Expressing expectation of bilateral trade between Sri Lanka and Pakistan doubling within the next two years, Trade Development Authority of Pakistan (TDAP) CEO and prominent business leader S.M. Muneer noted that the Pakistan Single Country Exhibition can serve as a gateway to harness the significant untapped bilateral trade potential between the two nations.
In this interview, conducted during his recent visit to attend the Pakistan Single Country Exhibition (from January 15 to 17 at the BMICH), Muneer – one of Pakistan’s most high-profile businessmen holding leadership positions in a number of the country’s top commercial establishments – elaborates on trade between Sri Lanka and Pakistan, possible measures to further strengthen trade relations and other areas for potential collaboration, including tourism.
What are your thoughts on trade between Pakistan and Sri Lanka at present?
Despite the free trade agreement (FTA) between the two nations, bilateral trade has been quite low – only slightly above US $ 300 million in 2014-15. According to the Pakistan Bureau of Statistics, Pakistan’s exports to Sri Lanka in 2014-15 amounted to only US $ 267 million while imports from Sri Lanka amounted to US $ 58 million. Further, Pakistan only accounted for 1.7 percent of total Sri Lankan imports in 2013. Especially considering the FTA, the strong and enduring friendship between our two countries, the good airline connectively, etc., this is quite insufficient.
This was one major reason to initiate the Pakistan Single Country Exhibition in Sri Lanka from January 15 to 17, 2016, with the intention of showcasing what Pakistan has to offer to Sri Lankan businesses in an array of industries. We expect the exhibition to be a catalyst in revitalizing the trade ties between Sri Lanka and Pakistan and to provide a gateway to significantly expand bilateral trade.
More than 110 leading Pakistani establishments were part of this large-scale exhibition held at the BMICH, which featured over 400 stalls showcasing Pakistan’s offering in many industries including engineering products, auto parts, agro products, textile and clothing, designer wear, handicraft and traditional textiles, cosmetics and herbal products, pharmaceuticals, cutlery, gems and jewellery, furniture, carpets, marble and services.
Following the exhibition, we expect bilateral trade to more than double within the next two years and to increase Pakistan’s exports to Sri Lanka to US $ 1 billion within the next few years.
We appreciate the assistance of the Sri Lankan government and the people for this initiative, which demonstrates the capabilities of the progressive Pakistani economy. Prime Minister Ranil Wickremesinghe joined Pakistan Prime Minister Nawaz Sharif in announcing the Pakistan Single Country Exhibition at the Temple Trees – indicating patronage at the highest level, which is deeply appreciated.
What are the products and services for which there is strong potential to increase bilateral trade?
Sri Lanka can source many items from Pakistan and textiles, pharmaceuticals, auto parts and food items should be mentioned in particular in this regard. With regard to services, the engineering sector has huge potential. Pharmaceuticals warrant special attention as Pakistan is a producer of high-quality yet relatively low-cost pharma products. It should be noted that even at present, Pakistan exports a greater volume of pharmaceuticals to Sri Lanka than even India. Around 20 pharmaceutical companies even participated at this year’s Pakistan Single Country Exhibition.
What are your views on the FTA between Pakistan and Sri Lanka?
It is important to note that Sri Lanka was the first country to sign an FTA with Pakistan. While the FTA, which has been in effect from June 2005, facilitating the trade of over 4,000 items, is definitely a positive and evidence of the excellent relationship between the two countries, unfortunately it has not been taken advantage of sufficiently. For instance, Pakistan has only utilized 29 percent of its FTA concessions so far.
Furthermore, bilateral trade has often been restricted to a fairly small number of items. For example, of Pakistan’s total US $ 267 million worth of exports to Sri Lanka in the fiscal year 2014-15, cotton cloth, a traditional Pakistani export item, represented US $ 89 million or 33 percent – nearly a third of total exports.
The FTA presents a win-win and therefore should be used far more effectively by both parties. There have been some recent improvements in ties between commercial establishments of the two countries – particularly the signing of agreements exceeding US $ 700 million coinciding with the recent visit of Nawaz Sharif to Sri Lanka – but there is still vast untapped potential. Pakistan’s exports to Sri Lanka has grown from US $ 154 million in 2004 to US $ 316 million in 2013, therefore showing an increase of only 105 percent in nine years.
Sri Lankan businesses should also be mindful of the ability to access large and lucrative markets including the Middle East and the Commonwealth of Independent States (CIS) countries by investing in Pakistan.
We have FTAs with China and Malaysia, in addition to Sri Lanka, and preferential trade agreements with Iran, Indonesia and Mauritius as well as a transit trade agreement with Afghanistan.
We are keen to encourage investment and have special incentives and tax holidays in place. Particularly with the removal of sanctions on Iran, trade between Pakistan and the Middle East could pick up substantially.
What are some of the other measures that have been undertaken to expand trade between Sri Lanka and Pakistan?
We have already invited Sri Lankan businesses to have an exhibition in Pakistan similar to the Pakistan Single Country Exhibition, to showcase the capabilities of Sri Lanka. We definitely need more business delegations of either country visiting the other.
Furthermore, many business-to-business meetings were held between commercial establishments of the two countries on the sidelines of the Pakistan Single Country Exhibition and we are hopeful that a number of these would yield positive results.
The TDAP is willing to provide any required assistance to Pakistani exporters to Sri Lanka as well as Sri Lankan businesses looking to import to Pakistan. We are also committed to high-quality and to ensuring that exports from Pakistan adhere to these standards.
Apart from trade and investment what are the other areas in which Pakistan and Sri Lanka can improve commercial ties?
Tourism is another area with good potential. Pakistan has many natural and cultural attractions. On the other hand, a growing number of Pakistanis are looking to spend holidays overseas which present an opportunity to the Sri Lankan tourism industry. In fact, according to the Sri Lanka Tourism Development Authority (SLTDA), the number of Pakistani tourist arrivals to Sri Lanka amounted to 32,300 in 2015. Pakistan was the third largest destination for tourist arrivals to Sri Lanka from the South Asian region.