INDO-PAK THAWING ECONOMIC RELATION?

AN INTERVIEW WITH SR. VICE PRESIDENT KCCI

TARIQ AHMED SAEEDI (tariqsaeedi@hotmail.com)
Aug 25 - 31, 2008

While India has awarded Pakistan with Most Favoured Nation status, country's economic managers are still in doldrums about what type of economic relations with India should be long lasting. Based on temporary policies and marred with political inactions, Indo-Pak trade association has not fructified to the extent to plug loopholes of duo economies.

However, enjoying an advantage of economies of scale probably India sweeps away high weight in balance of trade of bilateral trade. Few proponents of flourishing Indo-Pak trade tie-up consider the relation healthy for both the economies while other corporate think-tank that despite not being opponent to India-Pakistan economic affinity argues that along with bilateral regional multilateral trade should also be promoted.

One such advocate of the later school of thought is a senior vice president of Karachi Chamber of Commerce & Industry, Iftikhar Ahmed Sheikh, who staunchly believes strong economic relation is in mutual interest of Pakistan and India, but shifts equally also his disposition towards other economies of SAARC nations as he thinks India should not be in priority list because of its pre-partition link but logic and pragmatism must be there to build relationship instead.

"At any angle the statement does not militate against the economic windfalls betided in a course of cordial trade relationship building with India," he maintained. During an interview with PAGE, sr. vice president KCCI expressed his satisfaction over the economic relieves to be given to India in accordance with this fiscal year trade policy. He says there will be no negative impact on local industry of concessionary rates offers to 675 products exchanged bilaterally and of extension of tradable item list to 1938.

"Not a single local industry would be hit by the trade relaxations reported in the trade policy for Indian industries." In fact consumers will get price benefits if policy smoothens up flows of goods in out of border. He believes consumer must be the end beneficiary of prosperous trading.

There is no comparison between economies of India and Pakistan. India is a very big market. It will provide Pakistani industries a chance to expand its horizons. Disapproving the impression that Pakistan's economy may be overpowered by India after free flow of goods and services, concisely he summed up, "If Pakistan surrenders population of over 160 million to voracious Indian capitalists then it will too treads in to astronomical size market of near one billion heads.

Referring to European Union, he said, small nations in the union recorded as similar economic growth as their big co-nations did. "Basically regional free trade increases exposures, industrialization, and economies of scale and these all broaden trade spectrum for alike small and big economies", says he and adding therefore, "I think there shall be no panic of suppression of local economy by the counterpart in free trade". However, for Pakistan-India, "I would prefer some locks to protect local businesses". Both nations tacitly practice them.

Indo-Pak association is need of this critical juncture when business eagerly looks for cost cutting measures. He believes good Indo-Pak trade relation will be tantamount to slicing business operation costs down. Explaining his point, he says, alone freight cost pulls up the cost of doing business to a significant level. And if regional corridor is opened for cargo transportation, freight cost would heavily decrease. "Inland travelling via national corridors can lessen down freight cost to 5 percent," he stressed. Since movements of goods via roads are cost effective, he opines, the medium should be used to inter trade across borders.

He welcomes government decision regarding importation of CNG buses from India, adding it will incur less cost on exchequers as India manufactures cost effective CNG buses. Preferential trade with India will improve performance of the local vendor industry, which, he says, is not producing surplus for exports. Whatever is being manufactured is consumed locally. He said local vendor industry lacked exporting capability due to underutilized capacity of value addition.

For instance, agriculture sector beholds myriad of opportunities for promoting sub-sector activities but it confines to export of mere farm produce in raw form and slight focus has been given in value addition that can generate revenue as well as employment. Being a cotton producing county, Pakistan should explore global markets to export cotton made finished goods. He suggests growth in textile sector can not accelerate in full throttle until processing from first to last steps takes place within the national boundary. Similarly, he says, dairy products can earn the country hefty revenue to mitigate trade deficit if efficient management techniques execute. He says 75 percent of milk produced in the country goes waste owing to improper cold storage facility and paltry magnitude of packaging industry". Only proper management could open up new foreign markets for local milk supply. Investment is not a problem as he informs, "Many investors are eying to Pakistan for investments in different sectors".

Pakistan can share industrial expertises of India in manufacturing as well as in services sectors, he says. Iftikhar Sheikh said tourism and health sectors would become areas of convergence. Health sector of Pakistan needs a lot more improvement and has underemployment in terms of hospital nurses. Particularly in this area, Pakistan can get benefit from India by importing health practitioners especially nurses.

He fears economic conditions of Pakistan will not improve until unrest calms down in the nation and political issues are settled down amicably. "No new investment will land in until then," dismays sr. vp. Yet he is hopeful that democratic governance which is formed by public representatives can better conciliate concerns in relation to security of investments. He says after one and half year long sufferance "we [business community] see ray of hope at the other side of the tunnel".