Learning from Sialkot

Pakistan has precious few globally competitive exporters, but a good number of them are clustered in Sialkot, an out-of-the-way city of fewer than 1m people in north-eastern Punjab. It supplies the world with all sorts of sporting gear, from hockey sticks to judo suits, as well as leather goods and surgical instruments. Sialkoti Lederhosen are all the rage in Bavaria. The city’s 8,000-member chamber of commerce says Sialkot exported $2bn-worth of goods last year, or 9% of the country’s total exports of $22bn.

Sialkot’s success is especially surprising as it was cut off from its natural economic hinterland, the Kashmir Valley, when the subcontinent was split between India and Pakistan in 1947. Yet it is doing much better these days than the rest of the country. Its exports have remained reasonably steady for the past two years, even as those of the country as a whole have fallen by 12%. How are firms from such a backwater thriving, ask the exporters of Lahore and Karachi, while they struggle?

Pakistani businesses tend to blame the government for the country’s feeble export performance. Domestic and foreign investors alike are put off by the breakdown of law and order in Karachi, the commercial capital, and the storm of Islamic militancy across the rest of the country (a suicide attack on a police training college on the outskirts of the city of Quetta claimed over 60 lives this week). Manufacturers must endure crippling shortages of electricity in the summer and gas in the winter. Antiquated land administration and customs systems make buying property and exporting goods tiresome. It can take almost three years to settle a commercial dispute. Pakistan ranks a lowly 144th out of the 190 economies assessed in the World Bank’s latest “Doing Business” report.

Instead of waiting for politicians to stump up for local infrastructure, the businessmen of Sialkot have built it themselves. The Chamber of Commerce set up the country’s first privately financed dry port, where goods can clear customs before being shipped to a conventional port. It later charged members a special fee to raise funds to contribute towards the resurfacing of the city’s once-appalling streets. Local businesses also funded the construction of the city’s airport, the only private one in the country. It boasts both the longest and hardiest runways in the region, and handles 53 flights a week. That helps bring in foreign buyers who do not fancy the wearisome drive from Lahore. Some of the investors in the airport are now on the verge of launching their own airline.

The growing business climate of Sialkot should act as a guiding star for the rest of the country and it tells them that they have to take matters into their own and stop blaming government for all their woes. Just like Sialkot, every city has its own specialty product that it can export to the world and develop the local industry by themselves. If one city can do it, then every city can.

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