Taping the potential of regional trade

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It is welcome to note that the government is paying heed to the efforts to strengthen cross-border trade with neigbouring economies which has a high potential as it can help boost our exports to win the much-needed foreign exchange for the country and overcome our trade imbalance. Last week, President Arif Alvi, at a high level forum, underscored the need for furthering strengthening the trade with neighborising country which will also provide job opportunities to dwellers of the border areas like those in Balochistan province which lacks such opportunities.

It may be mentioned here that Pakistan’s regional exports rose by a substantial 35% in recent months, yet more efforts are needed on part of the govt to enhance the exports as the potential is much more. According to available information, Afghanistan, Iran, Turkey and the Central Asian states have emerged to be top destinations for Pak good in recent months as exports to these countries have risen to $938 million in the first quarter of current fiscal year as compared to that of corresponding period last year. The govt attributes this success to efforts which focused on enhancing regional connectivity. As a matter of fact, our trade with regional countries except China, has historically remained far below its potential.

The increasing trend in regional exports during the last few months will have positive impact for country’s foreign exchange, jobs, and productivity growth which have registered a decline during the pandemic. The purpose to say is that much more needs to be done to secure a sustainable growth.

There are still various factors that are hindering our exports growth and a mere focus on regional connectivity will not ensure a sustainable growth in the long run. For long term and balanced trade, the govt needs to focus on efforts to remove obstacles in the way of increasing exports. Analysts say that the key factors that are hindering exports are high taxes and tariff rates, low availability of long-term financing for companies to enhance the base of export capacity, insufficient provision of market intelligence facilities for exporters, and last but ot the least the low productivity of  our companies and businesses.   That our export policy is inadequate can be gauged from the long term decline in exports as a share of GDP during the recent years. One way to do is to develop infrastructures and upgrading the road conditions, providing telecommunication facilities and establishing banking channels at vital points in the areas bordering the neighbor countries to facilitate the traders. A connecting land route from Afghanistan to Central Asia would provide an effective and cheap alternative to Pakistan as compared to routes via Iran or China, The reginal facility which earns Pakistan billions in export revenue through exports to reginal markets must be the focus of attention. The various benefits which this trade with regional countries offer is the low transport cost,  low tariffs,  scheme guarantee include the generous tariff.  And as such0 we must make the most of this facility and broaden the scope of our exports which is need of the hour in these testing economic times.  At the same time Pakistan must use its diplomatic channels to continue to be the beneficiary of this facility.

There is no denying that shares  of  central Asian states is on the rise in our exports  but  that can increase by manifold as there still remains a huge untapped potential in the markets of the  neighbouring economies.  It can not only ensure rise in our exports but can also help control our import bill which has also enhanced substantially in during the pandemic and in post pandemic scenario. Analysts say that an import market of over two trillion US dollar is awaiting us on our borders, of which we have been utilising just a meagre share of 0.19%.

They say that a penetrating push in the potential markets of the neighboring economies is need of the hour. For instance they say that exports to Afghanistan have been on a continuous downward slope since 2011 due to the volatile security situation in war torn Afghanistan and decreasing demand in the wake of  withdrawal  of international troops together with the recent turmoil in Afghanistan has further impeding our trade with Afghanistan. On the other hand, the sanctions on Iran for over a decade have adversely affected Pak-Iran trade, however optimism is in the air as one sees a rapprochement in US-Iran ties. In the north, CPEC is ray of hope as it will provide great opportunity to enhancing exports to Chinese market. China is our time-tested friend and our economic ties with them have improved after the signing of an FTA, a similar arrangement with Sri Lanka is also in place and it is hoped that these FTAs will be revisited to further boost trade with China and Colombo.  Furthermore, the government should also focus on attracting foreign investors to Gwadar.

Moreover, provision of basic necessities to the residents of Gwadar should be on priority list as without these facilities, regional trade cannot enhance desirably. In recent months, we saw people of Gwadar protesting on mass scale for provision of water and other basic amenities, so these should be made available to the local on priority basis for the sake of steering the prospering of the locals and making the environment conducive for regional trade.