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July 23, 2019

Pakistan’s exports to South Asia fall 14pc in FY19

Business

July 23, 2019

KARACHI: Pakistan’s exports to South Asian neighbours dropped 14 percent to $2.672 billion in the last fiscal year of 2018/19 from $3.104 billion in the previous year, the central bank’s data showed on Monday.

The decline was mainly attributed to the dip in exports to three regional peers ie India, Afghanistan and Iran.

Exports of goods and services from Pakistan to Afghanistan—the major trading partner in the region—fell to $1.189 billion in July-June FY2018/19 from $1.494 billion in the preceding year.

The State Bank of Pakistan’s export destination-wise receipts figures revealed that exports to India stood at $312.032 million during the last fiscal year, compared with $419.773 million in July-June FY2017/18.

The country exported $4.293 million worth of goods and services to Iran in FY2018/19, compared with $17.530 million in the previous fiscal.

Analysts said the exports to India remained low as it had raised custom duty on all goods sent from Pakistan to 200 percent in February 2019. “Strained political relations, tariff and nontariff barriers and high cost of doing business also drag on Pakistan’s exports to India,” said an analyst. “An ongoing political tension is impeding Pakistan’s exports to Afghanistan.”

The SBP’s data showed that exports to Sri Lanka fell to $303.817 million from $340.018 million.

However, exports to Bangladesh rose to $742.979 million from $727.215 million.

The World Bank, in its report titled “Glass Half Full: The Promise of Regional Trade in South Asia”, said Pakistan’s trade with South Asia could rise eight-fold. “Regional trade can create many more jobs and make the country prosperous if trade barriers with South Asia are removed,” the report added. Pakistan’s trade with South Asia accounts for only eight percent of its global trade, despite the region being the world’s fastest growing. However, intraregional trade in South Asia is among the lowest at about five percent of total trade, compared with 50 percent in East Asia and the Pacific.

The report argues that the costs of trade were much higher within South Asia compared to other regions. The average tariff in South Asia was more than double the world average.

South Asian countries have greater trade barriers for imports from within the region than from the rest of the world.

These countries impose high para tariffs, which are extra fees or taxes on top of tariffs. More than one-third of the intraregional trade falls under sen­sitive lists, which are goods that are not offered concessional tariffs under the South Asian Free Trade Area (SAFTA).

In Pakistan, nearly 20 percent of its imports from, and 39 percent of its exports to, South Asia fall under sensitive lists.

The report identifies four critical barriers to regional trade: tariffs and para tariffs, real and perceived non­tariff barriers, connectivity costs, and a broader trust deficit.

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