EDITORIAL: Sometimes desperation can make you do the right things. And it was no doubt the country's desperate need to both ramp up exports and earn more foreign exchange that forced the prime minister to find ways of diversifying and point to the pharmaceutical industry's ability to export medicines and help achieve both aims. He clearly meant what he said since he also promised all sorts of help from the administration. Hopefully, the government will get it right because such a thing, if made possible, can not only do the economy a big favour but also make the pharma industry a lot more efficient. As things stand there are so many players in it that without enhancing exports it cannot achieve economies of scale and expand in the manner that is capable of. Also, right now is more of a packaging and processing industry than anything else because all it does is acquire necessary raw material, process it into tablets and syrups, and then send it off to the market. And it is something of a letdown that despite being a $3.2 billion industry that grows on average at about 15 percent annually, it is still overshadowed by India, which exports about Rs40 billion worth of drugs every year.
And now that the prime minister has offered all the help he can provide, he can expect to be overwhelmed very soon by requests from across the industry to ease regulation. The 700 or so manufacturing units that operate in Pakistan have long been unhappy about the stranglehold of regulations as well as the government's refusal to listen to their demands. In fact, the PM's initiative seems to have come at just the right time because some industrialists were reportedly on the verge of quitting the industry altogether to look for sectors where unnecessary regulation did not hold returns hostage. It's not as if the industry has anything against regulations, they have often said, in fact they are all for it provided that it helps them grow not hold them down. The usual way of enforcing rules through a bureaucratic top-down structure, without any meaningful input from the industry itself, will have to be abandoned. If the industry is indeed going to be used for capturing export markets to make up for the official forex shortfall, then it must first be freed from needless and cumbersome red tape. The very purpose of free market enterprise and comparative advantage in trade is defeated when the government designs policies that frustrate entire industries out of their organic growth cycles.
Fortunately, since medicines are items of essential use all over the world, this is also one of those industries whose outreach would not be compromised by the flimsy nature of our rupee-dollar parity. That is just one more reason in favour of the prime minister's initiative. All that remains is to sit down with the industry, like the government did with stakeholders in the cement and real estate industries before announcing its landmark construction package, and work on ways to expand its global footprint. If the country can adapt very quickly in the face of the pandemic and become self-sufficient in terms of producing protective suits and ventilators, surely we can carve out an arrangement that fulfills the potential of the pharmaceutical industry, and therefore the economy, as well.
Such initiatives must not be restricted to any one industry or sector. The state of the economy, especially in this bleak global environment, requires a thorough overhaul of the way our export sector is handled. We must not only work on adding value to our traditional export basket, but also remove any barriers that restrict its ability to capture fresh markets. The government can do the country and its people no bigger favour than sorting this issue out once and for all. Remittances, though impressive lately, will take a dive sooner rather than later because Pakistanis have lost jobs all over the world in record numbers. And it will be a while before tax revenue is able to contribute meaningfully to the exchequer. So the best hope of building reserves lies in working on exports. Once the country is able to export more and earn more, it will naturally be able to put more money in essential things like health and education. If helping the pharmaceutical sector can help achieve that end, the government should jump at that chance.
Copyright Business Recorder, 2020
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