PAKISTAN: Tapping New Export Markets

Written by Mohiuddin Aazim • November 2011

Bangladesh provides a ready market for Pakistani goods and further investment in trade could yield very positive results. In the fiscal year ending June 2011, Bangladesh emerged as the seventh largest export market for Pakistani products after USA, Afghanistan, UAE, China, Germany and UK. Export earnings from the erstwhile East Pakistan crossed the $1 billion mark, showing a phenomenal annual increase of over a hundred percent.

Pakistan must penetrate deeper into Bangladeshi markets to ensure continual growth in export earnings from within the SAARC region. Businessmen argue that there is great demand for Pakistani goods in major cities of Bangladesh due to similarities in preferences and tastes of consumers. Bangladeshis are fond of Pakistani wheat, rice, vegetables, fruit, meat and dairy products. Pakistani cotton yarn and textiles including towels and bed sheets are also very popular. Tanned leather and medium to high-value added leather products and footwear could also constitute a large percentage of Pakistani exports to Bangladesh. As for low-value added leather products and footwear, China and India are the main suppliers. Some Pakistani cotton lawn-makers have also shipped consignments of popular brands of Pakistani lawn suits for ladies.

In recent years, half a dozen Pakistani textile millers have set up factories in Chittagong to take advantage of cheaper labor and cheap gas and electricity tariffs. Old and new textile machinery from Pakistan has been used in these units, thus boosting Pakistan’s export earnings from Bangladesh. Pakistani motorbikes and cars as well as some brands of cement have also found new export markets in the former East Pakistan. Pakistan has been producing good quality paints and varnishes, ceramics and glasses, electric cables and a host of other such items, some of which are being exported.

Pakistani jewelry, both gold-made and artificial, along with Indian jewelry is also a favorite imported item for Bangladeshi womenfolk. During a gems and jewelry exhibition held in Karachi some months ago, Bangladeshi buyers showed keen interest in modern, newly-designed jewelry and struck multi-million dollars deals with the producers.

Solid economic growth in Bangladesh in the last few years with an average GDP growth of over five percent has given birth to consumerism and many young Bangladeshi men and women now have a higher level of disposable income. Apart from explaining the growth of Pakistani exports to its brotherly SAARC country, this trend also predicts the possibility of exporting modern household items such as TV, VCR and VCD sets, refrigerators, deep freezers and washing machines.

Bangladesh being the most congested country in the world is short of cultivable land and is working with Sudan and Morocco to ensure long-term lease agricultural land for producing food crops. However, this plan will take several years to yield the desired results and till then the country is expected to continue importing food items. With little effort, Pakistan can grab a sizable share of Bangladesh’s multi-billion dollar food imports market.

The chemical industry in Bangladesh leaves much to be desired. Companies like Engro, Fauji and Fatima Fertilizer can tap vast opportunities of exporting industrial chemicals. Chairman of Fatima Fertilizer, Arif Habib, says once his fertilizer manufacturing plant attains full capacity within a year or two, he also plans to export fertilizers to Afghanistan and Bangladesh. Sport goods, cutlery, carpets and surgical instruments from Pakistan are all in high demand in Bangladesh. But recently, cheaper Chinese products have emerged as a real challenge. Where pharmaceutical products are concerned it is India, not China that gives Pakistan tough competition.

Facing dire economic hardships, Pakistan has much potential to increase its export revenue by tapping into the Bangladeshi market. With much to gain and little to lose, it is easier for Pakistan to trade within SAARC countries. However, it is critically important to maintain standards and transparency. Trade experts lament that in the mid-2000s Pakistani exporters had indulged in heavy under-invoicing of tractor exports to Dhaka and on detection of this unscrupulous activity, tractor exports had come to a halt. As a result, China and other countries had taken over the lost market. This is a common occurrence and Pakistan cannot afford to lose whatever little markets it can ensure. Unless such practices are discouraged, sustainable growth in exports cannot be ensured.