Bilateral ties: Pakistan, Turkey to boost trade to $10 billion

Will follow Malaysian FTA as a model to conclude talks early.

ISLAMABAD:

Pakistan and Turkey have agreed to sign a Free Trade Agreement (FTA) to enhance bilateral trade to $10 billion besides inking an additional protocol to strengthen the protection available to Turkish investments in Pakistan.

“The existing volume of bilateral trade amounting to $650 million is painful and we have decided to complete negotiations to sign the FTA by June this year to remove the impediments to trade,” said Ahmet Davutoglu, Prime Minister of Turkey, while addressing the Pakistan-Turkey Business Forum on Tuesday.

The Turkish PM said the goal was to increase bilateral trade to $5 billion in the next three years and then to $10 billion.

He also announced $20 million assistance for the Internally Displaced Persons (IDPs). He said $10 million will be given for budget support and the remaining for project support.

Davutoglu appreciated what he called a positive change in the leadership to fight terrorism.

In order to complete the negotiations in the minimum possible time, both the countries have decided to use the Malaysian FTA as a base model, said Khurram Dastgir Khan, Federal Minister for Commerce.

Pakistan already has an FTA with Malaysia while Turkey has recently concluded the free trade pact with Kuala Lumpur. Pakistan has so far signed about half a dozen free trade pacts and except for the FTA with Sri Lanka, these agreements are working in favour of other countries.

The FTA with China has not only affected state revenues but has also rendered many domestic industries uncompetitive.

The Turkish PM announced that they will increase the number of air flights between the two countries. He said it was decided that a joint company will be set up to establish a manufacturing unit to produce locomotives in Pakistan.

Both the countries signed 11 protocols and memoranda of understanding to strengthen cooperation in the areas of trade, science, economy and protecting bilateral investment.

The protocols were signed to strengthen cooperation between chambers of commerce of both the countries. An agreement for scientific cooperation was signed besides inking a memorandum of understanding (MoU) between the Turkish Accreditation Agency (TURKAK) and the Pakistan National Accreditation Council.

An MoU was inked between Oil and Gas Development Company, Pakistan Petroleum Limited and Turkish National Oil Company while another MoU was signed for the sister seaport between the two countries. They also inked an additional protocol to the agreement on Investment Promotion and Protection of Investment after the dispute over Karkey Rental Power Plant highlighted the flaws in the existing legal framework.

Pakistan is pursuing a case to recover Rs26.6 billion from the Turkish company-owned rental power plant while the company has taken Islamabad to an international tribunal, demanding $700 million in compensation.

The Turkish PM also announced the setting up of a Turkey Special Economic Zone provided that Islamabad extends the logistical support. “It is good to hear that Turkey and Pakistan are brotherly countries but it is time to be more rationale and futuristic,” said Davutoglu, urging both the nations to make productive use of the friendship.

He also advised the Pakistani nation to be resilient in this time of crisis and build the future on the back of political stability and strategic vision for sustainable economic development.

PM Nawaz Sharif said Pakistan’s economy has started bouncing back to stability due to policies of the government. He said the government has initiated a plan to set up 3,600-megawatt LNG-fired power plants and by mid-2017 there will be ample electricity for the industrial sector.

The premier said that investment and national income were below his expectations and a lot had to be done in these areas.

Addressing the business forum, Finance Minister Ishaq Dar announced that the government intends to auction one licence each for further rolling out third generation and fourth generation telecom services. Dar invited the Turkish companies to participate in the bidding.

Published in The Express Tribune, February 18^th, 2015.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.