Chief Executive Officer (CEO) Industrial and Commercial Bank of China (ICBC) Pakistan, Airdy Friday informed that RMB is now approaching its final frontiers, full convertibility and transformation into a normal currency used by companies and individuals in some countries, especially Southeast Asia.
Addressing business community during his visit to the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), Airdy said RMB usage in trades and investment with China has opened the door to many new opportunities.
He said the State Bank of Pakistan (SBP) has taken comprehensive policy-related measures to ensure that imports, exports and financing transactions can be denominated in RMB. All public and private sector enterprises (both of Pakistan and China) are free to choose RMB for bilateral trade and investment activities.
Citing facts and figures, he said that market making volume by ICBC Pakistan in first 11 months amounted to 11 billion, 2.5 times of the volume of last year, a clear indication that more and more businessmen are inclining towards using RMB when trading with Chinese partners.
However, compared with the total trade settlement between China and Pakistan, it is quite minimal, indicating an enormous space and chances for all businessmen and banking industry.
Chinese Commercial Counselor Guo Chunshui in his multimedia presentation emphasized creating awareness on RMB usage in business community. Referring to the first China-Pakistan FTA, Guo said the bilateral trade volume between China and Pakistan rose from $5.25 billion in 2006 to $19.08 billion in 2018.
He hoped that in coming years, the Chinese Consulate General in Karachi will focus more on promoting the RMB usage in Pakistan and to boost bilateral cooperation.
FPCCI President Engr Daroo Khan Achakzai hailed Pak-China bilateral trade in RMB to reduce pressure on foreign exchange reserves.
"China is a trillion dollar economy, trillion dollar exports and imports, surplus in current account, high and growing per capita income with low level of inflation, unemployment and certainly lower interest rate," he added.
The FPCCI chief underscored the need for using RMB as trading currency between the two countries. He said that currency swap would be mutually beneficial and go a long way in strengthening economic ties between the two countries.
He said average trade volume between Pakistan and China is about $ 20 billion annually in which imports from China is $ 18 billion while exports from Pakistan to China is merely $ 2 billion. There is a huge export surplus of $ 16 billion in favor of China. "That is why, Pakistan and China signed bilateral currency swap arrangement to reduce the pressure on the foreign exchange reserves and give a quantum jump to the bilateral trade between the two countries," he said.
The FPCCI President also appreciated the services rendered by ICBC in the backdrop of capital intensive mega investment projects of CPEC and China Pakistan Free trade Agreement (CPFTA) in implementing and facilitating bilateral trade in RMB.
Dr Mirza Ikhtiar Baig, Senior Vice President, FPCCI said that in order to reduce dependency on the greenback over time, Pakistan has decided to use Chinese yuan for bilateral trade. It means that after the adoption of yuan, Pakistan and China would be able to replace the US dollar for trade transactions. He informed that the rupee-yuan swap amount has doubled, ie, from 10 billion yuan to 20 billion yuan which will reduce the dependence of Pakistan on US dollar at a time when forex reserves and the rupee are under pressure.
He said the government of Pakistan has signed currency swap agreements with China, Turkey, Russia and Iran.
Copyright Business Recorder, 2019
Comments
Comments are closed.