ISLAMABAD, Aug 14: Pakistan is gradually losing Afghan market for exports of its products because of rising militancy across the border.

Well-placed sources told Dawn that due to the violence at borders, the goods are either piling up at customs posts or facing delay in clearance on their way to Afghanistan.

The flow of goods further declined after the Afghan cabinet decided recently not to engage in dialogue with Pakistan, prompting exporters to halt entertaining export orders.

The security situation in the Khyber Agency has also worsened during the past few months, discouraging the movement of goods through this area, which is the main route for transportation of goods to Afghanistan.

A source in the commerce ministry said if the situation remained the same, the decline in exports from Pakistan would help India and Iran to ultimately penetrate into the Afghanistan market.

The road blockage in the tribal areas, frequent strikes by transporters to press for their demands and delay in clearance at Torkham customs post also hindered the flow of goods to Afghanistan, added the source.

An official source on condition of anonymity told Dawn that Pakistan’s major competitors in Afghanistan are China, Japan, Iran, India and Russia. All these countries hold regular exhibitions of their products.

Iran has constructed a display centre in Kabul, and Iranian companies are working on extending credit to importers, said the official and added Chinese goods include manufactured machinery goods, household durables, food items, clothing and plastic goods.

Japan is the major supplier of vehicles and other machinery items. Indian goods can never compete as transportation costs are very high as these goods are routed through Iranian ports of Chahbahar and Bandar Abbas. The competition can be from Iran, added the official. According to the official, the sector where Pakistan was seriously lacking was the holding of exhibitions in the lucrative market of Afghanistan. Competitor countries hold exhibitions and display products regularly, he added.

At least four product-specific exhibitions -- construction material, food items, light engineering goods and pharmaceutical products -- should be held in Kabul, he suggested.

Statistics showed Afghanistan is the third largest importing country from Pakistan, after the US and UAE. The exports of Pakistan to Afghanistan have shown a rising trend during the first half of 2007-08, but due to upsurge in violence in the past few months the flow of goods declined steadily, added the official.

The rise in the earnings of Afghan people has turned the country into a real market, and Pakistan has the advantage due to its geographical proximity and supply of quality goods, an Afghan exporter said.

Peculiarity of the market is that it absorbs all the products from Pakistan, ranging from food items to light engineering goods. The NWFP has gained the most from diversified supply to Afghanistan and various small- and large-size units have sprung up to cater to the needs of this market.

The trend is reaching the central Punjab area too, to the manufacturing bases of cutlery, spots goods, light engineering goods and food processing units located in Sialkot, Lahore and Gujranwala, the exporter said.

The presence of Afghan refugees in Pakistan over the decades made them acquainted to the way of living in Pakistan. They preferred Pakistani products for consumption. In the construction industry, most of the masons are Pakistanis or they have been trained by Pakistani masons, so they prefer the material originating from Pakistan, for its ease and experience in affixing the fixtures, says an official report of commerce ministry.

The exports of wheat, flour, rice and fruits to Afghanistan declined due to lack of exportable surplus in Pakistan.