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August 29, 2018

TDAP calls for free trade agreements with Saudi Arabia, GCC


August 29, 2018

KARACHI: Pakistan needs free or preferential trade agreements with Saudi Arabia and Gulf Cooperation Council (GCC) to increase foreign trade in goods and services, Trade Development Authority of Pakistan (TDAP) advised in a report.

Pakistan has no preferential trade agreement with Saudi Arabia. However, several negotiations have taken place to activate Pakistan-Saudi Joint Business Council and both the countries mutually agreed to overcome issues related to shipment delays, visa requirements and corporate registrations.

“KSA (Kingdom of Saudi Arab) is a consumption-oriented economy as about 41.3 percent of its GDP share comes from household consumption, which can serve as an opportunity for Pakistani exporters,” an official said, requesting anonymity.

Pakistan exports basket is not much diversified, the official said. In order to expand export base in KSA market it is necessary to find some potential products that Pakistan already exports to the world.

Pakistan’s annual exports to the world are around $24 billion, while KSA imports from the world are $126.7 billion. Pakistan’s total exports to KSA stood at $346 million against imports of $2.7 billion in 2017.

Pakistan’s total rice export to world is $1.5 billion while KSA’s total import of rice from the world is $957.3 million. The country exported $68.6 million worth of rice in 2017 with seven percent share in Saudi Arabia’s rice market.

International Trade Centre said Pakistan has an untapped rice export potential of $96.8 million.

Production and quality constraints, weak value chain, insufficient innovation in farming and milling practices, lack of research and development of new varieties, lack of coordination between farmers and research institutes are some of the bottlenecks in rice exports due to which the country’s rice export to Saudi Arabia has been stagnant since 2016.

TDAP report identified rice and meat as the high potential products, which can take country’s exports to more than one billion dollars.

Likewise, Pakistan’s total exports of frozen boneless meat to the world stood at $20.4 million.

The report said most of countries supplying boneless meat to KSA are non-Muslims, yet they are the top exporters of halal meat in the world.

“Pakistan being a Muslim country has advantage to capture its share by supplying halal and hygienic boneless meat to KSA,” the report said. “In addition to this large number of Pakistani community resides in KSA that demand Pakistani meat.”

Pakistan, by strengthening its supply chain, can facilitate the export of boneless frozen meat. Moreover, Pakistan needs disease free zones, efficient processing units having proper monitoring of livestock, their vaccination and breeding. Geographical location of both the countries reduces transportation cost and shipping time, which can serve as an opportunity to trade perishable goods and other materials having short life span. Pakistan’s halal food products have considerable potential to capture Saudi market, and poultry and meat products have export potential in Saudi Arabia’s market.

“Existing meat exporters can earn greater share of the market by proper marketing and supply chain management,” the official said.

The TDAP report said Saudi customers have high purchasing power, yet they focus more on quality, innovative and modern imported products. Therefore, exporters that focus more on modern techniques and innovation can earn greater share in KSA market.

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