Pakistan seeks to enhance bilateral trade with Russia

A business delegation of leading exporters of Pakistan, are expected to visit Russia next month to enhance trade cooperate. Pakistan’s current share in huge Russian global imports of over $196.8 billion was only around $300 million. The business group led by Senator Haji Ghulam Ali, President Federation of Pakistan Chambers of Commerce and Industry (FPCCI) is scheduled to visit Moscow on October 9, 2011, sources told Profit.
As the President Asif Ali Zardari and his Russian counterpart Dimitry Medyedev, during the Quadrilateral Summit in Tajikistan recently, have agreed to further strengthen bilateral relations between the two countries with cooperation in trade, economic, scientific and technological fields, the visit of exporters would try to explore ways of further enhancing bilateral trade. According to the sources the 30 member trade delegation of FPCCI will hold meetings with various trade bodies in the foreign country to tap the potential market of Russia which has been neglected by Islamabad during the last 60 years.
Though president Zardari has emphasized on the need to materialise full existing trade potential between the two countries while enhancing the existing trade volume of about $300 million to $1 billion, Pakistan has failed to build upon the existing trade potential with the densely populated Russian Federation. Besides, under the existing balance of trade between the two countries, Pakistan is at a highly disadvantageous position. Despite the disintegration of the USSR and 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. While expounding upon the impediments for bilateral trade, sources said that serious efforts have not been made by both sides to remove trade hurdles for increasing economic cooperation.
Higher freight rates is the main issue that needs to be addressed by both countries as most exports are shipped to the Baltic port of St. Petersburg which is distant destination and involves cost of up to $5600 per 40 ft. container. Therefore Pakistani exporters need to explore possibilities of shipments to the black seaport of Novorossiysk which has a relatively lower freight rate from Pakistan.
Pakistani exporters have traditionally focused on the European part of Russia. The Eastern or Siberian Russia which, contrary to common knowledge, has cities with sizeable population remain neglected by Pakistani exporters. These cities with comparatively middle to lower income segments of population are more suitable for Pakistan’s exports. According to sources the Preferential Market Access for Least Developed Countries (LDCS) including Bangladesh which is Pakistan’s major competitors in apparel market has caused a setback to Pakistan’s apparel exports to Russia. The country’s exporters, who mainly focus on traditional sports goods like footballs, are neglecting the remaining huge unexplored market for growingly popular winter sports goods like skating, skiing and ice hockey which is the Russian national sport.
Though President Zardari has also offered the Russian Banks to open their branches in Pakistan while entering in a currency swap agreement, the exporters of Pakistan are facing serious problems for not having a Pakistani bank in the foreign country due to weak international banking system that is hampering trade in Russia which is mostly done through DA and cash basis.
Pakistan is also yet to establish a Warehousing Facility in Moscow which is needed to maintain stock of exported goods in the host country.
However, sources believe that fresh development in Dushanbe where Russian President showed his country’s interest in various important energy projects of Pakistan such as TAPI, oil and gas exploration, hydel power production and distribution of coal based power generation; will go on to resolve trade impediments through diplomatic channels.
It is worth mentioning here that Pakistan’s major exporting products are Cotton Cloth, Art and Synthetic textiles, Fruits, Onyx Manufactured, Surgical Instruments, Bed ware, Rice, Towels, Sports goods etc. Major importing products from Russia are cereals, fertilisers, steel, machinery etc.