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Pakistan needs thorough due diligence in consumer financing

Pakistan’s trade with GCC countries has very limited recognition, no any efforts made in last 4 years

Interview with Mr Barkatullah Lone, a Saudi Arabia-based Pakistani

Profile

Mr. Barkatullah Lone is a qualified Chartered Management Accountant from UK, Chartered Global Management Accountant from USA, Chartered Certified Accountant from UK, Gold Medalist Cost & Management Accountant, and Public Finance Accountant and holds degrees of Law & Masters in Arts from Karachi University and Masters in Philosophy from Aleemiyah University.

He has full command over five languages including Arabic and English. He was awarded three gold medals by ICMAP back in 2002 when he qualified Management Accountancy. He has worked in various industries as Chief Financial Controller, Chief Internal Auditor and Head of Strategic Planning.

Currently, he is associated with a Conglomerate Group in Kingdom of Saudi Arabia.

PAGE: HOW WOULD YOU COMMENT ON THE TRADE BETWEEN GCC COUNTRIES AND PAKISTAN?

BARKATULLAH LONE: Pakistan, though, has strong brotherly relationship with GCC countries since 1947 and has a unique importance being the only atomic power in the Muslim world. Pakistan is also a key member of OIC as well. If you study the economy of major GCC countries, you will find that the economy of these countries is driven by export of oil and the manufacturing and agricultural activities are too nominal. Therefore, these countries depend on the import of almost each product (a product as small as a pin and as big as aeroplane).

Pakistan, on the other hand, is rich in agrarian economy as well as a hub for manufacturing. Thus, we have had an ample opportunity to creep into GCC countries to cater for their needs and could enhance our exports to threefold but unfortunately it is not so. Our largest exports are to the USA and then to the four countries of Europe. Despite having so close relationship with GCC countries and being the member of OIC, Pakistan has totally failed to explore the market there in its seventy year history. When we analyze Pakistan imports then we see UAE as the second largest partner and Saudi Arabia the third largest partner (China being at number one as our largest imports are made from China) just because Pakistan’s Oil bill for a year is around 35% of its total imports.

Now what should Pakistan do to enhance its exports with GCC countries. In my opinion, we can use OIC as a forum just like the Eurozone countries use European Union as a forum to flourish the bilateral trade. So far, OIC has failed to solve not only the political issues of its members but also this forum has not been able to boost bilateral trade among its members.

PAGE: SHOULD PAKISTAN SIGN FREE TRADE AGREEMENTS WITH GCC?

BARKATULLAH LONE: Yes, Pakistan should sign Free Trade Agreement with GCC countries as these countries have huge potential for consuming Pakistani products; you can just imagine that GCC countries import of only farm products in a year is $200 billion. Through free trade agreement, Pakistan can exploit this huge opportunity and boost its exports which at the moment are in declining trend causing a record trade deficit.

In addition to it, Pakistan can attract huge investment from GCC countries through free trade agreements as these countries are willing to invest in Pakistan after noting the improved law and order situation and little control over energy crises. Our Prime Minister and the Trade Minister have shown willingness to sign free trade agreement with Bahrain in the meeting held with Bahraini delegation that recently visited Pakistan.

PAGE: YOUR VIEWS ON IMPORTS FROM GCC COUNTRIES:

BARKATULLAH LONE: UAE and Saudi Arabia are the two GCC countries that Pakistan imports the most after China (as Pakistan’s largest imports are from China). Around 21% of our annual imports are from UAE and Saudi Arabia. Our Imports with other GCC countries have not been so significant but a fifteen year LNG import (around $1.0 billion per annum) agreement with Qatar a year ago will have significant impact on our imports from Qatar as well making Qatar the third largest GCC country of our import destination after UAE and Saudi Arabia.

PAGE: WHAT SHOULD PAKISTAN EXPORT TO GCC COUNTRIES WHICH MAY HELP US IN PROMOTING TRADE? 

BARKATULLAH LONE: You see GCC countries import only farm products of around US$ 200 billion per annum. Pakistan is basically an agrarian economy and therefore if we capture just 5% market share of the farm products as said above, we can export US$ 10 billion farm products to GCC countries but say if we do not have that much capacity of production, we can, at least, produce and export 2% which makes export of US$ 4 billion. This I am talking the potential of exporting only farm products to GCC countries. As GCC countries’ economy is mainly dependent on oil therefore you see manufacturing activity there at too low scale.

Pakistan being the fourth largest cotton producer in the world has the potential to cater the clothing need of GCC countries but to lament on the state of our textile industry due to various factors including energy crises, non-performing bank loans, shortage of working capital due to stuck up sales tax refunds from FBR, conflict of interest of spinning and value adding sector and above all lack of government’s will to focus at this our backbone industry; we have not been able to take advantages of this opportunity.

PAGE: GIVE YOUR VIEWS ON EFFORTS OF GOVERNMENT FOR PROMOTION OF TRADE WITH GCC COUNTRIES?

BARKATULLAH LONE: To be honest and candid, our government has made no effort to promote trade with GCC countries. Performance of our trade ministry has been too poor in the latest two financial years as our overall exports have decreased from already stagnant position.

Our Prime Minister has very strong relationship with GCC countries, in particular, Saudi Arabia and therefore Pakistan can make various trade agreements with these countries resulting in increase in exports but unfortunately our government has not been able to focus at this front in its four-year tenure for whatever reasons. Still I feel that PML (N) government can promote trade with GCC countries in next one year if this matter is kept on priority.

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