KARACHI – While Pakistani exports to Russia during the first six month of this financial year have picked up by almost 37.79 percent compared to the corresponding period last year Pakistan’s overall export to the country could not cross $100 million, amounting only 0.06 percent share of the lucrative Russian market valued at around $196.8 billion. Despite exports of $77 million made during July to December 2010 as compared to $55.88 million during the corresponding period last year, Pakistan has struggled to develop strong commercial relations with the Russian Federation with a population of over 145 million, a huge market for Pakistani goods due to various impediments, sources told Pakistan Today.
Besides, under the existing balance of trade between the two countries, Pakistan is at a highly disadvantageous position. Elaborating on the reasons for the dismal situation with regards to exports to Moscow, sources said that despite the disintegration of the USSR and the introduction of market based economy in Russia, the true potential of Pakistan’s trade with the foreign country could not be realised in the post Soviet era due to the negligence of the Pakistani government.
According to sources, higher freight rates between the two countries was one of the major impediments as most of Pakistan’s exports are shipped to the Baltic port of St Petersburg which is a distant destination and entails transport expenditure of up to $5600 per 40 foot container. They underlined that Pakistani exporters need to explore other destinations for shipments such as the Black Sea port of Novorossiysk which has a relatively lower freight rate in the case of Pakistani exporters.
In addition, Pakistani exporters have traditionally focused on the European part of Russia. The Eastern or Siberian Russia which, contrary to the common knowledge, has cities with sizeable population remains overlooked by Pakistani exporters. These cities with comparatively middle to lower income segments of population are more suitable for Pakistan’s exports, they stressed.
China, a major competitor of Pakistan in the Russian Federation has preferential market access due to special market access arrangements between China and Russia. Turkey is another major player. These countries have natural advantage due to geographic affinity and lower freight costs. China also has the advantage of direct access to whole of the southern Russia through road and rail links. Both the countries are taking increased market share in the products like sports goods, leather and apparel.
According to the sources, the Preferential Market Access for Least Developed Countries (LDCS) including Bangladesh which is a major competitor in apparel market has created a major hurdle in higher Pakistani apparel exports to Russia. The country’s exporters, who mainly focus on traditional sports items like footballs, are neglecting the huge untapped market for increasingly popular winter sports goods like skating, skiing and ice hockey, a Russian national sport.
Pakistani exporters are also faced by the pressing lack of a Pakistani bank in the foreign country. Due to the weak international banking system, trade in Russia is mostly done through DA and cash basis. Additionally, Islamabad has yet to establish a warehousing facility in Moscow which is needed to maintain stocks of exported goods in the host country. Beside the geographical and market issues, the Russian Mission in Pakistan seems to have imposed a stringent visa regime for Pakistani exporters.
This, they say is a major factor in the failure of trade events and disruption of official trade delegations to Russia. Pakistan’s major exporting products include cotton cloths, art and synthetic textiles, fruits, onyx manufactured, surgical instruments, bedware, rice, towels, sports goods. Major imported products from Russia are cereals, fertiliser, steel and machinery.
