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 fabric.

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.

- GW