International Growth Centre has released a report on Trade Costs and Trade Composition revealing that most of Pakistan’s exports belong to a very narrow set of large firms. The same report also states that the contribution of small traders to this figure is relatively low.
The report mentions that the Securities and Exchange Commission of Pakistan (SECP) had registered 50,518 firms in 2012-13. Out of those, only 17,258 (34 percent) entered the export sector. The number drops even further when occasional exporters, who number 10,559 in total, are excluded.
About a third of these firms take part in two-way trade (import/export) and contribute to the majority of the country’s exports. The firms round up to about 32 percent of all exporting firms. However, this relatively small number of firms deals with 81 percent of all of Pakistan’s exports.
46% exports are handled by 173 Pakistani companies (1 percent of all companies)
The high concentration of exports by these companies implies that they may have figured out how to lower their trade costs and might even have more knowledge of international markets and trade procedures than most other companies.
Nearly 46 percent of all exports belong to a mere one percent of the exporters, which sum up to 173 companies. 5 percent of all exporters manage 75 percent of all exports from Pakistan.
75% of all exports are managed by 5% of the Pakistani exporters
81 percent (or 14,049) of the firms are manufacturers and control 74 percent of the exports. Pakistan has 1,904 agriculture-related companies, which make up 11 percent of all exporting firms, but handle only 9 percent of the export share.
1,305 companies manufacture products related to agriculture. They contribute to 17 percent of the exports.
Out of all the export firms, only 19 percent export to five or more foreign markets.
Meanwhile, about 50 percent of all companies only export to a single market with a combined market share of only 13 percent.
Companies exporting in 2 to 4 markets hold a 13 percent exports share while amounting to 32 percent of all firms.
Pakistan’s three largest trading partners are US, UK and UAE, none of which are geographical neighbors. However, Pakistani companies prefer to trade in these markets.
Most of the trading happens with low cost regions such as North America, Europe and Central Asia while high cost regions like Africa, Latin America, Caribbean islands attract less exporters.
Sea ports account for 73 percent of shipments while airports handle 13 percent of exports. 64 percent of airport exports are products.
Most of the export firms belong to Karachi. Companies belonging to central areas and locations near airports, tend to bear far greater costs than the firms based near the sea ports.
It is hoped that the government of Pakistan takes urgent steps to facilitate small traders and exporters, and offer them expertise in enhancing Pakistan’s export levels.
After such inappropriate and unfriendly policies of Govt towards business community, how much Pakistani exports are left till date? As compared to past !! Industry is the area which suffered the most during the current and last decade. Just like these few firms, there few cities and few companies who are now involved in exports! The need of the hour is to improve the situation of exports to better manage the balance of trade. Thia is highly important and urgent matter for the betterment of our country for the future.