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8.2. FACTORS CONSTRAINING GROWTH OF EXPORTS
The survey of vendors revealed that almost 90 percent either did not feel capable yet of entering the export market or were unaware of export possibilities. Similarly, OEMs are not so motivated to export because of lack of competitiveness due to relatively low levels of production and since high level of profits are already available from the domestic market. In parallel to the structured questionnaire based survey of a sample of OEMs and Vendors, a series of discussions were also held with CEOs of several manufacturers/assemblers of vehicles and auto-parts manufacturers. During these discussions the factors inhibiting exports were identified. One of the principal factors identified by both the vehicle and auto- parts units was the absence of assistance by the Commercial Counsellor’s attached to Pakistan’s diplomatic missions abroad and the Export Development Fund in identifying opportunities, such as bulk public procurement opportunities in the developing countries, hosting roadshows using their own available resources and lack of skills in performing the task assigned to them. A second major reason was cited as the lost opportunity in accessing technical assistance available from international sources (such as, Association for Overseas Technical Scholarship
(AOTS)’s training program, the Japan External Trade Organization (JETRO)’s technical assistance, and the Japan Overseas Development Corporation (JODC)’s engineer deployments) for improving the quality of output and transiting from reverse-engineering processes to more sophisticated processes. The high cost of production as a consequence of low productivity and low rates of capacity utilisation exacerbated by the rapid decline in the Rupee’s exchange convertibility rates was also identified as a major inhibiting factor. Perhaps the most irritating factor identified was the refund of domestic and import input taxes paid on exported goods. Delays of up to three months or more were cited. This leads to a shortfall in working capital and thus impacts on output through the inability to finance inventory replenishment. Ina recent report (2009)
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the Pakistan-Japan Business Forum states “If the competitiveness (cost and quality) of cars and automotive parts made in
Pakistan were improved, the potential for export to other countries would emerge and Pakistani iwould conceivably have a valuable future”.


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Pakistan-Japan Joint Study Group 2009; Vision 2030 Pakistan Pakistan-Japan Business Forum Karachi.

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