KARACHI
President Pakistan Business Forum (PBF), Mian Usman Zulfiqar said businesses remain uncertain about how the system should function.
Even though the government announced the procedures for barter trade last month, traders are still unaware of them due to lack of clarity.
As the government in early June authorized barter trade with Afghanistan, Iran and Russia — encouraging direct exchanges of goods and services without cash as a way of reducing pressure on rapidly dwindling foreign reserves. The Commerce Ministry released a list of 57 eligible products, including oil and gas, under what is called the Business-to-business (B2B) Barter Trade Mechanism 2023.
After a month, PBF President says initiative has gained little traction. Experts and traders blame a lack of clarity and a perceived lack of interest from Afghanistan for the slow start.
According to Engr. Daroo Khan Achakzai, Chairman of the PBF in Balochistan, bartering has existed for centuries, but in today’s globalized world of interconnected economies and modern trade mechanisms, it has diminished. The practice of purchasing goods from Afghanistan, making payments in Pakistan, and then purchasing goods from Pakistan to be sent back to Afghanistan is already followed by many traders in the border regions. However, if the ministry SRO had an additional facility last month, they must disclose it, particularly to Russia.
Daroo Khan added, “I believe the Ministry of Commerce launched the initiative without properly taking into account the stakeholders.”
PBF likewise saw that because of stressed ties among Islamabad and Kabul, the Taliban have not answered decidedly.
According to Afghan Chamber officials, traders on the Afghan side claim to have received no instructions or guidance from the Taliban government or its central bank, according to the PBF President. Even though Pakistan issued the order at the beginning of June, “Afghan traders are unable to take any action until they receive clear instructions from the Taliban government in Kabul.”
In theory, the three partners ought to be enthusiastic about the arrangement, according to PBF, which stated that even though a barter trade with Pakistan is a win for them, it is a win for Pakistan.
Pakistan, in its own words, “can benefit from this process by accessing cheaper energy from Russia and Iran, as well as coal from Afghanistan, without using dollars,” as stated by President PBF. This can assist with facilitating the strain on its unfamiliar trade saves,” he said.
Similarly smuggling across Pakistan’s borders with Iran and Afghanistan, which is blamed for significant losses in foreign exchange, could also be reduced through official barter trade. As recently as last year, Iran illegally imported 35 percent of Pakistan’s diesel. A crackdown on the smuggling of flour, wheat, sugar, fertilizer, and other goods to Afghanistan was recently launched by Pakistan.
It should also be noted that Pakistan’s primary export markets are the United States and the European Union, whereas its primary import markets are China and the Middle East. The three bargain exchange accomplices were not among the main 20 product objections in the 2021-2022 financial year, and Russia likewise was not among the main 20 import sources.
