Home remittances continue to fall. In the first five months of this fiscal year (July-November 2022), inflows of remittances totalled about $12.009 billion, down from $13.287bn in July-November 2021, according to the State Bank of Pakistan.

There are several reasons for this decline of 9.6 per cent, two cyclical and one structural. Inflows through illegal channels (Hundi/Havala) and smuggling of hard currencies to neighbouring Afghanistan are on the rise. And these are cyclical issues — Pakistan periodically experiences a rise or fall in these two trends.

The third reason is structural. Over twos-third of our remittances—about 68.2pc—originate from just four countries: Saudi Arabia, UAE, UK, and USA. If we include Bahrain, Kuwait, Oman and Qatar, the share of eight countries in our total remittances rises close to 80pc.

Pakistan needs to re-design its workforce export policy. But even the most meticulous new policy and its most stringent implementation cannot yield appreciable results in the short run. In the long run, though, it will.

In exports as well as in remittances, we have not been able to focus on second-tier potential markets, which must change to ensure that hard work done now saves us in future from the humiliation of a sovereign loan default

Till November this year, 765,172 Pakistanis left for overseas jobs. But about 62pc of them went to just one country — Saudi Arabia, according to the Bureau of Emigration and Overseas Employment. Such heavy reliance on a single destination or a few destinations (whether in remittances or in exports) reflects a weakness in our national psyche: we choose easy over right.

It is obviously hard to develop the right approach towards any strategic requirement — and even harder to implement. So, we opt for an easy approach. Years and decades later, ground realities make us realise that the easy approach we’d once chosen was not right. But by then, it is too late. Or so our leadership wants us to believe.

The only reason why Pakistan is under external debt stress now is that the country has long been choosing easy over right in every field of national life — from geopolitics to economy to political system to governance. The list goes on and on.

In exports as well as in remittances, we have not been able to focus on second-tier potential markets. This must change to ensure that hard work done now saves us in future from the ultimate humiliation of a sovereign loan default.

In our home remittances, the importance of the UK, US, Saudi Arabia, UAE and four other GCC countries is undeniable. But there is a need to develop suitable strategies to ensure faster growth of remittances from three other host countries of the Pakistani diaspora, namely Australia, Canada and South Africa. Besides, Pakistan must consider innovative ways of attracting more remittances from the European Union through banking channels.

Our export earnings from the US, China and the UK account for more than a third of total exports of goods and services. And more than two third of the total comes from 11 nations. See table.

In the fiscal year 2021-22 ended in June, Pakistan earned $6.799bn through exports of goods and services to the US. The amount was equal to 21.7pc of our total exports of $31.269bn, according to the SBP. Export earnings from China totalled $2.781bn or about 8.9pc, followed by the UK’s $2.2bn or 7pc.

This explains, at least partly, why the government makes strenuous efforts to balance its relationship between the US (and the West) and China. Forex-starved Pakistan cannot afford to make geopolitical mistakes that may result in losing even a portion of its export earnings from the US and the West. Mind you, in addition to the US and the UK, Germany, Netherlands, Spain, Italy, Belgium, and France also sit on the list of Pakistan’s top 10 export markets.

In FY22, Pakistan’s export earnings from Germany accounted for about 5.6pc of the total, followed by the Netherlands at 4.7pc, Spain at 3.7pc, Italy at 3.5pc, Belgium at 2.3pc and France at approximately 1.7pc.

Pakistan exports go to about 200 countries. Islamabad, therefore, tries to pursue a very inclusive geopolitical policy to retain all these markets. And obviously, it makes sense if it takes special diplomatic care of the markets from where anything between 1pc and 20pc or more of its total export earnings originate.

What is perturbing is that we have so far not exploited the true potential of exports within Asia — the region that is now serving as the growth engine of the world economy.

In addition to China (with our annual exports at $2.781bn), only three Asian countries feature on the list of export destinations from where we earn half a billion dollars. In FY22, export earnings from the UAE totalled $1.843bn (5.9pc of the total), followed by Bangladesh at $871m (2.8pc of the total) and Afghanistan at $552m (1.8pc of the total).

Pakistan needs to improve its overall relationship with India and Iran and achieve economies of regional trade. Similarly, there are several second-tier export markets where we need to penetrate deeper. These include Australia, Canada, Indonesia, Malaysia, Singapore, Hong Kong, Vietnam and Turkey etc.

Published in Dawn, The Business and Finance Weekly, December 19th, 2022