Experts believe the European Commission’s decision to remove Pakistan from its list of ‘high-risk third countries’ may have no immediate impact on the country’s economy, but could benefit it in the long run.
The development was shared by Federal Minister for Commerce Syed Naveed Qamar in a tweet on Tuesday night.
“EU has removed Pakistan from the list of high-risk third countries. Pakistani businesses and individuals would no longer be subjected to ‘enhanced customer due diligence’ by European legal and economic operators,” the minister said.
Federal Minister for Climate Change Sherry Rehman said this was good news for Pakistan. “Trade will now face less obstacles for Pakistani exporters,” she tweeted. Meanwhile Foreign Minister Bilawal Bhutto Zardari said “Pakistani businesses & individuals would no longer be subjected to Enhanced Customer Due Diligence by European legal & economic operators.”
Prime Minister Shehbaz Sharif tweeted “de-listing of Pakistan from EU’s updated list of high-risk third-countries is a major development which will facilitate our businesses, individuals and entities”.
“It is a reflection of our unwavering resolve to further strengthen anti-money laundering & anti-terror financing regime.”
Experts weigh in
Despite terming this as a positive development, market experts say it will have no immediate impact.
“The decision bodes well for Pakistani exporters, and those seeking job opportunities in the EU,” Tahir Abbas, Head of Research at Arif Habib Limited (AHL), told Business Recorder.
He believes the move will benefit Pakistan in the-long term, but perhaps not in the short run, given that “the global economic scenario is not viable at the moment.”
Similar views were expressed by Fahad Rauf, Head of Research at Ismail Iqbal Securities. “Immediate impact is not in sight,” he said.
Rauf said that the EU is a major destination for Pakistan’s textiles. The recent plunge in Pakistan’s exports is due to a combination of both international economic slowdown and domestic factors such as import restrictions and political volatility, he said.
“However, as soon as the downturn settles, we will witness a rise in demand. This would allow Pakistan to access more businesses, which would help expand its export base,” said Rauf.
Background
Pakistan was initially placed on the list of high-risk third countries in October 2018 due to perceived strategic deficiencies in its anti-money laundering/counter-terrorism financing (AML/CFT) regime.
According to the EU’s Delegated Regulation latest report, the decision to remove Pakistan from its list of high-risk third countries comes after the Financial Action Task Force (FATF), a global money-laundering and terrorism-financing watchdog, finally removed Pakistan from its grey list last year in October.
The Commission said that the assessment of the information available leads it to conclude that Pakistan alongside Nicaragua and Zimbabwe no longer have strategic deficiencies in their AML/CFT regimes.
“Nicaragua, Pakistan and Zimbabwe have strengthened the effectiveness of their AML/CFT regimes and addressed related technical deficiencies to meet the commitments in their action plans regarding the strategic deficiencies that the FATF had identified,” it said.