Sri Lanka-Pakistan bilateral trade holds great potential: Amna Baloch

The High Commission of Pakistan in Sri Lanka organised an interactive meeting with the members of the Sri Lanka Pakistan Business Council on 31 January 2013 in Colombo.

Minister of Economic Development Basil Rajapaksa, Minister of Industry and Commerce Rishad Bathiudeen, Acting High Commissioner of Pakistan in Sri Lanka Amna Baloch, Sri Lanka-Pakistan Business Council President Rohitha Thilakaratne , the Executive Committee and members of the Sri Lanka-Pakistan Business Council, and a large number of prominent business personalities attended the event.

Speaking on the occasion, Acting High Commissioner Amna Baloch said: “In today’s world, health of the bilateral relationship between any two countries is gauged by trade and commercial linkages, which allow fostering of win-win partnerships for mutual benefit. The economies all over the world search for complementarities and comparative advantage to build upon them and to create closer ties with each other.

“Pakistan and Sri Lanka are traditionally friendly countries which enjoy excellent relations based on non-interference, mutual respect for sovereignty, territorial integrity and support at all forums. Similarly, Pakistan and Sri Lanka also strive to add more substance to their economic cooperation and benefit from each others’ strengths.

“With this view, the two countries have strived to put in place an overarching economic framework to facilitate businessmen of both countries to set-up and strengthen commercial and investment ventures. The hallmark of this framework is the FTA for trade in goods, which has been operational since 2005.”

In addition, Pakistan and Sri Lanka also have a Bilateral Investment Treaty (BIT) and a MoU on Customs cooperation. Identifying the factors responsible for slow progress in trade relations, she said it was due to the facts that export diversification has been limited over the years; a lack of research towards identifying new tradable products; restriction of trade only in goods and not in services, due to limited progress on expansion of FTA to include trade in services and investments; lack of awareness regarding trade potential resulting from the Free Trade Agreement and inability to fully capitalise on the concessions granted under the agreement; and particularly, major Sri Lankan export sectors, garments and tea have not made full use of the duty free concessions extended by Pakistan – particularly on 10,000 metric tons of tea or three million pieces of garments that are allowed each year to be exported with a margin of preference of 35%.

Here a note may be taken of the fact that Pakistan is the third largest tea consumer in the world and has a niche market for high value added garments. Currently Sri Lanka imports apples, dates, grapes and other fruits at much higher prices from destinations such as the USA, Australia and the Middle East.

Pakistan offers a good opportunity to Sri Lankan traders and consumers to benefit from abundant raw material, available at competitive prices and low freight costs. Pakistan offers various varieties of rice, vegetables and fruits, which if imported from Pakistan, can considerably reduce the inflation in food items, at the same time providing a wide choice of the consumables.

Regarding the issue of trade surplus being in favour of Pakistan, she said: “I would also like to allay the apprehensions of Sri Lankan traders regarding the lopsided trading pattern with balance of trade in Pakistan’s favour. It needs mention that cheap textiles and cotton raw material exports from Pakistan are fuelling Sri Lanka’s value-added apparel industry and earning valuable foreign exchange for Sri Lanka through its exports to EU and US. The market forces certainly dictate the flow of goods, which is always backed by supply/demand principles and profit/loss calculations of the private sector.”

Responding to the security concerns expressed, she said that in today’s context conflicts prevail all over the world and trade and investment goes on irrespective of those issues. Sri Lanka itself is a prime example where the private sector held the economy together during its 30 years of turbulence.

Rizwan Ghani of Packages Lanka briefed the forum about his company with 80% shares of Packages Pakistan and its investments in Sri Lanka. He proposed that Sri Lanka may take advantage of Packages Pakistan’s expertise in developing indigenous facility to produce tissue-paper and related items.

Economic Development Minister Basil Rajapaksa appreciating the efforts of the High Commission in organising the interactive meeting said that such events provide opportunity to gain firsthand insight into the issues in bilateral trade and at the same time create confidence among the business community.

Minister of Commerce and Industry Rishad Badiudeen said that the problems faced by the two business communities would be addressed in order to take the economic relations forward.