This document discusses the importance of value addition for Pakistan's economy. It notes that countries like South Korea and Japan became developed despite lacking natural resources by focusing on value-added exports. Pakistan has natural and human resources but has not utilized its potential. The document argues that Pakistan should focus on exporting value-added goods rather than raw materials in order to earn higher profits. It provides the example of textile exports and how restricting imports has limited value addition opportunities, while countries like Bangladesh that allow raw material imports have been more successful with value-added textile exports. The document stresses that substantially reducing import duties on equipment and technology is crucial to encouraging investment in value addition processes.

1. Indigenous Resource Mobilization
Export Promotion & Value Addition
Pakistan

2. Why Value Addition
• South Korea and Japan were two main countries in the
world which had only human resources and not
mineral resources but still they became developed
countries only due to value added exports.
• On the other hand, Pakistan is blessed with both
human and mineral resources and has the potential to
be listed among developed countries within a short
span of time but unfortunately, the potential is not
being used properly.
• The primary need to make Pakistan an industrial state
is to give emphasis to export of value-added items
rather than exporting raw material.

3. Why Value Addition
• It is right time that Pakistani businessmen and
manufacturers should work on the production
of only value-added items so that they could
earn more profit margins.
• producing value-added products involves a lot
of processes including educated and skilled
human resources as well as latest technology.
• But when an entity successfully uses both of
these resources properly, its margin of growth
becomes incredible.

4. Why Value Addition
• Earlier, it had been a custom that Pakistani
businessmen preferred to export only raw
material and get their profit and never tried to
export value-added products.

5. Why Value Addition
• A factory produces only billet of iron ore that
has tag price of $100 per ton.
• Another factory, by using the same quantity of
iron ore, produces boilers that can be
exported up to $1,000 per ton.
• If a manufacturer produces a cog of aircraft
engine from the same metal, it could fetch
$10,000 because of value-addition

6. Textile Export – A Case Study
• Government’s restrictive import policies are
blocking access to new raw materials, which
are required to diversify product lines to take
full advantage of the duty-free access under
the EU’s Generalized Scheme of Preferences
(GSP) Plus.
• The country could utilise only three textile
categories out of the total of 73 that it was
given duty-free access to under the EU’s
limited, unilateral trade concessions.

7. Textile Export – A Case Study
• We do not have access to finer, synthetic
fabrics used to make products like ladies’
garments, sportswear, etc., which involve high
value addition to fetch higher prices. Our
garment industry is still forced to produce low
value added garments.
• Government must relax the import policy to
allow the value added textile industry to get
the maximum benefit from the GSP Plus
scheme, as the country has no raw material,
except for cotton.

8. Textile Export – A Case Study
• Bangladesh is enjoying duty-free import of every
raw material and, hence, have increased their
value added textile exports to $26 billion,
compared with Pakistan’s garment exports of
$4.5 billion.
• Chinese investors are interested in relocating
their manufacturing facilities to Pakistan because
of rising labour and other costs in China but they
feel impeded by our restrictive fabric import
regime.

9. The Most Important Aspect
• It is absolutely important to substantially
reduce the duties on plant and equipment to
be used for value addition.
• Value addition is process intensive which can
not be achieved with out encouraging the
businessmen to invest more for more profits.
• We have to re-visit the duty structure for
import of technology. This requires great deal
of research.

10. ENDS