LAHORE: The Iranian Consul General Mehran Movahhedfar has said that Pakistan-Iran Business-to-Business (B2B) Barter Trade Mechanism 2023 has now resolved the issue of lack of proper banking channel, which was earlier hindering smooth trade between the two countries, stressing the private sector to play its due role in tapping the huge potential to enhance bilateral trade and economic ties between Iran and Pakistan in diverse fields, including the auto sector.
He was addressing the members of the Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) at a meeting held here today. Besides PAAPAM senior vice chairman Usman Malik, Pakistan-Iran Business Council Chairman Najmul Hassan Jawa, management committee members, and a number of former office-bearers also attended the meeting. In the meeting, both sides decided to exchange expertise to scale up the country’s engineering standard.
The Iranian Consul General Mehran Movahhedfar observed that the barter system would help the two countries meet their product requirements in the absence of a proper currency exchange apparatus, as Pakistan and Iran, isolated from much of the rest of the world due to Western sanctions, face a similar problem of limited foreign exchange reserves.
The Iranian Consul General stated that the auto parts industry of Pakistan and Iran should enter into formal bilateral collaboration to bridge the gap by transferring technologies, skill sets, and capacity building to meet the demands of industry in both countries.
He appreciated Islamabad, as well as two other countries to take serious initiatives to remove hurdles to bilateral trade. In order to meet the objective of the barter trade mechanism, all parties must finalize an international mechanism to remove difficulties in barter trade.
He said that barter trade was, in fact, the right decision, which could boost Pakistan’s foreign exchange reserves through an escalation in exports.
Moreover, he invited the PAAPAM members to attend the International Auto Exhibition being held in Tehran on August 13-16, 2023, to consult the Iranian market, besides exploring the potential of transit trade to Central Asia and Russia.
He offered all necessary support to the local businessmen to establish joint ventures, set up businesses, and access free zones in Iran.
Addressing the meeting, Pakistan Association of Automotive Parts and Accessories Manufacturers Senior Vice Chairman Usman Malik stated that PAAPAM members employ over 3 million workers, as the Association is a representative body of 350 tier-I and 1,200 tier-Il auto parts manufacturers spread all over the country.
Our members are manufacturers and suppliers of thousands of locally produced auto parts and components worth over Rs150 billion per year to all foreign assemblers of passenger cars, light commercial vehicles, motorcycles, tractors, trucks, and buses. PAAPAM SVC added that their members were
producing components
per global quality standards, tested and approved in line with Japanese, Korean, and Chinese specifications.
Usman Malik emphasized that auto manufacturers had been saving foreign exchange of $1.5 billion per annum through import substitution, besides contributing over 5% of the country’s tax revenues.
He said that the Pakistan’s automobile industry’s contribution to GDP is fairly substantial, and a very encouraging sign is that Pakistan’s parts have increased their share in the export market as well.
Many new players have entered the 220 million population market, but limiting the cost of inputs is still a challenge for this auto parts industry.
He stressed that import substitution and savings of foreign currency equivalent of billions of rupees have been achieved by our parts’ producers through localization of imported items.
In addressing the meeting, Pakistan-Iran Business Council Chairman Najmul Hassan Jawa said that Pakistan had signed a barter trade agreement with Iran, and this MoU would work a long way in strengthening the business ambitions between the two countries.
Today we have less than $1.5 billion of bilateral trade; he observed that we should have at least $5 billion in trade between the two countries. He stated that the barter opportunity is important, as Pakistan could gain from the barter trade, particularly from oil and energy imports from Iran, without adding to dollar demand.
Najmul Hassan Jawa said it was the need of the hour to give access to each other to create a synergistic impact on the economy. This was one of the ways to curb the outflow of foreign exchange. There are a number of areas that can be identified as possible joint ventures between these two countries’ auto sectors.
Copyright Business Recorder, 2023
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