Daily Times

At the close of fiscal year 2016-17, Pakistan joined the lists of economies worth over $300 billion. It achieved a growth rate of 5.3 percent in the said period, the highest in a decade.

The economic rebound has been attributed to a low oil prices in the international market – giving Pakistan’s forex reserves a breather – and the much-touted China-Pakistan Economic Corridor (CPEC). Despite all the concerns and different narratives being propagated by different groups, the rising growth rate does show impact of CPEC – that has start delivering positive results for the country.

While there are some legitimate concerns about the monopoly of Chinese companies under the CPEC and Pakistan’s ability to repay the soft loans, the government is betting on the foreign direct investment from other countries to balance things out. So far, things are not bullish. But there have been signs of things to come.

Many countries, including Iran, Saudi Arabia and Russia among others have shown interest in being a part of the mega project. Recently, a Turkish company acquired an electronics company in Pakistan, while a Dutch firm stuck a deal with Engro Foods, Pakistan. The stock market has also been bullish for the past four to five years, with Pakistan Stock Exchange being upgraded to MSCI’s emerging market’s category.

Amid all this, the news of the United Kingdom’s willingness to participate in joint ventures with Pakistan augurs well for the later as it looks to boost its growth rate to cater to the large middle-class.

Recently, a joint statement issued by the UK Minister of State for Trade Policy, Mr. Greg Hands and Pakistan’s Minister for Commerce and Textile, Mr. Muhammad Pervaiz Malik reaffirmed the close cooperation between the two countries on the occasion of 70th anniversary of bilateral relations between the two countries.

The statement read that the mutual relations will be strengthened through trade policies and links between businesses in both countries.

The current trade between the two countries is approximately £2.4 billion while 120 British companies are operating in Pakistan. The UK also supports Pakistan through the GSP plus scheme, which has encouraged sustainable growth and development in Pakistan.

But the real test lies in the days to come as the UK prepares to leave the EU. Both the countries need to ensure a smooth transition in respective trading agreements. The joint statement said that the intention of the UK government is to maintain these preferences on a bilateral basis, with a generous access to the UK markets.

Here lies the test for relevant ministries and officials to strike best possible deals for Pakistan. Since the UK will be looking to boost its trade ties on an individual basis now, and has also showed its willingness to join the CPEC, there needs to be comprehensive look into the benefits Pakistan can derive from the new agreements.

China is Pakistan’s largest trading partner at the moment but the balance of trade is heavily tilted toward Pakistan’s all-weather friend. Since Pakistan doesn’t produce that many goods of importance for the Chinese, it needs to look towards other opportunities abroad to balance out the deficits.

To support UK companies exporting to Pakistan and for Pakistani buyers of UK goods and services, the UK export credit agency, UK Export Finance (UKEF) support is to more than double to up to £400 million, meaning an additional £200 million for the UK exporters to win, fulfil and get paid for export contracts, and Pakistan’s buyers access finance to source high-quality goods and services.

Given the UK government’s support for its exporters, Pakistan should be aware of the challenges that they pose for the domestic market and how to protect it.

Moreover, the focus should on starting joint ventures between the two countries, as Pakistan needs to tackle the problem of unemployment, instead of relying on import only – which have been a source of strain on Pakistan’s fragile forex reserves.

From textiles to pharmaceuticals, engineering and sports goods, to finance, legal or business services, Pakistan has a huge potential to the global economy and it needs to utilise its options wisely to gain maximum benefits.

The writer is a freelancer and can be reached at ufaridi@hotmail.com

Published in Daily Times, September 26^th 2017.