ISLAMABAD: Pakistan Business Council (PBC) has demanded incentives to help enhance exports of fans.
“Despite manufacturing the good quality electric fans, Pakistan’s exports are far less due to high cost of production and heavy reliance on imported raw materials,” the council pointed out in a report, according to WealthPK.
Pakistan exported electric fans worth $32.444 million during the last fiscal year (2020-21) against the exports of $23.579 million in the preceding year, registering a growth of 37%, according to the Pakistan Bureau of Statistics (PBS).
Major export destinations for Pakistan’s domestic fans included Iraq (21.1%), Bangladesh (16.7%), and Oman (14.5%) in 2020. Despite the growth in exports last year, PBC said that the actual exports potential of the fan industry was far bigger.
Pakistan has the highest untapped potential worth $928.0 million in the European region. Although fans from Pakistan face zero tariffs in these countries, non-tariff barriers are strict, and difficult to comply with, said the report.
Other top potential markets include countries in Africa, Asia, and the Middle East with the potential of $122.8 million, $618.8 million and $262.0 million, respectively.
The global market for electric fans has been expanding with the fans worth $6.1 billion sold in 2020. The industry posted a compound annual growth rate of 11.3% between 2016 and 2020 and sales are expected to touch $7.7 billion by 2023, the PBC report said.
China is the dominant domestic fan supplier with a global export share of 77.6%, followed by Malaysia (2.9%). The top domestic fan importers in 2020 included the USA (35.3%), Japan (5.3%), and Germany (4.0%).
Counting the problems faced by Pakistan’s fan industry, the council said in its report that the absence of domestic supply of raw materials was the biggest hurdle in exports as imported raw materials such as printed circuit boards, electric steel sheets and plastic accounted for 70% to 80% of production costs.
The absence of skilled labour to operate modern machines and tools, a lack of institutional linkages, low research and development support and underutilised production capacity were among the major hurdles in making the industry export-oriented, said the report.
Domestic fan manufacturers, who are unable to obtain import quotas, have to face significant regulatory duties on direct imports of electric sheets, the PBC said, adding some of the imported inputs were not rightly classified.
The PBC suggested that the government make arrangements for skill development of labour force working in fan industry to improve its efficiency.
Exports of recycled raw materials must be discouraged, the council demanded, adding that regulatory duty needed to be restored on exports of recycled metals.
“Special arrangements are also needed for allocating import quotas of electric sheets, and cumulative quota needs to be given to domestic fan associations,” the PBC suggested in its report.
The council also demanded reduction in customs duties and levies on import of raw material used in fan industry, besides simplifying the access to finance by reducing collateral requirements and encouraging banks to look at cash flows as a basis for financing for small and medium enterprises.
PBC also urged the government to finance participation of fan exporters in international trade fairs to allow them to display products in new markets and to build business contacts.
Pakistan’s domestic fan industry is primarily concentrated in the Gujrat and Gujranwala cities of Punjab. These two regions account for nearly 90% of Pakistan’s domestic fan manufacturing capacity.
INP
