The country's exports to Azerbaijan have declined by over 70 percent in January 2010 as compared to the corresponding month last year. A monthly report of Pakistan's commercial secretary in Azerbaijan sent to the competent authority here last month shows that the exports to Baku has dipped from $1.13 million to $0.3 million in January this year.
While the country's imports from Azerbaijan swelled to $15500 in January 2010 as compared to $9300 of the corresponding month last year, it said. Pakistan is one of the first countries to recognise Azerbaijan after its independence in 1991 following the collapse of the USSR.
The country had diplomatic relations with Azerbaijan since June 9, 1992, was lacking behind in trade with the foreign country as compared to other countries like Italy, Russia, Turkey, Iran, Germany, India and China which have a high rate of export with Baku.
The reasons for decline of Pakistani export to the foreign country, according to the report, were the competitor's strategy to promote specific products, changes in trade policy, sharp decline or erratic increase in products of interests to Pakistan, acquiring shelf space etc.
It said that most competitors have edge over Pakistan in terms of price and quality. Besides, it said the Commonwealth of Independent States (CIS), Iran and Turkey were also exploiting their racial, cultural and linguistic commonalties.
The trade among the CIS countries including Russia, Georgia, Belarus, Kazakhstan, Uzbekistan, Turkmenistan, Kyrgyzstan and Moldova were free of custom duties and only 18 percent Value Added Tax (VAT) was charged whereas for rest of the countries a maximum of 15 percent of customs duties plus 18 percent of VAT along with some other custom handling charges were levied which sum up to around of 36 percent, the report added.
Moreover, it said many foreign companies, especially from CIS, Turkey and Iran have established their offices and outlets to grab any business opportunity immediately and keep a permanent liaison with the local importers. "This becomes more important in peculiar business environment of Azerbaijan where documented trade through banking channel is very little and every economic activity is controlled by strong monopolies," it said.
To grow in the market of Azerbaijan, the country surrounded by the Caspian Sea, the country's exporters as the report suggested, should open outlets and promote their own brands. Pakistani rice was the first item to be exported most of Azerbaijan, while the rest of exportable items which the foreign country has demands were wheat products, industrial/engine oil, medicines, pouches and bags made from paper and boards, whitened cotton fabrics knitted head cloths soya oil extracts etc.
The report further said that the commercial attaché has delivered information about local importers of musical, surgical and dental instruments, textile, sports and leather goods were sent to Pakistani exporters in reply to their inquiries. It is to mention here that the two countries had previously signed a series of agreements covering tourism, trade, customs, and combating narcotics trafficking and international terrorism with boosting co-operation in IT, food, agriculture, and trade.
They had also agreed to cooperate in the gas transmission and distribution sectors in all fields, including cross-border gas pipelines, by sharing expertise and transfer of technology. Due to their geo-strategic location, Azerbaijan and Pakistan can also play a vital role as hubs for the flow of energy resources from landlocked Central Asian States to Europe and Asia respectively.