How can Pakistan increase its exports?


In light of this, this piece will outline an agenda for MSMEs to help them export their products at a minimum logistical cost

The marketing budget is something which can be controlled since the digital marketing industry in Pakistan is flourishing, with several local software houses doing lead generation for international markets

 Hence, a conventional business-person with a bit of technical knowledge in Pakistan can engage in digital work since it can be done completely online

This is the path which India has followed, because of which the IT Industry there is flourishing on the backbone of a large, thriving community of IT freelancers and software development houses

This scheme of things is very simple and leads to the developing of IT products at a small cost and charging a premium amount for it

This removes the need to send physical products abroad through logistical services

 Naturally, not everyone in Pakistan can afford to have a software house which contains lead-generation experts and a product development team

 Instead, IT freelancers can participate on the requisite websites to develop and deliver such projects

However, the fact of the matter is that exporting physical products through MSMEs would be much more cost and time effective

It will also lead to the building of an inventory of life long customers

Many businesses also choose to not export low-cost products through MSMEs because it is easier and cheaper to just import these products from China and sell them locally

This is not the case in Pakistan since Pakistan’s Express Mail Service (EMS) can charge MSMEs around Rs3000/kg

As a result, this drives up the cost of logistics for MSMEs, and hence the price of the product

One may argue that a minimum order quantity can be set for each international customer interested in purchasing the products provided by an MSME

For instance, if someone wants to buy a pashmina shawl then they will need to purchase at least five of these items to be able to avail a set ‘reasonable’ price

 But since MSME products are bought by individual customers in individual quantities, it is imperative that the logistics support these dynamics

Over the past week, I have been researching for this article and have been talking to different logistics companies and reading up on the mechanisms which underpin this sector

 It appears that it is still possible to send a product weighing 1 kg to the United Kingdom for approximately Rs650 (inclusive of doorstep delivery charges)

But how is this possible given that the Pakistan Post and DHL are charging Rs3000/kg? The answer is –  consolidation

The logistics business achieves economies of scale through consolidation

Instead of having minimum order quantities for individual customers, what is being proposed here is that a larger lead time is provided for the product to be delivered to a certain customer

This lead time for the international markets may be 10 days, thus allowing MSMEs to gather enough orders for a certain international city so as to avail economies of scale, and hence be able to book a space with a Pakistani freight forwarder or logistics partner in their lose container load (LCL) bound for a certain international destination

There are a number of logistics partners which would be willing to deliver products at the doorstep of an international customer as long as the consignment meets a certain load requirement

The next question is how does an MSME consolidate? The answer is relatively simple

All an MSME has to do is choose a specific city it would like to sell in and focus its social media campaigns towards that city

Once the business starts receiving orders from that city, the consolidation work starts, and with in a maximum of four days, depending on marketing budget and popularity of the MSME, the threshold for a low cost shipment through a logistics provider can be reached

As per my research, these logistics providers will ensure complete documentation of the work they do, and there are no untoward practices which currently plague the system

 The logistics partner will usually work with an MSME as long as proper documentation is available and will also help with the required information related to the product

Therefore, I would highly encourage those who import products from China to instead sell those products locally and to try exporting local products from Pakistan using this practice



Date:27-Dec-2019 Reference:View Original Link