Pakistan to boost UAE trade

Pakistan is planning to boost its foreign trade with the UAE within the shortest possible time. Plans also include stepping up business with the Gulf-Middle East region. The scope is vast. For instances, according to the official estimates Pakistani exports to the UAE can be doubled from the present volume of $3 billion to $6 billion just by focusing on improvement of overall supply chain of goods. It will include perishable products.

The current UAE-Pakistan trade volume is $9 billion plus. It includes $6 billion UAE exports to Pakistan. The Pakistani exports to UAE are $3 billion. Pakistan faces a current account trade gap of $3 billion against UAE. The deficit is largely met through the home remittances, sent by overseas Pakistan from the UAE. At present, Saudi Arabia is the first while UAE is the second biggest source of home remittances, which are a major source of Pakistanis external balances and forex reserves.

The business relations can also be enhanced by finalising a Free Trade Agreement, or FTA between the UAE and Pakistan as well as the rest of the region by among others trade promotion measures. An FTA will reduce the tariff rates on traded goods and services to the advantage of producers, exporters-importers and the consumers at large. A senior official of the Ministry of Commerce said: “We have to make a full and total focus on a large expansion of trade ties, especially to enhance exports to the UAE as Dubai is one of the greatest hubs of the trade and business in the Gulf-Middle East region. It has a huge potential to expand in all directions as it is already experiencing a big boom.”

Pakistani exports to the UAE have been rising in recent years. The exports rose from Rs55 billion in FY-2009 to Rs206 billion in FY-2013, according to State Bank of Pakistan, or SBP, the central bank. The SBP says, its share of exports to the UAE was eight per cent worldwide in FY-14.

The UAE has been the top source of imports to Pakistan on a global and overall basis. Its imports from the UAE rose from Rs247 billion in FY-2009 to Rs838 billion in FY-13, the SBP says. At 17 per cent, Pakistan’s share of imports from the UAE was the highest in FY-14, SBP says.

Among others, some of the estimates of the plans for growth of trade have been conveyed by Asif Durrani, Pakistani Ambassador to the UAE while meeting the Managing Committee of the Karachi Chamber of Commerce and Industry (KCC&I), which is headed by its President Abdullah Zaki. Zaki said the business community in Pakistan requires “dissemination of more and comprehensive information on business possibilities and the two-way investment potential to attract FDI and cooperate with the UAE entrepreneurs.” The UAE, already, is the biggest source of imports for Pakistan, particularly because of a vast variety of products available there. Added to it is the fact that the two countries have deep and close political, economic and cultural relations. On the top of this is the fact of its close geographical location. It means a very beneficial and cost effective freight rate for imports and exports, and a fast speed execution of orders for the items, the two countries exchange. Some of items produced or originating in the other countries — including Singapore and India — also contribute to these import. Some of the third countries also place their orders for Pakistani products via Dubai.

Ambassador Durrani has been consistently working on the plans for expanding trade between the UAE and Pakistan. He is of the view that if the present 72- hour supply chain duration for Pakistani goods reaching Dubai can be slashed down to 24-hour by improving the transportation, the exports will double. Pakistani exporters should maintain cold chain transportation during the transit of perishable items as it will “surely help enhancing exports to UAE,” he says. Of course there are several other steps, which are being adopted on a fast track basis to expand the exports. One of these is to enhance export of the horticulture products. Pakistan has the potential of sharing a good deal of the UAE market, in this area. At present Pakistani exports of horticulture to UAE are almost very small.

Looking forward, and providing mainly high value products to UAE is another key for enlarging exports. The export items will be of high quality, and sent out after proper processing and packaging, as UAE is a high-quality importer and user of goods. Pakistan is building up its trade relations with the Gulf-Middle East region. Based on the latest data, “around 50 per cent of Pakistan’s imports originate from just four countries — UAE, China, Kuwait and Saudi Arabia — Ministry of Commerce reports. “About one-half of Pakistan’s export destination are to six countries — USA, China, the UAE, Afghanistan, UK and Germany,” it also says. The present plans are to build up both imports and exports from these countries and regions. Pakistan’s current annual imports are around $40 billion, while exports are about $25 billion. “These volumes will be significantly enlarged in the near future,” officials say. As the UAE expand its quality production and business it is proving to be a highly attractive production base for Pakistani investors, too.

They strongly feel that their ever-increasing presence in the UAE can enable them to use the country as a high-quality production base. It will help them to undertake exports to other countries in the region, as well as to EU, US and rest of the booming Middle East markets where the consumer incomes and spending power is high, and still rising fast.

The present official and business estimates are that Pakistani investors have invested $25-30 billion, largely in the UAE real estate sector. But a good deal of new investment is going into establishing industrial units, reprocessing, trade and trade-related services. Some of these high quality products and services are also exported back to Pakistan as they are competitive quality-and-price wise as ell as benefiting from of low air and shipping freight rates. They also employ a good deal of skilled and semi-skilled Pakistani labour, working on competitive wages. At the same time Pakistani business, occasionally, has to face poor prospects because of internal problems. This is why Pakistani investment in several sectors is rising further.

Nearly 1.3-1.5 million Pakistanis are currently working in the UAE. They include 20 per cent white- collar persons and 80 per cent blue-collar workers. The number of white-collar persons is expected to rise especially in the field of IT, banking and other high-wage jobs and services.

According to the Strategic Trade policy Framework of the Ministry of Commerce, Pakistan’s cumulative exports have to rise on a fast track basis. Beside lager physical output of industrial goods, commodities and services, the ministry is working on tangible goals and the business framework, to achieve these targets. They include: regulatory amendments in the trade regulations, institutional strengthening and governance, and measure to enhance competitiveness both price and quality-wise. A good deal of this work has already been completed and its is helping the two-way foreign trade.In view of this, the foreign trade sector, business, and industry have highly productive and profitable prospects to get into the act.

Views expressed by the writer are his own and do not reflect the newspaper’s policy.