Selected Trade and Manufacturing Data for Pakistan - A Brief Analysis. May 2015

Transcription

1 Selected Trade and Manufacturing Data for Pakistan - A Brief Analysis May 2015

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3 Selected Trade and Manufacturing Data for Pakistan A Brief Analysis May 2015 i

4 ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Zahra Anum Disclaimer: The findings, interpretations, and conclusions expressed herein are those of the author(s) and do not necessarily reflect the views of the Board of Directors and Members of the Pakistan Business Council or the companies they represent. Any conclusions or analysis based on IDB, CTS, UNCTSD, PBS, The Economists Intelligence Unit and WEO are the responsibility of the author(s) and do not necessarily represent the opinion of the The Economist, WTO, IMF or UN. Although every effort has been made to cross check and verify the authenticity of the data used, the Pakistan Business Council does not guarantee the data included in this work. All data statistics are correct as of 11th April, 2015 and maybe subject to change.

5 Introduction Each year the Research Unit of the Pakistan Business Council (PBC) publishes selected trade & manufacturing figures for Pakistan and briefly analyses the likely impact of a liberalized trade regime on domestic manufacturing 1. The PBC supports free trade and strongly believes that trade, as opposed to protectionism, leads to domestic industry becoming competitive and able not only to defend its domestic market share but also to compete in regional and global markets. However, for this competitiveness to develop, the domestic industry needs a level playing field in its own markets. In Pakistan, domestic manufacturers have to contend with massive under-invoicing & mis-declarations in imports and outright smuggling in the garb of Afghan Transit Trade. A simple example of prevailing unfair practices in 2013 is reflected in the US$4,393 Million difference in the reported figures of actual Chinese exports to Pakistan as reported by China and the figures reported by Pakistan Customs of the value of Chinese imports into Pakistan. Similar is the case of transit trade where large quantities of basic raw material are being imported by Afghanistan for which there is no industry in that Country. 1 Previous year reports can be found on our website iii

6 The Pakistan Business Council The Pakistan Business Council (PBC) is a business policy advocacy platform formed in 2005 by 14 of Pakistan s (now 47) largest private-sector businesses including multinationals. The PBC board is elected by its members for a three year term and is headed by a non executive Chairman. The current Chairman is Mr. Bashir Ali Mohammad while the Vice Chairman is Mr. Atif Aslam Bajwa. The PBC secretariat is professionally managed by a fulltime paid CEO. The PBC is a not-for-profit entity registered under Section 42 of the Companies Ordinance Though it is not required under the Law to do so, it follows to the extent possible the Code of Corporate Governance as applicable to listed companies. iv PBC views the government as a partner and works very closely with various line ministries and key regulators to improve the overall business climate in the country.

7 Objectives of the PBC The major objectives of the PBC as stated in its founding documents are: To provide for the formation and exchange of views on any question connected with the conduct of businesses in and from Pakistan. To conduct, organize, set up, administer and manage campaigns, surveys, focus groups, workshops, seminars and fieldwork for carrying out research and raising awareness in regard to matters affecting businesses in Pakistan. To acquire, collect, compile, analyze, publish and provide statistics, data analysis and other information relating to businesses of any kind, nature or description and on opportunities for such businesses within and outside Pakistan. To promote and facilitate the integration of businesses in Pakistan into the World economy and to encourage the development and growth of Pakistani multinationals. To interact with Governments in the economic development of Pakistan and to facilitate, foster and further the economic, social and human resource development of Pakistan v

8 The PBC s Member Companies vi

9 The PBC s Member Companies vii

10 PBC s Position on Trade with India The Pakistan Business Council supports trade with India as it believes that regional trade is the next growth opportunity for Pakistan. PBC however would like the Government of Pakistan to ensure that Pakistani businesses have a level playing field in India, especially in areas where Pakistan has a competitive advantage e.g. cement, textiles and some agricultural products. In 2013, PBC produced a Study on India Pakistan Trade normalization, strongly recommending the Pakistani government to negotiate with the Indian government, prior to the granting of MFN / NDMA, to ensure that Pakistani exporters have equal opportunity for trade with India. viii PBC was officially notified as the Secretariat in Pakistan of the Pakistan India Joint Business Forum (PIJBF) in June The PIJBF, setup by the governments of Pakistan and India, comprises of 15 prominent businessmen from each country. The PIJBF has already met 4 times since its inception and has formed sector specific task forces to address the impediments in India Pakistan trade normalization.

11 TABLE OF CONTENTS Background... 1 Trade and Manufacturing Data for Selected Commodities... 7 Television Sets... 8 Paper and Paperboard... 9 Electric Motors Tea Ceramics Footwear...13 Tyres Fertilizers Sugar Textiles Articles of Apparel & Clothing Accessories Textiles Synthetic Fabrics, Ready Made Garments Pakistan s Free Trade Agreements Overview of Pakistan s Free trade agreements...21 Pakistan Sri Lanka FTA Pakistan China FTA Pakistan Malaysia FTA Pakistan Indonesia PTA Pakistan Mauritius PTA Export Potential with Selected Partners European Union (GSP+) Total EU Imports from Bangladesh, Pakistan, Sri Lanka and Viet Nam Share of EU s Trade with the World ix

12 x GSP Overview GSP+ and its Workings Benefits of GSP+ to Pakistan Conditions to Retain GSP+ Status Trade with Central Asian Republics Central Asian Republics Limited potential of CAR Regional Trade and Trade with India Trade Prospects within the Region SAFTA is heavily under-utilized Pakistan-India Trade as Percentage of their Inter-SAARC Trade Pakistan-India Trade as Percentage of their World Trade Pakistan-India Bilateral Trade in Pakistan s Top 5 Imports from India Pakistan s Top 5 Exports to India Potential of Exports Sampling of Potential Export Items Trade with Afghanistan Problems of Under Invoicing and Misreporting Comparison of Official 2014 data From Top 10 Import Partners Pakistan India: Difference in Reported Import/Export Figures Pakistan China: Difference in Reported Import/Export Figures Pakistan China: Discrepancy in Import Figures for Selected Commodities Top 10 Imported Commodities under APTTA by Afghanistan... 88

13 Background Government & Industry urgently need to develop a strategy to reduce the trade gap and bring about higher levels of economic growth. Higher and sustained levels of growth are necessary if Pakistan is to benefit from its youth bulge. It is critical to revive the manufacturing sector as this will lead to: Creation of jobs and higher levels of economic activity hence increasing government tax collection Reduction in imports as domestic manufacturers gain domestic market share Increased competitiveness in export markets 01

14 Background The current state of Pakistan s foreign exchange reserves, though stable, owe their positive outlook to a reduction in global oil prices, increase in remittances, as well as the Dollar Sukuk Bonds floated by the government. With Pakistan opting for an IMF program and giving a commitment to maintaining certain levels of FX Reserves, the FX position is expected to be stable in the near term. However in the medium to long term the situation is much more critical, as the ability of Pakistan s exports to fund its imports is weak. The trade deficit has continued to rise, reaching $22.8 B in 2014 from $22.2 B in The current account balance was negative at $3.1B in Trade Deficit Current Account Balance $25.00 $22.8B 02 USD in Billions $20.00 $15.00 $10.00 $5.00 $0.00 -$5.00 -$ $ $20.00 $19.2B $(4.6)B $22.2B $(2.5)B $(3.1)B Source: United Nations Commodity Trade Statistics Database and Calculations World Economic Outlook Database, IMF; State Bank of Pakistan

15 Background - Imports After 2010, this is the first year that Cotton has dropped from the top ten items imported by Pakistan though it has retained it s position in the top 15 imports since 2003 The top 10 items accounted for 73%, 74%, 70% and 70.2% of our imports in 2011, 2012, 2013 and 2014 respectively Others 30% Mineral fuels, oils, distillati on products, etc 31% Oil seed, oleagic fruits, grain, seed, fruit, etc, nes 2% Fertilizers 2% Vehicles other than railway, tramway 3% Plastics and articles thereof 4% Organic chemicals 4% Animal,vegetable fats and oils, cleavage products, etc 4% Electrical, electron ic equipment 7% Machinery, nuclear reactors, boilers, etc 8% Iron and steel 5% Auto-Vehicles & parts 3% 2013 Cotton 3% Fertilizers 1% Plastics 4% Iron and Steel 4% Others 30% Organic Chemicals 5% Animal or Veg oils/fats 4% Mineral Fuels 33% Durable Cons. Goods (Machines & Appliances) 7% Electrical Machinery (Sound, Mobile Telephony, TV) 6% Source: International Trade Centre. Trade Maps 03

16 Background - Exports Majority of Pakistan s exports are still based around Cotton, Textiles & Textile articles; making up around 53% of Pakistan s exports in Export diversification, though necessary, continues to look difficult in the near term Pakistan's Exports in 2014 Cotton, Textile & Textile Articles Other Exports USD in Billions $12.7 $12.1 $11.7 $12.4 $10.7 $10.3 $6.6 $6.8 $8.0 $8.5 $5.4 $4.7 $12.7 $7.9 $9.5 $10.1 $9.8 $10.0 $10.7 $12.2 $13.0 $13.0 $9.0 $ Source: International Trade Centre. Trade Maps

17 Background - Exports As a result, Pakistan s export performance in the world continuous to be more or less flat, with most competitors starting to either catch up or go past Pakistan. The highest growth has been from Viet Nam with a reported Trade Value of $150B in Percentage Share in World Exports 0.90 %share Bangladesh %share Viet Nam %share Sri Lanka %share Pakistan % Percentage % 0.13% 0.06% Source: WTO and Calculations

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19 Trade and Manufacturing Data for Selected Commodities 07

20 Television Sets USD in Millions $60 $50 $40 $30 Trade Value of Imports Televisions were removed from the ATTA negative list in This corresponded with a decline in domestic manufacture and legal imports, although 2014 saw a rise in both domestic manufacture and television sets. This could be in part due to a decline in Applied Tariff, a trend that can be seen from $20 08 $10 $ Television Imports in 2014 Partner Trade Value (US$) Quantity World $10.65M 142,709 Units in Thousands 3,500 3,000 2,500 2,000 1,500 1, Domestic Manufacture and Import Quantities Imports Domestic Manufactures APTTA Egypt $5.16M 41,370 China $2.59M 79,267 Malaysia $2.01M 16,520 Thailand $0.31M 2,556 United Arab Emirates Afghan Transit Trade Agreement Source: Trade Data: United Nations Commodity Trade Statistics Database. HS 02 Code: ) Manufacturing Data: Pakistan Bureau of Statistics, Quantum Index of Large Scale Manufacturing Industries 2014 APTTA Data: Pakistan Customs $ 0.18M 1,306

21 Paper and Paperboard US DOLLARS IN MILLIONS Trade Value of Imports Market share of domestic manufacturers has gradually increased to 900 thousand Tons while imports decreased to 590 thousand Tons in 2014; indicative of growth in the industry. APTTA imports continue to be negligible as a percentage of Pakistan s imports % 17.5% 17.2% 15.2% 15.1% 16.2% 18.0% 19.0% 20.1% 20.7% 19.6% Applied Tariff* *trade-weighted average of HS 02 subheadings of 48 Tons in Thousands 1,200 1, Domestic Manufacture & Import Quantities Total Import Quantities Domestic Manufacture APTTA Quantities % 17.5% 17.2% 15.2% 15.1% 16.2% 18.0% 19.0% 20.1% 20.7% 19.6% Applied Tariff* *trade-weighted average of HS 02 subheadings of 48 China Paper and Paperboard Imports in 2014 Trade Partner Indonesia Sweden Egypt Russian Federation Trade Value (US$) Afghanistan Pakistan Transit Trade Agreement Source: Trade Data: United Nations Commodity Trade Statistics Database (Product HS 02 code: 48) Manufacturing Data: Pakistan Bureau of Statistics, Century Paper Tariff Data: World Trade Organization, Tariff Analysis APTTA Data: Pakistan Customs $628.88M $165.76M $81.51M $70.61M $46.65M 09

22 Electric Motors Trade Value of Imports Millions The 2014 data appears to be inconsistent as 2014 Import Quantities are reported to be 99.8M Units, with 99.1M Units of a single HS Code (850152) imported from China, Hong Kong SAR alone. This discrepancy results in a drastically increased trend when import trade values are compared; with 2014 showing an all time high of $41.9M. Mirror data reported by China, Hong Kong SAR on the other hand report exports of a mere 229 units to Pakistan with a trade value of $44, % 11.9% 11.7% 12.3% 12. 3% 12.3% 12.2% 12.4% 12.3% 10.7% 10.4% Applied Tariff* *trade-weighted average of HS 02 subheadings of , DOMESTIC MANUFACTURE & IMPORT MILLIONS Domestic Manufacture & Import Quantities Import Quantities Domestic Manufacture APTTA Quantities % 11.9% 11.7% 12.3% 12.3% 12.3% 12.2% 12.4% 12.3% 10.7% 10.4% Applied Tariff* *trade-weighted average of HS 02 subheadings of , APTTA UNITS IN MILLIONS Electric Motor Imports by Country in 2014 Trade Partner Trade Value (US$) Quantity China $20.02M 571,848 Germany $4.55M 17,107 Rep. of Korea $2.15M 5,300 Italy $1.89M 40,007 China, Hong Kong SAR Source: Trade Data: United Nations Commodity Trade Statistics Database (Product code: , , HS year as reported) Manufacturing Data: Pakistan Bureau of Statistics Tariff Data: World Trade Organization, Tariff Analysis APTTA Data: Pakistan Customs $1.30M 99,103,743*

23 Tea Dollar Value Millions Imports in Dollars % 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% Applied Tariff* Kilograms in Millions Imports and Domestic Manufactures Imports Domestic Growth APTTA Quantities % 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% Applied Tariff* *trade-weighted average of HS 02 subheadings of 48 Domestic Blended quantities and imports have been increasing slowly but steadily since the signing of the new APTTA in 2010, with 2014 showing the most quantities imported since Black tea Imports through APTTA, after a slight increase in 2013, saw a 26% drop in The year also saw a continuation of the 17% Sales tax on black tea, imposed in Feb 2013 after the 5% Sales tax was rescinded. According to Market reports this increase has caused an increase in Black Tea smuggling through the APTTA, though the veracity of this statement could not be determined through reported data. Tea Imports by Country in 2014 Exporter Trade Value (US$) Netweight (kg) Kenya $232.78M 96,168,055 India $24.25M 18,485,731 Rwanda $18.91M 8,566,944 Burundi $10.72M 4,802,059 Indonesia $7.96M 3,939,862 Afghanistan Pakistan Transit Trade Agreement Source: Trade Data: United Nations Commodity Trade Statistics Database (HS 02 code: , ) Manufacturing Data: Pakistan Statistical Year Book, Pakistan Bureau of Statistics Tariff Data: WTO, Tariff Analysis APTTA Data: Pakistan Customs 11

24 12 Ceramic Tiles USD in Millions Thousand Square Meter $120 $100 $80 $60 $40 $20 $ Trade Value of Imports % 25.0% 25.0% 25.0% 25.02% 30.0% 30.0% 35.0% 35.0% 30.0% 25.0% Applied Tariff Domestic Manufactures and Import Quantities Manufactured Imported APTTA % 30.0% 30.0% 35.0% 35.0% 30.0% 30.0% Applied Tariff Imports of Ceramic Tiles have been on a continuous rise since 2009 with 2014 marking the highest imports with a value of $102 Million. Ceramic Tiles Imports 2014 Partner Trade Value (US$) Quantity China $79.46 M 7,688,424 Spain $10.08M 1,127,743 Malaysia $3.65M 405,528 United Arab Emirates $3.07M 342,986 Iran $2.81M 316,464 Afghanistan Pakistan Transit Trade Agreement Source: Trade Data: Trade Maps (Product HS Code: 6907 & 6908) Manufacturing Data: Unavailable: 2013 data Shabbir Tile Tariff Data: World Trade Organization, Tariff Analysis *2014 Domestic Manufacture and Import Quantities data not updated due to unavailability of data from the Local Ceramics Industry

25 Footwear Trade Value of Imports & Exports US Dollar Millions Imports Exports The data suggests a gradual increase in domestic production. Imports, though less than exports, are once again rising. This is a worrisome trend for domestic manufacturers when compared to : when exports far outstripped imports, suggesting a stronger local industry. There is an inconsistency in reporting data by Pakistan as can be seen by the 2011 import and export quantity data, which is reported incomplete. 20 Units in Millions % 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% Applied Tariff* *trade-weighted average of HS 02 subheadings of Import & Export Quantities Imports Qty Exports Qty APPTA Quantities Footwear by Country in 2014 Partner Trade Value (US$) Quantity China $71.49M 16,356,629 Thailand $4.83M 1,058,006 Viet Nam $1.66M 239,286 Indonesia $0.65M 88,881 Malaysia $0.48M 82,182 Source: Trade Data: United Nations Commodity Trade Statistics Database (Product HS 02 code: ) Manufacturing Data: Pakistan Statistical Year Book, Pakistan Bureau of Statistics Tariff Data: World Trade Organization, Tariff Analysis APTTA Data: Pakistan Customs 13

26 Tyres Dollars In Millions Trade Value of Imported Tyres The trade value of imported tyres saw a gradual decline from , with a drastic increase from While the trend towards a decline in imported tyres once again continues 2011 onwards, quantities of domestic manufacture have been increasing steadily saw a 66% difference in import quantities and domestic manufacture, indicating a healthy local industry Units in Millions % 17.2% 17.2% 15.2% 15.2% 15.2% 15.2% 15.2% 15.2% 15.2% 16.67% Applied Tariff Quantities Imported & Domestically Manufactured Import quantities Domestic Manufactures APTTA Quantities % 17.2% 17.2% 15.2% 15.2% 15.2% 15.2% 15.2% 15.2% 15.2% Applied Tariff Tyre Imports by Country in 2014 Partner Trade Value (US$) Quantity China $152.00M 2,043,971 Thailand $17.70M 231,044 India $17.16M 252,459 Japan $7.88M 130,666 Indonesia $4.07M 157,270 Source: Trade Data: International Trade Centre. Trade Maps (Product HS code: ) Manufacturing Data: Pakistan Statistical Year Book, Pakistan Bureau of Statistics Tariff Data: World Trade Organization, Tariff Analysis APTTA Data: Pakistan Customs

27 Fertilizers US Dollars in Millions 1,200 1, Trade Value of Fertilizer Imports % 5% 0% 0% 0% 0% 0% 0% 0% 0% 0% Applied Tariff Tonnes in Millions Domestic Manufacture & Import Quantities Import Quantities Domestic Manufactures % 5% 0% 0% 0% 0% 0% 0% 0% 0% 0% Applied Tariff Although domestic quantities have outstripped imports in recent years, fertilizer remains one of Pakistan s top ten imports. Import of ammonium nitrate fertilizer was banned in Afghanistan in Fertilizer Imports by Country in 2014 Partner Trade Value (US$) Quantity China $551.66M 1,295,440 Saudi Arabia $175.64M 389,606 Jordan $20.29M 1,295,440 Australia $19.66M 389,606 Qatar $18.18M 1,295,440 Source: Trade Data: United Nations Commodity Trade Statistics Database (Product HS Code: ) Manufacturing Data: Pakistan Statistical Year Book, Pakistan Bureau of Statistics Tariff Data: World Trade Organization, Tariff Analysis APTTA Data: Pakistan Customs 15

28 Sugar 16 Dollars in Millions Trade Value of Imports % 11.61% 11.61% 12.5% 14.3% 14.3% % 1 4.6% 15.3% 1 5.3% 15% Applied Tariff Tons in Millions Domestic Production & Import Quantities Import Quantities Domestic Production APTTA Quantities % 11.61% 11.61% 12.5% 14.3% 14.3% 14.64% 14.6% 15.3 % 15.3 % 15% Applied Tariff Pakistan has maintained it s position amongst the top 10 producers of Sugar in the world, a fact that can be demonstrated through the steady increase in domestic production over the years. Trade value of imports has been consistently negligible except in years where the country faced large scale natural disasters that effected crop production; namely the 2005 earthquake and 2010 floods. APTTA import quantities continue to be negligible. Imports by Country in 2014 Partner Trade Value (US$) Quantity Germany $7.59M 3,886 China $6.50M 7,636 France $4.59M 3,886 Thailand $2.57M 7,636 Malaysia $2.55M 3,886 Source: Trade Data: International Trade Centre. Trade Maps and United Nations Commodity Trade Statistics Database (Product HS code: ) Manufacturing Data: Pakistan Economic Survey Statistical Supplement Tariff Data: World Trade Organization, Tariff Analysis APTTA Data: Pakistan Customs

29 Textiles Articles of Apparel & Clothing Accessories US Dollars in Millions Trade Value Imports & Exports Total Imports - Pakistan Exports to Pakistan - China Exports to Afghanistan - China % 25.0% 14.0% 15.0% 15.02% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% Applied Tariff * Units in Millions China & Pakistan Quantities Imports - Pakistan from China Exports - China to Pakistan APTTA Quantities % 25.0% 25.0% 25.0% 25.02% 25..0% 25.0% 25.0% 25.0% 25.0% 25.0% Applied Tariff* *trade-weighted average of HS code , 6112, , 6214 At $36 M Total imports reported by Pakistan are less than the exports to Pakistan reported by China ($187 M), for the HS codes mentioned below. Interestingly exports to Afghanistan reported by China amount to almost exactly the same as the exports to Pakistan reported by China. Since Pakistan is one of the top 20 exporters of this category, the vast data discrepancy could indicate misreporting. Source: Trade Data: United Nations Commodity Trade Statistics Database, International Trade Centre, Trade Maps (Product HS code: 61 & 62) Tariff Data: World Trade Organization, Tariff Analysis The above mentioned discrepancy is evident in the reported import and export quantities as well. Compared to China s Export figures, Pakistan s imports are minimal, hence once again indicating a possible error in reporting and emphasizing the need to strengthen local reporting mechanisms. Source: Trade Data: United Nations Commodity Trade Statistics Database. (HS code: , 6112, , 6214) Tariff Data: World Trade Organization, Tariff Analysis APTTA Data: Pakistan Customs 17

30 Textiles Synthetic Fabrics, Ready Made Garments Not only are exports to Pakistan reported by China greater than the total legal imports reported by Pakistan, China s exports to Pakistan are greater than Pakistan s exports and imports combined; A trend that has been increasing since Trade Value of Imports & Exports $1,200 Total Imports -Pakistan Exported to Pak - Rep China $1,000 $1,035 M 18 Dollars in Millions $800 $600 $400 $200 $ % 25.0% 25.0% 25.0% 25.02% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% Applied Tariff * *trade-weighted average of HS code 5407, 5408, Source: Trade Data: United Nations Commodity Trade Statistics Database, International Trade Centre, Trade Maps (Product HS code: 5407, 5408, ) Tariff Data: World Trade Organization, Tariff Analysis $613 M

31 Pakistan s Free Trade Agreements 19

32 Free Trade Agreements (FTA) An FTA is an agreement between two or more countries to minimalize tariffs, quotas and preferences on most (if not all) goods and services traded between them. An FTA generally starts off with a reduction in tariffs before eventually leading to elimination of tariffs in 5-10 years. With WTO talks stalled, more and more countries are resorting to signing FTAs with their preferred trading partners. This could create problems of market access. For example, the EU is planning on signing an FTA with India but an EU FTA with Pakistan is not on the horizon. This will have an effect on Pakistan s textile exports to EU. 20 Pakistan has signed 3 major FTAs and 3 PTAs (with about 10 more in the works)

33 Overview of Pakistan s Free Trade Agreements Country Year Implemented Pakistan's Exports in year of implementation Pakistan's Trade Balance in year of implementation Pakistan's Exports in 2014 Pakistan's Trade Balance in 2014 Sri Lanka 2005 $0.154B $0.094B $0.301B $0.217B China 2006 $0.507B $(2.408)B $2.253B $(7.336)B Malaysia 2008 $0.138B $(1.556)B $0.234B $(1.046)B Indonesia 2013 $0.144B $(1.064)B $0.138B $(1.969)B Mauritius 2007 $0.036B $0.035B $0.028B $0.006B Source: International Trade Centre. Trade Maps and Calculations 21

34 22

35 Pakistan Sri Lanka FTA 23

36 Pakistan Sri Lanka FTA Pakistan s first FTA. Operational from June 2005 Total trade in 2014 was $329 M Pakistan got market access at zero duty for 102 products including agricultural goods, rice (with quantity restrictions) and engineering goods Sri Lanka was given duty free market access on 206 products including tea (with quantity restrictions), rubber and coconut 24 In April 2014 further tariff concessions were given on the import of 993 items. This includes tariff concession of 50% on the import of herbal cosmetics marketed as Sri Lankan brands, 20% on the import of tiles, cubes and similar articles, and 100% tariff concession on import of green and black tea

37 Comparison of Key Economic Indicators Pakistan Sri Lanka GDP 1 $ B $ B $74.59 B $67.45 B GDP Growth 4.41% % % % 5 GDP per Capita 1 $ 1,342 $ 1,274 $ 3,557 $ 3,239 Population M 183 M 21.4 M 20.8 M Trade Surplus/(Deficit) 6 ($22.80) B ($18.60) B ($7.95) B ($7.93) B Current Account Balance ($3.1) B 4 ($2.5) B 4 ($1.6) B 5 ($2.72) B 5 FDI, net inflow $0.8 B 4 $1.3 B 4 $1.2B 5 $1.4B 5 1. World Economic Outlook, IMF 2. The Economist Intelligence Unit 3. Pakistan Bureau of Statistics 4. State Bank of Pakistan 5. Central Bank of Sri Lanka 6. International Trade Centre Trade Maps 25

38 Trends in Pakistan - Sri Lanka Trade Pakistan's Imports and Exports with Sri Lanka Pakistan's Imports from Sri Lanka Pakistan's Exports to Sri Lanka $400 USD in Millions $350 $300 $250 $200 $150 $100 $316 M $266 M $252 M $203 M Pakistan s trade surplus with Sri Lanka decreased to approx. $203 M in 2014 as compared to 2013 s 252 M 26 Percentage $50 $ Sri Lanka's Share in Pakistan's World Trade % share in Total Exports from Pakistan % share in Total Imports to Pakistan $64 M $63 M 1.08% 0.13% --- FTA operational The Percentage of Pakistan s exports to Sri Lanka, while only around 1.08% of it s total World exports, have far exceeded it s imports from Sri Lanka; which is only only 0.13% Source: International Trade Centre Trade Maps & calculations

39 Comparison of Pre and Post FTA Import figures Top 5 Imports from Sri Lanka --- FTA operational USD in Millions Vegetable plaiting materials, vegetable products nes Edible fruit, nuts, peel of citrus fruit, melons Wood and articles of wood, wood charcoal Rubber and articles thereof Oil seed, oleagic fruits, grain, seed, fruit, etc, nes Vegetable plaiting materials, vegetable products nes $17.6M $17.3M Edible fruit, nuts, peel of citrus fruit, melons $9.5M $5.8M Wood and articles of wood, wood charcoal $8.5M $8.8M Rubber and articles thereof $8.2M $11.4M Oil seed, oleagic fruits, grain, seed, fruit, etc, nes $3.5M $1.2M Import growth: Vegetable plaiting materials are the top imports from Sri Lanka. Edible fruit, nuts, peel of citrus fruit, melons shifted up to No 2 from No 5 in 2013, while Rubber and articles thereof dropped down to No. 4 from No. 2. Coffee, tea mate and spices has dropped out of the top 5 imports to No. 7 in Source: International Trade Centre. Trade Maps

40 Comparison of Pre and Post FTA Export figures Top 5 Exports to Sri Lanka --- FTA operational USD in Millions Cotton Salt, sulphur, earth, stone, plaster, lime and cement Cereals Pharmaceutical products Articles of iron or steel Edible vegetables and certain roots and tubers Cotton $90.8M $102.2M Salt, sulphur, earth, stone, plaster, lime and cement $42.7M $45.2M Cereals $36.6M $37.8M Pharmaceutical products $18.1M $17.5M Articles of iron or steel $14.5M $14.5M Edible vegetables and certain roots and tubers $10.1M $17.7M Export growth: While cotton retains it s top position as an export commodity, the most major change in 2014 exports is the decline of Sugar and Sugar Confectionary (with the Trade Value dropping by $35M) from the 4th most exported commodity to No. 33; a position it had occupied in all previous years except 2013 when it was seen to be in the top 5 exports. Source: International Trade Centre. Trade Maps

41 Pakistan China FTA 29

42 Pakistan China FTA Early Harvest Program (EHP) operational from Jan FTA operational from Nov 2006 Total bilateral trade in 2014 exceeded $11 Billion Pakistan got market access at zero duty for: Cotton fabrics, bed-linen and other home textiles, marble and other tiles, leather articles, sports goods, iron & steel products and engineering goods, industrial alcohol 30 China was given market access mostly on commodities required for industrial growth: Industrial machinery, organic and inorganic chemicals, raw material for various industries including engineering sector, intermediary goods for engineering sector

43 Comparison of Key Economic Indicators Pakistan China GDP 1 $ B $ B $ 10, B $ 9, B GDP Growth 4.41% % % % 1 GDP per Capita 1 $ 1,342 $ 1,274 $ 7,589 $ 6,958 Population M M 2 1, M 1 1, M 1 31 Trade Surplus/(Deficit) ($22.80) B 6 ($18.60) B 6 $ B 5 $ B 5 Current Account Balance ($3.1) B 4 ($2.5) B 4 $ B 1 $ B 1 FDI, net inflow $0.8 B 4 $1.3 B 4 $ B $ 118 B 5 1. World Economic Outlook, IMF 2. The Economist Intelligence Unit 3. Pakistan Bureau of Statistics 4. State Bank of Pakistan 5. Ministry of Commerce, People s Republic of China 6. International Trade Centre Trade Maps

44 Trends in Pakistan - China Trade Pakistan - China Trade USD in Billions Pakistan's Exports to China Pakistan's Imports from China $ 9.5B $ (7.2) B Pakistan s Net Exports to China decreased by $0.4 B in 2014, with the difference between exports and imports reaching $7.2 B. 32 Percentage China's Share in Pakistan's World Trade % share in Total Exports of Pakistan % share in Total Imports of Pakistan $ 2.3 B EHP operational At almost 30% China holds an important place as Pakistan s trading partner. Reported imports from China at 9.11% are significantly less than exports Source: International Trade Centre Trade Maps & calculations

45 Comparison of Pre and Post FTA Import figures 2.5 Top 5 Imports from China 2 USD in Billions Electrical, electronic equipment Machinery, nuclear reactors, boilers, etc Iron and steel Fertilizers Organic chemicals Electrical, electronic equipment $2,264.1M $1,756.3M Machinery, nuclear reactors, boilers, etc $1,369.9M $836.7M Iron and steel $712.7M $324.8M Fertilizers $551.7M $229.4M Organic chemicals $490.8M $378.3M Import growth: Imports have increased steadily for all top 5 items in 2014, although Organic chemicals fell to No. 5 after being No.3 in Fertilizers on the other hand rose to No. 4 from being No.8 in 2013 replacing manmade filaments in the list of the top 5 import items. Source: International Trade Centre. Trade Maps

46 Comparison of Pre and Post FTA Export figures 2.5 Pakistan's Top 5 Exports to China USD in Billions Cotton Cereals Ores, slag and ash Residues, wastes of food industry, animal fodder Raw hides and skins (other than furskins) and leather --- EHP operational Cotton $1,525.3M $1,936.0M Cereals $137.8M $144.1M Ores, slag and ash $91.7M $129.2M Residues, wastes of food industry, animal fodder $64.7M $37.7M Raw hides and skins (other than furskins) and leather $55.4M $57.1M Export Growth: Growth that had primarily been seen in Cotton and its derivatives (yarn and fabrics) declined in Residues, wastes of food industry, animal fodder replaced Salt, sulphur, earth, stone, plaster, lime and cement in the top 5 list. Source: International Trade Centre. Trade Maps

47 Pakistan Malaysia FTA 35

48 Pakistan Malaysia FTA Early Harvest Program (EHP) operational from Jan FTA signed in November 2007 and came into force from January 2008 Total trade in 2014 was approx. $ 2.0 Billion Pakistan has duty free market access for: cotton yarn & fabrics, fruits and jewellery. However, textile made-ups are excluded. 36 Malaysia was given preferential market access on palm oil, industrial machinery, organic and inorganic chemicals, raw material for various industries including engineering sector and intermediary goods for engineering sector

49 Comparison of Key Economic Indicators Pakistan Malaysia GDP 1 $ B $ B B B GDP Growth 4.41% % % % 1 GDP per Capita 1 $ 1,342 $ 1,274 $ 10,803 $10,457 Population M M M M 1 Trade Surplus/(Deficit) 6 ($22.8) B ($18.6) B $ 25.0 B $ 22.0 B Current Account Balance ($3.1) B 4 ($2.5) B 4 $15.13 B 1 $12.67 B 1 FDI, net inflow $0.8 B 4 $1.3 B 4 $10.0 B 5 $11.7 B 5 1. World Economic Outlook, IMF 2. The Economist Intelligence Unit 3. Pakistan Bureau of Statistics 4. State Bank of Pakistan 5. Central Bank of Malaysia Bank Negara Malaysia 6. International Trade Centre Trade Maps 37

50 38 Trends in Pakistan Malaysia Trade USD in Millions 3,000 2,500 2,000 1,500 1, EHP operational Percentage Pakistan - Malaysia Trade Pakistan's exports to Malaysia Pakistan's imports from Malaysia $1,920 M $1,280 M $234M Malaysia's Share in Pakistan's World Trade % share in Total Exports to Pakistan % share in Total Imports of Pakistan % 0.9% Pakistan s Imports from Malaysia declined by $640 M, while exports rose to $234 M from $ 205 M 2013 Pakistan s imports from Malaysia have always been erratic. In 2014 Malaysia s percentage share in the total imports of Pakistan (2.7%) has been at a decline since This may be due to Pakistan s recent FTA with Indonesia Source: International Trade Centre. Trade Maps and Calculations

51 Comparison of Pre and Post FTA Import figures 2500 Top 5 Imports from Malaysia USD in Millions Animal,vegetable fats and oils, cleavage products, etc Mineral fuels, oils, distillation products, etc Ships, boats and other floating structures Machinery, nuclear reactors, boilers, etc Plastics and articles thereof --- EHP operational Imports Animal, vegetable fats and oils, cleavage products, etc $566.7M $1,163.8M Mineral fuels, oils, distillation products, etc $256.7M $385.5M Ships, boats and other floating structures $61.7M $ 29.9M Machinery, nuclear reactors, boilers, etc $56.7M $51.8M Plastics and articles thereof $36.3M $29.5M Import growth: Ships, boats and other floating structures have been amongst the top 5 imports since 2013; being a negligible commodity before that, with many years reporting a trade value of $0 (to indicate negligible quantities). Animal, Vegetable fats and Oils imports have seen a sharp decline since 2011, though still remaining the highest imported commodity. Source: International Trade Centre. Trade Maps 39

52 Comparison of Pre and Post FTA Export Figures USD in Millions Top 5 Exports to Malaysia Cereals Cotton Other made textile articles, sets, worn clothing etc Fish, crustaceans, molluscs, aquatic invertebrates nes Edible vegetables and certain roots and tubers --- EHP operational Exports Cereals $106.5M $75.7M Cotton $23.4M $18.7M Other made textile articles, sets, worn clothing etc $21.6M $19.6M Fish, crustaceans, molluscs, aquatic invertebrates nes $16.7M $15,.9M Edible vegetables and certain roots and tubers $9.9M $15.3M Export growth: Export of cereals, Pakistan s top export to Malaysia, shows a gradual increase after a significant decline from After cereals textiles have retained their top most position as the most exported commodity to Malaysia. Source: International Trade Centre. Trade Maps

53 Pakistan Indonesia PTA 41

54 Pakistan Indonesia PTA Pakistan s PTA with Indonesia became operational from September 2013 Total bilateral trade in 2014 was $2.45 Billion Pakistan has preferential access for fresh fruits, cotton yarn & fabrics, ready made garments, fans, sports goods, leather goods and industrial products. Indonesia has granted market access to Pakistani kinnow at 0% tariff, which is expected to significantly enhance the export of this product and other fruits. 42 Similarly, Pakistan will provide market access at preferential tariff rates to Indonesian exports. Pakistan has extended a 15% Margin of Preference (MoP) over the standard tariff rate to Indonesian palm oil products, similar to what has been extended to Malaysian palm oil products under the Pak-Malaysia FTA

55 Comparison of Key Economic Indicators Pakistan Indonesia GDP 1 $ B $ B $ B $870.0 B GDP Growth 4.41% % % % 1 GDP per Capita 1 $ 1,342 $ 1,274 $3,533 $ 3,510 Population M M M M 1 Trade Surplus/(Deficit) ($22.8) B 6 ($18.6) B 6 $0.19 B 5 $0.02 B 5 Current Account Balance ($3.1) B 4 ($2.5) B 4 (26.23) B 1 (28) B 1 FDI, net inflow $0.8 B 4 $1.3 B 4 $28.5 B 7 $28.6 B 7 1. World Economic Outlook, IMF 2. The Economist Intelligence Unit 3. Pakistan Bureau of Statistics 4. State Bank of Pakistan 5. Central Bank of Indonesia 6. International Trade Centre Trade Maps 7. Indonesia Investment Coordinating Board 43

56 Trends in Pakistan Indonesia Trade Pakistan - Indonesia Trade USD in Billions $2.50 $2.00 $1.50 Pakistan's Exports to Indonesia Pakistan's Imports from Indonesia Pakistan s Net Exports declined to $138 M, from $144 M, in 2014; while imports have rocketed to an all time high of $2.1B. $1.00 $0.50 ($1.9B) 44 $ EHP operational Percentage 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Indonesia's Share in Pakistan's World Trade % share in Total Exports from Pakistan % share in Total Imports to Pakistan % 0.6% Indonesia s share in Pakistan s world exports is a negligible 0.6%, while import share has risen from 2.8% to 4.4% in 2014 Source: United Nations Commodity Trade Statistics Database and Calculations

57 Comparison of Pre and Post PTA Import figures USD in Billions $1.6 $1.4 $1.2 $1.0 $0.8 $0.6 $0.4 Top 5 Imports from Indonesia $0.2 $ Animal,vegetable fats and oils, cleavage products, etc Manmade staple fibres Edible fruit, nuts, peel of citrus fruit, melons Mineral fuels, oils, distillation products, etc Paper and paperboard, articles of pulp, paper and board --- PTA operational Imports Animal,vegetable fats and oils, cleavage products, etc $ 1,419.4M $708.3M Manmade staple fibres $124.6M $99.6M Edible fruit, nuts, peel of citrus fruit, melons $92.1M $73.7M Mineral fuels, oils, distillation products, etc $89.6M $92.9M Paper and paperboard, articles of pulp, paper and board $81.5M $61.9M Import growth: Paper and paperboard, edible fruits, and manmade staples imports have grown marginally. As expected palm oil dominated imports due to the Margin of Preference (MoP) extended to Indonesia for palm oil. Indonesia is the world s largest exporter and producer of palm oil. Source: International Trade Centre. Trade Maps 45

58 46 Comparison of Pre and Post PTA Export figures USD in Millions Cotton Cereals Top 5 Exports to Indonesia Raw hides and skins (other than furskins) and leather Edible fruit, nuts, peel of citrus fruit, melons Fish, crustaceans, molluscs, aquatic invertebrates nes --- PTA operational Exports Cotton $75.2M $63.1M Cereals $20.1M $32.9M Raw hides and skins (other than furskins) and leather $13.1M $10.8M Edible fruit, nuts, peel of citrus fruit, melons $9.0M $2.3M Fish, crustaceans, molluscs, aquatic invertebrates nes $7.1M $6.5M Export growth: Export of cereals has declined drastically since As expected exports of Edible fruit have increased from $2M in 2013 to $9.019M in Out of this Citrus Fruit (HS 0805) amounted to $9.018M worth of trade. Increased exports of fruits, especially of kinnow, was expected for coming years due to 0% preferential tariff been given to Pakistan. Source: International Trade Centre. Trade Maps

59 Pakistan Mauritius PTA 47

60 Pakistan Mauritius PTA The Preferential Trade Agreement between Pakistan and Mauritius was signed on 30th July 2007 The Pakistani Cabinet ratified the agreement on 30th October 2007 and the agreement became operational on 30th November 2007 Total bilateral trade in 2014 was $51 M 48 Pakistan has preferential tariff access for cereals, microwave ovens in Electrical goods, fresh fruits, plants, carpets and other flooring coverings, made up textile articles and leather goods, tobacco items and salt, Sulphur, earth & stone, lime & cement. Pakistan has extended an approx. 25% Margin of Preference (MoP) over the standard tariff rate to Mauritian textile and clothing items. Other items on the preferential list include: Plants, Black Tea, Fish such as Tunas, types of mixes and doughs for the preparation of bakers wares, and organic surfaceactive products and preparations for washing skin

61 Comparison of Key Economic Indicators Pakistan Mauritius GDP 1 $ B $ B $12.03 B 6 $11.94 B 1 GDP Growth 4.41% % % 1 3.2% 1 GDP per Capita $ 1,342 1 $ 1,274 1 $9,543 6 $9,483 1 Population M M M M 5 Trade Surplus/(Deficit) 5 ($22.8) B ($18.6) B $ (2.9) B $ (3.0) B Current Account Balance ($3.1) B 4 ($2.5) B 4 ($0.96) B 5 $ (1.18) B 5 FDI, net inflow $0.8 B 4 $1.3 B 4 $ 0.44 B 6 $ 0.26 B 6 1. World Economic Outlook, IMF 2. The Economist Intelligence Unit 3. Pakistan Bureau of Statistics 4. State Bank of Pakistan 5. International Trade Centre Trade Maps 6. Mauritius Financial Services Commission 49

62 Trends in Pakistan Indonesia Trade Pakistan - Mauritius Trade USD in Millions Pakistan's Exports to Mauritius Pakistan's Imports from Mauritius $28M Pakistan s Net Exports have declined while imports have risen drastically from $0.9M in 2010 to $22 M in EHP operational Percentage Mauritius's Share in Pakisan's World Trade % share in Total Exports from Pakistan % share in Total Imports to Pakistan $22M Exports from Pakistan have dropped since 2003, with a significant decline seen in the Post PTA scenario Source: International Trade Centre. Trade Maps & Calculations

63 Comparison of Pre and Post PTA Import figures 25 Top 5 Imports from Mauritius USD in Millions Ships, boats and other floating structures Iron and steel Soaps, lubricants, waxes, candles, mo delling pastes Pulp of wood, fibrous cellulosic material, waste etc Raw hides and skins (other than furskins) and leather --- PTA operational Imports Ships, boats and other floating structures $20.21M $16.47M Iron and steel $1.82M $0.14M Soaps, lubricants, waxes, candles, modelling pastes $0.28M $0.04M Pulp of wood, fibrous cellulosic material, waste etc $0.18M $0.18M Raw hides and skins (other than furskins) and leather $0.02M $0.01M Import growth: Imports in 2014 of all top 5 categories were negligible; a consistent trend since Ships, boats and floating structures have seen the most movement with demand rising steadily from 2010 onwards. Source: International Trade Centre. Trade Maps 51

64 Comparison of Pre and Post PTA Export figures USD in Millions Top 5 Exports to Mauritius Cotton Cereals Other made textile articles, sets, worn clothing etc Cereal, flour, starch, milk preparations and products Salt, sulphur, earth, stone, plaster, lime and cement --- PTA operational Exports Cotton $11.54M $7.81M Cereals $7.30M $11.57M Other made textile articles, sets, worn clothing etc $1.49M $1.17M Cereal, flour, starch, milk preparations and products Salt, sulphur, earth, stone, plaster, lime and cement $1.29M $1.24M $11.22M $0.09M Import growth: Cereal exports have dropped drastically since the PTA came into force with 2014 showing a record low of $7M; an overall decline in Trade Value when compared with 2008 s export of Cereal at $28M s highest exported commodity is Cotton at $11.5M. Source: International Trade Centre. Trade Maps

65 Export Potential with Selected Partners 53

66 54

67 European Union(GSP+) 55

68 European Union Market The European Union consists of 28 member countries with the accession of Croatia on 1 July Total imports of the European Union (28 countries) in 2014 was around $6.0 Trillion Of this, total Pakistani exports to the European Union in 2014 were $7.0 Billion If taken as one entity, the European Union is Pakistan s most important market comprising of over 29% of Pakistan s exports in Despite this, Pakistan has been unable to improve its penetration into the European market while other competitors (low-income, developing countries) increased their share in European Union trade Receiving GSP+ status therefore attains a lot of significance if Pakistan wants to continue to compete in this market Pakistan was the only country from amongst it s top competitor countries to be granted GSP+ in December 2013 & effective from 1st January 2014

69 Total EU Imports from Bangladesh,Pakistan, Sri Lanka and Viet Nam Pakistani exports to the EU have been outstripped by all competitors except Sri Lanka; with Indian Exports far outstripping the rest of the countries. Trade Value of EU 28 Imports 60 Pakistan Bangladesh Sri Lanka Viet Nam India USD iin Billions $49B $29B $16B $7B $3B Source: International Trade Centre. Trade Maps 57

70 Share of Selected Countries in EU s Trade with the World Competitor countries are fast becoming more important trade partners for the EU than Pakistan, with India far ahead of the rest Percentage Share of EU World Imports Pakistan Bangladesh Sri Lanka Viet Nam India % Percentage % 0.279% 0.123% 0.057% Source: International Trade Centre. Trade Map and Calculations