Synthesis of Global Search for New Alliances, Markets and Economies is Indispensable
Columnist Mehmood-Ul-Hassan Khan talks about establishing new relationships across the board.
For centuries human beings are trying their level best to search for
new markets and economies to live comfortable and secured life. The
Greek, Roman, Arabic and Central Asian people used to go to China,
Egypt, Hindustan, and Europe to search new avenues of earning and profitability.
Even animals and birds immigrate from drought affected areas or hot
lands to lands of peace and comfort. The examples of Vasco da Gama,
Columbus, arrival of East India Company, invasion of Dutch and French
trade companies in sub-continent and Africa unearths the essential
reality and open secret that search for new markets, possession of
territories, lands, and economies are very important for unshakable
economic might/superiority and sustainable economic development.
World has changed after the tragic event of September 11. Search for
new friends, creation of new alliances and exploration of new markets
and economies are going on and on around the globe. Every country has
changed its geo-political priorities, genuine philosophical stances,
and geo-strategic approaches to cope with the internal socio-economic
problems and external compulsions. Pakistan is also facing all kinds
of socio-economic problems and trying its level best to put the already
shattered economy on the right path. But all the national managers of
economy, master minds of planning and financial experts will have to
pull out the economy from troubled waters in the latest available national
resources and emerging bitter realities around the globe. It is correct
that the ratios of global foreign direct investment and foreign portfolio
investment have decreased in the year 2001-2002 due to many reasons.
The flows of foreign direct investment [FDI] into 86 major economies
fell 52.7% to $694.8 billion in 2001. It was the biggest fall since 1970;
global trade also fell in 2001 for the first time since 1998, chilled
by a slump in the information technology sector and fallout from the
September 11 attacks.
IMF has cut its growth forecasts for most major economies of the world
including USA, Germany, European Union, Japan, Asia and Middle East countries.
Economic imbalances are also a risk to the global recovery, such as the
high current account deficit in the United States, recession in Germany,
increasing ratios of bad debts in Japan, constant Middle-East tension
and its impact on oil prices and the risk of attacks similar to those
on the United States on September 11 and the last but not the least perpetual
enmity between Pakistan and India are decreasing the brighter chances
of regional and global economies. Furthermore, Pakistan has also been
in great trouble because recently Nigeria has suspended imports from
Pakistan for more than 5 months, and Canada has not granted the special
country status to Pakistan exports (textile goods), which is decreasing
the ratios of profitability. Dominance of Chinese textile goods in the
international markets is also supposed to be main hurdle for the promotion
of textile industry of Pakistan in international markets.
The recent visit of Prime Minister of Pakistan to China is treated as
crucial trip to enhance the already bilateral ties with China and produce
some “STRATEGIC CUSHION”. The visit of President Pervez Musharraf
to Russia had also stressed the importance of “REGIONAL BALANCE” and
need of another effective block to counter the short and long-term designs
of imperialism. Russia had also stressed the importance of peace and
security in South Asia, which were vital to economic development, and
prosperity in the region. Furthermore, it would also contribute significantly
to the promotion of international peace and stability given South Asia’s
strategic locations astride regions with vast natural resources and economic
potential. Globalization, emerging of financial markets and economies,
increasing regional inequality, growth patterns and scarcity of resources
has forced many countries to go for new potential alliances, markets
and economies where it can generate more foreign exchange and revenues.
The increasing globalization has made markets/economies more interdependent
and interrelated than ever before and every country is trying its level
best to go in safe hands.
The increased international integration of economic activity, the emergence
of international capital markets as a consequence of trade and international
financial deregulation as well as the growth of powerful information
technologies has created a new set of influences on the world’s
economic geography. Flows of investment to developing countries to take
account both of low labour costs for industry and emerging markets have
stimulated economic growth, increased employment and create a major new
era of prosperity. Sony Japan shifted its TV factory from Japan to Malaysia
because of easy availability of cheap labour. Pakistan has offered to
Azerbaijan to utilize Karachi as a trading post for the promotion of
trade with the Far East and other countries. Turkey has also offered
Pakistan to use Istanbul as a warehouse for its exports to rest of Europe.
Due to increasing globalization of financial markets and economies, expected
multidimensional compulsions of GATT/WTO and scarcity of resources, there
is great need for us to make every possible effort to search new alliances,
potential markets and economies in the region and around the globe for
bilateral trade, joint ventures and investments. Knowledge of international
marketing, applied economics, international banking, diplomacy/foreign
policy, and above all clear political will is vital for the search of
new markets and economies. Government of Pakistan is making every possible
effort to achieve what is and was missing under the successive regimes
in the country. The main commitment of the recent government is to put
the shattered economy on the right track and make sensible national decisions
which may pay dividends in the future and there is no doubt the government
is quite successful.
Many purposeful accords have been finalized in the recent visit of PM
of Pakistan to China. The bilateral economic and trade ties between the
People’s Republic of China and Pakistan during the last two years
has increased to $ 1.4 billion. Government of Pakistan is seeking the
help of Chinese Government to develop the declining sector of communication,
especially in railways to upgrade railways, as it is the cheapest, reliable,
promising, and cost-effective and environment-friendly medium essential
for economic revival. Recently, China has purchased goods worth $80 from
Pakistan. Pakistan has learnt far-reaching financial and administrative
reforms from China to boost the economy and as a result of these integrated
and diversified reforms, foreign exchange reserves have crossed $7 billion,
credit rating has improved, stock exchanges are afloat, confidence of
international donors has been high and Pakistan enjoyed confidence in
the rank of nations. There are many purposeful and giant projects of
national importance such as Saindak Copper Mining Project, Thar Coal,
construction of dams and setting up of an electronic industry in private
sector in Lahore, and the last not the least the project of Gwadar Port
are being carried on.
The recent visits of the President of Pakistan Gen. Pervez Musharraf’s
to Sri Lanka, Bangladesh and close economic ties with Turkey, Thailand
is accommodating the efforts of government to boost bilateral economic
ties and establish model of regionalism against the onslaught of globalization.
It is assumed that the liberalized trade agreements between the three
South Asian countries, Pakistan, Bangladesh and
Sri Lanka, provide big opportunities for regional trade with a potential
to benefit all the parties involved and strengthen the SAARC process.
Although organization of SAARC is very much there to promote regional
trade and sentiments of trust, peace and harmony but still the legitimate
volumes of bilateral trade is very low as compared to other regional
organizations like, North American Free Trade Agreement [NAFTA], the
South Asian Association for Regional Cooperation [ASEAN], European Free
Trade Agreement [EFTA], Pacific Economic Cooperation [OPEC], South Asian
Free Trade Agreement, and Common Market of the South [Mercosur].
The main reason for the low volume of mutual trade is due to perpetual
enmity between India and Pakistan. Federal Commerce Minister has ruled
out any possibility of change in the existing trade pattern between Pakistan
and India. There will be no change in the matter of Pak-India trade in
the near future, and it will continue as per practice. Although USA and
UK are trying to resolve the existing bitterness between Pakistan and
India in recent times through different diplomatic and back door activities
but still the final destination of pure, simple and durable peace is
far away in the region. The latest arms race between the two countries
is not good for the whole region and common people alike.
A number of many important agreements were reached aimed at boosting
free trade between the two countries during President Pervez Musharraf’s
visit to the Sri Lanka and Bangladesh by giving reciprocal concession
and duty-free access. Due to fatal movements of separatist in Sri Lanka,
perpetual civil disobedience, deteriorating law and order and bitter
geo-political ties among the three countries has limited the scope of
free trade in the region for many years. Now any major initiative on
the part of the regional governments to open up bilateral trade will
change the regional trends and will increase the volumes of trade and
commerce. Memorandums of Understandings [MoUs] between Pakistan and Sri
Lanka had been signed at Colombo, 3 years ago.
There is great scope for mutual trade between Pakistan and Sri Lanka
and Pakistan and Bangladesh. Sri Lanka can export its tea, garments,
textiles, engineering and electronic goods. On the contrary Pakistan
can export its engineering goods, such as electric fans, pumps, generators,
electric meters, steel pipes and fittings etc. vehicles and agricultural
products, particularly fruit. The two countries have also signed an agreement
to end all trade barriers between them by 2005. At present, bilateral
trade amounts to a US$130 million. The balance is heavily tilted in Pakistan’s
favour because of its being an important supplier of military hardware
to Sri Lanka. The signing of the recent agreements is likely to increase
the volume of trade significantly to the benefit of both countries, particularly
Sri Lanka, whose economy has suffered a great deal because of the prolonged
and bloody civil war. Besides trade, the two countries have also pledged
to increase cooperation in a number of other fields, including science,
technology, tourism, culture and archaeology.
The current volumes of trade between Pakistan and Sri Lanka and Pakistan
and Bangladesh are very low as compared to other regional blocks. Pakistan’s
volume of bilateral trade has swung between $120-$130 million out of
$10 billion trade of Sri Lanka. In the case of Pakistan-Bangladesh trade,
of the total volume of $13 billion, Pakistan’s share has varied
between $120-$150 million.
BALANCE OF TRADE (US$ Million)
Year Pak Export to BD Imports
from BD Balance
1996-97 97.50 38.40
49.10
1997-98 98.80 38.30
60.30
1998-99 119.56 32.24
87.32
1999-00 120.45 29.49
90.96
2000-01 133.84 33.27
100.57
The Economist of Pakistan (2002)
Pakistan is exporting cotton American, rice, polyvinyl chloride, textile
yarn and fabrics, vegetable and fruits, pharmaceutical products, articles
of apparel, petroleum products, and cloth accessories. While Pakistan
imports raw jute, tea, sacks and bags of jute, betel leaves etc from
Bangladesh. There is great scope for growth of bilateral trade between
the two countries. Pakistan cannot only export, raw cotton, rice but
cement, food products, engineering goods, textile yarn and machinery.
Importing fresh and cheap fish, vegetables like ginger, fruits; bamboo,
paper, pulp and betel nuts besides jute and tea can also benefit Pakistan.
Both the countries can save handsome foreign reserves by increasing ratios
of mutual trade. There is a vast scope for joint ventures between the
two countries especially in the field of cement, energy, textile, leather,
chemicals, fertilizer and engineering goods. The textile sector of Bangladesh
is fully equipped with the latest facilities of printing, dyeing and
stitching. Pakistan’s textile sector should strike at the opportunity
for more value addition. Bangladesh has abundant orders regarding export
of readymade garments to Europe and other world markets. Pakistani business
may enhance the export of readymade and value added goods of textile.
Comparison of Advantages/Disadvantages (Sector& Industry) among Pakistan, Sri Lanka and Bangladesh and other factors responsible for Mutual Trade
Sr. No Name of the Country Sector/Industry Advantage/Disadvantage HRD
End Result
Literacy
That has been a major cause
1 Pakistan Textile Pakistan has some 36% for substantial presence of
disadvantage: Easy availability the two countries in the US of educated and
cheap labour in textile made-up market Bangladesh and Sri Lanka
2 Bangladesh Garment do 56%
3 Sri Lanka Garment do 90%
Pakistan Important Factors: High cost of Pakistan is losing some production, low quality of finished $500 million per annum products and expensive labour due to illegal trade rates, WTO ties with India
Pakistan Solution: joint ventures between Benefits for all Pakistani and the South Asian entrepreneurs
4 Pakistan Engineering Pakistan has edge over Sri Lanka Pakistan can fetch millions and Bangladesh markets of dollars in the engineering sector
5 Pakistan Light Engineering Pakistan can capture the markets Low price, The defence production of Sri Lanka and Bangladesh better quality equipment is the first step in this direction.
6 Pakistan Auto do Low price, In the auto sector, recently better quality licensed production with the Chinese brand names can find markets in Sri Lanka and Bangladesh
7 Pakistan Horticulture Pakistan has an edge over other Low price, Boost to the exports countries in the region better quality of fresh fruits and vegetables
8 Pakistan Tea Sri Lanka and Bangladesh Low price, $13 million worth tea has edge over Pakistan. better quality comes from Sri Lanka, Pakistan is the world’s third the rest comes from Kenya. largest importer of tea. Liberalization of trade It spent $200 million. has the potential to change It has reduced duty from the composition of 30 per cent to 25 per cent. Pakistan’s tea imports in a big way. Possibility of joint venture between Pakistan and Sri Lanka
9 Sri Lanka & Fish/Fish Edge over Pakistan Easy Low tariffs can create Bangladesh preparation availability some setbacks for the local stake holders
The impact on the trading patterns in the major items of trade between
Pakistan and Sri Lanka and Bangladesh and Pakistan would be gradual
and may not produce quick results as being propagated. However, this
opening up will now strengthen the South Asian trade arrangement. What
can be witnessed in the coming years would be a real competitive environment
in the South Asian region. India’s auto sector and engineering
goods are cheaper, but it will have to work hard to counter Pakistan’s
entry into Sri Lanka and Bangladesh because of high-quality of its
products. Similarly, the Pakistani garment sector will have to be more
efficient than those of Bangladesh and Sri Lanka to sustain itself
even in home market. Trade agreements signed by three SAARC countries
have the potential to set into motion the transformation of the region
into a competitive economy. The resolution of regional conflicts may
lead to more vibrancy in trade relations.
Pakistan should also explore the potential markets and economy of Turkey
because according to my assessment ultimately Turkey will be inducted/included
into Euro-zone in the near future. Turkey has taken many meaningful integrated
steps to fulfil the pre-qualification criteria to join the giant Euro-Zone
i.e. abolishment of death penalty, more basic rights to Kurds, and many
diversified economic policies. Pakistan and Turkey should dispense with
over-dependence on textile and diversify products in order to boost bilateral
trade. The leather products, surgical goods, sports goods, fresh and
dry fruits, furniture, fans, air conditioners, marble, handicraft, pharmaceuticals
and cement has potential markets in both the countries. Government of
Pakistan may seek the help of Turkish investors in the fields of Oil
and Gas sector, small and medium enterprises, agro-based industries and
information technology. Pakistan should avail the opportunity/incentive
offered by Turkish government to establishment at Istanbul of a permanent
display centre of Pakistani products. Moreover, Pakistan could boost
its export of textiles to Europe by warehousing its textile products
in the Turkish free trade zones. The setting up of a joint marketing
company by the private sector is also commendable step. There were 23
Pakistani firms operating in Turkey with a capital of 3.2 billion Turkish
liras as of the end of 2001.
Government of Pakistan has also explored the Thai markets to increase
imports of cotton yarn, raw cotton, carpets, fruits, surgical instruments,
textile products, textiles, raw material, consumer goods, fabrics, clothes,
precious stones, hand-knotted carpets, furniture, handicrafts, cotton
made-ups and sports goods, machinery and engineering merchandise from
the State Engineering Corporation and Heavy Mechanical Complex [HMC].
The volumes of mutual trade in 2001 amounted to $233.7. It is estimated
that there is great and profitable scope to launch projects in joint
capacity. Joint ventures between the two countries in private sectors
i.e. construction of infrastructure, machinery maintenance and trade
in consumer goods and other merchandises with Pakistan’s neighbouring
countries and countries in South and Central Asian regions is also a
promising possibility. The agro-based industries i.e. livestock, shrimp
hatchery and corporate farming, food and fruits processing industry,
fisheries industry, textiles, automobile spare parts, air-conditioning,
chemical industries, aviation related services, and real estate development
and construction can easily be started and both sides may enjoy the fruits
of increasing volumes of trade. Pakistan may be ideal and secured country
of origin for SMEs and as well as a transit place for Thai merchandises
for markets in Afghanistan, Middle Eastern and Central Asian countries.
The closed cooperation in the fields of education, science and technology,
information technology, agriculture and livestock, the establishment
of cold-chain and foodgrain storage facilities, corporate farming and
food, vegetable and fruit processing industries, export of skilled labour
and manpower, tourism, cultural and youth exchanges, population welfare
and water and power may bring economic prosperity and sustainable economic
development in both the countries.
Pakistan’s trade performance has not been sufficient in recent
years. While world trade was increasing rapidly in the second half of
the 1990s, Pakistan’s exports stagnated at around $8 billion a
year. In 1996-97 Pakistan achieved the highest level of exports in its
history i.e. $8.4 billion. In 1997-98, the value of exports declined
by 11 per cent, to only $7.5 billion. The following year, there was some
recovery but export earnings did not reach the level achieved in 1996-97.
It is estimated that export earnings in the just completed financial
year may be below $9 billion.
Conclusion
Pakistan should take many consequential steps in order to achieve all
its desired socio-economic goals in the days to come because tough
time is ahead. The process of new friendship and enmity is on the region
and
around the globe. The boundaries of old philosophies, political doctrine,
and concrete efforts for the spread of imperialism, are taking place
in the world. The counter strategic alliances, search of new markets
and economies are also under consideration for many countries in the
world to secure their lion share in the international socio-economic
power game.
There should be complete turnover from religious intolerance to tolerant
society, corruption inflicted government machinery to efficient and
active official mechanism in the country. There should be thorough
revision
in the realms of our hard foreign policy, geo-political and geo-strategic
stances and common impression of non-cooperation, war against terrorism.
Our national image as rigid nation needs to be changed in the West.
There ought to be comprehensive U-turn in our diplomatic efforts and
unuseful
alliances. Traditions of social and international adaptability and
timely response may also enable Pakistan in the search of new alliances,
markets
and economies within the region and around the globe.
Pakistan should develop a strategic and clear-cut approach aimed at
concluding bilateral trades with the countries, which are important
markets for
its products in the present age and days to come. It should have concrete
arrangements with the countries that will become serious competitors
with it once the trade in textiles opens up further in 2005. The bilateral
economic and trade ties among the nations already mentioned above i.e.
Sri Lanka, Bangladesh, China, Turkey, and Thailand offer an attractive
approach which should be followed and expanded. Pakistan has been playing
the major role against the war of terrorism and closed ally of US.
Rigorous diplomatic and foreign policy options and operations should
be explored
to make realize the West and especially US and UK that we are much
more important than, Morocco, South Africa, and Australia. We are also
paying
huge price in the war against terrorism and losing the brighter future
of economic prosperity and sustainable development due to troubles
created in the region.
Pakistan should press Washington for a bilateral deal to get better
access for the goods and commodities of interest to it. Pakistan should
also
encourage the multinational companies to invest in the country. Pakistan
should also finalize deal with the Chinese on textiles and leather
products due to increasing dominance of Chinese textile and leather
related commodities
in the international markets. Once the full impact of the WTO membership
takes effect in China, Pakistan will find it harder to gain an increase
in market share in these two lines of products vital for its economic
health. It is extremely important to come up with a trade strategy
in line with the way the world seems to be moving and get rid of our
national
differences and share the qualities of humanity, peace, decency, harmony
and economic prosperity to end the increasing global apartheid.
About The Author
The Writer is currently Research Scholar in National Bank of Pakistan.
He has an MPA from the University of Punjab. Did various courses relating
to banking. Contributed articles in various newspapers and journals on
various issues as a freelance writer.
