S. M. Muneer emphasize the need of promotion of bilateral trade between Pakistan and India

Islamabad, June 06, 2012 (PPI-OT): Mr. S M Munner President India Pakistan Chamber of Commerce and Industry (IPCCI) emphasized on the need of promotion of bilateral trade and economic relations and is of the opinion that the two countries can not afford any further disputes which may impede and hurdles in promotion of bilateral trade relations particularly. This was stated by Mr. S M Muneer President IPCCI in a dinner meeting with Mr Sharat Sabarwal High Commissioner of India in Pakistan

In his address Muneer admired and appreciated the pivotal role of Shri Sharat Sabarwal for his support as High Commissioner for India in Pakistan which has created enabling environment paving the way for enhancing trade relations and his trade diplomacy encompassing diversity, optimism, openness and friendship is appreciable.

Mr. S .M Muneer who took the Presidentship of IPCCI in November 2009 informed that India Pakistan Chamber of Commerce an Industry was formed under an MoU between Federation of Pakistan Chambers of Commerce and Industry (FPCCI) and Federation of India Chambers of Commerce and Industry (FICCI) signed on 10th April 1999.

The objective of IPCCI was to play a significant role in forging a strong economic partnership between Pakistan and India encouraging private sectors of the two countries to take the lead to drive the bilateral relationship by defining a clear road map and removing all road blocks.

He further said that the Executive Committee and General Body Meeting of IPCCI could not take place despite his best efforts. The main reason behind this was some unpleasant events which badly disturbed the relations between the two countries and hampered the official bilateral trade. But by the grace of God the things are now improving particularly for the last one year and the progress in this regard is visible which is not only encouraging but beneficial to both the countries in terms of improving their economy and overcome their unnecessary problems particularly with respect to the challenges of poverty being faced by both the countries, Muneer added.

Mr. S M Munner said that the Credit for improvement of the bilateral trade and economic relations goes to the Commerce Ministers of India and Pakistan and surely the role played by the Commerce Secretaries and High Commissioners of India and Pakistan.

He also commented on the current state of the affairs between both the countries with the particular focus on trade and economic relations. The business community of both the countries are of the firm belief that normalization of trade and economic relations would create a win situation bringing substantial benefits to both the countries for peace and stability and strengthen their economy and reduce unnecessary political tension which will also bring about a great deal of improvement in the entire region.

He said that in last one year there have been some healthy developments in resolving unnecessary constraints and resumption of better trading relations. The businessmen convinced that liberalization of bilateral trade would be in their mutual interest and a good momentum has been built by frequent interaction between the governments and private sectors of both the countries for which the credit goes to High Commissioners of both the countries.

He stated that a major break though came in the form of Pakistan decision to grant MFN status to India and moving away from a highly restrictive positive list of items that could be imported from India to a negative list.

The negative list will also be phased out by December 2012 and there will be no restrictions on tradable items. Out of 8100 items only 1.5 percent or 1209 items are placed in the negative list. The remaining 6800 can now be imported from India, while the previous positive list had only 1964 items. This is a significant change whereby 85 percent of tradable goods can be procured from India. The SAPTA which both India and Pakistan have signed will gradually phase out all tariffs on traded goods with zero tariffs by 2016.

He said that inspite of many hurdles and obstacles India Pakistan trade has recorded almost a tenfold increase between 2001 and 2011 reaching a level of U$ $ 2 billion. Unofficial trade, including that through third countries is also estimated at almost the same amount.

Pakistan estimates based on different assumptions and models indicates a jump ranging between five to tenfold from the current levels if all the tariff and non tariff barriers are dismantled. Because of low transport costs, dismantling of tariff and non tariff barriers, grant of MFN status to India by Pakistan and improvement of logistics arrangements the total volume of bilateral trade should be able to raise to approximately US$ 10 billion annually within next 3 years.

The full scale realization of the potential of trade will take some time but like a newly planted sapling it requires tender care and protection from strong winds and other extraneous influences that will otherwise uproot this weak plant.

He said that Pakistan realizes that the liberalization of bilateral trade between Pakistan and India will not only lend impetus to both economies in a beneficial way but also remove the barriers to the regional integration within South Asia.

He suggested that Pakistan should take advantage of strategic location between two most populous and high performance economies i,e China and India. With the signing of FTA with China Pakistani markets and producers have already adjusted to reality of cheaper imports from China.

They do not longer consider that the Indian products flooding Pakistani markets as a threat and displacing domestic industries carries much substance. In some areas such as fashion wear, bed wear, home textiles, cement etc., Pakistan would be able to do much better and penetrate a much larger market. Overwhelming support from Pakistani businessmen for MFN status to India is partly a reflection of this sense of confidence. Businessmen of Pakistan are anticipating much larger business volumes for themselves for liberalization of Trade which will ultimately benefit Pakistani consumers.

The focus group consultation with the businessmen engaged in Automobile, Chemicals, Pharmaceuticals and Textiles sectors etc. held at Karachi and Lahore during early 2012 revealed strong reservations about the non-tariff barriers imposed by India.

He further stated that few days ago a meeting of the Home Secretaries of India and Pakistan could not finalize the new Visa arrangements and without visa, businessmen of both countries cannot visit each other. It was decided between India and Pakistan that for bonafide businessmen of both the countries multiple visas would be issued for 10 cities valid for one year with Police exemption. Efforts could be made to restart the old Sindh-Rajasthan rail route for cargo service also open up all Trade Routes that existed in 1965.

He also pointed out that the railway connectivity between India and Pakistan for cargo movements is highly irregular and suffers from shortage of wagons and lack of coordination between the Pakistani and Indian Railway authorities. Railway connectivity needs to be further improved.

The shipping links are very expensive and uneconomical, especially for high bulk and low-value products. The bilateral shipping arrangements do not permit loading by ships by one country’s cargo, meant for third countries at the sea port of the other country. This is another constraint for bilateral sea borne trade on the Karachi-Mumbai route.

While commenting on the current status of the bilateral trade he said that Pakistani imports from India are 6% of the total imports whereas Indian imports from Pakistan are merely 0.1% we need to Front Load with Textile, Cement, Chemical and Agriculture exports to India to gain at least 2% market share of total imports into India.

He regretted that more than 42 million people live below poverty line ( Less than 1 $ a day) in both the countries and only aggressive business between the two countries can help their poor masses to improve their livelihood.

In view of this fact and to eradicate the poverty to the maximum extent both countries should resolve the issues/disputes. He added why can’t we have equitable distribution of the Indus Basin Waters, settle Siachin and Sir Creek? As any incident can suddenly tilt this delicate balance and reverse the normalization process. The coming generations of both the countries will never forgive us. Trade must be balanced and both sides should benefit, business will force each governments to change and also improve their governance.

He also emphasized on the need of implementing the decisions of joint communiqué in true letter and spirit. He said that responsibility of private sector particularly the National Chambers of both the countries to play their due role in bringing business community of both the countries more close.

The business community of Pakistan always committed with India to have a serious normalization of relations on the basis of mutual non-interference, peaceful co-existence and respect for each other. He also talked about the agreement between the Reserve Bank of India and the State Bank of Pakistan which was signed in 2005 for opening of branches by two Indian commercial banks in Pakistan and two Pakistani banks in India which had not been implemented yet. Without the provision of banking services, opening of letters of credit, and cross border transactions of funds, trade could not be taken place. Institutions to manage and facilitate trade integration such as those involved in setting standards, quality control, technical regulations, material testing should be strengthened and made user friendly.

He particularly mentioned that he appreciates very much that Mr. Manmohan Singh, Prime Minister of India has declared his vision to move from poverty to prosperity for India and Pakistan and to write a new chapter. The Prime Minister of Pakistan Syed Yousuf Reza Gillani has also made improving relations with India as his Mission.

He suggested that the move to create or form another platform in place of India Pakistan Chamber of Commerce and Industry will hamper the confidence of the business community and he further proposed that High Commissioner to moivate FICCI to hold the Executive Committee and General Assembly Meeting of IPCCI which is long over due in Pakistan.

For more information, contact:
Syed Masood Alam Rizvi
Secretary General
Federation of Pakistan Chambers of Commerce and Industry (FPCCI)
B-1, Federation House, Main Clifton Road,
Shahra-e-Firdousi,
Karachi-75600, Pakistan
Tel: 0092-21-35873691, 93-94
Fax: +9221 3587 4332
Email: info@fpcci.com.pk
URL: www.fpcci.com.pk

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