ISLAMABAD: While welcoming the China Pakistan Economic Corridor (CPEC), Pakistan Business Council (PBC) has sought “critical debate” within Pakistan on investments under the CPEC. 

“Questions like how much additional growth would be generated, additional jobs created, increase in exports, impact on existing industry in Pakistan, etc., need to be answered,” said the Council, a private sector non-profit Company which has 55 of Pakistan’s largest businesses including multinationals as its members.

PBC argued that the likely impact on Pakistan’s future balance of payments from repayment of debt or equity investments under CPEC projects also needs to be clarified.

Commenting on Pakistan’s Free Trade Agreements (FTAs) the business policy platform formed in 2005, said that FTAs have failed miserably to deliver, yet the appetite of the Ministry for signing more FTAs seems insatiable.

Pakistan’s exports which stagnated from $ 24-25 billion levels for the last two years have seen a significant drop in the last calendar year. Pakistan’s current export levels are roughly half of its imports. At current levels Pakistan is headed for a major balance of payments crisis.   

Pakistan’s net exports to China decreased by $ 0.3 billion in 2015 with the difference between exports and imports reaching $ 9 billion. At almost 25.04 per cent China holds an important place as Pakistan’s trading partner. Reported imports from China at 25.04 percent is significantly less as compared to exports at 8.75 percent.

Imports have increased steadily from the top five items. In 2015 organic chemical imports from China moved up one place to number four.  Man-made filaments are the latest addition in 2015 to the top five imports from China. “Despite PBC’s repeated requests for a moratorium on fresh FTAs the Commerce Ministry is currently busy in finalizing phase II of the China Pakistan FTA as well as FTAs with Thailand, Turkey and South Korea, “ says the group in its latest analysis of manufacturing data of selected items.

Pakistani industry is being destroyed – ceramic tiles, paper and paperboard, electric motors, footwear, readymade garments to name a few – those that have already been wiped out include stationery, toys, bicycles, electric heaters etc. In the absence of a level playing field for domestic manufacturing, no amount of improvements in the supply of energy will make a difference to investments and jobs in the manufacturing sector.

According to the advocacy forum, massive under-reporting or mis-declaration or under-invoicing in imports continues. In 2015, the gap between just Chinese reported exports to Pakistan’s reported imports from China has widened to $ 5.4 billion. Since the signing of FTA with China in 2006,  total” unaccounted for imports from China” made up a whopping $ 25.8 billion in un-taxed imports.

The PBC has supported trade with India as it believes that regional trade promises to be the next growth opportunity for Pakistan. PBC, however, is of the view that level playing field should be ensured to Pakistani businesses especially in the areas where Pakistan has a competitive advantage e.g. cement, textiles and some agricultural products.

Since 2013, PBC has been tracking trade partners between Pakistan and India and has noted with concern that though India has granted Pakistan MFN status in 1996 there has been no significant increase in Pakistan’s exports to India. One of the major reasons identified by the PBC is the web of elaborate NTBs that India has in place for defending its domestic industry. Pakistan’s imports from Malaysia declined by $ 370 million, and exports declined to $ 186.2 million from $ 233.9 million in 2014. Animal, vegetable fats and oils’ imports have seen a sharp decline since 2011, though still remaining the highest import quantity. Man-made filaments’ and aircraft, spacecraft and parts’ have scored a position in top five imports replacing ships and boats.

Commenting on trends in Pakistan- Afghanistan trade, the advocacy forum says that exports to Afghanistan have declined by 157 million in 2015. Imports, on the other hand, have decreased marginally by $ 2 billion. Overall bilateral trade has declined by $ 159 million in 2015. With the deteriorating security situation in Afghanistan and as international troops withdraw, further decline in bilateral trade can be expected. It is perceived that a significant portion of trade between the two countries is informal and not captured in official data. 

PBC says that imports of primary raw materials destined for non-existent industries as well as products for which there is no significant demand in Afghanistan continues. The import of black tea by Afghanistan, a nation which traditionally does not drink this type of tea has increased its imports of black tea by 150 per cent in 2015 over the 2014 figure. —MUSHTAQ GHUMMAN