BILATERAL TRADE BETWEEN PAKISTAN AND JAPAN

DURING 1990-91 TO 1999-2000

By Dr. HAJAN KHAN JAMALI and 
RIZWANA CHANG

Jan 20 - 26, 2003

The diplomatic relations between Pakistan and Japan were established in December 1950. With the development of these relations, a number of agreements were signed by both sides for enhancing and promoting bilateral trade between the two countries. As a result, both nations maintained close and co-operative relations in the trade and always realized the increasing need to expand the range and quantum of bilateral trade between these countries. Unfortunately, the mutual efforts did not appear fruitful for increasing volume of trade and particularly poor exports of Pakistan to Japan. Although Pakistan consistently tried to increase its exports to the desired level but both the internal and external economic factors did not allow to achieve this objective. Hence the presence of poor exports to Japan. Pakistan always suffered from the problem of unfavourable trade balance position. To understand this trade scenario between Pakistan and Japan, the present paper investigates the bilateral trade between both countries during 1990-91 to 1999-2000. In spite of evaluating and examining the values and percentage changes in total trade, imports and exports, it also discusses the trade balance positions of the two countries. The data required for this analysis have been collected from Economic Survey of Pakistan 2000-2001. The trade balance positions are derived by subtracting imports from exports, while the percentage changes in total trade, imports and exports are computed from compiled data by applying the following formula:

Percentage change = Current Value - Previous Value x 100
Previous Value

The present section investigates the bilateral trade between Pakistan and Japan during 1990-91 to 1999-2000. In spite of evaluating and examining the values and percentage changes in total trade, imports and exports, it also discusses the trade balance positions of both countries. The data required for this analysis are documented in different tables as given below:

Table - 1
BILATERAL TRADE BETWEEN PAKISTAN AND JAPAN

Rs. Million

Year

Value

Change %

Year

Value

Change %

1990-91

33609

+17.51

1995-96

62197

+31.16

1991-92

47160

+40.32

1996-97

58837

-05.40

1992-93

53200

+12.81

1997-98

49830

-15.30

1993-94

46867

-11.9

1998-99

52433

+05.22

1994-95

47420

+1.18

1999-2000

47531

-09.35

Source: Economic Survey of Pakistan 2000-2001.

*Annual growth rate in bilateral trade within 10 years.
* Annual growth rate in bilateral trade in the first 6 years.
* Annual growth rate in bilateral trade in the last 4 years.

+6.63%

+15.18%

-6.21%

If we look at the data given in table 1, we can find that during the whole period of the study (1990-91 to 1999-2000)), the value of bilateral trade between Pakistan and Japan mounted to Rs. 47531 million in 1999-2000 from Rs. 33609 million in 1990-91, showing the average rise of 6.63 per cent per annum. However, it experienced a fall of 11.9 per cent in 1993-94, 5.4 per cent in 1996-97, 15.30 per cent in 1997-98, and 9.35 per cent in 1999-2000 as compared to the annual trade turnover of 1992-93, 1995-96, 1996-97, and 1998-99 respectively. The analysis also indicates that in the first six years (1990-91 to 1995-96), the value of total trade increased by 15.18 per cent yearly that from Rs. 33609 million in 1990-91 to Rs. 62197 million in 1995-96. However, it dropped by 11.9 per cent only in 1993-94 as compared to 1992-93. The Table-1 also shows that in the last 4 years (1996-97 to 1999-2000), the total trade declined gradually with the average rate of 6.21 per cent annually and reached to Rs. 47531 million in 1999-2000. The gradual downfall in total trade in these years was based on the fall of exports and imports of both countries.

Table-2
PAKISTAN'S EXPORTS TO JAPAN

Rs. Million

Year

Value

Change %

Year

Value

Change %

1990-91

11448

+16.53

1995-96

19544

+16.66

1991-92

14226

+24.27

1996-97

18700

-04.32

1992-93

12109

-14.88

1997-98

15583

-16.67

1993-94

16460

+35.93

1998-99

13616

-12.62

1994-95

16753

+01.78

1999-2000

13850

+01.72

Source: Economic Survey of Pakistan 2000-2001.

* Annual growth rate in the exports to Japan during the whole period of the study:
* Annual growth rate in exports to Japan in the first 6 years:
* Annual growth rate in exports to Japan in the last 4 years:

4.48%

+13.38%

-7.97%

Table-2 reveals the exports of Pakistan to Japan of imports of Japan from Pakistan. These values reached to Rs. 11448 million in 1990-91, showing a rise of 4.84 per cent per year. However, these values decided by 14.88 per cent in 1992-93, 4.32 per cent in 1996-97, 16.67 per cent in 1997-98, and 12.62 per cent in 1998-99 as compared to the values of exports in 1991-92, 1995-96, 1996-97 and 1997-98 respectively. The analysis also declares that in the first six years (1990-91 to 1995-96), Pakistan's exports to Japan mounted to Rs. 19544 million in 1995-96 from Rs. 11448 million in 1990-91 with the average rate of 13.38 per cent per annum. In the last 4 years these exports reached to Rs. 18700 million in 1996-97, Rs. 15583 million in 1997-98, Rs. 13616 million in 1998-99, and Rs. 13850 million in 1999-2000, declaring a fall of 4.32 percent, 16.67 per cent and 12.62 per cent and a minor rise of 1.72 respectively. The analysis points out the reasons of the downfall in these values. These are listed as the lack of foreign exchange reserves due to economic sanctions resulted in a sharp decline of imports of industrial raw materials and capital goods, the short fall in cotton crop adversely affected the exports of raw cotton and textile manufactures, and depressed international commodity prices adversely affected the unit price of major exports.

Table-3
PAKISTAN'S IMPORTS TO JAPAN

Rs. Million

Year

Value

Change %

Year

Value

Change %

1990-91

22161

+18.02

1995-96

42653

+39.08

1991-92

32934

+48.61

1996-97

40137

-05.90

1992-93

41091

+24.77

1997-98

34247

-14.67

1993-94

30407

-26.00

1998-99

38817

+13.34

1994-95

30667

+00.86

1999-2000

33681

-13.23

Source: Economic Survey of Pakistan 1999-2000

* Annual growth rate in the imports to Japan during the whole period of the study:
* Annual growth rate in imports to Japan in the first 6 years:
* Annual growth rate in imports to Japan in the last 4 years:

+8.49%

+17.56%

-5.12%

.Table-3 shows the imports of Pakistan from Japan, which are also known as exports of Japan to Pakistan. These values increased with the average rate of 8.49 per cent annually and reached to Rs. 33681 million in 1999-2000 from Rs. 22161 million in 1990-91. Whereas, these imports dropped by 26 per cent in 1993-94, 5.9 per cent in 1996-97, 14.67 per cent in 1997-98, and 13.23 per cent in 1999-2000 as compared to the imports of 1992-93, 1995-96, 1996-97 and 1998-99 respectively. The analysis also disclose that during the first 6 years (1990-91 to 1995-96), the imports from Japan or exports to Pakistan mounted to Rs. 42653 million in 1995-96 from Rs. 22161 million in 1990-91, declaring a rise of 17.56 per cent per year, while in the last 4 years (1996-97 to 1999-2000), these values decreased with the average rate of 5.12 per cent per year. By dropping 5.9 per cent in 1996-97 and 14.67 per cent in 1997-98, these imports reached to Rs. 40137 million in 1996-97 and Rs. 34247 million in 1997-98. In 1998-99, these values increased by 13.34 per cent and reached to Rs. 38817 million in 1998-99. But again in 1999-2000 these values decreased by 13.23 per cent and reached to Rs. 33681 million. The reasons for the downfall in these imports were based on the rise in the value of Japanese yen against US dollar and the assembling of Hyundai cars, Daewoo cars, Pak Suzuki, and Italy's Fiat Pakistan.

Table-4
TRADE BALANCE POSITIONS OF PAKISTAN AND JAPAN

Rs: Million

Year

Exports

Imports

Pakistan's
Balance of Trade

Japan's
Balance of Trade

1990-91

11448

22161

-10713

+10713

1991-92

14226

32934

-18708

+18708

1992-93

12109

41091

-28982

+28982

1993-94

16460

30407

-13947

+13947

1994-95

16753

30667

-13914

+13914

1995-96

19544

42653

-23109

+23109

1996-97

18700

10137

-23109

+23109

1997-98

15583

34247

-18664

+18664

1998-99

13616

38817

-25201

+25201

1999-2000

13850

33681

-19831

+19831

Source: Economic Survey of Pakistan 1999-2000.

* Average rise is deficit in trade balance position of Pakistan:
* Average rise in surplus in trade balance position of Japan:

20.16%

20.16%

Table 4 demonstrates the trade balance positions of both countries during 1990-91 to 1999-2000. According to the figures, available in this table, Pakistan under went a deficit of Rs. 10713 million in 1990-91, Rs.18708 million in 1991-92, Rs. 28982 million in 1992-93, Rs. 13947 million in 1993-94, Rs. 13914 million in 1994-95, Rs. 23109 million in 1995-96, Rs. 21437 million in 1996-97, Rs. 18664 million in 1997-98, Rs. 25201 million in 1998-99 and Rs. 19831 million in 1999-2000. These figures show that within the 10 years (1990-91 to 1999-2000) of the study, the deficits in balance of trade increased from Rs.10713 million in 1990-91 to 19831 million in 1999-2000, showing a rise of per cent per year. However, it increased by 66.08 per cent in 1995-96 as compared to 1994-95. The table 4 also reveals the trade balance position of Japan as compared to Pakistan. In all the years of the study, the excess of exports to imports favoured the trade balance position of Japan. The reasons were based on the facts that Pakistan's imports from Japan were largely consisted with machinery, particularly electrical machinery, textile machinery, construction and mining machinery, transport equipment, plastic material and medical products. But its exports to Japan were largely consisted with cotton yarn, particularly low count and some other minor items.

CONCLUSION

The present study examined and evaluated the performance of bilateral trade between Pakistan and Japan during 1990-91 to 1999-2000. Inspite of analyzing the values and percentage changes in total trade, imports and exports, it also discussed the trade balance positions of both countries in the given period. The inferences of this analysis are declared as:

1. In the whole period of the study, the annual trade turnover between both countries remained below the target level and did not reflect the real trade potential between the two countries.

2. The bilateral trade between both countries within 10 years increased with the average rate of 6.63 per cent annually, from which Pakistan's exports to Japan rose by 4.84 percent, while its imports from Japan escalated by 8.49 per cent annually.

3. In the first 6 years (1990-91 to 1995-96) of the study, the total trade between both countries rose by 15.18 per cent annually from which Pakistan's exports to Japan rose by 13.38 percent, while its imports from Japan increased with the average rate of 17-56 per cent a year.

4. In the last 4 years (1996-97 to 1999-2000) of the study, the total trade between both countries declined by 6.21 per cent annually, from which Pakistan's exports to Japan decreased by 7.97 percent, while its imports from Japan dropped with the average rate of 5.12 per cent per year.

5. The total trade reached to the highest-level in 1995-96. It claimed Rs. 62197 million from which exports to Japan existed Rs. 19544 million, while imports from Japan remained Rs. 42653 million.

6. In total trade, Pakistan's exports to Japan claimed one-third, while its imports from Japan shared two-thirds of annual trade turnover.

7. The balance of trade always appeared against Pakistan but in favor of Japan.

8. The deficit in trade balance position of Pakistan increased from Rs. 10713 million in 1990-91 to Rs. 19831 million in 1999-2000 showing a rise of 8.51 per cent a year. However this amount increased with the highest rate of 66.09 per cent in 1995-96 as compared with its preceding year 1994-95.

9. In 1992-93, 12.81 per cent rise in total trade was due to 24.77 per cent rise in imports from Japan, while exports to Japan decreased by 14.88 per cent in the same year.

10. In 1993-94, 11.9 per cent fall in total trade was based on 26 per cent drop in imports from Japan, while exports to Japan increased by 35.93 per cent in the same period.

11. In 1998-99, 5.22 per cent rise in total trade was due to 13.34 per cent rise in imports from Japan, while exports to Japan decreased by 12.62 per cent in the same year.

12. The gradual fall in total trade between both countries was based on the reasons that:

(a) Pakistan's exports to Japan decreased due to shortfall in cotton crop, depressed world prices of primary products, lack of capital and competition among primary products in the world market.

(b) Pakistan's imports from Japan decreased due to rise in the value of Japanese yen against US dollar and assembling of Hyundai cars, Daewoo cars, Pak Suzuki, and Italy's Fiat in Pakistan.

The paper also proposed some important suggestions for increasing bilateral trade particularly poor exports of Pakistan. These include:

1. Public and private sectors on both sides should make enough efforts to expand their trade and economic co-operation.

2. There is need for Japanese financial and technical assistance to Pakistan.

3. The exporters from Pakistan have to visit Japan, get to know the country and its importers better.

4. Export Promotion Bureau should have excellent single country exhibitions and to participate in other trade fairs in Japan.

5. Commercial policies should be flexible, dynamic and responsive to the market trends.

6. To discover the new fields of exporting, like information technology through software industry.

7. The quality conscious and quality improvement steps should be taken for increasing exports.

8. To diversify exports through the export of non-traditional goods.

9. To provide special assistance to the textile sector to make large additional investment and install more sophisticated machinery.

10. To take care of cotton crop because the highest share in total exports is claimed by the cotton group.

11. To protect the foreign currency deposits of foreign and domestic investors.

12. To enhance the productivity in agriculture and industrial sector for producing exportable surpluses.

13. Mutual efforts for increasing bilateral trade should be based on the interests of both nations.