PAKISTAN NEEDS TO DIVERSIFY EXPORT DESTINATIONS
TARIQ AHMED SAEEDI
Nov 1 - 7, 2010
Exports from Pakistan did not improve with a much difference during last financial year (2009/10) as products exported from the country fetched only $19.6 billion, up 2.7 per cent as compared to $19.1 billion in the preceding financial year. Noticeable are also the export figures that showed growth rates in between four and 19 per cent from 2002-03 up to 2007-08 while following year a decline of 6.4 per cent was recorded by SBP. Though negative impacts of global recession and subsequent retrenchment of buying orders, on exports cannot be overlooked, yet lethargic moves of commerce ministry to look for new markets within the region and in expansion of exports to especially south Asian region are equally responsible for the statistics recorded for last two years.
Over the years, Pakistan depends on selected numbers of importing countries, which have major shares in the exports from the country. USA, Europe, and UAE are some of the biggest markets of Pakistani products. According to analysts, the country needs to rid itself of overreliance on traditional markets and explore neighbouring countries and other profitable markets in the region to shield the economy against the contagious disorders in the interconnected western markets. They said India, China, Afghanistan, Sri Lanka, Turkey, and central Asian republics will prove profitable markets for Pakistani products that would not only enhance industrial production but also create employment opportunities.
Concessions given by European Union on mainly textile products of Pakistan would prove a good omen for the exporting sector in the country. The decision to cut regressive duties on textile products were sought after by textile industrialists for many years since their products were to surrender price competitiveness to Sri Lankan and Bangladeshi counterparts because of heavy duties on Pakistani textile made-ups. Generally, textile industrialists welcome the cut in duties with open arms barring few reservations stemmed from makers of bed linen and knitwear, which did not come under 75-items list granted duty free access to 27-nation EU. Some are also of the opinion that there is a need of seeking alternative markets for bed linen and knitwear.
China is already a big market of fish products and following EU ban on fisheries, it greatly helped exporters to mitigate financial losses. It makes many to scratch their heads when Pakistan's external trade volumes with its neighbouring countries are put in front. It is an example of weakest links in the world of economic blocks and their effectiveness in economic turnarounds. Last year did not see any major improvements in trade relation of Pakistan with its neighbouring countries. Pakistan's imports from Iran totalled one billion dollar while export to it stood at $203 million. Afghanistan-Pakistan bilateral trade lays in favour of the latter as imports from Afghanistan were meagrely three million dollar and exports to the country crossed one billion dollar mark. Tajikistan shares border with Pakistan but bilateral trade is equal to zero. China and Pakistan however have good trade relations with more than four billion dollar bilateral trade volume tilted heavily in favour of China, which imported 1.2 billion dollar products from Pakistan whereas earned $3.2 billion from pro-Chinese market. India with which Pakistan shares second longest border after Afghanistan has politics-infested trade relations with Pakistan. Despite similarities in many ways shared by the people of both countries, this relation has never come to normal in over sixty year of their existence. Indo-Pak aggregate population is well beyond that of China. Nevertheless, ironically, their bilateral trade was to the tune of 1.3 billion dollar last year. Pakistan's exports stood at $259 million while imports one billion dollar.
Overall, Pakistan's trade with neighbouring countries is near the mark of eight billion dollar—which is roughly 16 per cent of its international trade volume of $50 billion in a year under review-and it has trade deficit in relation to three neighbours out of five. Tajikistan is no-playing fellow nation.
Unfortunately, result-oriented efforts have not been made to improve trade relations with fellow countries. It is believed if government were to render some serious struggles to maintain a balance of trade by going in to trade accords with its neighbouring countries, the situation would be different. Critics also pointed out defunct free trade agreement with Sri Lanka that was made of no use. For example, Pakistan's total bilateral trade with Sri Lanka is less than $350 million. This was also because of souring affinity with India. According to an estimate, India-Pakistan bilateral trade has potential to reach five billion dollar a year if official channels are being used for trade. A significant quantity of goods is channled through smuggling, which causes revenue losses to both the governments. Analysts emphasised over the importance of tapping sectors to bring economic prosperity for the poverty-stricken masses of two important south Asian countries.
Increasing trade with neighbouring countries will reduce prices of goods and services in a subsequent effect of reduction in cost of production for instance transportation costs. Gems and jewellery sector has great potential to increase India-Pakistan bilateral trade. While Pakistan has rich resources of gems, India has technical expertise in value addition. Technology transfer will speed up process of Pakistan's emergence in the field of value added gems and jewellery sector.
On the other hand, Pakistan has also growing automobile assembling plants and is becoming attractive place of re-exporting for auto-assemblers because of its giving transit to virgin markets of Afghanistan, central Asian republics, and Iran. Many are the unknown automobile brands in these markets. Automobile assemblers especially motorcycle makers are exporting motorcycles to Afghanistan from Pakistan. The export volume is not significant however in view of production capacity increased astronomically in few years. Lack of incentives to assemblers is also obstacle to exports.