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February 22, 2020

Pakistan losing Afghan market to trade rivals: TDAP

Business

February 22, 2020

KARACHI: Pakistan is gradually losing its trade share in Afghanistan’s market to Iran, India and China that offer value-added products, relatively attractive transit tariffs, and better consignment handling facilities, a staterun agency said.

Trade Development Authority of Pakistan (Tdap) called for a need of reduction in cost with regards to both transit and bilateral trade in the country to secure better access to Afghanistan.

Tdap, in a report, said a key concern for the stakeholders is increasing cost of doing transit and bilateral trade with Afghanistan that is shifting to other neighbouring countries like Iran that offer competitive rates, better consignment handling facilities and cost-effective transportation.

In Pakistan, costs for all these facilities have increased substantially over the years.

Tdap said these factors severely affected Pakistan’s export momentum to Afghanistan, which the country gained in over six years since 2009/10.

Pakistan’s exports to Afghanistan significantly declined in the first three quarters of 2019. Exports to neighbouring economy, however, picked up to $299.179 million in the fourth quarter, compared to $234.673 million in the same period of 2018.

Tdap said high cost of transportation and hefty deposits by shipping companies for transportation containers are also discouraging Afghan importers to deal with Pakistan.

Last year, Afghan trade transit resumed after Pakistani authorities decided to open up Torkham border on 24/7 basis. Officials said the bilateral trade with Afghanistan dropped in recent years, but now it is hoped that the bilateral trade volume would increase gradually in months and years ahead and could reach $5 billion.

“In addition to the high cost of doing business, the lack of a level-playing field for the local business community and investors in terms of marketing their products and services in Afghanistan resulted in substantial decline in Pakistan’s exports to Afghanistan,” Tdap said. It further attributed the overall deteriorated bilateral relations with Afghanistan to the souring ties, and urged the authorities to take up the issue of bilateral relations at the highest government level.

Another major reason for Pakistani being not able to increase its share in the Afghanistan market is the “reliance on food commodities and non-value added exports”, Tdap said.

“Eighty percent of our exports were of non-value added items, including wheat, sugar, fruits, vegetables and cement,” it said. “Any supply and production issues with any one of these commodities results in substantial decrease in our export figures to Afghanistan vis-à-vis our competitors including Iran, Kazakhstan and India.”

On the other hand, China, being the supplier of value-added goods to this market is becoming the leading competitor and taking over the lion’s share in the (Afghanistan) market.