convert the remaining nontariff barriers into tariffs,incorporate various ad hoc import taxes into customs duties, and reduce thenumerous exemptions and concessions on duties.

Weak world demand for its exports and domestic politicaluncertainty has contributed to Pakistan's high trade deficits. In FY 2008, the tradedeficit was over $15 billion. In the 2008-2009 budget, the Government ofPakistan raised the maximum tariffs from the 20%-25% range to the 30%-35%range on 300 luxury items due to the large trade gap and growing currentaccount deficit. In the 2009-2010 fiscal year, Pakistans trade deficit decreased to$10.92 billion as a result of a decline in imports and a slight increase in exports.

Major imports, which fell to $28.4 billion in 2009, include petroleum and petroleumproducts, edible oil, wheat, chemicals, fertilizer, capital goods, industrial rawmaterials, and consumer products. Energy imports account for nearly 30% ofPakistan's imports, and the total gap between electricity supply and demand inPakistan is over 4,800 megawatts (MW). The ongoing energy crisis and security

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concerns, together with a decline in global demand, have hampered Pakistanstextile-reliant export base. Pakistan's exports continue to be dominated by cottontextiles and apparel, despite government diversification efforts.

After the careful and deep study of the data we are able to on

examine that exchange rate, inflation, devaluation of currency, are directlyaffect our export either in positive or negative manner. Except these economicvariable factor our internal situation i.e poor infrastrucher, law in order situation,political instability, poor economic policy, power storage etc these are the factorthat affect the performance of our exporting firms and in result we not ableexpand our market. And in the result of all these India, China, Bangladesh,Indonesia etc are take advantage of our poor performance.

Top 20 Countries.

The top 20 countries / major buyers export accounted for US$ 13,645 million and

grew by +8.44%.Exports to 6 of these countries increased in Afghanistan (+22.20%), China

(+2.37%), Saudi Arabia (+19.88%), Iran (+86.91%), Bangladesh (+12.11%), India

(+25.41%) and Korea Republic of (+22.77%) whereas decline trend was noticed in USA (-

10.21%), UK (-15.09%) and UAE (-29.02%) respectively.

GEOGRAPHICAL ANALYSIS-;

During the last two decades USA is major export partner of Pakistan both

in export and also in import. Major export toward USA is textile product and import is

ammunitions and cocking oil.

Middle east is also big market of Pakistani product specially UAE, Saudi

Arabia. Kuwait. Turkey, etc the major export in these region is textile fruits and vegetables,

etc

In south Asia region Afghanistan is maojor exporter of wheat, rice, fruits ,

textile etc but here many products are smuggled thats had no record. In India there is huge

potential but due to polltically unstability create hurdle. There is small analysis of our

export in different region last four years.

Pakistans exports during July-June 2008-09 as compared to the

corresponding period of the last year decreased by (-7.16 %) to Middle East Region, (-

9.60%), to Eastern European Region (-14.78 %), to African Region, grew by (+5.55%),

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Asian Region, increased by 5.28% Oceania region and Western European Region

decreased by (-9.47%) and (-14.49%) respectively.

Decrease is recorded in exports to American region by (-10.63%)

Primary export partners: US (15.87 percent of total valor

of exports), UAE (12.35 percent), Afghanistan (8.48 percent), UK (4.7

percent), China (4.44 percent).

Country Percentage of exports Percentage of total trade

European Union 22.6 15.8

China 7.9 15.4

United Arab Emirates 7.9 9.6

United States 17.1 9.2

Saudi Arabia 2.3 7.8

Kuwait 0.4 3.8

Malaysia 0.8 3.0

Japan 1.6 3.0

India 1.3 2.6

Afghanistan 7.0 2.5

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Country Percentage of exports Percentage of total trade

Iran 1.4 2.4

Singapore 0.4 2.3

Major exporter-;

These are the major exporter of Pakistan since last two decades.These are as follows.

1) U.S.A

2) U.A.E3) Afghanistan4) China5) England6) Germany7) Italy8) Saudi Arabia9) Turkey10) Hong Kong

Here we discuss only first five countries that what we export them

and either our export with these states are exceed or declined and what arethe causes of these rise and fall.

Pakistan is trading with large number of countries but its exportsare highly concentrated in few countries. Slightly above one half of Pakistan'sexports during 1990-91 to 1998-99 went to seven countries namely, USA,Germany, Japan, UK, Hong Kong, Dubai and Saudi Arabia. Among thesecountries, the share of Pakistan's exports to USA has been rising persistentlywhile that of Japan exhibited a continuous decline mainly due to theprotracted recession. The share of exports to Germany, UK, Hong Kong,Dubai and Saudi Arabia remained almost stagnant with minor fluctuations.

The country-wise annual share in exports since 1990-91 to 1998-99..

1- U.S.A-;

After the analysis of 20 years export of Pakistan to USA we areable to understand that the export to USA is continuously increased and sincelast two decades US is biggest trade partner of Pakistan. The major export ofPakistan is ready made garment, cotton cloth, carpet and rugs, leather

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gloves, basmati rice, cotton yarn, jewellery, guar and guar product, cutlery,wool textile, footballs etc.

On 1991 Pakistan export to US is $877.5 million and the amountof this export is continuously increased till 2005 and than after that there is

sharp declined in our export. In 1993 Pakistan export to US is amounted$974.4 million .in 1994 its is amount is about $1156.6million In 1995 there isan upward shift of export. In 1995 this export rise and reach to $1204.7million . In 1996 this export rise up to $1550.8 million, In 1997 export withUSA is $1625.8 milliom, 1998 export goes to $1821.4 milliom, in 1999 thisexport take large jump and reach to $1834.8ml, in 2000 export comes to$2236.9 million and this rising trend continued upto 2006 whe export reachedto $3604 million but then sharp decline from 2007 to 2010 an in 2010 theexport comes to 3389 million.

Major reason of depreciation of export is entery of othercompetitor in US market such as India, China, Korea etc an other reason is

that the increase in prices of this goods due to high cost.Exports have decreased by US$ (-379.907 million) or (-10.21%) in theyear 2008-09. However, USA, contributed US$ 3339.453 million during 2008-09,whereas it was increased by +19.52% in 2007-08. Decline was recorded in Knitwear(US$ 1069 million), Bedware (US$ 625 million), Ready made garments (US$ 404million), Textile made up (US$ 302 million), Cotton cloth (US$ 97 million), WoolCarpet & Rugs (US$ 51 million ), Leather gloves (US$ 32 million), Cotton yarn (US$28 million), Rice Basmati (US$ 19 million), Art Silk & Synthetic textile (US$ 17million), Foot balls complete (US$ 14 million), Cutlery (US$ 12 million), Guar andGuar products (US$ 7 million) and Jewellery (US$ 7 million).

2- United Arab Emirates.

UAE is fifth biggest trade partner of Pakistan. The export toward

UAE is continuously increases since last two decades major export of Pakistan to UAE

is Rice, Ready made garments ,fruit and vegetables, and plastic etc but in last two

years there is sharp decline in export the main reason is that huge prices of Pakistani

products as compare to other competitors. UAE is open market they not induce tariff or

any other import barrier thats why in UAE all states enjoy equal opportunity of trade.

In 1991 Pakistan export to UAE is amounting $414.9 Million which

reached in 2000 is $560 million there is no Sharpe growth in these ten years and then

this export reached in 2007 amounted $2009 million.

Exports have decreased by US$ 600.963 million or

-29.02% in 2008-09 and fetched total exports US$ 1469.990 million compared US$

2070.953 million of 2007-08. Main decline was recorded in Petroleum Products (US$

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234.488 million), Rice Basmati (US$ 215.408 million), Ready made garments (US$ 39

million), Art Silk & Synthetic Textile (US$ 32 million), Fruits (US$ 16 million),

Plastic material (US$ 9 million) and Vegetables (US$ 6 million).

3 Afghanistan.

Afghanistan is neighbor states of Pakistan and boundery line of

Afghanistan and Pakistan is 2200 km. Afghanistan is land locked country and Pakistan

provide their seas to Afghanistan without any duty.

The trade between pak afghan in 1993 $15.4 million and in 2000 this export

rises upto $121 million but in 2005 this export $1065.1 million and in 2007 this export

reached to $1633.6 million.

During 2008-09, the total exports to Afghanistan were US$ 1397.518 million

showed an increase by 22.20%. Exports increased in the items like Rice other varieties

(US$ 142.686 million), Rice Basmati (US$ 82.25 million), Article of Plastic (US$ 46.78

million), Vegetables (US$39.76), Wheat (US$ 39.41 million), Fruits (US$ 27.64

million), other Chemicals (US$ 25.12 million), Pharmaceutical Products (US$ 18.44

million). However, significant decreases appeared in exports of Petroleum Products (US$

363.7 million), Household equipments (US$ 8.43 million), Fruits & Vegetables (US$ 8.32

million), Electric fans (US$ 2.640 million) and Paper & Products (US$ 1.01 million).

After all that its necessary to tell here that huge amounted of goods are

smuggled toward Afghanistan which has no record.

4 United Kingdom.

United Kingdom is an important country of Europe and Pakistan has strong trade

relation with them> the major export of Pakistan to UK is Basmati Rice, Textile products

surgical instrument etc. In last two decades there is no waste change arises in export.

In 1992 the export to UK is $ 447.3 million which comes in 2000 $586 million

and in 2005 this export rises on amounting $ 907 million. In 2007-.08 this export comes to

$968.6 million and there is fall in 2010 when export comes to $913 million.

During the year 2008-09 the exports to UK came down by (-15.09%) worth US$

874.588 million compared to US$ 1030.028 million (+5.41%) over the previous year.

Exports decreased in the items like Bedware (US$ 185.502 million), Ready made garments

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(US$ 136.027 million), Textile made ups (US$ 53.01 million), Cotton Cloth (US$ 46.064

million), Rice Basmati (US$ 35.868 million), Towels (US$ 32.88 million), Apparel and

Clothing (US$ 32.73 million), Surgical goods (US$ 27.07 million), Art Silk & Synthetic

Textile (US$ 12.088 million) and fruits (US$ 10.76 million).

5 Germany.

Germany contributed US$ 737.988 million exports with decrease of (-9.63%)

during 2008-09 compared with last year US$ 816.615 million (+4.29%). Declining trend in

exports was recorded in Ready made garments (US$ 174.50 million), Bedware (US$

114.103 million), Cotton Cloth (US$ 72.96 million), Knitwear (US$ 72.22 million),

Surgical goods (US$ 36.60 million), Towels (US$ 23.74 million), Foot balls complete

(US$ 18.21 million), Leather gloves (US$ 16.23 million), Textile made ups (US$ 15.60

million), Wool Carpets & Rugs (US$ 15.135 million), Leather (US$ 12.79 million) Leather

footwear (US$ 11.05 million) and Rice Basmati (US$ 9.39 million). However, increase

was seen in Apparel and Clothing (US$ 59.883 million), Gloves Sports (US$ 9.03

million), Fruits (US$ 7.56 million), Crude animal material (US$ 6.55 million), Other

leather manufacture (US$ 2.535 million) and other machinery (US$ 2.015 million).

Pakistans exports during July-June 2008-09 were US$ 17.688 billion as compared

to US$ 19.052 billion in 2007-08 and US$ 16.976 billion in 2006-07 reflecting a decrease

of (7.16%), (12.2%) and (3.19%) respectively.

Textile & Garments Sector contributed 54.16% in Pak-exports and declined at US$

9.579 billion in 2008-09 from US$10.670 billion worth exports in 2007-08 registering a

decrease of (-10.22%).

SECTOR WISE EXPORTS ARE AS FOLLOWS:

A) TEXTILE & GARMENTS CATEGORIES:

Major categories that increased over the previous year were Towels, Knitwear

(Hosiery) and other Textile Material etc.

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A decrease was witnessed in Textile items such as Cotton fabrics, Textile made-

ups, Cotton yarn, Garments, Ready made garments and Synthetic textile.

PRODUCT WISE ANALYSIS:

I Cotton Fabrics.

Export of Cotton Fabrics declined at US$ 1.955 Billion from US$ 2.011 billion in

the year 2008-09 as compared with 2007-08 showing a decrease of ( -2.75% ) and quantity

showed also decrease to 1882 million SQM from 2035 million SQM.

Major buyers of the product were Bangladesh, China, UAE, Russian federation,

Egypt and Mexico.

II Textile Made-ups including Towels.

a) Bedware fetched US$ 480.138 million in 2008-09 as against exports of US$

537.868 million in 2007-08, showing a decrease of ( -10.60% ). Major buyers of the

product were UAE, Canada, Saudi Arabia, Chile, Malaysia and Sri Lanka.

b) Towels exports increased at US$ 643 million in the year 2008-09 as compared with

2007-08 exports of US$ 613 million which recorded an increase by (4.86%). The

quantity of the product increased to 165.638 million kg from 152.323 million kg.

Major buyers of the product were USA, UAE, Saudi Arabia, South Africa,

Netherlands and Belgium.

III Cotton Yarn.

During 2008-09 exports decreased by (-14.31%) of US$ 112 million as against

exports of US$ 131 million in 2007-08. Quantity decreased by (-5.59%) from 554.817

million kg to 523.790 million kg, however AUP came down (-9.96%).

China remained number one among the major buyers of the product, while

Bangladesh obtained number two position followed by Egypt, Philippines and Australia

respectively.

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IV Garments.

Export of garments decreased by (-23.26%) during the year 2008-09 and detailanalysis of Knitwear and Readymade garments is given as follows:-

a) Knitwear ( Hosiery ) witnessed increasing trend touching US$ 1741 million in thereview period 2008-09 as compared to US$ 1732 million last year. Upward trend

was also seen in exports to United Kingdom, Belgium, UAE, Saudi Arabia and

Sweden, while decreasing trend was seen in the market of USA, Germany,

Netherlands, Spain and Canada.

b) Ready made garments there was a decrease of US$ 362 million (-22.76%) over

the previous year. During the period under review exports came down to US$ 408

million from US$ 1442 million. However, it showed increased trend in the exports

to Belgium, Turkey, Saudi Arabia, Sweden and Denmark. Major decreases were

witnessed in the markets of USA, Germany, UK, Spain and France.

V Synthetic textiles.

There was a decrease of US$ 139 million i.e. (-32.23%) over the previous year.

During the period under review exports came down to US$ 278 million from US$ 410

million. Quantity is also decreased by (-18.77%) from 442.5 million SQM of the previous

year to 359.4 million SQM. AUP was US$ 0.89 per SQM while it was US$ 0.93 per SQM

in 2007-08, thus showed a decrease (-4.14%). Moreover, Mexico, Malaysia, Indonesia,

Srilanka and Kuwait were higher export markets. On the contrary, minor decline in UAE,

USA, South Africa, Saudi Arabia and UK were observed.

B) OTHER CORE CATEGORIES.

This head Contributed (25.60%) in Pak-Exports and came down to US$ 4.528

billion from US$ 5.177 billion showing a decrease of (-12.20%) over the last year.

The items witnessed increased trend in Rice, Leather & leather products, leather

manufactures and leather footwear. However, decreased trend appeared in the products of

Leather garments (excluding gloves), Leather gloves and Surgical Instruments and Sport

goods. Therefore, it further shown high trend in the Molasses item.

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I Rice.

This Commodity witnessed an increasing trend by US$ 1983 million from US$

1836 million showing an increase of 8.02%. Quantity felt down by (-8.87%). In terms of

Quantity total export of Rice which was 2809 thousand/MT in 2007-08 and in 2008-09

came down to 2560 thousand MT. However, AUP, which was US$ 653.60/MT in 2007-08,

went up to US$ 776.06/MT in 2008-09.

a) Rice Basmati Contributed US$ 1070 .338 million in total export of Rice,

export of basmati was US$ 1068.86 million in 2007-08. Quantity exported

868577 MT in 2008-09 as against 1138093 MT in 2007-08. AUP sowed

increase by 26.86% per MT from US$ 939.17 per MT to US$ 1191.41 per MT.

b) Rice Non-Basmatis share is US$ 912.89 million in 2008-09 from US$

767.200 million of 2007-08. AUP increased by 22.58% and quantity went up to

169.535 MT from 167.055 MT showing an increase of 1.23%.

The buyer of the Rice and Rice others was Iran obtained number one

followed by Afghanistan, Saudi Arabia, Qatar, Kenya and Mozambique.

II Leather and leather products.

Showed decrease of (-22.65%) exports of leather and leather products which came

down to US$ 943.788 million from US$ 1220.119 million. Leather tanned contributed

2.18%, Leather garments/manufactured 2.77% and leather footwear 0.65% in the group of

leather & leather products.

a) Leather showed a decrease of (-27.88%). The export of

Leather fetched US$ 299 million as against US$ 415 million in previous year. Quantity

also decreased by (-21.57%) from 24,258 thousand SQM to 19, 026 thousand SQM.

Major buyers of the product were Bangladesh, Indonesia, Sri Lanka, Thailand and UAE.

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b) Leather garments ( Excluding gloves ) registered decrease

of (-25.68%) to US$ 392.537 million from US$ 528.154 million. The major buyers of this

product were Germany, USA, Spain, France, Turkey and Brazil.

c) Leather gloves a downward trend of (-5.53%) from US$

161.168 million to US$ 152.258 million. The major buyers of the product were Belgium,

Saudi Arabia, UAE, Norway and Poland.

The product market of USA, Germany and Sweden and France registered decrease during

2008-09.

d) Leather Manufacture registered increase of 17.66% fromUS$ 10.177 million

2007-08 to US$ 11.974 million 2008-09. The major buyers of the product were

USA, Germany, UK, Netherlands, France and South Africa.

e) Leather footwear, obtained increase by 3.54% from US$ 124.135 million of

the previous year to US$ 128.531 million.

The major markets of the product were UAE, Germany, Italy, Afghanistan,

Oman and South Africa.

III Carpet.

Exports during 2008-09 were US$ 145.77 million as Compared to US$ 216.620

million of the previous year, showing a decrease of (-32.71%).

Major Buyers of the product were Afghanistan, Thailand, Mexico and China while

USA, Germany, Italy, Turkey, France & UK remained on decreasing side during

2008-09. Pertinently, only ten Countries were buyers in the export arena of Carpet

from Pakistan in the year 2008-09.

IV Petroleum & its Products.

Decreased (35.41%) in value and (4.57%) in term of AUP. Value from US$

1259.33 million to US$ 813.458 million and AUP from US$ 804.85 MT to 768.05 MT.

However, Quantity wise is also decrease from 592,758 MT to 583,827 MT.

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The major buyers of the products were also six Countries i.e. India, Korea,

Netherlands, Singapore, Kenya and South Africa.

V Surgical Instruments.

The exports which were US$ 261.072 million in 2007-08 came down to US$

253.554 million in 2008-09 showed a decrease of (-2.88%). Although exports to USA,

Australia, India, Korea, China & Turkey increased. The top buyer of this product was

USA.

VI Sport Goods.

Exports from US$ 302.723 million in 2007-08 declined to US$ 273.318 million in

2008-09, showed a decrease of (-9.71%) while export increase took place in USA,

Belgium, Italy, UAE and Turkey. Offset by markets of Germany, UK, Spain, Netherlands

and Denmark, where declining trend is appeared.

C) DEVELOPMENTAL AND OTHER CATEGORIES.

This head Contributed 15.51%) in Pak-Exports and went-up to US$ 2.743 billion in

2008-09 from US$ 2.365 billion showing an increase of (16.01%) over the last year 2007-

08.

Major categories that increased over the previous year were fish & fish

preparations, fruits & vegetables, engineering goods, jewellery, marble stones and onyx

manufactures, cement and oil seeds. A decrease was witnessed in same developmental

categories such as chemical and its products, cutlery, gems (Precious Stones) and furniture.

I Fish & Fish Preparation.

In terms of Quantity and value exports increased by (1.58%) and (10.41%)

respectively and AUP is also increased from US$ 1.60/Kg to US$ 1.76/Kg. Exports of fish

and fish preparation came-up to US$ 234 million 2008-09 from US$ 213 million 2007-08.

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Major buyers were Thailand, China, Malaysia, Saudi Arabia, Korea and Egypt.

Decline was noticed in buyer Countries i.e. UAE, Kuwait, Japan, Sri Lanka and Hong

Kong.

II Fruits.

Exports were US$ 157 million during the period under review, compared to US$

146 million in the previous Corresponding period showing an increase of 7.84%. The

major buyers of the fruits were India, Afghanistan, Russia, Germany and USA.

III Vegetables ( Excl: Leguminous ).

Exports were US$ 72.92 million during 2008-09 as against US$ 56.39 million of

the year 2007-08 showed an increase by 29.31%.

The major buyers of the Vegetables were Afghanistan, Malaysia, Saudi Arabia,

Qatar and Canada.

IV Chemical and its Products.

The exports which were US$ 619 million in 2007-08 and decreased to US$ 604

million in 2008-09 showing a decrease of (2.40%). However, exports of Pharmaceutical

Products rose to US$ 116.286 million from US$ 110.531 million. Italy, Afghanistan,

Philippines, China, USA and Sri Lanka are the major buyers of the Product and among

these major buyers decreases are recorded in the markets of Netherlands, UAE, Turkey,

Korea and France.

V Engineering goods (Machinery & Transport equipment ).

There was an increase of (25.35%) and exports came-up to US$ 264.898 million

from US$ 211.329 million. Imports in the markets like Afghanistan, Djibouti, Bangladesh,

Sudan and Iran were higher over last year. However there was a major decline in UAE,

Saudi Arabia, USA and UK.

VI Cutlery.

Export of this item is US$ 48.681 million during 2008-09 compared to the US$

54.856 million in the previous year showing a decrease of (11.26%).

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The major buyers of cutlery were France, Italy, Saudi Arabia, China and

Netherlands.

VII Gems & Jewellery.

a) Precious & Semi Precious Stones (Gems ) decreased by (-54.84%) during

2008-09 and export was US$ 3.386 million from US$ 7.497 million (2007-08).

The major markets of Gems were Canada, Japan, Russian federation, Belgium

and Iran while declined trend was witnessed in USA, Hong Kong, Germany,

UAE and Thailand.

b) Jewellery, increased by 33.90%. Export came up to US$ 285.684 million in

2008-09 from US$ 213.364 million 2007-08.

The exports of jewellery major buyers were UAE, UK, Afghanistan, Turkey

France, Netherlands and India.

VIII Marble & Stones / Onyx Manufactures.

Exports increased by 46.35% from US$ 22.119 million 2007-08 to US$ 32.371

million (2008-09). However the major buyers of the products were China, Russian

federation, Ukraine, UAE, Saudi Arabia, Malaysia and Germany.

IX Cement.

There was an increase of 39.21%. Export grew up from US$ 416.977 million

during 2007-08 to US$ 580.479 million in 2008-09.

Major buyers of the product were Afghanistan, Qatar, Oman, Iraq, Djibouti and Sri

Lanka.

X Oil Seeds.

The Exports were US$ 39.379 million in 2007-08, came up to US$ 41.746 million

in 2008-09, showing an increase of 6.01%. Increase took place in exports to Korea, Turkey,

Iran, China, India, UAE, Singapore, Netherlands and Saudi Arabia.

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XI Furniture.

The Exports were US$ 11.035 million in 2007-08 came down to US$ 8.455 million

in 2008-09, showing a decrease of (-23.38%).

The main buyers of the product were Afghanistan, Italy, Germany, Netherlands,

Poland, Australia and Denmark.

Exports Exports were targeted at $ 17 billion or 18.1 percent higher thanlast year. Exports during the first nine months (July-March) of the current fiscalyear are up by 18.6 percent rising from $ 10.18 billion to $ 12.07 billion in thesame period last year. The exports of primary commodities were up by 22percent; prominent among those areexports of rice (33.6%), fish and fish preparation (30.2%) and fruits (20.6%).Exports of textile manufactures grew by 19.2 percent; prominent among thoseare exports of bedwear (58.4%), readymade garments (31.0%), cotton yarn29.4%), cotton cloth (16.5%) and towels (12.0%). Exports of othermanufactures also registered a high double digit growth of 19.2 percent. Withinthis category, exports of petroleum products grew by 80.8 percent and leathermanufactures were up by 44.0 percent. In recent years, Pakistan has alsoentered in the exports of engineering goods. Though relatively small innumbers, exports of engineering goods were up by 10.3 percent. The overallexports posted an increase of $ 1890.2 million, in absolute term in the firstnine months, of the current fiscal year over the same period of last year. Ofthis increase, 61.4 percent or $ 1160.5 million has come alone from textilemanufactures followed by other manufa-ctures (20.9% or $ 395.7 million),primary commodities (11.1% ) or $ 209.6 million) and other exports (6.5% or $124.5 million). In other words, over 82 percent incremental exports in the firstnine months (July-March) of the current fiscal year owe to textile and othermanufactures and the remaining 18 percent to primary and non-traditionalexports. It is encouraging to note that exports this year have been largelyquantity driven and with firming up of the price of exportable, Pakistansexports may rise substantially in the mediumterms. During the first ninemonths (July-March) of the current fiscal year, over 88 percent increases inexports are driven by quantity (quantity effect) and the remaining 12 percentare due to the increase in unit values of exports (price effect).Pakistan's exports are highly concentrated in few items namely, cotton,leather, rice, synthetic textiles and sports goods. These five categories ofexports account for 74.5 percent of total exports during the first nine monthsof the year with Cotton manufacturers alone contributing 58.4 percent,followed by leather (6.1%), rice (6.9%) and synthetic textiles (1.2%). Pakistansexports are also highly concentrated in few countries. The seven countries,namely USA, Germany, Japan, UK, Hong Kong, Dubai and Saudi Arabia accountfor 50 percent of its exports. The United States isthe single largest exportmarket for Pakistan, accounting for 27 percent of its exports followed by theUnited Kingdom, Dubai, Germany and Hong Kong. Japan as Pakistans exportdestination is fast loosing its significance less than one percent of its exportsentering Japan. Pakistan needs to diversify its exports not only in terms ofcommodities but also in terms of markets. Heavy concentration of exports infew commodities and few markets could cause serious export instability.

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Composition of Exports-;

Pakistans export composition has changed significantly since early 1990s as it movedfrom primary and semi manufactured exports to manufactured exports However,during thelast three years the export composition has observed no change with both primary and semi

manufactured exports contributing 11 percent, while a major bulk of contribution comingfrom manufactured goods, that is, 78 percent. The composition of Pakistans export reflectsthat it doesnt rely heavily on primary commodities for foreign exchange earnings. WhatPakistans economy lacks is the export of high technological products and software

Direction of Exports

Like the concentration of Pakistans export in few items, the countrys exportsare also highly concentrated in only few countries. USA, Germany, Japan, UK, HongKong, Dubai and Saudi Arabia alone account for almost one-half of Pakistans export.Continuing the past trend, these seven markets remained the major destinations forPakistani export during the current fiscal year with a marginal diversification. US remained

by far the major destination for Pakistans exports accounting for 26.4 percent, followed byU.K, Germany and Saudi Arabia. Since Pakistans exports are highly concentrated in few items and few countries,a more diversified export mix both in terms of commodities and markets is necessary. Heavyconcentration of exports in few commodities and few markets can lead to export instability.Besides the issue of export diversification, other broad-based measures need to be undertaken toaddress the constraints faced by the export sector. In this regard, private sector should increase itscompetitiveness by employing state of the art machinery, better management, and cost effective-eness. Other major problems such as low value addition and poor quality; obsolete use of mach-inery and technology higher wastage of inputs adding to the cost of production; low labor produ-ctivity; little spending on research and development; export houses lacking capacity to meet bulkorders; inability to meet requirements of consumers in terms of fashion and design; nonadherence

to contracted quality and delivery schedule, lack of marketing techniques also needs to beaddressed. Government should play its role as a facilitator in achieving the objective of raisingexports by providing a strong macro economic environment with a stable exchange rate, low costof capital and strong infrastructure.

Barrier of export-

Trade barrier are government included restriction on international trade,The barrier are many form such as fallows.- Tariff - Non Tariff - Export licenses- Quota

- Subsidies- Currency devaluation

Atariffmay be either tax onimportsorexports(trade tariff), or a list orschedule of prices for such things asrailservice,bus routes, andelectricalusage(electrical tariff, etc.). The word comes from the Italian wordtariffa"list of prices, book ofrates," which is derived from the Arabicta'rif"to notify or announce.

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Non-tariff barriers to trade(NTBs) aretrade barriersthatrestrictimportsbut are not in the usual form of atariff. Some common examples of NTB'sare anti-dumpingmeasures and countervailing duties, which, although they are called"non-tariff" barriers, have the effect of tariffs once they are enacted.

Role of exchange rate on export-

Effective from May 19, 1999 the exchange rate in Pakistan has been unified with theintroduction of market-based floating exchange rate system, under which the exchange rate isdetermined by the demand and supply position in the foreign exchange market. The currentexchange rate is working under this floating exchange rate regime; however, the SBP dointervenes in market to smooth out volatility in exchange rate at times if it is required. Pak rupeeafter remaining stable for more than four years, lost significant value against the US dollardepreciating by 6.4 percent during July-April 2008.

Effective from May 19, 1999 the exchange rate in Pakistan has been unifiedwith the introduction of market-based floating exchange rate system, under which the

exchange rate is determined by the demand and supply position in the foreign exchangemarket. The current exch-ange rate is working under this floating exchange rate regime;however, the SBP do intervenes in market to smooth out volatility in exchange rate at timesif it is required. Pak rupee after remain-ing stable for more than four years, lost significantvalue against the US dollar, depreciating by 6.4 percent during July-April 2008.

Impact of inflation on export-;

The most immediate effects of inflation are the decreased purchasingpower of the rupee and its depreciation. Depreciation is especially hard on retiredpeople with fixed incomes, as spending power decreases each month. Those noton fixed incomes are more able to cope, because they can simply increase their

income. Another destabilizing effect of inflation is that some people choose tospeculate heavily in an attempt to take advantage of the higher price level.Because some of the purchases are high-risk investments, spending is divertedfrom the normal channels and some structural unemployment may take place.Finally, inflation alters the distribution of income. Lenders are generally hurt morethan borrowers during long inflationary periods, which mean that loans madeearlier are repaid later in inflated rupees. Inflation weakens the function of moneyas storage of value, because each unit of money is worth less with the passing oftime. The progressive loss of the value of money during a period of inflationmakes the borrowers to be less willing to use the money as standard differedpayments.

Price Index (WPI) are

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Period SPI CPI WPI

1991-1992 10.54 10.58 9.84

1992-1993 10.71 9.83 7.36

1993-1994 11.79 11.27 11.40

1994-1995 15.01 13.02 16.00

1995-1996 10.71 10.79 11.10

1996-1997 12.45 11.80 13.01

1997-1998 7.35 7.81 6.58

1998-1999 6.44 5.74 6.35

1999-2000 1.83 3.58 1.77

2000-2001 4.84 4.41 6.21

2001-2002 3.37 3.54 2.08

2002-2003 3.58 3.10 5.572003-2004 6.83 4.57 7.91

2004-2005 11.55 9.28 6.75

2005-2006 7.02 7.92 10.10

2006-2007 10.82 7.77 6.94

2007-2008 10.96 9.72 7.02

To measure the price level, economists select a variety of goods

and construct a price index such as the consumer price index (CPI). This is onemeasure of inflation. The CPI measures inflation as experienced by consumers intheir day-to-day living expenses; it is the ratio of the value of a basket of goods inthe current year to the value of that same basket of goods in an earlier year. Byusing the CPI, the inflation rate can be calculated. This is done by dividing theCPI by the beginning price level and then multiplying the result by 100. The GDPdeflator is another very important measure of inflation as it measures the pricechanges in goods that are produced domestically.

Pakistan publishes four different price indices, namely: theconsumer price index (CPI), the wholesale price index (WPI), the sensitive priceindex (SPI) and the GDP deflator. The CPI is the main measure of price changesat the retail level. It indicates the cost of purchasing a representative fixed basketof goods and services consumed by private households. In Pakistan, the CPIcovers the retail prices of 374 items in 35 major cities and reflects roughly thechanges in the cost of living of urban areas. The WPI is designed for those itemswhich are mostly consumable in daily life on the primary and secondary level;these prices are collected from wholesale markets as well as from mills atorganised wholesale market level. It covers the wholesale price of 106

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commodities prevailing in 18 major cities of Pakistan. The SPI shows the weeklychange of price of 53 selected items of daily use consumed by those householdswhose monthly income in the base year 2000-01 ranged from Rs3000 to aboveRs12000 per month. The SPI also informs about the actual position of supply:whether the commodity is available in market or not. If the commodity is not

available, the reason for that is also recorded. It is based on the prices prevailingin 17 major cities and is computed for the basket of commodities beingconsumed by the households belonging to all income groups combined as inCPI. In most countries, the main focus for assessing inflationary trends is placedon the CPI, because it most closely represents the cost of living. In Pakistan, themain focus is also placed on the CPI as a measure of inflation as it is morerepresentative with a wider coverage of 374 items in 71 markets of 35 citiesaround the country. Inflation has started veering its ugly head in many parts ofthe world, including Pakistan. Food inflation has emerged as the main contributorto inflationary pressures.

The inflation rates based on CPI, SPI and WPI for the year 2008-09increased by 22.35 per cent, 26.33 per cent and 21.44 per cent respectively over thecorresponding period of 2007-08. It increased by 10.27 per cent, 14.09 per cent and13.70 per cent respectively in 2007-08 over the corresponding period of 2006-07.In 2006-07, the rate of inflation increased by 7.89 per cent, 11.13 per cent and6.92 per cent respectively over the same period of 2005-06. An analysis of datafor last three years for the same period indicates that CPI, SPI & WPI werehigher as compared to last two years.

The government is cautious about inflation and thus has takenvarious steps to release demand pressures on the one hand and enhance

supplies of essential commodities on the other. To ease demand pressures, theState Bank of Pakistan (SBP) has continuously tightened the monetary policyover the last three years and more so in the current fiscal year, while to enhancesupplies, the government has relaxed its import regime and allowed imports ofseveral essential items so that there is a continuous flow in the supply of thoseimportant commodities. In addition, the government increased the imports ofitems like wheat, pulse and sugar to complement the efforts of the private sector.In order to provide relief to the common man, the government also increased thescale of operations of the Utility Stores Corporation (USC) which suppliesessential commodities such as wheat flour, sugar, pulses and cooking oil/ gheeat less than the market prices.

12 percent. Government sets ceiling prices for various goods but they are sold at differentprices in the market. Government has to ensure that whatever it decides, it must also seewhether ground realities also show the blossoming picture they are trying to depict.Government should cut down sales tax and increase direct taxes and earn the forgone revenue

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from indirect taxes from direct taxes, so that a common man has to suffer less and inequality ofincome can somewhat be reduced.

Recoumendation to increase export- Pakistan is 47th biggest economy of the world and according the data of

2010 Pakistan is 67th large exporter. On the other hand the population of Pakistan is morethan 180 million. Thats mean we had to much potential to increase this export many smallcountries in term of population and also in area else but there export is hundered of billiondollars liks Singapore, Malaysia , Korea, Finland etc

Govt of Pakistan must need to take many steps to enhance their exportbecause Pakistan suffer huge deficit in BOT and thats why our currency is to muchdevalued and consumer of Pakistan faces huge prices of this imported goods. Manyeconomist says that if Pakistan not prepare themselves to compete globally than a timecomes that Pakistan lose their existing markets because China, India, Bangladesh, andother Asian country prepare themselves and try to access these market.

Following are the steps suggested that must taken govt as well as

enterprises take to secure themselves.1) Poor infrastrucher create huge hurdle for development and groeth of export. For the

development of export govt must need to establish roads, railway, ports, to insure fastand smooth extension of export.

2) Govt must try to use their diplomatic channels for extension of export such as SARCC,China FTA, Malaysia FTA, Srilanka FTA etc such type of agreement must require tobuild with other nation such as EU, Russia, Africa, and America.

3) Govt required to financing these exporting firms that help them to improve theircapacity. For this purpose they must focus on SMEs those suffer shortage of funding.

4) Govt must provide subsidies to reduce their cost. Like China, Malaysia.5) Tax is huge burden on this firms govt must provide tax concession to these firms.

Many sectors are here those enjoy tax concession but its not enough.6) 75% of our export exist in the form of agriculture, textile so govt must focus on these

sector those contribute huge foreign reserve.7) These firms also try improving their efficiency in production, marketing, so they

attract foreign buyers and with the help of this they reduce their cost.8) Govt organize and invite delegation, launch seminars and wor shop thats provide

facilities to know the trend and taste of our firm.9) Politically instability, law in order situation create hurdle not only for FDI but also in

export.10) Mentioned countries gradually shifted their export from primary goods to capital or

valu added goods.

If govt and firms take these steps than it may possible in a short periodof time we can remarkable change on our export.

Sources-;

State Bank Of PakistanAsian Development BankEconomic Survey Of PakistanWorld Trade Organization WTO

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Federal Board Of RevenueMinistry Of Trade and Commerce Pakistan

Export Promotion BauerInternational Monetary Fund IMFMany Other Articles, Reports,

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