The Federal Minister for Commerce has recently expressed hope that exports for FY 2005-06 would reach $20 billion mark. This indeed is laudable but, seen in the context of the country's actual and present potential of $35 billion, seems to be very low in expectations. The antagonists would also argue against this assumption and cite the lowly export figure of FY 2003-04 and the slow-down since then in their favour.
To arrive at the right conclusion, it would be appropriate to discuss the very pillars upon which any rapid export growth strategy is based viz, improved market access, focus on neglected regions, strengthening trade, improving infrastructure, provision of large scale training and state of art physical infrastructure in the industrial and agricultural sectors.
The services sector, on the other hand, is reliant upon other factors but nearly to the above effect. The first four of these pillars to rapid export growth strategy are basically in the hands of the GoP, while the fifth one needs concerted efforts of both the government and the public and private sectors. Here these sectors have been clubbed together under the presumption that, in fact, both compliment each other and should never be contradictory in meaning or focus.
To focus on the issue of large-scale training and state of art physical infra-structure, the subject can further be divided into many sections. Furthermore, we would also try to understand as to what would all the training's lead to and the exact need for a state of art physical infrastructure.
Training's are two-fold viz, the activity to arrange for the understanding of processes, machinery, working of a whole set of machines, the production process itself, the product to be produced, TQM etc and secondly the ability to correctly perform all the aforesaid. It, in fact, goes on and on and also encompasses all possible facets of the production, be it industrial, agricultural or even services.
In other words, training's arrange the eventual minimisation of inputs and maximisation of the output or the end product. Improvements in quality is another of the advantages.
State of art physical infra-structure would be the most modem machines, the set of such contraptions and the latest systems running/ operating the same. And in the context of exports, the crux of the matter is the effort to increase exports to the maximum potential, which can only be done through sale of finished goods by making these attractive in terms of price, quality and usefulness. And specifically, the price is dependent upon inputs and out of all the most important being the energy component.
Thus in order to be price-effective, the real effort would be to ensure conservation in energy use, as reduction in other inputs can only be taken up to a very small extent.
Every entrepreneur, worth his salt, knows the impact of energy savings on the price of his product and even tries to save as much as possible, which sometimes leads to acceptance of illegal abstraction as a worthwhile exercise in reducing the input-costs.
However, in-depth scrutiny reveals that conservation as an art or a specialised science has never been taken up in earnest and the present efforts are in line with the dictum penny wise and pound foolish. Experts are of the opinion that conservation has to be taken up as necessity and as a whole in Pakistan.
The various numbers pertaining to efficiency of machines and prudent use of energy show that Pakistan is placed nearly at the lowest in rank of compatible nations and barring a special section of the textile industry, no real attempt has been made to acquire the latest energy efficient technologies.
Moreover, home grown R&D supplementing foreign acquisitions is also missing. As a consequence, generally the systems here in Pakistan are lumbering, gas-guzzling and inefficient. Some of the industries are most notorious and in extension their products expensive to produce.
These thus are unable to compete even in our very region. And right on top of all is the fact that the Country is also a haven for inefficient machines and products. Import details reveal that trite and out-dated machines and processes are exported to Pakistan from areas where these are currently being replaced.
Actually, every smart alec knows that one can get away with everything as no standards (both local and foreign) or specifications are in place here. It is a fact that implementation of such laws is most lax in our context and organisations as PQSA etc just operate on the day to day basis.
What thus is to be done. First of all, we have to understand the requirements of efficiency standards, somehow adapt the same for each segment of our industry, pinpoint the variations and deviations, focus on the graver of the issues- coming down to the least of the losses and then ensure that everything remains on the path of conservation.
As conservation is also needed in our day to day life away from the specific means of production, GoP would have to run sustained awareness campaigns through the media, which incidentally has come of age.
The media here in Pakistan has been instrumental in bringing a big change in our lives and has also brought the best of the world to us and thus can easily help in the field of energy conservation too.
In order to take-up all the above-mentioned five steps for export growth, a partnership would have to be developed within the governments ie the federal and the provincial ones first, thereafter dovetailing other stake-holders viz. NGQs, international Agencies like UNDP etc and the CCIs (Chambers of Commerce and Industry) into the arrangement.
This arrangement would work for a one-point agenda, which would be conservation and conservation alone. In this regard, the above conglomeration would start work on all the five pre-requisites in tandem- off course on the basis of a specific, measurable, achievable, realistic and a time bound plan.
All the above needs to be undertaken in a fixed period of 3 to 5 years with a central co-ordinator ensuring true and correct application of the programme. As, primarily, conservation in energy input is to be at the work of the entrepreneur, where 29% of total electricity and nearly 50% of gas is expended, which equals a stupendous Rs 170 billion each year, there is a need to acquire the latest in technology to replace the non-up-gradable machinery and systems in vogue and for upgrading the rest to become truly energy efficient.
All this would have direct impact on the cost of production (which besides quality remains the biggest of the inhibiting factors). This in turn would allow the Pakistani entrepreneur to compete in the international market. All this taken in the regional context too is bound to be beneficial as, at present, China seems unbeatable with its two-prong national policy viz. constant upgrading of manufacturing plants and availability of cheap energy for industry (surely through hidden subsidies).
In order to ensure that the above is taken up in earnest and to the advantage of the country, inclusive of individual companies/entrepreneurs etc, the GoP should give an annual award on the lines of US government's (through their Department of Commerce) Malcolm Baldwin Award.
The prerequisites to this award are an impressive array of facets of entrepreneurial skills, including management proficiency, the technology being used, the ability to upgrade technology on a regular basis, the R&D in vogue, conservation as a whole and the effort to maintain a minimum level of environmental standards etc.
Thus any enterprise, if evaluated on the above, is sure to present the true picture of its operations and also have its deficiencies uncovered.
As the conditions for winning this are most stringent and encompassing all possible angles to efficiency, it is bound to attract big level of reduction in cost of production through conservation. As a consequence, the award alone would be of great value.
Moreover, it would also set a competition amongst entrepreneurs to excel in reduction of input cost as a national policy. Additionally, conservation would spare energy for other industry and also result in a reduced oil bill. However, it all can only happen if we allow an industrial culture to flourish, where initiative and creativity get precedence over everything else.
Going by the quantum of energy being consumed by the industry in Pakistan viz. Rs 270 billion (all inclusive of electricity, gas and fuel oil), we can easily deduce that even a 20% of the total potential of conservation can yield a bonanza, which when translated into reduction in inputs can convert into a potential increase in exports (due to being able to compete with lessor cost of other exporters) to the tune of at least 2.5 billion to 5 billion dollars each year.
Similarly, on the same analogy, upon reaching 100% potential of conservation, exports can even reach higher levels and then allow the Pakistani entrepreneur to compete in the long run too.
Once energy conservation is merged with acquisition of modern technologies, there are good chances for the country to become an export-oriented state. It would also lead to easy value addition of the goods being produced against the present export of basic items like cotton, rice, initially treated leather, meat, coarse cloth etc.