ISLAMABAD: Pakistan should diversify its exports in terms of markets with a special focus on regional states, especially neighbouring and South Asian countries, experts told WealthPK.
Despite substantial increase in exports and imports, the volume of Pakistan’s trade with regional countries is too low. Apart from China, most of the country’s exports are concentrated on the USA and a few European countries. Pakistan’s exports to seven countries remained $14.557 billion during July to May period of financial year 2021-22, which accounted for 50.41 percent of the total exports during this period.
None of the regional country is on the list of Pakistan’s top five export destinations while only Bangladesh is among the top 10 importers of Pakistani goods. Likewise, no South Asian or Central Asian country is among Pakistan top 10 trade partners.
Dr. Ashfaq Hassan, a renowned economist and dean at Business School of National University of Science and Technology (NUST), told WealthPK that growth in trade with regional countries was necessary for the development of the country.
He said that India was Pakistan’s neighbour and the second largest market in the world. “Pakistan should take advantage of such a huge market. Trading with India would benefit Pakistani exporters as well importers and public,” he added.
According to a report of Pakistan Business Council (PBC), Pakistan trade with its non-Chinese regional partners has historically been below its optimal level. It says that in 2018, India’s exports amounted to $323 billion and imports clocked in at $508 billion, a historic high, but nothing special with Pakistan. Pakistan used to export dates and cement to India while imported cotton, cotton yarn and industrial chemicals and dyes.
In 2018, Pakistan had an export potential of $1.6 billion for just top 20 high potential items. “On the imports side, the top 20 high potential items from India were worth $7.0 billion,” said the report.
Dr. Ashfaq said that Pakistan could import various food items from India. “Transportation charges of goods to and from India are lesser. Imports from India would help in reducing impact of inflation in Pakistan,” he added.
He said that there was huge trade potential with other South Asian countries such as Bangladesh and Afghanistan.
He said that Pakistan’s trade with Bangladesh, especially exports, was growing gradually. He said that most of the exports to South Asian trade partner were related to textile. “Exporters should also focus on other products to diversify exports to Bangladesh,” he added.
He said that Pakistan was trying to keep the momentum of its trade with Afghanistan despite the absence of formal banking system in Kabul. “Volume of Pakistan’s trade with Afghanistan is declining despite emergency measures such as allowing trade of certain goods in Pakistani rupee instead of dollar,” he added.
It said that Afghanistan was an important trading partner of Pakistan, however, the trade volumes between the two countries had been on decline since 2011. Sugar, petroleum products, wheat and rice are Pakistan’s top exports to Afghanistan. Pakistan imports grapes, apples, coal and cotton from Afghanistan.
Dr. Ashfaq said that trade with Iran should be much higher and frequent. He said that Pakistan and Iran made the arrangements for barter trade last year, however, progress was slow. “Both the countries need to move swiftly to take full advantage of barter system,” he suggested.
According to a report of Asian Development Bank (ADB), many Asian countries that have successfully transformed their economies from low-income to middle- and high-income status rely on exports to the regional states.
“Pakistan has undoubtedly great opportunity with a unique potential to become the regional hub of economic activities due to its strategic geopolitical location at the crossroads of South Asia and Central Asia,” said the report a copy of which is available with WealthPK.
-INP
