Export industry: challenges and solutions

It is heartening to note that a multinational company operating in Pakistan has successfully showcased and set an example that the challenges faced by the export industry in the country can be overcome entirely on the strength of its own standing through a vision and a dedicated approach.

However, it is important to note that the potential and need of multinational companies (MNCs) in support of the country’s export endeavours has largely been unexposed, underleveraged and much out of public and government focus.

It was brilliantly displayed at a ceremony held this week at Islamabad where Nestlé Pakistan announced its vision of “Limitless Possibilities of Exports from Pakistan” and showcased the company’s exports journey over the last few years, expanding to 26 countries and generating dollar 23 million in 2024. The company reaffirmed its commitment to government’s vision for Pakistan’s economic growth by unveiling its dollar 50 million packaged food exports vision till 2030.

Addressing the gathering, Jason Avanceña, Chief Executive Officer, Nestlé Pakistan, said: “As we celebrate 35 years of operations in Pakistan, we are committed to be a force for good throughout our value chain for the future of the country by boosting exports and earning foreign revenues for the country.”

“We have also made significant strides in expanding beyond ethnic channels to mainstream channels, securing partnerships with mega chains such as Costco in the US, Sobeys in Canada, and Sainsbury’s in the UK. Looking towards the future, Nestlé Pakistan has set ambitious goals for 2030. Our vision is to further expand our global reach, and to achieve this, streamlined regulatory processes, fair trade agreements, and export incentives are crucial to support our growth,” he added.

Claudia Thomas, Chargé d’affaires, Embassy of Switzerland in Pakistan, also congratulated Nestlé Pakistan on the achievement and said it was exciting to see Nestlé playing an important role in the country’s economic plans.

Nestlé Pakistan has gone beyond transactional exports by generating demand for its brands through digital communications and robust trade activations. The company’s high-quality brands enjoy extraordinary on-shelf presence, ensuring their visibility and appeal to consumers in markets like Afghanistan, the USA, UK, UAE, Australia, Bahrain, Belgium, Canada, China, France, Germany, Ghana, Hong Kong, Ireland, Libya, Maldives, Qatar, Reunion, Saudi Arabia, Sweden, Tajikistan, Uzbekistan, Tanzania, Turkey, Japan, Mauritius.

Nestlé is reported to have solved its affordable energy needs by an investment of PKR 2 billion in renewable energy last year, launching multiple solar power plants and biomass boilers at its manufacturing sites in Pakistan.

Nestlé Pakistan has made its products cost-effective by strengthening its localization journey, moving to over 90 percent of raw and packaging requirements locally by sourcing 420 million litres of milk, over 7,500 metric tons of wheat and rice and 50,000 tons of local fruits, enhancing local farmers’ livelihoods.

The export industry and the trade bodies have for long been debating about opening up new channels for export other than its dependence on the textiles and time and again shown country’s up to ‘100 billion dollars export potential’.

But none of it has so far been worked upon nor achieved; and not surprisingly, the export level of the country stays hovering around 30 billion dollars for quite some time.

The presence of multinationals in Pakistan in pharmaceuticals, energy sector, food and agriculture industry, engineering industry and many other fields offers a great potential for export business.

Pakistan’s peers in the region have done well in encouraging and lining up the multinationals operating in their countries in the export trade. A significant portion of export out of countries like India, Vietnam, Malaysia, Thailand and above all China is based on the goods produced and managed by multilateral organizations operating in these countries.

While on the contrary, many multinationals operating in Pakistan have expressed reservations regarding absence of a level playing field in the Pakistani market. Some have left the country for the said reason.

On top of this are other challenges like infrastructure deficiencies in terms of adequate transport and logistics infrastructure, inconsistent policies which deter foreign investments impacting export levels, legal and regulatory framework and a complex regulatory environment, which create hurdles for MNCs.

Pakistan’s free trade agreements (FTAs) with certain countries offer a significant advantage to exporters. But this advantage remains under-leveraged as the country has product deficiency and market channels to effectively enter these markets.

Pakistan has FTAs with Sri Lanka, China, and Malaysia. Pakistan is also a part of the South Asian Association for Regional Cooperation (SAARC) and has preferential trade agreements with Iran, Indonesia, Turkey, and Mauritius.

With China, the trade surplus remains significantly in favour of China, as Pakistan could only enter China’s low end and a highly competitive market.

The country’s trade balance, the gap between exports and imports, was recorded at a deficit of dollar 5.44 billion in the July to September period of 2024-25 as compared to dollar 5.21 billion in the same period of the previous year, an increase of 4.2 percent.

These markets of free trade offer a significant export potential to the MNCs of Pakistan to explore on the strength of their global outreach, branding, quality and certified products and business channels. This could fill the gap by entering the high-end market of these countries, which so far is missed out by Pakistan.

Pakistan has to do better in focusing on the role of MNCs in the export business of the country. According to the record of Overseas Investors Chambers of Commerce and Industry (OICCI), it has 200 MNCs representing 14 key sectors of Industry. This is quite a potential the government needs to incentivise.

Copyright Business Recorder, 2024