Political tension no barrier to trade with Afghanistan
By Mohammad Ali Khan
THE business community of Pakistan and Afghanistan have formed Pak-Afghan Chamber of Commerce and Industry (APCCI) to strengthen bilateral economic ties between the two countries.
A Memorandum of Understanding (MoU) to this effect was signed between the Sarhad Chamber of Commerce and Industry (SCCI) and the Afghanistan International Chamber of Commerce (AICC) on March 23.
The organisation will help in exchange of information pertaining to government policies, rules and regulations concerning trade, investment and other allied areas between the two countries, Senator Ilyas Ahmad Bilour, its first chairman said.
Likewise, recommending means for removal of irritants to the respective governments for better economic cooperation, increasing trade, investment opportunities, organising trade fairs, encouraging people-to-people contact and working for reduction of non-tariff and tariff barriers between the two countries would be some of other activities of the body.
With main secretariat at SCCI, the APCCI would have an executive committee comprising 12 members each from Pakistan and Afghanistan besides an equally represented general assembly of 48 members.
The formation of a joint forum for economic cooperation was announced at a time when the political relations between the two countries are going through one of the worst periods of the history. The businessmen of both the sides, however, don't consider political tension any potential barrier that could really affect their business ties..
"Ups and downs in bilateral relations both in past and in present have nothing to do with the business community as geographical nature of our countries makes us indispensable for each other," says Azarakhsh Hafizi, the AICC chairman and co-chairman of the new body.
Pakistan and Afghanistan share not only 2,400-kilometer long border, and also have strong bonds of faith, history and culture. At government level, Pakistan formed Joint Ministerial Commission with Afghanistan in 1992, but the situation on ground never allowed the vision of JEC to materialise.
"Three-decade long hostility hasn't given any benefit to the people of both countries rather they suffered for the wrongdoings of their rulers. Now it is only the business communities of the two sides, who will pressurise their respective governments for maintaining cordial relations with each other," says Sarwar Mohmand, a former SCCI president.
According to official statistics, in financial year 2003-04 total size of the bilateral trade between the two countries stood at $540 million, rose to $786 million in 2004-05 and $1.54 billion in 2005-06.
Pakistan, being the biggest trading partner of the war-ravaged country is the main beneficiary because of its increasing exports, which stood $492 million, $747 million and $1.63 billion in year 2003-04, 2004-05 and 2005-06 respectively.
Zahidullah Shinwari, who exports goods to Afghanistan, considers discriminatory policies on the part of Pakistani government as the major obstruction in boosting the exports to Afghanistan.
Under the present arrangements, it is binding upon the Pakistani exporters claiming rebate of taxes on export to Afghanistan to produce an original copy of import clearance document, issued by Afghan Customs Authorities across the border.
This procedure has created lot of problems for the exporters because most of the Afghan importers are reluctant to provide copies of the requisite documents of Afghan Customs Authorities.
"No such demand is made from Pakistani exporters exporting goods to any other destination except Afghanistan. Also you cannot find the existence of such practice anywhere in the world," he laments.
He argues: "The Pakistani customs staff posted at Torkham border certainly verify the export consignments which should be more reliable for Central Board of Revenue (CBR) than the verifications made by the Afghan customs. This discriminatory and cumbersome procedure is illogical, thus, it should be abolished and previous practice of verification of the export documents by the embassy/consulates of Pakistan in Afghanistan or the newly formed APCCI should be restored," Mr Shinwari opines.
Delay in sales tax refunds on pretext of investigative audits is another impediment that, many think, affects the country's export to Afghanistan. "Physical verification of each and every refund claim took years, which discourages exporters. Suspicious cases must be investigated but blacklisting the whole sector is not fair. This not only aggravates exports but also causes severe liquidity problems creating harassment and resulting into total stoppage of exports," said another exporter.
The geographical location naturally makes Pakistan a hub for regional transit activities. However, the existing infrastructure is not only hampering its efforts to alter itself into a transit corridor, but it also affect smooth flow of regular exports to landlocked Afghanistan and onward.
Pakistan, under an agreement signed with Afghanistan in 1965, offers transit facility for Afghan goods reaching at Karachi seaport. These goods are then transported via land route of Chaman and Torkhum border both through railway wagons and trucks.
But lack of facilities and growing transportation charges compels the Afghan traders to opt for Iranian seaport Bandar Abbas despite the fact its cost of transportation and delivery period is higher than the Karachi port.
People involved in Afghan trade complain that the existing operations of the Pakistan Railways for the transportation of transit goods do not cater to the needs of such trade.
They consider shortage of railway wagons, delays in timely delivery at Peshawar station and high fares of National Logistic Cell (NLC), which is also authorised to carry transit goods from Karachi to Peshawar, as the contributing factors affecting the trade between the two countries.
Zai-ul-Haq Sarhadi, chairman SCCI standing committee on dry port, argues that being actual gateway to the Central Asia, Peshawar needs a modern dry port for timely handling of export and transit goods.
The Nawaz government, he says, had allotted 64-acre near Azakhel Payan G.T.Road, for construction of a modern dry port to improve infrastructure, but no progress could be made on such a vital project till date.
Currently Pakistani exports are only allowed, via land route of Chaman and Torkhum, whereas the Ghulam Khan custom station in North Waziristan Agency partially operates.
Exporters say the capacity of these custom stations do not cater to the demands that is why hundreds of trucks always remained blocked there.
The CBR had notified the establishment of nine new customs stations to facilitate the trade on Dec 30, 2004. But so far no progress could be made to this end.
These stations include one each at Nawa Pass (Bajaur Agency), Khapakh (Mohmand Agency), Terimengal (Kurram Agency), Kharlachi (Kurram Agency), Sheedano Dand (Kurram Agency), Lawara Boya Datta Khel Road (North Waziristan Agency), Angoor Ada (South Waziristan Agency), Khand Naral (South Waziristan Agency) and Arandu Pass at Chitral district.
The exporters mainly dealing with Afghanistan also pinpoint a number of issues that are blocking the timely and secure movement of trade inside the war-torn country.
Three decades of conflict have left Afghanistan with a severely deteriorated infrastructure, which has substantially reduced economic activity and a major decline in legitimate trade.
Current logistical support for traders is underdeveloped, and a tough security problem aggravates the challenge. As a result, trade logistics related costs are substantial and unsafe..
The deficiencies of current cross-boarder trade logistic operations include protection of local trucking, unofficial and discriminatory charges and vehicle standards below international levels.
They believe streamlining Afghanistan's transport infrastructure would reduce transport-related trade costs and facilitate the restoration of economic activity and its people's incomes.
Keeping in view the whole situation, reform initiatives on the part of Afghan government to improve the effectiveness and efficiency of customs procedures in detecting and deterring illegal trade are needed besides the reconstruction of infrastructure. and the enforcement of security throughout the country.
THE business community of Pakistan and Afghanistan have formed Pak-Afghan Chamber of Commerce and Industry (APCCI) to strengthen bilateral economic ties between the two countries.
