Pakistan-Sri Lanka bilateral trade under-used
Sri Lanka and Pakistan under-use the South Asian Free Trade Agreement
and bilateral trade agreement between the two countries, said Chairman
of RCC IMPEX, Mohsin Ali.
Under these trade agreements both countries have duty free market
access for 70 percent of the goods exported but only a few items are
traded today, he said.
RCC IMPEX is a Pakistani commodity exporter that has over $ 10
million monthly exports with offices in the US and Dubai. Tea, rubber,
spices, coconuts and coconut-based industrial products are among Sri
Lankan exports to Pakistan.
Coconut- based products imported from Africa is 20 percent more
expensive compared to Sri Lankan products in the Pakistan market due to
duty free access.
Spices from China and Vietnam flood the Pakistan market while Sri
Lanka does not optimally use the trade facilities afforded to Sri Lanka.
The Pakistan commodity market is a free market and there is no
government intervention or other restrictions. Sri Lanka mainly imports
agricultural products such as potatoes and big onions, cotton, yarn and
However, there are a range of agricultural and industrial products
that can be traded between the two countries. Pakistan is a huge market
and Sri Lankan exporters have several benefits.
Mohsin said that payment default by buyers is higher in the Documents
against Acceptance (DA) trading that takes place today.
Exporters in both countries have faced this situation and specially
in the export of perishable commodities, buyers default payment pointing
out reasons such as the market dipping or quality issues.
To safeguard exporters and iron out trading problems between the two
countries government level intervention is needed. “Today we have to
handle the issue individually. In the recent past, my company incurred
huge losses due to payment default. RCC IMPEX decided to set up an
office in Colombo to face the situation and exploit untapped
opportunities,” Mohsin said.
“We have appointed Kushalya Ariyaratne as our dealer in Colombo and
we will open the office soon,” he said.
Mohsin said that Sri Lanka can attract Pakistani investment by
providing incentives because today Pakistani investors are leaving the
country because of terrorism and the political situation in the country
is not conducive for business.
The power crisis is another reason for investment outflow and today
there is a 12-hour power cut in Pakistan.
Therefore, industries cannot run today. Galloping inflation and rapid
depreciation of the Pakistan rupee are other reasons.
During the past five years the Pakistani currency has depreciated by
40 percent. Investments flow to Bangladesh, Jordan and African countries
such as Tanzania.
People of Pakistan hope that the situation will change under Nawaz
Sharif’s leadership, Mohsin said.