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Import And Export Of Pakistan Commerce Essay

Paper Type: Free Essay Subject: Commerce
Wordcount: 2972 words Published: 1st Jan 2015

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In today’s world no matter how much progressive, successive or superpower a country is, no matter how much investment they made, how much modern technology they’re using in their country still there’s not even a single a country who is self sufficient in all his needs without any import from the adjacent or neighboring countries. Who is not in a need to export anything from his country to the out world as he doesn’t feel any necessity or required anything from the outer source? Hence every country is in need to import and export some of the things from other countries as that’s the way to progress, development and success. These activities are the source of globalization and globalization results in welfare of well being along with fruitful results. Not even a single country is capable to produce or manufacture all the things/commodities by itself. So while producing things countries always look for the source/resources in which they are rich and are helpful in producing things with ease and that are advantageous for them. It produces things in which they are efficient and abundant and then either exchange them with other countries against things which they need or export them against cash and utilize that money as they want.

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The difference in level of production relatively the equipments that are used for this in different countries like production of things according to taste, requirements, technology factors etc have contributed majorly in import and export around the world and has greatly enhance basis of this activity. The countries are importing and exporting according to their needs and level of progress, development nature like countries that are much developed they export mostly good that are industrial and consumer goods and in exchange acquire primary sort of goods from them. On the other hand countries that are developing they export semi finished/unfinished goods, raw materials etc as they are industrialization base and in place of this import labor, finished goods, technology or services from the countries to run their industry. Now what is left at the end are the countries that have low income they are comparatively in a state of loss but it is a fact that a major contribution in the trade, import and export is by these low income countries that play their part in the economic development as well. On the example of low income countries is Pakistan.

The promise and pitfalls of exporting

While exporting every country faces and reap some of the advantages for which this activity was performed. Thus we can say that exporting promises some benefits to the exporting country but there are also some disadvantages against exporting activity that has to be faces by the country. Thus in short we can say that a country while doing this must has to keep certain things in consideration that if they are going to have some progress and a success in achieving their task then they also have to suffer some problems with this activity. For example if we take USA its market is very global and is very extensive for almost everything, but inspite of this hugeness it still doesn’t facilitate few or more of the entrepreneurs. Who are these entrepreneurs? These are the minds who are interested in more growth. They are in search of place where their business can grow more, have more opportunity to growth and success and thus these minds prefer rest of the world as compared to USA.

While doing business in import and export you need to go global obviously and thus this activity ensures some opportunities, benefits along with some drawbacks. Let’s consider some of the following;

In a country like Pakistan export is very much helpful as it increase the lifetime of a product or offerings by looking out for some new markets

The dependence on certain markets that we have developed in some countries can be reduced by going global

In a business faces situation of instability, impacts the fluctuations in its performance because of external factors like seasonal, environmental or political factors then it’s better to export things in new markets. This saves the face to loss moment.

Gives an exposure, know-how about different things

Going global is a source of fame, recognition and making relation that can be use in the hour of need.

Enable them to be competitive, learn how to sustain stress situation and compete.

Increase and polish growth potential.

Aware us with different opportunities on international level that can be achieved.

Similarly there are some pitfalls that we have to face while going globally;

While going global and practicing export game one needs to have a very effective strategy which is not easy to plan in this aspect thus have to face failures and problems.

Poor market analysis also cause huge problems while going global

Ignorance of the difference in cultural is another pitfall that’s been faced while exporting thus need to be keen in observing this difference

Ignorance of host country language

While exporting out things one needs to have a very strong and effective distribution chain.

Managing the finance is another important factor that needs focus

(John E. Cleek)

Regulatory Bodies in Pakistan

Some of the regulatory bodies for import and export in Pakistan are;

TDAP (Trade Development Authority of Pakistan)

EPB (Export Promotion Bureau)

Improving Export Performance

Exporters who are new they can improve their performance by using different techniques and avoiding pitfalls. There are certain ways in which export performance in Pakistan can be improved and are helpful for the exporters.

Urge more investment in trade and try to make liberalized policy

Try to control the shortfalls of accounts and reduce tax rate on exports.

Built suitable tariffs for international trade.

Resolve gas and power supply issues with firm policies

Stabilized political environment

An International Comparison

One of the biggest problem in the way of successful exporting is the lack of knowledge about different countries we are going to deal and that’s simply because of the reason that we have difference in our cultures, traditions, environments, requirements, time, language and are far apart from each other. We don’t have much of the interaction with each other and lacks information about each other that’s why most of the organizations in Pakistan seeks to have hesitation in export with other countries. This situation can simply be resolved by attaining information about other countries or countries we are going to deal with.

Information Sources

The Pakistani firms can increase their knowledge and awareness of export while doing business in various countries by gathering export information about them through various means.

Like the organization of international trade centre (ITC) is a very useful source of providing information about export when we’re doing with different countries as it deals with exporters, the policy designers and institutions of trade support. To understand the foreign culture, trade aspects and other things organizations like this are very helpful to improve the export performance. Besides other organization include SECP, Chamber of Commerce along with some private organizations.

Utilizing Export Management Companies

This is another source of improving the export. In Pakistan institutions; like this who are working for the support and purpose of providing valuable information to export companies and their management skills playing their part in improvement. The exporters should gain advantage from their services, knowledge and skills. One of the very famous export management companies working in Pakistan is ITC that provides links and information related to policy formers, export management institutions.

Exporting Strategy

Exporting strategies are helpful to reduce the risks to export. By carefully manipulating and implementing these strategies they can prove beneficial for exporters. There are few guidelines, strategies and points that can be prove advantageous for the exporting businesses in Pakistan.

In order to improve the export performance in Pakistan the skills development should be carefully observed.

We are living in a era which exhibits rapid innovational techniques everyday in various fields of life, so expose new ideas and fulfill the demands of seekers in a effective and rapid way every day.

To overcome the competitiveness in export skills in different aspects like labor, services, supply, quality etc should be improved.

Pakistan has labor/human force that is young and energetic building their skills will obviously results in improved export performance.

Try to reduce the cost of doing business especially when we are exporting. The high cost is usually because of two reasons,

Unfavorable business environment

Inadequacy of infrastructure

Effective policies and strategies should be adopted and framed to overcome these problems.

Provide a workable business environment that practices cooperation.

Trade should be facilitated through trade supportive policies that urge the exporters to export more and more.

As compared to other countries the export time taken by Pakistan is much more that shows the attitude of government policies, support and interest in this aspect. This area should be observed carefully and try to efficient the way of exporting by stating new policies.

Export and Import Financing

This term has to do a lot with import export as it exhibits the attitude when one businesses with someone who is stranger for him. He has to carry out export or import with him but is in a situation of total dis-trust. It creates lack of trust when doing import export. There are some financial devices used in Pakistan and internationally that has solved this matter and help to ensure the delivery of goods and payments while doing business across the border. It involves the following financing elements like letter of credit (LC), Bill of lading (BL), drafts.

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Lack of Trust

Lack of trust is a huge hurdle in the way of import & export. Firms doing business globally most of the time has to trust someone who is unseen and unknown. So it creates a level of lack of trust between both of them. One feels stress about the completion of his job by the other and other has a feeling about the receiving of payment against his services after completion of work that he may or may not receive his charges after accomplishing the task. Thus both the parties are in a state of confusion and this is because of lack of trust. In order to resolve this problem the concept of third party has been introduced and used here which is trusted by both the parties. The third party involved is bank.

Letter of Credit

It’s a import export financing instrument that helps to carry out the international transaction with trust. It is issued by the bank on request of the importer that he will pay a particular amount of money sanctioned by the importer to the exporter on the delivery of the prescribed items or shipment under the conditions specified. This amount is paid to exporter on the presentation of specific legal documents that ensures that the party is eligible for this sum. Most of the time, this transaction is carried out by banks of importer and exporter on their behalf.

In Pakistan majorly this instrument is used by the shipping lines to carry out their every day transactions. Like safemarine, Maersk, Rafey internationals etc


Draft is also known as bill of exchange. This financing instrument is used in international trade transaction to facilitate the payments with surety and trust. It its written by the exporter to other party importer that include the information to pay a particular amount of sum on a specific time. It can also be written to agent of exporter. It involves two parties

Maker: the person or party who initiate the draft, it is usually exporter

Drawee: the person or party to whom draft is send, it is usually importer

There are two categories of drafts presented

Sight Draft: it is payable on presentation to the drawee

Time Draft: it is for a delay in payments

Bill of Lading

It’s the third mode of financing import and export use. It is used by the common carrier for transporting merchandising issued by the exporter. It usually supports three purposes; it serves as a receipt, document of title and contract. Receipt show that the merchandise specified on the document has gained/received by the carrier, the term contract states that the carrier/transporter is oblige and bound to deliver services against the service charges, and the document of title is used to receive the payment/written promise before releasing the merchandise to the importer.

Export Assistance

The export assistance helps exporter to finance their export activities. Through this they are able to get finance help and also export credit insurance. Export assistance is provided by following bodies.

Export-Import Bank

The basic purpose of export-import banks is to make financially strong the exporters and importers to facilitate their export and import activities and strengthen the rate of exchange of commodities between countries.

Recently the ministry of commerce in Pakistan, Islamabad has announced to establish an EXIM bank in the strategic trade policy framework to boost the exporters and make them competitive. According to director general trade policy Safdar Sohail it is the need of hour to establish such institution that support exports if we need Pakistan to boost its trade with international standards.

Export Credit Insurance

These are the institutions that have been known to serve the exports as collateral to meet their needs. It usually consists of those private commercial institutions who are working under the supervision of import-export banks to facilitate the exporters. If the importer defaults in his payment then it provides the credit insurance.


Countertrade is a bit different to trade in a meaning in terms of money, as it refers to the process of carry out trade in terms of good/services or commodities instead of money. We can say that when conventional means of payment are difficult like payment in the form of money is not possible or difficult then this way is structured to carry out international sale in terms of other commodities that are used against money.

Types of countertrade

There are few types of counter trade which are as follows


It is an old system of carrying out transactions when there was no money. Good used to be exchange against goods without involvement of cash. Here those goods are exchanges which have equal value. As it was an old technique it has two problems,

One of the parties involved in trade end up to finance other if the goods that are traded are not exchanged simultaneously

Commodities that are used may not have a re-sale value, they may be un-useable or unwanted.


It’s a sort of transaction that includes two separate simultaneous transactions between the two parties that either involves cash or not


Here it involves an extensive arrangement in such a way that seller is needed to assist in or have to make arrangements for the marketing of the goods that produced by the purchasing country. Sometimes it also allow the purchasing country that they can produce a portion of the product in their own country

Switch trading

It occurs when the counterpurchase of a firm is buying by the third party and then sold them to some other firms that can use them effectively. It involves a change in the destination of goods exported with reference to their destined country

Compensations or buybacks

It involves the repayment in the form of goods/services that are produced by the technology or instruments provided by the seller of those goods.

Pros and Cons of Countertrade

Countertrade helps a firm to finance its export deal in the absence of other means

It helps those countries who lack adequate foreign currency stock/reserves

Attractive to huge multinational enterprises


Helpful to make entry possible in difficult markets

Source of companies increase sales

Reduce currency exchange problems

Enhance sales and reduce credit problems


Costs increase

Risky when involves commodities

Time taking


The overall discussion simply narrated the importance of exports in Pakistan with imports. It shows the problems we are facing and government needs to have strong policies to overcome these issues if they want to attain a sustainable place in international business marketing. To grow our exports strong policies should be designed by the ministry of commerce and other trade supportive organizations. If trade provides benefits then it also brings some issues and problems it is up to the decision and abilities of the government what they want to have. Import and exports of a country plays a vital role in the economic development of a country thus this fields a hell lot of concentration.


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