ISLAMABAD, June 23: Pakistan’s exports face much greater barriers than other South Asian economies because of a less favourable governance environment and a weak control on corruption, says the World Bank.

In its latest report “World Trade Indicators 2008,” the bank also said that although Pakistan began liberalising its trade regime as part of the Comprehensive Economic Revival Programme launched in 1999 and its tariff rates have fallen dramatically since then, the latest Trade and Tariff Restrictiveness Index (TTRI) suggests that the trade regime remains relatively protectionist as is common for most South Asian countries.

The 2007 MFN-applied simple average tariff (14.1 per cent) is comparable to the regional average (14.4 per cent), but the import weighted (15.3 per cent) tariff average is higher than the regional mean (12.9 per cent), with both indicators above the low income country group averages.

Moreover, only 2.5 per cent of Pakistani imports in 2000-05 were MFN duty free, much less than regional and income group comparators.

Unlike most other South Asian countries, almost all (98.7 per cent) of Pakistan’s tariffs were bound. A number of Pakistan’s service industries, including the financial and telecommunications services, have been successfully liberalised. However, its low overall GATS commitment index suggests an ample room for greater multilateral commitment to services liberalisation.

Market Access TTRI (including preferences) ranked near the worst at 117th (out of 125). Its MFN duty-free exports accounted for about 14 per cent of all exports in 2006, lower than the South Asian average of 26.4 per cent, but almost twice its own 2000-04 average.

Pakistan is a Generalised System of Preferences (GSP) beneficiary with a number of industrialised countries and a signatory to the Trade and Investment Framework Agreement (TIFA) with the United States. Its utilisation rate of EU and US preferences is a moderately high 74 per cent, but the value of such preferences is a very low: one per cent of bilateral exports.

Regionally, Pakistan is member of the Economic Cooperation Organisation (ECO), the South Asian Association for Regional Cooperation, and the South Asian Preferential Trade Arrangement (SAPTA), although the country’s difficult political relationship with India undermines their bilateral trade.

After an appreciation of 3.2 per cent in 2005-06, Pakistan’s currency with the rupee depreciated only slightly by 1.1 per cent in 2007 on a real trade weighted basis.

The bank also said that Pakistan’s Doing Business rank is a relatively high 76th (out of 178), despite a low rank on the subcategory Enforcing Contracts (154th).

Surpassing the regional and low-income group averages on nearly all aspects of trade facilitation, it ranked 68th (out of 150) on the 2006 Logistics Performance Index. Here its weakest indicators were quality of transport and information technology (IT) infrastructures and efficiency of customs and other border procedures.

With relatively short processing times and low per container export costs, the country is ranked also 94th (out of 178) on the Doing Business Trading Across Borders subcategory, a worse standing from the previous years rank of 81, partially attributable to an increase in average import costs by $165 per container.

Pakistan’s estimated real growth in trade was a low 0.9 per cent in 2007. This follows high growth rates of 18.5 per cent in 2005-06, and moderately high rate of 6.9 per cent in the early 2000s.

The impressive growth rates in 2005-06 were mostly driven by expanding imports, which grew by 29.6 per cent. Even with this substantial increase in total trade in recent years, Pakistan’s trade share in the GDP which was about 42 per cent in 2007 is lower than the regional and about half the low-income group mean integration ratio. The services’ share in total exports is a low 17.2 per cent, with transport being the most important service export.

Pakistan’s main merchandise exports were textiles products, such as linen, cotton and various fabrics. Its export concentration is lower than the average South Asian or low- income country. Its main destination markets are the US, the United Arab Emirates, Afghanistan, the United Kingdom, and China.

Its imports, which include petroleum, machinery, plastics and transportation equipment, are obtained from a wide range of countries, including China, Saudi Arabia, United Arab Emirates, Japan and the United States. Foreign direct investment (FDI) inflows as a share of the GDP were relatively high (3.4 per cent) in 2007, attracted in part by privatisation of some key state-owned industries.