HE, Dr. Zafar Iqbal, Ambassador of Pakistan to Romania identifies possibilities of stronger bilateral trade and economic cooperation
H.E. DR. ZAFAR IQBAL, AMBASSADOR OF PAKISTAN TO ROMANIA
Romanian companies can incerease their profit margins by sourcing inputs and products from Pakistan which offers good quality at competitive rates
Pakistan and Romania have very friendly and cordial relations spanning over five decades. However, the economic content of the relations has yet to achieve a level that is commensurate with our friendly political relations. My vision for Pakistan-Romania economic and trade relations is to create such an enabling environment for business communities of both sides and help strengthen our relations in this particular area.
I assumed my responsibilities in Romania as Pakistan’s Ambassador in July 2020. Since then, I have visited a number of Romanian Chambers of Commerce and Industry and have held numerous meetings with Romanian companies and enterprises interested in exploring business opportunities in Pakistan. I met the leadership of Romanian Chamber of Commerce and Industry as well as local Chambers of Bucharest, Ilfov, Galati, Prahova, Iasi, Dambovita, Vaslui and Maramures counties. As Embassy, our main responsibilities include inter alia, establishing a direct interface between Romanian and Pakistani Chambers of Commerce and Industry, providing information on Pakistan’s export market to Romanian business entities, and facilitating business visas for Romanian business delegates travelling to Pakistan. We are trying to establish institutional linkages between different Chambers of both countries. We have also shared details of Romanian companies involved in different business activities with the relevant Pakistani entities for easing their smooth contacts.
We are now also in the process of establishing a dedicated export exhibition hall at the Embassy where Pakistani exportable commodities would be displayed, enabling the Romanian business entities to have a direct look at some of the commodities offered by Pakistan.
There are a number of possibilities for Pakistani products in Romanian market. The biggest advantages that Romanian businesses can have by importing more from Pakistan include lower costs coupled with high quality. If we consider the existing market penetration by Pakistani commodities in Romania, apparel, home textiles, cotton, rice, and leather products have huge unexplored export potential in Romania. Romanian trading and business houses could also consider importing machine tools, sewing machines, surgical items, fans, plastic items, copper and zinc articles, mineral fuels and waxes, footwear, cutlery items, tobacco, fish, spices, vegetables and fruits especially mangoes and dates, at very cost-effective rates from Pakistan.
Last year, bilateral trade between Pakistan and Romania was around US$ 46 million. Of this, Romanian exports to Pakistan stood at US$ 18 million while Pakistan’s exports to Romania amounted to US$ 28 million. Our estimate based on market analysis and research is that Pakistan’s unexplored export potential with Romania is around US$ 29 million while that of Romania in respect of Pakistan is around US$ 55 million at present. Through concerted efforts and right focus on the right products, we can increase our bilateral trade threefold over the next 2-3 years. We are engaged in efforts to create more awareness among business communities and enhanced interaction between them for achieving this target.
In addition, While Romania can be a source of technology for Pakistan in different economic domains, Pakistan can provide skilled and semiskilled human resource to Romania. We are trying to explore these particular domains for more strengthened bilateral economic relations.
Romania, owing to its EU membership and location is of interest to all types of investment. While Romanian and Pakistani companies can establish joint ventures in diverse fields, I would like to highlight that, in terms of investment opportunities, Pakistan is a goldmine for investors interested in making long-term and stable investments abroad. Pakistan’s strategic location coupled with huge young population (55 percent) and a large English-speaking workforce make Pakistan a choice destination for foreign investors. Pakistan follows a very liberal investment regime and is ranked as being the most investor-friendly in the South Asian region. Some of the prominent elements of Pakistan’s investment regime include the following:
- Remittance of capital, profits, dividends, etc. is allowed
- Upper limit of allowed foreign equity is set at 100 percent
- For the manufacturing sector, customs duty on import of plant, machinery and equipment is set at only 5 percent. For other sectors, such duty is zero for agriculture, 5 percent for infrastructure, and 0-5 percent for the services sectors including IT and Telecom services.
- For manufacturing sector, there is no restriction to the payment of royalty & technical fee.
- 25 percent tax relief is given for both manufacturing and non-manufacturing sectors.
The areas for joint ventures and investment in Pakistan, which could be of interest to Romanian investors, include food processing, logistics, textile, automobiles, IT, housing and constructions as well as oil and gas exploration sectors.
Machinery and equipment is an area having the potential where Romania could enhance its current exports to Pakistan by manifold as Pakistan’s economy picks up and needs more machinery for production. Similarly, there is a huge potential for Romania in Pakistan’s automobile sector, where Romania could consider launching its car brand Dacia by establishing a local assembly/production facility in Pakistan.
As cost-effectiveness is the key comparative advantage that can make or break a business, I would recommend to the Romanian producers as well as trading houses to consider importing more and more of their inputs and goods and services from Pakistan and increase their profit margins. With the CPEC entering into second phase, this is high time that Romanian business entities should be thinking to establish joint investment collaboration with Pakistani counterparts to expand their businesses and access the growing Asian markets.