Business

Bilateral ties: Don’t think emotionally in trade with India, says Pasha

Former finance minister says country needs to re-think policies

Our Correspondent July 09, 2015

Former finance minister says country needs to re-think policies. PHOTO: FILE

LAHORE:

Former finance minister and renowned economist Dr Hafeez Pasha has said that Pakistan should give trade incentives to India on items that are being imported from other countries, especially from China.

“We should think strategically, not emotionally, on trade issues,” he said. “Giving duty concessions to India on items that we import from China under the Free Trade Agreement will create competition between the two countries for the Pakistani market. This will economically benefit Pakistan.”

Read: Pakistan losing out on South Asian integration: experts

He further said that the global economy is in recession and bilateral trade is diminishing, however, in Pakistan’s case the scenario is worse as its imports are increasing more than exports and recently, the country has started importing items that had never been imported before.

“India’s exports to Pakistan have reduced 19%, whereas Pakistani exports to India have also witnessed a cut of 9% this year,” said Pasha. “Similarly, cotton yarn exports to China, which have witnessed a massive increase in previous years, have also observed a decrease of 20%.”

The former finance minister said that the country has to move on by giving access to India on those items that do not hurt its industry.

The best example of such commodities is agricultural items. Around 40% to 50% of our imports from India are agriculture based, he added.

This is due to the huge amount of subsidy which Indian government gives to its sector and this is the main reason why Pakistan, which before partition, was exporting agriculture items, is now importing those products.

“India is giving $37 billion subsidy to its agriculture sector, whereas in Pakistan, this subsidy is merely $1 billion,” he said.

Read: India-Pakistan relations on slippery slope

“Removing barriers in Pak-India trade will not boost growth rate immediately. It will have a modest impact on the economy. In some years, our GDP level would be higher.”

The economist added that the country needed to incentivise exporters.

“Pakistan doesn’t want to reduce its exchange rate when India has reduced it by 6%, Turkey by 22% and Brazil by 26%,” he said, adding that the policy of the Pakistani government on exchange rate does not make sense.

Published in The Express Tribune, July 9^th, 2015.

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COMMENTS (38)

Union Jack | 9 years ago | Reply @Muhammad: "We have much bigger economies to do business." ..... but who wants to do business with you ? You should read more about China-Pak economic corridor before naming China. It might be shocking for naive like you that the sole beneficiary of the corridor will be China and few poitico businessmen in Pakistan for name sake. Truth is, Pakistan has become a tissue paper country for powers like USA, Russia and China. It is very easy to make Pakistan dance by giving them carrot of support vis a vis India. And regarding our toilets. Yes we are working on that. Sanitation planning is not as easy as installing a toilet seat. And this is an issue with half a billion. All the countries pointing finger at this grim situation in India do not even collectively have half billion population. Still we will finish this mamoth task someday soon. Inshahallah.

Muhammad | 9 years ago | Reply @Sandy: Who would in their right state of mind would like to compare with a low class baniyya country like yours? Our country must be good enough for people like you being so awesomely obsessed with.

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Afzal | 9 years ago | Reply @Sandy: Yes we are two different countries. Fifty percent of your population defaecate in open field (needle aka ash ke ) as compared to 30% of Pakistani population. Your farmers are committing suicide when their crops fail but virtually none in Pakistan. You sell female babies and your men are gangraping elderly women in their 70 . And yours is no 1 liar nation in the world. You need to look inside which will reveal that you are nothing other than a corruption driven and pakora/ jalibi selling nation. You need to come out of your state of hallucination.

Sandy | 9 years ago | Reply Hi As a Indian, we do not think of Pakistan and compare with pakistan. If at all we have to compare, we shall compare with China or brazil or brics and develping nations while benchmarking with developed nations. Your economy and its progress is for you to think. We are two different countries and two different cultures. We are not interested to have trade relations with unstable country like pakistan

ask | 9 years ago | Reply To trade or not to trade (with India) is primarily an internal debate in Pakistan. Indians shouldn't be bothered about it. It is amazing to see so many Indians commenting on something that is a non-issue for most. So long as Pakistan doesn't export anything undesirable (one thinks of Mumbai), no business is best business!

Kumar | 9 years ago | Reply Who cares whether Pakistan trades with India or not. It is an economy going in reverse. Pakistan has more to gain than India. I would encourage Pakistan not to trade with India.

Vikram | 9 years ago | Reply I think some commentators are misinterpreting what the minister said. His basic point is that since Pakistan is solely dependent on one country for imports in its primary sector (mainly agriculture) it is missing out on the lower prices it can get imports for, if other countries (namely India) are allowed to sell to it. This will save Pakistan capital for investment or boosting its forex reserves. Both of those can only benefit its industrial growth. Must say that I am again disappointed by the immaturity of my fellow countrymen, who are insistent on making every comments section on a Pakistani newspaper a forum to abuse another country and thump their chests.

hellboy | 9 years ago | Reply @AA: India is in 7th position in terms of nominal gdl though per capita is very less.By 2030 Indian economoy will be around 10 trillion means 5 times more than now.

AA | 9 years ago | Reply @Sameer: Again a false Indian propaganda, 1) India is not "in top five countries in field of economy," I don't know what you mean by field of economy, but India is thirteenth in its GDP growth rate. Even that is not an amazing fact since Ethiopia, Myanmar and Chad are ahead of India ranked at 11th, 8th and 4th. Economic growth simply tells us the percent increase in GDP from its previous state, the growth is faster if you have very bad starting point like in the case of Chad and Ethiopia. It is slower if you are already have better economy, such as US 130th, Germany 138th and England 97th. 2) In trade India has -154 billion trade deficit, it means it has a negative balance of trade in its imports exceeds its exports. Which means it is left with extra payments of -154 billion dollars annually after its all exports are paid off. Which in fact opposite to china which has 155 billion earnings after its imports are paid off. 3) India is not in top five countries of pharmaceutical exports. They are Germany (1), US (2), Switzerland (3), France (4) and UK (5). 4) There is not much data available for software export but giving largest software companies are either in the US or Western Europe the software export can not be a top export for India however, it can be one of top exporters of IT services due to the size of its cheap skilled labor along with Philippine. 5) Foe space missions, I would say bravo, we have a country whose priorities are misplaced, it want to send a probe to Mars but let 622 million of its people without toilet. You can get proud of it, in Pakistan I want remaining 30 percent of its people to also have access to toilets than to go into space. 6) Finally India’s forex reserve which you said have crossed 350 billion dollars. Unfortunately it is nothing for a country whose trade deficit is -154 billion dollars. Please come out of your delusional pride and smell the coffee. All countries in South Asia are struggling economies, they must resolve their conflicts in a mature and reasonable manner without sticking to rhetoric of nonsense to progress at the grassroots level. A probe to Mars can earn you a shallow pride but it could not enable 633 million people to have a toilet. Half of them are women who often get raped when out in the open to defecate.

B | 9 years ago | Reply India and Pakistan should stop all trade and contacts with each other for the next five decades until there is no more poverty, more toilets and education in each country.

AA | 9 years ago | Reply @Sameer: Because the people of Pakistan are mature and they know conflict does not benefit people. It erodes natural growth by diverting resources to military competition. Both countries have millions of people who need education and basic necessities. Half of India and 30 percent Pakistanis defecate does not have access to toilet and we are spending billions on Nuclear Submarines. The day Indian people get aware of the reason why their politicians continue to simmer Kashmir issue. The actual reason they refuse to talk. They will start demanding them just the same way as Pakistani people are demanding from their politicians. Indian politicians wants the conflict going with Pakistan so that they use Pakistan blaming and bashing to distract their constituents from asking about real problems. Look at Mr. Modi's campaign there is hardly a single speech he delivered when he did not use Pakistan bashing. Sometimes his comments even amounts to calling Indian military incompetent and coward. For example the case of beheading of Indian soldiers. He blamed Pakistani regulars got 15-20 miles inside Indian territory and beheaded five soldiers. Were those soldier sleeping on their post ? Or Indian military is so incompetent that Pakistan army went in beheaded five and went back without being intercepted. But this was an stunt work for flaring up emotions which turn his audience blind to the fact that 600 million people in India does not have access to toilets. They just join their voice with his blindly. It is time to see the real facts. Conflicts don't feed hungry people who are in plenty on both sides of the border. to resolve it. The future of subcontinent is in peace and presence of irritants like Kashmir issue won't let it happen.

genesis | 9 years ago | Reply if India can change its mind set and the deep rooted ambition of harming Pakistan.....Pakistan is a product of two nation theory when it was decided that Muslims cannot co exist with Hindu majority and they are equal if not more than equal to Hindus.This mindset has not changed and Pakistan is convinced on this parity which is not going to happen.It accepts that it is lesser than china but with India it claims parity>India is too big and growing faster than even china and will soon be an important market for the world and if Pakistan accepts this reality there is much to benefit both nations.As otherwise India can certainly go ahead with or without Pakistan.

AA | 9 years ago | Reply @pat: Then what are you doing here ????? I will stand here and argue with you though I don't give importance to you opinion ??????

AA | 9 years ago | Reply The article is full of contradictions. In the title "Dr Hafeez Pasha said that Pakistan should give trade incentives to India on items that are being imported from other countries, especially from China." But he mentions in his analysis that "India is giving $37 billion subsidy to its agriculture sector, whereas in Pakistan, this subsidy is merely $1 billion," Which indicates that if Pakistan trade with India, its agriculture will also hit be competition from across the border. Pakistani Industrial sector which is marred by energy shortage, disincentives in Pakistan's industrial policy and political crises will be bombarded with cheaper products in its home market from across the border where labor is cheap, no shutdowns due to scheduled and unscheduled load shedding and cheap raw material subsidized by government. The uneven competition will kill Pakistan's fragile industry. He himself agreed that "the global economy is in recession and bilateral trade is diminishing, however, in Pakistan’s case the scenario is worse as its imports are increasing more than exports and recently, the country has started importing items that had never been imported before." Now if we open our market to Indian products we will crush our remaining exports of finished goods. Pakistani industrialist will have to compete not only in exports but also with in our own home market. Every product in small scale industry has to recover its cost in first few batches of production before it could start to make profit, if Pakistani industrialists will be unable to sell there first few batches of product at home the cost of production of quality goods will not recover, declining the ability to export further. Trade with India when our Industry needs attention is suicidal. Once we start importing products that are supposed to be manufactured locally we will run into extreme imbalance of trade deficit. Our exports will increasingly limit to raw material and thus the prices of food and basic raw material for industry will rise leading to an inflation crises uncontrollable. Pakistan should focus on developing its home industry through incentives to reduce imports. Items that are imported should be incentivize to produce at home than opening your market to other countries. This kind of economics is good for capitalist markets which have moved to advanced products like Western Europe and US whose exports of technology is hundred times more valuable than producing food and consumable products at home. Pakistan is a fledgling economy it needs its home market to support its goods to finance its exports We are also opening another vulnerability to India by allowing access to our markets, it will open to industrial terrorism. The "dumping" strategy. India can deliberately incentivize and subsidize specific products to crush Pakistan's industrial growth. The cheaper imports from India will push small industries to closure and further decrease our exports. The only benefit by opening free trade with India is for Sharif brothers to invest in Indian industry. That is the whole impetus behind this campaign. It is a killer of Pakistan's industrial growth.

Sameer | 9 years ago | Reply @usman and ibrar ....despite of many challenges, India is in top five countries in field of economy, trade, pharmaceutical, IT, software, space missions etc...India is a part of big forums like G20, Brics etc.....India's forex reserve have crossed 350 billion dollars....... so instead of competing with India ...Pakistan should first complete with Bangladesh.... coz Pak forex reserve is around 16 billion dollars, but Bangladesh's forex reserve is 24 billion dollars.... Bangladesh's taka is stronger then Pak currency....Bangladesh's growth is around 6% , compared to Pak growth of around 4% .... so please try compete with Bangladesh...... Otherwise if Bangladesh keep this momentum on then by 2024 it'll become second largest economy of SAARC ..... leaving Pakistan behind

Muhammad | 9 years ago | Reply @pat: Your intense raving and poor display of reason, logic and intelligence on this page are directly proportional to the pain you stockpile in your azz. Yes China is on your side, yet it would block every Indian move against Pakistan. You even can not convince the Chinese about what you say is a clear case against Lakhvi. What cshit of a big country you think you are whose life has come to spin around Lakhvi or Hafiz Saeed. So when you think your country is going to be offered a UNSC seat. No doubt you are big economy but you also have as big population to feed so that at the end of the day you are hardly left with enough resources to give your community enough toilets. We do not think we will benefit from trade with you. We have much bigger economies to do business.

Muhammad | 9 years ago | Reply @Tepper: Just for correction -their number is said to be > than 200. I agree 100 of these can be used to generate energy while the remaining will maintain the current stretagy of 5 nukes per major city and town …that would generate vast stretch of territory for the regional generations to live on and benefit from plenty of newly created coal resources.

pat | 9 years ago | Reply @Usman: oh please bro chill out. India doesn't need to have dialogue with Pakistan for getting a UNSC seat. Pakistanis think they are to important to be ignored. No country gives a damn about the opinion of coffee table countries. And you know what Pakistan is the founder member of the coff we table. If a reform takes place a country should get 2/3 votes of all 196 countries and best part is India already has a suppof 189 countries that include china. So go smoke up and chill. Pakistan is not so important as u think. UN even removed Kashmir form disputed issues list in 2010

Muhammad | 9 years ago | Reply Just for correction -their number is said to be > than 200. I agree 100 of these can be used to generate energy while the remaining will maintain the current stretagy of 5 nukes per major city and town ...that would generate vast stretch of territory for the regional generations to live on and benefit from plenty of newly created coal resources.

Sameer | 9 years ago | Reply @ibrar....India has been progressing well without pak and keep progressing without pak.....India has huge economic and huge partnership with big giants....so your presence doesn't matter to us.... in fact India is not interested in talking to you ....but you people are dying to resume dialogue with India

Sameer | 9 years ago | Reply @usman .....your Pakistani people keep saying we won't accept Indian hegemony.....fine then why you people keep requesting to Indian BCCI for bilateral cricket series and IPL contracts?? Don't accept BCCI hegemony...... and why your govt keep requesting India to resume dialogue....when India is already not talking to you

Muhammad | 9 years ago | Reply @Haider: Load shedding will be thing of the past by 2018, all we have to do is to show some more patience ....no gain without pain! BTW, I do not belong to any political party and in fact live outside Pakistan.

Ibrar | 9 years ago | Reply @sameer: You seem far ahead of Pakistanis in terms of extreme ideas. Loss of diplomatic relations will hurt India more. Your half a century demand for a UNSC seat will remain a dream and Pakistan will only have one forum to raise issues rather than adhering to bilateralism, As for Visa, more Indians seek this, particularly the more respectable and trust worthy Sikh community, Pakistan always looks forward to. Playing in corrupt IPL will only contaminate our players and even if this seemingly is one area countries could compromise ...but if I had the say I would ban our players playing in India. I do not think we can benefit from doing trade with a B'wood driven and Pakoura/ Jalaibi selling nation.

amir-india | 9 years ago | Reply @Usman: pakistanis live in past and past glory they get happiness by giving example srilanka ltte to say india is not cordial relation with neighbour but my dear world had changed from 90s today india is making roads connecting bangladesh nepal bhutan ,electricity project of india are in full swing in nepal and bhutan , every neighbouring country (exept pak) want indian market access so ur rhetoric of no neighbour have good relation with india are good to give consolation to ur soul may u live with ur lies and feel peace with it.

Afzal | 9 years ago | Reply @singh: Hatred between the two seems genetically mediated and will only diminish if India can change its mind set and the deep rooted ambition of harming Pakkistan. Yes some favourable trade can be started while keeping our powder dry and ready to strike bc you should never trust this neighbour.

Bobb mack | 9 years ago | Reply @vicktor d'souza: You are right, there is a disproportion between population and land. Nukes can be used to release energy with in magnetic field Pak periphery to generate more territory. This way Quality would also show up without a v bit of doubt.

pat | 9 years ago | Reply Pakistan needs trade with India not the other way round. India already gave mfn status to Pakistan considering it cant compete with indian subsidies and instead of taking advantage of the mfn status you want to cut trade totally till Kashmir is resolved. Then why do Pakistanis want Pakistan players to play in IPL ? IPL is conducted to bcci not icc

Usman | 9 years ago | Reply @sameer: Don't worry. We have the official 'pathetic' class full of past criminals in power in Pakistan at the moment. Real Pakistanis don't give a toss about cricket/trade/visits to India. . Further to the article, think strategically, not emotionally. EU is a successful economic zone only because first and foremost, EU countries developed mutual respect for each other, which led them to a combined defence and trade alliance. Unlike Pakistan, India has a lot of ground to cover to not only respect its neighbors, but developing some self respect as well.

sameer | 9 years ago | Reply @Khan ....if their is no trade till Kashmir issue resolved.....then why Pakistanis demanding Visa.., Pak players entry in IPL and cricket series with India???.... make it clear That till Kashmir issue is resolved there is no trade...no cricket....no diplomatic relations with India

singh | 9 years ago | Reply At the same time, pak must get rid of its habit of blame game/hatredness towards india.@Haider:

vicktor d'souza | 9 years ago | Reply @Tepper: Somehow if those nukes could be used to generate energy, that would be a good start; perhaps contained in a magnetic field ...?

vicktor d'souza | 9 years ago | Reply @Haider: Pakistan should also cut its population growth; less people, less problems. With limited resources emphasis should be on quality rather than quantity.

Vectra | 9 years ago | Reply So then 1st start with giving MFN to India and complete your WTO obligations which is still pending.

Khan | 9 years ago | Reply We can only progress ahead with India once Kashmir issue is resolved once and for all.

Juggernaut | 9 years ago | Reply Why afraid of doing business with India...come on grow up...

Tepper | 9 years ago | Reply Everything of what he has said makes sense. Pakistan must start thinking about resurrecting its economy. I'am sure no one wants to end up like Greece. Though i'am not sure what kind of bankruptcy would one qualify for with 100 nuclear weapons in possession!

Haider | 9 years ago | Reply First Pakistan should concentrate on ending loadshedding then focus more on exports

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