Barter trade potential: Ministry works out exports at $1.2bn, imports at $2bn

ISLAMABAD: Pakistan has the potential of exporting goods worth $1.153 billion and importing goods of $2.032 billion per annum under barter trade with Iran, Afghanistan and Russia, discloses a working of the commerce ministry. In the barter trade, no monetary transactions are involved as it is merely the trading of goods or services between two or more parties. In essence, bartering involves the provision of one good or service by one party in return for another good or service from another party. The government issued a statutory regulatory order (SRO) on June 1, under which the import and export of goods under B2B barter trade with three countries, Afghanistan, Iran and Russia, has been allowed. Pakistan is facing a serious dollar liquidity crunch. Afghanistan’s Taliban regime is not being accepted by big economies, including the US. Iran is facing US sanctions on its nuclear ambitions and Russia is also facing the G7 countries’ sanctions and regulations because of the war against Ukraine.

“The barter trade with Iran, Afghanistan and Russia is a win-win situation for all stakeholders,” a senior official said. “The purpose is to ease pressure on the dollar, especially concerning our trade with Afghanistan besides with Iran and Russia where we can’t export due to financial issues and restrictions.” To a question, the official said that barter trade will stay in the time to come as Pakistan doesn’t see any ease in restrictions on Iran and Russia in the near future. “Barter will initially take 45 to 50 percent in case of Iran, 20 percent in case of Afghanistan, and around 15-20 percent in case of Russia,” the official said and added the rest of trade will continue as it is. “However, barter trade will be increased gradually in the next few years and we will add more countries and products.” According to the working by the Ministry of Commerce, the official said that there was potential for barter exports of US $716.98 million to Afghanistan, which is 2.3 percent of our total exports, and likewise, there is a potential for imports of $801.26 million from Afghanistan, which becomes 1.8 percent of total imports. For Iran, there is a potential of exports of $311.7 million, which is a 0.9 percent share of total exports. And imports from Iran will be worth $737.7 million, which is 0.98 percent of total imports.

For Russia, the potential for barter exports has been worked out at $124.37 million, which is a 0.4 percent share of total exports. Imports from Russia will be at $457.58 million, which is equal to 0.58 percent share of total imports. This is how the total potential of barter exports to Iran, Afghanistan and Russia transforms into $1.535 billion, which is 3.63 percent of total exports and imports at $2.032 billion, which is 2.58 percent share of total imports. The list includes 26 exportable items such as milk, cream, eggs, cereals, meat and fish products, fruits and vegetables, rice, confectionary and bakery items, salt, pharmaceutical products, essential oil, perfumes, cosmetics, toiletries, soaps, lubricants, waxes and matches, tanning, chemical products, plastic and rubber products, finished leather, textile (intermediaries) readymade garments, textile made-ups, iron and steel, copper, aluminum, tool and cutlery, electric fans and home appliances, electric equipment, motorcycles and tractors excluding components, surgical instruments, furniture items, and sports goods.

The products to be imported from Afghanistan, according to government notification, include fruits and nuts, vegetables and pulses, spices, minerals and metals, coal and its products, raw rubber items, raw hides and skins, cotton and iron and steel. From Iran, Pakistani importers can bring fruits, nuts, vegetables, spices, minerals and metals, coal and related products, petroleum crude oil, LNG and LPG, chemical products, fertilizers, articles of plastics and rubber, raw hides and skins, raw wool and articles of iron and steel. And from Russia, Pakistani traders will be allowed to import pulses, wheat, coal, and related products, petroleum oils, including crude, LNG and LPG, fertilizers, tanning and dyeing extracts, articles of plastic and rubber, minerals and metals, chemical products, articles of iron and steel, and items of textile industrial machinery.