Pak-Iran trade: ‘Govt should weigh pros and cons before inking FTA’

Country must restructure industrial sector, close porous borders, says business community

LAHORE: Trade links would provide a strong base for healthy bilateral trade with Iran, however, the government should take the industry and trade fraternity on board before it decides to derive benefit from the recent change in international relations, voiced the business community.

“Trade with Iran has huge potential and economic managers need to move in quickly to re-establish Pakistan as a major trading partner,” they said, adding however, that moving quickly did not, in any way, mean rushing, especially at the cost of national interest.

As the government looks to negotiate the Free Trade Agreement (FTA) with Iran, the business fraternity advises it to carefully weigh the potential threats the agreement might pose on the local businesses.

The newly-appointed Ambassador of Iran to Pakistan Mehdi Honardoost was recently told by Commerce Minister Khurram Dastagir Khan that Pakistan was interested in negotiating an agreement with Iran.

‘’The draft of the FTA template will be forwarded to the Iranian authorities as soon as they express their willingness,’ said the minister. “Pakistan has plans to construct three border posts along the Pakistan-Iran border.”

Auto sector

‘’Iran is a big market for Pakistani motorcycles and some of our products are widely respected there. When Iran’s economy grows we will most likely see a shift of that market to higher CC bikes,’’ said S M Engineering CEO Ishtiaq Siddiqui.

“India is, however, well positioned to grab that segment and we will have to slog it out with India in that market,” he added. He said Iran’s auto and motorcycle market was well-developed and although Pakistan’s localisation is much more than what Iran has achieved so far, they will catch up quickly as they have resources and laws in place that restrict import of finished auto products and encourage local manufacturing.

In view of the porous border with Iran, he said, “we see more unorganised than organised trade with Iran. Even today, a lot of Iranian traders are purchasing goods from Karachi wholesale markets.

“Our bikes are being transported to Iran, and Iranian bikes are freely available in Balochistan,” he added.

“Iran could be a good opportunity for Small and Medium Entrepreneurs, but first, we have to restructure our industrial-sector to make it compatible to compete,” said economist Doctor Qais Aslam.

“As far as smuggling is concerned Pakistan government itself is the only authority who can handle this by signing contract with Iran over the issue,” added Aslam.

Published in The Express Tribune, January 31^st, 2016.

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