20000324

High Commission

sees ample room

for enhancing

trade ties

with Bangladesh

NAYYAR ZUBERI

KARACHI: Pakistani exporters are facing difficulties in entering the Bangladeshi market because of their lack of purchasing power, and easy availability of inexpensive Indian goods.

An economic report on Bangladesh for the year 1999, prepared by the Commercial Section of the High Commission for Pakistan in Dhaka says that Pakistan's major exports such as Basmati rice, carpets, rugs, leather, ready-made garments, fish and handicraft are not in demand in Bangladesh.

Out of major imports items of Bangladesh (cement, raw cotton, cotton fabrics, wheat, non-urea based fertilizer petroleum, edible oil and transport equipment) only raw cotton, yarn and cotton fabrics have a market for export from Pakistan.

The report says that government agencies and State Corporations handle 65 percent of total imports of Bangladesh, which generally imports through international tenders. Pakistani public and private sector exporters, the report says are reluctant to participate in such tenders because of protracted procedures and the requirement of submission of performance guarantees and bid bonds.

Ignoring existing trade and business potential of Bangladesh, well established companies and export houses in Pakistan do not consider Bangladesh a lucrative market, and only small exporters and new companies have shown some interest. But these only export low quality products. Such exports are fraught with trade disputes with the result that those exporters either turn away from Bangladesh or are unable to capture the market, the report says.

Suggesting measures to enhance bilateral trade, the High Commission's report calls for preferential, and free trade agreements between Pakistan and Bangladesh.

The report also suggests long-term soft credits to Pakistani exporters, as are being offered to Indian exporters; and call for private and public sectors trading houses in each other's countries.

Frequent visits of trade delegations, Regular shipping and air services between Pakistan and Bangladesh, and joint studies by PNSC/BSC and PIA/BIMAN to remove impediments; and encouragement participation in each other's trade fairs/exhibitions have also been proposed.

Pakistan Railways, Pak-Telecommunication, State Engineering Corporation, the report said, should ensure regular participation in the international tender bids in Bangladesh and explore opportunities for arranging required supplies; and private sector automobiles manufactures of two countries should be encouraged to collaborator with each other in manufacturing trucks, buses, tractors and three wheelers etc.

Joint venture collaboration should be initiated in sports goods industry, carpet industry, fruit processing and preservation, textile industry, cement industry, sugar industry, heavy mechanical industry; and both the countries should offer each other training facilities in different fields of trade, agriculture, engineering etc.

The report laments that the potential of Bangladesh, a market of 12.5 million people, has not been realised fully by Pakistan. Although the balance of trade has all along remained in favour of Pakistan, ample scope still exists to further increased Pakistan's export considering their import dependent characteristic of the economy.

The report pointed out that on the bases of trade figures compiled by the Ministry of Commerce, Pakistan's exports have shown a steady increase. During the fiscal year 1998-99 Pakistan exported goods worth $119.556 million in comparison with $98.425 million in the previous year. This increase of $21.131 million during 1998-99 appears quite reasonable while taking into account the overall decline in Pakistan's exports.

On the other hand, Pakistan's imports from Bangladesh during the year 1998-99 amounted to $32.241 million whereas these figures were $38.348 million in the corresponding year. Thus showing a decline of $6.107 million.

Among the major items that have contributed to increase exports from Pakistan is rice and cotton yarn. Rice registered an increase of $39.664 million i.e., $43.55 million in 1998-99 and only $3.886 million in the year 1997-98. The increase is mainly attributed to the devastating floods in Bangladesh in September 1998 that destroyed crops, creating demand for rice. Other items that registered substantial increase is cotton yarn with total exports of $9.476 million compared with $5.914 million in the preceding year.

Other commodities that have shown increase include petroleum and petroleum products ($0.758 million in 1998-99, and $ 0.258 million in 1997-98). Similarly, export of paint and varnishes increased to $0.108 million in 1998-99, $0.081 million in the corresponding period. Export of medicinal and pharmaceutical produces increased to $1.511 million in 1998-99 from $1.049 million in 1997-98.

Several other items that performed better in 1998-99 include: Special textile fabric and related products, made-up articles of textile materials and road vehicles and their parts.

The figures also indicate certain items, which were exported by Pakistan for the first time and were not exported during the previous years. These items comprise: tobacco, cotton waste, vegetables and synthetic textile fibers, chemical materials and products, leather, non-freeous metals, footwear and optical goods.

The increase in export from Pakistan no doubt is appreciable but maintaining and accelerating the pace is all the more essential to withstand competition from India, which particularly is determined to monopolise the market.

The manufacturers and exporters from Pakistan face difficulties to compete with cheap Indian goods that have flooded the market. Unchecked smuggling from across the boarders also adds to stiff competition. A well thought-out policy, comprehensive long-term plan with an aggressive marketing strategy could help in capturing the potential, the report says.