Pakistan: regional trade artery?

The need of the hour for Pakistan is now to rethink how we should plan for the immediate future given the remarkable changes being wrought in the region. It is disheartening that in past we concentrated on domestic issues while neglecting to frame a strategy of development for the outside world, in particular ignoring neighborhood.
It is a well known that there have been significant alterations in the structure of global production, system of trading and the world of finance. Pakistan remains dependent on external flows, but FDI has dropped more than 49 percent while only expatriate remittances have improved, it is plausible that with a little more effort, the country could fetch about $10 billion. Due to instability and poor governance during the last three years, Pakistan is not considered suitable for long term investment. The burning concern is that country is dependent on external flows in order to not only boost investment but to meet its external obligation as well. Austerity remains unpalapable to our politicians nor government functionaries, the trade and fiscal deficit gap remains. We remain totally dependent on export of cotton and its products and rice, our traditional exports, whilst cotton yield is stuck around 12-13 million bales whilst India is well ahead with 31 million bales. Bangladesh a country without cotton production but has excelled in exporting garments valued at over $15.5 billion alongside increased demand for golden fiber jute which is being revived due to the fact that it is an environmental friendly Hessian product, which will give a fillip to export of jute products which has virtually died down.
All countries in the neighborhood are experiencing enormous change that may have bearing on the future economy. Policymakers responsible for economic and finance must be cognizant of these changes. It is notable that Afghanistan, Iran, India and China are all evolving with both positive and some negative aspects. China’s appetite for natural resources in particular energy and raw material is unbelievable, thus China is augmenting investment in Afghanistan and Middle East. Some of these resources could be transported through corridors that connect China from Pakistan to the source of supply, Indians are raising their imports of coal and have invested in Iran for LNG.
In 2003, when the Shipping Protocol between India and Pakistan was signed, there was stiff resistance in many quarters and it took three years to finalise the deal in Delhi in December 2006 after convincing all concerned that Pakistan would be a beneficiary. It proved true that due to large volume of Indian trade, it was PNSC which benefited from transporting oil and other cargoes destined for India. In view of precedent set, there is strong opinion that Pakistan must open its corridors to India for transportation of natural resources and products to Afghanistan, Central Asia and Pakistan. Gas from Iran and the Middle East can be transported through Pakistan to both India and China who desperately seek energy. Pakistan is strategically located to become a major artery of commerce for rapid changes taking place along our borders.
A major change in mindsets is imperative for Pakistan’s position with respect to the use of its territory for the purpose of transit, particularly in respect to India. The logic of security and geopolitical considerations stalls progress in today’s world. Let us ponder coolly analyze and study the benefits that may be generated for our economy. The cost benefit issue is equally important and we must work along these lines thereby allowing transit right to India which will give a significant bump to regional trade. The motorways constructed with huge investments and great cost of economy remains under-utilised. The revenue generated charging transit dues to Indians will assist us building hinterland connectivity from Gwadar to Indus trade corridor and possibly extending into Afghanistan and we may expand our motorways to Karachi and Tharparkar border as well, opening new vistas for the backward regions. Pakistan, in order to become regional corridor as the case of Turkey, has to do accession of TIR convention (Transit International Routier or International Road Transit). The main goal of convention is the simplification of the customs transit operation relative to commercial transaction between member countries. It allows the transportation of goods in suspension of duties and taxes from a departure custom Office of two member countries. Some initial work was done by Pakistan ICC chapter in 2004, holding a TIR seminar, to use TIR carnets, and a guaranteeing association so that a person using TIR system stands security up to 60,000 Euros.
We can generate substantial revenue as transit dues in foreign exchange. We will be able to improve our trade with our neighbors based on gravity model as priority to neighborhood exports and trade. Let us change, the only way to progress.

The writer is a member Board of Governor World Maritime University, Malmao, Sweden.