Pakistan can export thousands of products to China at zero-duty: Afridi

LAHORE: Shah Faisal Afridi, chief executive officer at Ruba SEZ Group, is an ardent supporter of free trade. His group’s investment is China-centric. He is serving as the president of Pak-China Joint Chamber of Commerce and Industry. His family is relatively new in local business environment, manufacturing a variety of home appliances. It has launched Euro II compliant tractors and established a textile mill. Besides, it is in power sector business, leasing, furniture making and services sector. His venture is the country’s largest investor in Chinese technology. The News discussed with Afridi the implications of Pakistan-China trade relationship. Following are the excerpts from the interview.
Q. What are the bases of your trust on Pakistan’s economy?
A. The actual consumer base of Pakistan is not known to investors, who look at the official size of the country’s economy of less than $300 billion; the actual size is $600 billion. The latter gross domestic product shows the real buying capacity of consumers and investors take this potential into account while making investment decisions.
Q. Why our exports to China are limited?
A. The size of Chinese economy is many times higher than Pakistan. Pakistan-China trade is limited to $12 billion, most of which are exports from China. Chinese respect and love Pakistan. They have provided us with opportunities that are denied to most of the developing world. Our group and many others are making efforts to turn the economy around with the assistance of a friendly neighbour.
We have not benefitted from the free trade agreement signed between the two countries. Bulks of our exports are confined to low value-added yarn and grey cloth. The potential to export footballs, surgical goods, and light engineering goods has never been exploited. Thousands of HS codes could be exported to China at zero duty.
Q. What is ailing Pakistan’s economy?
A. For a long time, we have been trying to make our economy a trading hub; although what we actually need is to make it a manufacturing centre through making better infrastructure available to the investors. Policies encouraging import of finished goods should be shunned and those boosting manufacturing should be encouraged. You cannot expect foreign or local investment in manufacturing if the local products are not protected from cheap imports. I do not suggest protectionist policies but we ought to provide at least similar protection to our finished products that is available to the manufacturers in the neighbouring economies.
Now look at our electronic policy that was pursued for the 10 years. It resulted in exceptional growth in the production of home appliances. The policy was then changed and the import of finished products was also permitted at the same duties as levied on electronic component. The result of this policy resulted in closure of many international home appliances brands in Pakistan. The multinationals are now importing finished products. So with the change in policy, we have shifted the jobs from Pakistan to Japan or Korea, while the consumers are getting same products at slightly higher prices.
Q. Chinese cheap products are hurting the local economy. What’s your take on that?
A. Let me tell you when you open your market to a larger economy, there is an immense pressure in the short-term. However, the smaller economy benefits in the long-term as it gradually starts getting an access to a larger market. That some local industries feel pressure from Chinese imports is partly true.
But the real story is that the Chinese have taken full advantage of the concessions it got under FTA from Pakistan. In many cases, the Pakistani planners failed to consult local stakeholders while granting concessions to China. Moreover, we lack the strategies to take advantage of our geography, natural resources or concessions provided to us by friendly economies.
There is no think tank, for instance, to chalk out a China strategy. We could increase exports to China manifold if we take advantage of concessions provided by China. It is now globally acknowledged that China will lead the 21st century in soft economic approach. China is not trying to bully smaller nations through military might but is gaining their confidence through economic cooperation.
Q. Why do you prefer China over others in technology transfer?
A. No other country or multinational corporation has transferred technology in Pakistan as liberally as Chinese. My group is manufacturing most of the Chinese brand home appliances in Pakistan after initially assembling them from Chinese parts. Our Chinese principals seamlessly provided us the technology to locally produce components. Now very few components are imported from China.
In the same way, we introduced green tractors in the process of localising component. Same thing is happening in our other automobiles. Developed economies hesitate in transferring technology to Pakistanis. We take pride in our nation and our Chinese partners are facilitating us in localisation of several products through technology transfer.