Pact to start new era in Turkey-Pakistan economic ties

ISLAMABAD/ANKARA Economic relations between Turkey and Pakistan will enter a new era with a free trade agreement (FTA) expected to be signed this year, a Turkish commercial official said on Friday. Ferhat Kavakli, Turkey’s commercial counsellor to Pakistan, told Anadolu Agency that the agreement is believed to be Pakistan's most comprehensive free trade deal to date. "The fifth round of negotiations was held in December. We’re expecting to complete our work and hope to sign the FTA this year," Kavakli said. "Pakistan has the world's sixth-largest population. There is a great consumption potential in the country, where imported goods dominate the markets as local industry is lacking," he said. Kavakli stated that the Turkish-Pakistani trade volume could be boosted by strengthening transportation networks and cutting tariffs, adding: "Turkish products already have a favorable image in Pakistan. Our goods will be preferred even more in Pakistani markets with the advantages we get by cutting customs duties." He said many Turkish contractors already have operations especially in dam projects and other infrastructure projects. “There is a clear need for investments in a wide range of sectors in Pakistan, but infrastructure and energy are prominent,” Kavakli said, adding: “Opportunities in the automotive, civil aviation, education, healthcare, transportation, construction, durable goods, and food and beverage sectors should also be looked at.” In Pakistan, Anadolu Group, a major Turkish beverages producer which boasts 25 plants in 10 countries, has six factories operating under the group company Coca-Cola Beverages Pakistan Ltd. Last year, Turkish giant Koc Group, one of the world's top home appliances manufacturers through its company Arcelik, active in more than 130 countries, paid $250 million to acquire Pakistani leading home appliances brand Dawlance. Another Turkish conglomerate, Zorlu Group, entered the Pakistani energy sector in 2006, and since 2013 Zorlu has been operating the country's first wind power plant. The group inked agreements with Pakistani authorities to construct a total of 300-megawatt solar power plants this January and February. ‘The doors are open to Turkish companies’ Atilla Yerlikaya, head of the Turkey-Pakistan Business Council of Turkey’s Foreign Economic Relations Board (DEIK), told Anadolu Agency this week that the Turkey-Pakistan free trade pact would boost economic ties between the two countries. "First exporting and then investing in Pakistan would be a great horizon for Turkish companies in the sectors where they are competitive," Yerlikaya said. He stressed the potential of the pact, saying, "According to the Pakistan Business Council, there is an opportunity to raise Turkey's annual exports to Pakistan to $12 billion with free trade conditions.” The business leader stated that Turkish companies need to proceed as soon as possible to benefit from the great potential in Pakistan, where "the doors are open to Turkish companies." Underlining Pakistan's economic capacity as the world's fourth-largest milk and sixth-largest cotton producer, Yerlikaya said: "Pakistan's economic potential cannot be transferred to value-added goods due to the country's meager energy infrastructure." "However, Pakistan stands very close to realizing its strong potential. Especially the energy and logistic infrastructure will be restored by the China-Pakistan Economic Corridor (CPEC) project through around $50 billion in investments," he said. The CPEC is a multi-billion-dollar project including a network of rail, roads, and gas pipelines to connect China to Pakistan's southwestern deep-sea Gawadar port to provide the shortest route for Chinese goods to reach the Middle East, Africa, and Central Asia. "Considering the country's [2015] GDP was around $270 billion, the importance of these investments can be understood well," he added. Trade volume rose in recent decade Recalling the $1 billion annual trade volume target set by Turkish and Pakistani officials, Yerlikaya said: "Unfortunately, the business potential could not be realized well although the historical friendship between the two countries." According to the Turkish Statistical Institution, the total trade volume between Turkey and Pakistan increased to $7.75 billion in the last decade, marking a 218 percent hike compared to $2.43 billion in the period of 1997-2006. Last year, Turkey exported $347 million to Pakistan while the total value of exports to Pakistan was $2.39 billion between 2007 and 2016. In 2016, Turkey imported $263 million from Pakistan while the country's total imports from Pakistan were recorded as $5.36 billion in the period of 2007-2016.