KARACHI: Pakistani exporters are fast losing ground in Commonwealth of Independent States (CIS) markets. Sources attribute the decline to the aggressive strategy of competitors in specific product categories and trade policy.
There is a significant fall in Pakistani exports to the states of the former Soviet Union. In Azerbaijan, particularly, Indian rice exporters have successfully displaced Pakistani exporters of basmati rice and assumed a predominant position in the market.
Beside India, according to sources, most competitors hold an edge over Pakistan in terms of both price and quality. Iran and Turkey are pushing home the advantage and exploiting their racial, cultural and linguistic ties with Central Asian nations.
Moreover, trade amongst CIS members including Russia, Georgia, Belarus, Kazakhstan, Uzbekistan, Turkmenistan, Kyrgyzstan and Moldova is free from custom duties and only a 18 percent Value Added Tax (VAT) is charged. For countries outside the association, a maximum of 15 percent customs duty and 18 percent of VAT alongside custom handling charges is levied; an aggregate of 36 percent, the sources added.
Sources also pointed out that many foreign companies, especially from within the CIS, Turkey and Iran have established offices and outlets to generate fresh business opportunities and maintain links with local importers. “This has becomes more important in the unique business culture of Azerbaijan where documented trade through banking channels is limited and economic activity is essentially controlled by powerful monopolies,” they revealed.
According to a recent report issued by the Pakistani commercial attache in Baku, for Islamabad to gain a strong foothold in the Azeri market, Pakistani businessmen must open outlets and actively promote their brands.
The commercial counsellor, in his report sent to the Ministry of Commerce, voiced concern that the country’s rice was fast losing its share in Baku’s market to Indian exports. Unless measures are in place to control quality standards of basmati rice, important Pakistani good will its customers, it warned.
Other exportable items highlighted included wheat products, engine oil, medicines, pouches and bags made from paper and boards, whitened cotton fabrics, knitted head cloths and soya oil extracts. According to the report, there is strong potential demand for these products.
It is pertinent to mention that the two countries have previously signed multiple agreements on tourism, trade, customs, narcotics trafficking, international terrorism, and cooperation in the fields of IT, food, agriculture, and trade.
Significantly, it had also been agreed to cooperate in gas transmission and distribution sectors in all fields, including cross-border gas pipelines through the sharing of expertise and technology transfer. It is notable that due to their geostrategic position, Azerbaijan and Pakistan are poised to play a vital role as hubs for the flow of energy resources to Europe and Asia, respectively. The current volume of bilateral trade between Pakistan and Azerbaijan stands at no more than $11 million per annum. Pakistan forged diplomatic relations with Azerbaijan in June 9, 1992 and has since lagged in trade compared to other countries like Italy, Russia, Turkey, Iran, Germany, India and China which have forged strong commercial links with Baku.
