. .

The government has allowed the exporters to trade with Afghanistan

Jan-21 - 27, 2002

The Government of Pakistan has not only added 18 new items to the list of exportable goods to Afghanistan, but it has also allowed the exporters to trade with that war ravaged foreign currency starved country in Pak rupees.

Announcing the decision at a press conference in Islamabad last week, the Commerce Minister Razzak Dawood, said the decision has been taken as gesture of goodwill to ensure the supply of goods of day to day requirements of the unfortunate people of brotherly neighbouring country. With Afghan transit trade (ATT) almost suspended and absence of any workable trade and commerce arrangement, the people of Afghanistan badly needed this facility. The government has therefore allowed Pakistani exporters and traders to trade with their Afghan counterparts without any licence or permit. The Minister further informed that no permission is required for exports to Afghanistan as there is no restriction on trade with the country even in rupee currency.

He, however, clarified that there will be no duty drawback in case of trade with Afghanistan in rupees, adding that documentation was essential so that the government has a record of the trade.

The Minister said, the government desires to enlarge the list of 32 items upto 300 so that a time comes when a negative list of items for exports to Afghanistan is required. Towards this end, Razzak Dawood informed that the government has constituted a two-member committee comprising a representative from CBR and the Secretary Commerce so that the volume of trade with Afghanistan continues to be reviewed from time to time.

The minister further said that owing to the current situation in Afghanistan with no banking system, LC condition will not be required for exports to the country, adding, but the trade will be carried out on the basis of advance in cash.

Giving the background of these decisions the Commerce Minister said that a one day conference on prospects for Pakistan's trade in the reconstruction and development of Afghanistan was held on Monday. The conference was organised by the Commerce Ministry in collaboration with World Bank and the United Nations Development Programme (UNDP) with the focus as how Pakistan could avail the future trade opportunities in Afghanistan. A number of people from the country's chambers of commerce and industry, exporters, contractors and consultants attended the conference and gave valuable suggestions to enhance trade with Afghanistan.

The Minister said that the Commerce Ministry has set up a special desk in the ministry to promote exports and remove impediments in the way of trade with Afghanistan. The business community could play a vital role in promoting friendly relations between Pakistan and Afghanistan through trade. The government will fully encourage the private sector in enhancing trade with Afghanistan, he added.

The Minister hoped that the businessmen will take part in the reconstruction process which will increase our existing trade with Afghanistan. Regarding the utilisation of $ 100 million assistance to Afghanistan announced by the government, the Minister said, the decision will be taken at a meeting to be held in Tokyo on January 21.

The policy decision taken by the government are in the right direction. Beside being a gesture of goodwill to the people of Afghanistan in their hour of need, this also have been motivated by the understandable urge to benefit from the inevitably tremendous boost in demand for a widening range of goods for use in the multi-directional reconstruction activity there. A big reconstruction programme is to be launched by US-led world coalition of which Pakistan also is a member. As to the discrimination between the two modes of export, it will be noted that the new facility of trading in Pakistani rupee is an innovation that has been adopted with a view to offsetting the delays in transactions likely to occur due to the collapse of the Afghan banking system as a result of widespread devastation caused by the ongoing all-out war against terrorism.

Needless to point out that in the absence of the rupee trading facility, the prospect of Pakistan benefiting from the just unfolding export opportunities to that country would have been marred to a considerable extent despite the enviable close proximity that we enjoy. Conceived as a stop gap arrangement to remain effective until such time as establishment of a regular banking channel in Afghanistan, it will certainly give an edge to Pakistani exporters over their competitors from the world over who can be seen now intently eyeing that country as a highly profitable destination. The new system may have some drawback too. However, good care seems to have gone into enduring that its overall thrust does neither hurt the country nor the business community while enabling both to mitigate the effects of the recession now threatening the world economies. While agreeing that exporting against the rupee may deprive the country of foreign exchange earnings to the extent, the Commerce Minister will be seen as rightly emphasising its advantages. As he pointed out, the loss of foreign exchange earnings will be more than compensated by helping keep the wheels of industry running, thereby warding off the threat of widespread unemployment as now afflicting many countries in our region as well as elsewhere in the world. Extraordinary situations often call for extraordinary measures to meet them, and seen from this angle the option of exporting against Pakistani rupee will be found ideally suited to the need of making the best of the unfolding export opportunities.

Very conscious of the need of saving it from widespread ravages in the aftermath of the Afghan war of liberation against the former Soviet Union, Pakistan has never shirked in lending whatever cooperation deemed necessary and within its means. So much so that while responding to the world coalition's call for participation in the war on terrorism in that country, it tried its best to persuade the then Kabul government to heed its advice for sanity and compromise, which unfortunately fell on deaf ears. The urge for participation in the construction of Afghanistan is essentially part of that same sentiment.

As for Pakistan's concern for economic reconstruction of Afghanistan, reference may be made to Finance Minister Shaukat Aziz's timely proposals in his address to Islamic Development Bank's 26th Annual Meeting in Algiers in October last year. Lauding its new thrust on enlargement of areas of its operations, he had pointed to added emphasis on trade financing operations, including project financing and technical assistance besides ordinary operations. His exhortation to IDB to deploy adequate funds for drawing an outline of the rehabilitation programme for Afghanistan should, as such, serve as evidence enough of Pakistan undiminished sincerity about reshaping the destiny of its next door Islamic neighbour.