Private sector should guide policy makers in India, Pakistan in the larger interest of the two economies: Speakers
Lahore, January 10, 2013 (PPI-OT): Identifying products for trade between Pakistan and India through enhanced opportunities is not a problem but realizing trade potential will be a problem in coming months as the major impediments are related to transport and logistics infrastructure at the land borders, lack of testing facilities, banking facilities, recognition of standards, customs and valuation.
These conclusions were drawn at a Roundtable Conference jointly organised by the Lahore Chamber of Commerce & Industry (LCCI), Indian Council for Research on International Economic Relations (ICRIER) and Lahore University of Management Sciences (LUMS).
The speakers belonging to cross section of society including Presidents of Chambers of Commerce, leading businessmen, sector experts and academics, were of the view that even though the visa regime is an improvement over the earlier one, it is only an incremental improvement. An important category that remains missing is the “work visa”, which is an essential requirement in this regard.
The key speakers included LCCI President Farooq Iftikhar, Director ICRIER Rajat Kathuria, Deputy Indian High Commissioner Gopal Baglay, Joint Secretary Ministry of Commerce Rubeena Athar, former Finance Minister Dr. Salman Shah, LCCI Senior Vice President Irfan Iqbal Sheikh, Vice President Mian Abuzar Shad, SAARC Chamber Vice President Iftikhar Ali Malik, former LCCI Presidents Ijaz Butt, H. Karim Baksh, former Vice President Aftab Ahmad Vohra, Professor Nisha Taneja, Country Director International Growth Centre LUMS, Ijaz Nabi and DG Mumbai Chamber of Commerce and Industry Atindra Sen.
The discussions focused on trade and investment possibilities, and non-tariff barriers. It was felt that identifying potential products for trade was not a problem, but realization of trade faced several impediments.
There was a lot of interest in FDI flows. The sectors identified for investment included energy, fertilizers, agriculture and floriculture, mining and mining equipment, dairy and livestock, tourism and tourism infrastructure, textile machinery, biotechnology, seeds, herbal and herbal extracts, heavy mechanical products, and entertainment. One suggestion that received a lot of support from both sides was the idea of holding road-shows on both sides to bridge the information gap on possible investment opportunities.
The speakers said that private sector should take the lead to evolve a broader vision to guide the policy makers in the two countries in the larger interest of the two economies. “There would be some gainers and some losers but the ultimate beneficiary would be the people of Pakistan and India who are an important stakeholder to the process of normalization of trade between Pakistan and India.”
There was, however, a consensus that trade is an important route to address economic challenges and concerns. Speaking on the occasion, the Indian Deputy High Commissioner Gopal Baglay recounted the confidence building measures India has taken so far. While quoting the Indian Commerce Minister, Gopal Baglay said that for every step Pakistan takes, India is ready to take two.
In his opening remarks, the LCCI President Farooq Iftikhar said that indirect trade’s magnitude between Pakistan and India is greater than that of direct trade and presently estimated to be around US$ 3 billion. He said that it can render more benefits to the consumers and become a source of economic benefits to both the countries if traded directly through land routes.
He said that considerable reduction in lead time and freight charges will result in much predictable and stable inventory management as well. It is need of the hour to open more trade routes between the two countries and also upgrade facilities and services existing at border points in order to handle much expected bigger volume of trade in days ahead.
The LCCI President said that serious study to move forward while taking care of concerns shown from both the sides has yet to be framed in order of preferences. For that matter NTBs are required to be removed and the level of acceptance to various certificates issued by the concerned authorities on either side needs to be enhanced.
Farooq Iftikhar said that frequent interaction between the private sectors representative is the key to success. He said that relaxation in travel restriction needs to be further modified such as removal of invitation clause in the current visa regime between two countries.
He said that LCCI has also proposed the establishment of purpose-built infrastructure at border points where businessmen can freely interact, hold business meetings and exchange samples etc. In second phase, warehouses and trade facilitation centers can be opened in each other countries or in neutral territory to further expand the trade relations.
The LCCI President said that India can reach out the markets of Afghanistan and Central Asian Republic States through Pakistan. Similarly, Pakistan can market through land route our products to countries like Bangladesh, Sri Lanka etc.
He said that shifting from positive list of tradable items to negative list has surfaced as a major development for which the Ministries of Commerce from two countries need to be complemented. In the same way, the go-ahead given by the governments of Pakistan and India to open bank branches in each other cities and exploit investment opportunities are welcoming steps.
He said that rather than following the conventional way of international trade, we need to improvise for the sake of mutual survival and economic benefits. Let me quote the famously known Mercosur Automotive Policy agreed between Brazil – a strong economy and Argentina – comparatively weaker economy. With a view to minimizing the adverse effects of intra-regional trade liberalization on employment and trade balance, the governments of both the countries negotiated an elaborate system for managing intra-regional trade in the automotive sector.
He said that we must follow this or similar model to address the reservations of those particular sectors which are showing some resistance to trade with India. In Mercusor Model, there are provisions for compensated trade through a system whereby any trade imbalances are monitored, controlled and even fined, if required, thus providing some reassurance to specific industries. This idea should also be discussed during the proceedings of the conference and we will welcome to have your recommendations on it.
He said that our National Tariff Commission must respond swiftly to any adverse effect on Pakistan’s industry in light of finished products imports under SAFTA & WTO trade regimes. They must also take into consideration the subsidy of the Indian government to their agriculture sector which may adversely affect our agriculture.
Farooq Iftikhar informed the participants that LCCI has established a Dispute Resolution Center in collaboration with IFC a private Arm of World Bank which can be very helpful in settling trade disputes between businessmen of both the countries.
For more information, contact:
Lahore Chamber of Commerce and Industry (LCCI)
Lahore -54000, Pakistan
Tel: +9242 111 222 499
Fax: +92 42 636 8854