EDITORIAL: One of the great failures of South Asian politics has clearly been the failure to exploit the region’s trade potential. Indeed, as speakers gathered at the Karachi Chamber of Commerce and Industry (KCCI) agreed the other day, enhanced legal trade with neighbours can go a long way in helping economies like Pakistan’s.
Yet since the largest regional economy, India, also boasts one of the world’s highest poverty rates, there’s every reason for everybody to want to trade more.
But it’s not just that nobody has given trade the attention it deserves, it is rather that everybody has pursued policies that look to blunt, even rule out, commercial relations – especially between Pakistan and India.
Now Pakistan, at least, has all but run out of time to keep playing this game. With the economy on the edge, it needs to tap every avenue that will help trigger production and trade, bringing precious foreign exchange into the country and strengthening the jobs market.
Speakers at the forum stressed more trade with India, Afghanistan and Iran, for which Islamabad would have to extend proper diplomatic outreach and also take practical steps like enhancing facilities at checkpoints and organising a robust barter system to promote legal trade.
The latter is true for Iran, especially, since a lot of Iranian goods, particularly petroleum products, are smuggled into Pakistan and then infect the real economy by snaking their way into the local market.
The idea of barter trade has been pressed many times – including a recent directive from the prime minister himself – but it’s never really got off the ground.
Everybody makes a point of mentioning this because proper commerce requires beefing up trade and also cracking down on smuggling; and right now we’re failing on both fronts. Sanctions are a big problem, of course, but as countries as near as India have shown over the last few years, there is a way of making your case and protecting your own commercial interests if you play your cards right.
The Iranian delegate at the KCCI conference reminded everybody, for example, of the lessons to be learned from the $200 million worth of goods his country exported to the United States despite sanctions. Needless to say, the United States, the United Nations and the European Union have imposed multiple sanctions on the Islamic republic.
A number of regional countries have also started trading in their own currencies, leaving Pakistan as the outlier that must always be on the hunt for the greenback even as the rest of the world is adapting and moving forward.
We have tried to work out a currency swap arrangement with the Chinese, though, but that too has been a non-starter because of a lack of seriousness on our side; something that made Beijing angry on more than one occasion.
At the end of the day, it boils down to political will. It seems that despite the depth of our problems, no government has given trade promotion the attention it really deserves. You could say that some leaders have made some noise about it, even made high profile foreign trips, but this is a long process that will require a thorough transformation beginning with the production matrix, then moving to adding value to products, and then carving out fresh export markets.
Countries that prioritise trade manage to find ways around obstacles and eventually expand their revenue base. There’s no better example than China and India, whose bilateral trade volume stood at $113.83 billion last year despite their border disputes and fast heating cold war. Pakistan, on the other hand, has not even set its priorities right; even this late in the day.
Little wonder, then, that its current account is so shaky and its reserves are always insufficient without significant exogenous injections.
Copyright Business Recorder, 2024