Ban mobile phones, cosmetics; save $15bn – Economists

“The country will have to take tough measures to reduce imports of mobile phones, fruits and vegetables, dairy products, luxury vehicles and cosmetics,” Professor Dr. Athar Ahmed, a senior economist, told Arab News. (AFP/File)

• Other goods such as fruits, vegetables and dairy products also a burden on foreign exchange reserves
• Import of 45% unnecessary goods real factor for Pakistan’s balance of payment deficit, experts say

KARACHI: As Pakistan’s new leadership contemplates measures to reduce dependency on imports and curtail the burgeoning bill, economists said shunning the policy of “exporting potatoes and importing chips” could save $15 billion for the country. 
“Pakistan’s imports consist of 45 percent of unnecessary goods and services which are the real caustic factor for the country’s ballooning balance of payment deficit,” Professor Dr. Athar Ahmed, a senior economist, told Arab News.
He reasoned that intangible goods such as royalty for foreign brands and franchises can be replaced with local brands or by promoting localization and value addition, adding that: “Pakistan exports potatoes on one hand while importing potato chips from the other. This seems like an illogical business practice and needs to be reviewed”.
The country’s external account situation has worsened due to an increasing current account deficit which swelled to $2.2 billion in July this year, mainly 2018 due to increasing imports and insufficient foreign inflow. The balance of payment deficit was recorded at $18 billion during fiscal year 2017-2018, which ended on June 30, while the deficit for the current fiscal year is estimated at $18-19 billion.
Pakistan’s major exports are based on imported raw material which cannot be curtailed. “The country will have to take tough measures to reduce imports of mobile phones, fruits and vegetables, dairy products, luxury vehicles and cosmetics,” Professor Ahmed stressed.
During fiscal year 2017-18, Pakistan’s imports included mobile phones worth $848 million, a variety of dairy products including cheese worth $184 million, edible fruits and nuts worth $108 million; while the cost of imported luxury vehicles amounted to $2.24 billion, data by the State Bank of Pakistan showed.
Dr. Shahida Wizarat, an economist who protested against the imports of unnecessary goods, says that the country can easily save billions of dollars by banning such products. “Edible products, electronic goods and deferred arrangements for payments for crude oil can save the country’s foreign exchange up to around $15 billion,” she said, urging consumers to “think out of box”.
One among many who opposed the idea of Pakistan seeking a bailout package from the International Monetary Fund (IMF), Dr. Wazirat said: “Borrowings from the IMF is contracting our investments, output and employment with all the ugly manifestations like worsening the distribution of income and wealth, increasing poverty levels. This, in turn, have horrendous social and political implications. Instead, we should charge the USA and Nato for using Pakistan’s territories and infrastructure.”
Stakeholders suggest steps to take border control measures apart from banning the import of unnecessary goods. “The government does not issue permits for import of fruits but markets are abundant with varieties of foreign fruits from Iran and Afghanistan through smuggling,” Waheed Ahmed, vice president of Federation of Pakistan Chambers of Commerce and Industry, told Arab News.
He added that smuggling negatively impacts the local market because “it affects revenue collection of the government and hurts local industry”.
And despite the country being under external payment obligations due to an insufficient foreign exchange amounting to $9 billion, brand new super luxury vehicles can be seen cruising on the roads of Pakistan. “During the outgoing fiscal year around 60,000 luxury vehicles were imported under the baggage and gift scheme. [That’s] more than Rs65 billion in terms of duty paid to government,” HM Shahzad, Chairman of All Pakistan Motor Dealers’ Association, told Arab News.
However, Shahzad said that the vehicles purchased under the gifts scheme are not a burden on foreign exchange as the payments are made in local currencies.