Pakistan is increasingly focusing on the security measures at Pak-Afghan border in the backdrop of a tension between the two neighboring counties, resulting in a significant loss of market share of Pakistani products in Afghanistan. In the meantime, Iran and India are capturing the lost market share by fast replacing Pakistani products with their locally manufactured products.
Islamabad has also introduced high rates on products like pharmaceuticals, juices, PVC pipes, and cement. Last year, not a single container of cement was transported to Afghanistan as Iranian cement was available at a cheaper price. Similarly, Iran has also taken over the transit trade as it now provides handling and onward transportation at a cheaper rate.
The government of Pakistan, as of now, is not paying any attention in increasing exports to Kabul that have gone down from $1.69 billion in FY 2015 to $1.12in FY 2017. Rather than focusing on Afghanistan as its trade partner, Islamabad is now promoting exports to Africa as the Ministry of Commerce recently approved an export promotion package for the continent.
This stance from the government is hurting export market that claims that the government closes all trade option by closing out the border in case of any incident. They said that the government does not take any such severe decisions when it comes to trade with other countries. Businessmen have advised the government to shift from a security-centered policy towards one that focuses on the economy.
Afghanistan has the potential that can benefit the business community of Pakistan, but the restrictions on visa and travel have increased the problems for the community. However, Afghanistan itself is facing issues as NGOs have stopped their development operations in the country and international funding for development projects have also gone down.
According to Zahid Shinwari, President KP Chamber of Commerce and Industry, even the local investors in Afghanistan are not willing to invest in the real-estate sector which is one reason why no major factory has been established in the country over the last two years. Infrastructure problems at the border are also a problem as no land port authority has been made by the government.
Governments of both the countries need to sit together in order to overcome their differences and devise a strategy that supports trade transit and full potential is utilized by both the parties.