Exports to Iran drop by 37.5pc

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KARACHI – Pakistan’s export to Iran suffered a dent, dropping by 37.5 percent during 2009-2010 in comparison with the last financial year. This slump was a result of the increase in import duty from 25 percent to 50 percent by the Iranian government. Iranian government had increased the ad valorem safeguard duty on import of various goods by 100 percent during 2009-2010. Pakistan’s export, recorded at $360 million in 2008-2009, dwindled to around $225 million, sources said.
Though imports from Iran has increased by 12 percent as Islamabad imported goods worth $896.5 million from Tehran during the last financial year compared to import of $801.6 million in 2008-2009. However, sources said that “as Iran provides 90 days interest free differed payment facility on purchase of crude oil, Pakistan now imports almost 1/3 of its crude oil requirements from Iran while two years ago, Pakistan was importing only nine percent of its requirements from the neighboring country.”
Sources disclosed that Basmati Rice, a major export item of Pakistan to Iran, has reduced to $117.4 million in 2009-10 from $260.4 million in 2008-09. The export of other varieties of rice also decreased from $68.4 million to $25.6 million, sources added. Sources cited an increase in foreign duty and a reduction of rice price in international markets as the primary reason for the massive decline in exports.
In addition, the country’s banks’ policy of not accepting letters of credit (LCs) of even neighbouring countries not banned by United Nation or US had adversely affected bilateral trade. Though UN or US has imposed the ban over five major banks of Iran for nuclear issue, Pakistani banks do not accept LCs opened by sanctions-free banks of the foreign country, causing significant losses to the country’s exporters, sources said.
Interestingly, Indian Rice Exporters Association (IREA) in a recent statement has also expressed reservations over the US sanction issue saying that “With stiff competition from Pakistan, payment crisis with Iran (because of India’s bowing to US pressures) and European countries imposing of what New Delhi calls ‘unreasonable’ pesticides standards, India’s basmati rice exports are expected to decline sharply during the current fiscal. Indian rice exports may dip by 10 percent in terms of volume and decline by as high as 20 percent in value terms”.
However, export of fruits, plastic material, vegetables, surgical goods, papers, molasses, cotton cloths and other textile fabrics increased during the last financial year, sources added. Being the major export item, Pakistani rice faced tough competition in Iran from India, Vietnam and Uruguay. Iran’s annual import requirement of rice of 0.8-1/0 million metric tons was mainly filled from Pakistan, India, Vietnam and Uruguay, however, the better quality rice i.e. basmati and sela was imported from Pakistan.