Barter trade instrument: MoC says it has gotten ‘blanket’ approval from cabinet

ISLAMABAD: Commerce Ministry said on Wednesday that it has obtained “blanket” approval from the Federal Cabinet for barter trade instrument, which can be expanded after due process of consultation.

Briefing Senate Standing Committee on Commerce, presided over by Senator Zeeshan Khanzada, Secretary Commerce, Sualeh Ahmed Faroqui, who was grilled by the Committee due to continuous absence of Commerce Minister from meetings, stated that barter trade has started at a limited level which will improve with the passage of time.

“We have obtained enabling approval from the Cabinet for inclusion of any new country or new commodity,” said Secretary Commerce.

Russia, Iran: B2B barter trade comes into effect

He informed the Committee that trade with Afghanistan, Iran and Russia is affected due to various sanctions, mainly related to banking/ financial transactions.

“Banks are reluctant to issue financial instruments for trade,” Secretary Commerce said, adding that objective of barter trade is to promote trade by marginalising the role of financial institutions. Another purpose of barter trade is to encourage shifting of informal trade to formal trade channels.

Commerce Ministry has directed Trade Development Authority of Pakistan (TDAP) to discuss barter trade with entrepreneurs.

“Informally there was a system of barter trade with bordering countries but now Pakistan has signed an agreement to formally launch it,” Faruqui said adding that talks have started between Afghanistan and Pakistan Customs officials.

He further informed the Committee that local industry has provided a list of items to include in the barter trade mechanism.

According to approved mechanism, a business entity/ trade in Pakistan has to enter into contract with a counterpart in a foreign country; and the contract needs to be verified by Pakistan Mission in the country with which barter trade is allowed.

Senator Danesh Kumar, who hails from Balochistan, argued that since most of the people from his province do informal business with bordering countries (which the government terms smuggling) now with barter trade mechanism in place local industry will start direct dealing with their Iranian and Afghan counterparts.

He urged the government not to exclude the role of third man (i.e., from Balochistan) so that their earnings do not suffer.

Secretary Commerce proposed that the concerned stakeholders of Balochistan should register their companies to play their due role. He also suggested Senator Danesh Kumar visit Commerce Ministry along with a delegation so that a mechanism can be formulated in this regard.

Senator Kumar further suggested barter trade with China as it will improve Pakistan’s exports to China.

Deputy Chairman Senate, Mirza Afridi stated that he was informed that the negotiation process for holding a three-day mango festival in China has been completed adding that a letter has been written to the Ministry of Commerce and Finance stipulating that the establishment of cold storage at the border is necessary to increase mango exports.

He apprised the Committee that last year the 54% of Pakistani mangoes that could not be exported were spoiled. Mangoes should be exported by land route instead of air route and mango diplomacy will be advanced by organizing the Mango Festival in Urumqi, he contended.

The Chairman Senate has formed a committee on this matter which consists of Senators, and Deputy Chairman Senate.

Copyright Business Recorder, 2023