Re­quired: a multi-di­men­sional strat­egy

Enterprise - - Editor's Desk -

South Asia is home to 22 per­cent of the world’s pop­u­la­tion and is con­sid­ered an im­por­tant player in in­ter­na­tional geo-pol­i­tics due to its strate­gic lo­ca­tion, sheer num­ber of in­hab­i­tants, po­ten­tial as a big con­sumer mar­ket and the va­ri­ety and abun­dance of its nat­u­ral re­sources. But the re­gion’s share in world GDP and global trade is just about 2 per­cent. In this back­drop, while Pak­istan has re­cently made ef­forts to demon­strate greater flex­i­bil­ity by grant­ing MFN sta­tus to In­dia in or­der to nor­mal­ize trade ties and re­move bu­reau­cratic hur­dles, the fact re­mains that In­dian im­port tar­iffs are high and there are ob­sta­cles in ex­pan­sion of In­dia-pak­istan trade though it is said to of­fer an an­nual po­ten­tial of $40 bil­lion ac­cord­ing to some an­a­lysts. Stud­ies show that in the medium term, Pak-in­dia trade can eas­ily be mul­ti­plied by 20 times. Con­sid­er­ing that In­dia will be the en­gine of growth in South Asia in the next decade, it is im­por­tant for Pak­istan to ben­e­fit from this op­por­tu­nity.

Pak­istan also needs to ex­pand its trade hori­zons in other di­rec­tions. It lies at the heart of tremen­dous trade prospects be­tween Cen­tral and South Asia and this could play a key role in the de­vel­op­ment of re­gional eco­nomic in­te­gra­tion. How­ever, the abil­ity of the Pak­istani eco­nomic regime to de­rive ben­e­fits from re­gional trad­ing ar­range­ments de­pends upon its ex­port-ori­ented strate­gies, the way its do­mes­tic in­dus­try is pro­gress­ing, the qual­ity of prod­ucts it is pro­duc­ing and the com­pet­i­tive­ness that it of­fers in terms of prices. While Pak­istan achieved im­pres­sive eco­nomic growth for the most part of the last decade, in re­cent years the coun­try’s ini­tia­tives in terms of tak­ing ad­van­tage of pref­er­en­tial trad­ing ar­range­ments have not been very en­cour­ag­ing though the Trade De­vel­op­ment Au­thor­ity of Pak­istan has been in­stru­men­tal in cre­at­ing op­por­tu­ni­ties for trade ex­pan­sion.

There has also been a de­sire in re­cent times to in­crease the amount of trade and in­vest­ment in the re­gion through the cre­ation of a new “Silk Road,” by cre­at­ing an eco­nomic re­gion in­te­grat­ing Cen­tral Asia, Afghanistan, Pak­istan, In­dia and Bangladesh. The Pak-china Free Trade Agree­ment is one ex­am­ple. Since it be­came op­er­a­tional in 2007, bi­lat­eral trade be­tween the two coun­tries has been in­creas­ing. Bi­lat­eral trade be­tween Pak­istan and China dur­ing 2006-07 was US $4,110 mil­lion and the bal­ance of trade of US $2,958 mil­lion was in favour of China. Cur­rent vol­ume of bi­lat­eral trade be­tween the two coun­tries is still in favour of China. This is be­cause Pak-china trade has re­mained uni-di­rec­tional all through and there is much that needs to be done from Pak­istan’s side to im­prove the bal­ance.

An­other ex­am­ple of the sit­u­a­tion with ref­er­ence to Pak­istan is that some of the big­gest com­pa­nies in the United Arab Emi­rates have in­vested in the coun­try and are con­stantly on the look­out for more op­por­tu­ni­ties. Cur­rently, the UAE is Pak­istan’s sec­ond largest trad­ing part­ner. Many large pri­vate com­pa­nies from the UAE are work­ing in Pak­istan in var­i­ous fields and con­tribut­ing to vi­tal sec­tors of the econ­omy such as telecom­mu­ni­ca­tion, bank­ing, real es­tate, air­lines and in­sur­ance and are look­ing for joint ven­tures in oil ex­plo­ration, en­ergy, alu­minium prod­ucts, agri­cul­ture, fi­nan­cial sec­tor and hous­ing. Given the ab­sence of in­no­va­tive and imag­i­na­tive so­lu­tions to its cur­rent trade sit­u­a­tion, Pak­istan needs to come up with a more work­able and well-thought route map to con­sol­i­date its po­si­tion in a multi-di­men­sional re­gion and take ad­van­tage of its strate­gic lo­ca­tion.

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