PESHAWAR: Though the Khyber Pakhtunkhwa has enough potential to export to Afghanistan yet frequent suspension of border causes exporters major losses whenever their containers are stranded on the border.
According to an official report of the KP Planning Department, manufacturing in the province is quite diverse. The province produces cigarettes, cement, ceramics, sanitary wares and tiles, cotton textiles, blankets and fabrics, electric bulbs, fertilizers, pharmaceuticals, matches, paper and board products, maize, sheet glass, paints and varnish, beverages, sugar and starch.
The processed food industry, including vegetable ghee and cooking oil products, also has a considerable presence in KP and contributes over 30pc to the country’s total ghee production. It also produces 30pc of the country’s cigarettes and 27pc of cement.
Pharmaceutical exports to Afghanistan also have the potential to grow significantly. But the repeated border suspension, bad relation and ad-hoc rules, controlling drug prices, are an impediment. The strict price control leaves a minimal room for pharmaceutical companies to invest and export to international markets, including Afghanistan.
Similarly, KP produces 23pc of the country’s limestone. Investors say the provincial government needs to offer land at subsidized rates to facilitate investment in cement production near limestone deposits in the province.
Finally, there is tremendous potential for trade in services in fields like healthcare, education and information technology between Afghanistan and KP. The similarity of language and culture can also facilitate trade.
Any change in federal policy can hurt or facilitate trade from a province. Traders complain that the ill-advised changes in the trade regime with Afghanistan have led to a substantial fall in export proceeds.
After a big increase in export proceeds to Afghanistan over a decade, the exporters were required to switch over from trading in rupees to the dollar in January 2014. This impacted the province’s trade with Kabul.
Pakistan was the first choice of landlocked Afghanistan for its transit trade, but it has lost that position to Iran due to faulty policies. The high cost of handling charges at Pakistani ports and for onward transportation has induced Kabul to turn to Iran.
The risk to Pakistan is the diversion of trade to Afghanistan’s other neighbours. Afghanistan has signed more than 36 trade agreements and protocols with different organizations and countries in recent years, including Iran, India, Tajikistan, Turkmenistan and Uzbekistan.
KP needs to invest in a strong export-oriented manufacturing base to serve the Afghan and regional markets, and also improve its connectivity and logistical infrastructure. Substantial investment is also required in roads, truck ports and storage capacities on both sides of the Afghanistan-Pakistan border.
