Pak-Turk ties and economic realities

Prime Minister Shehbaz Sharif has invited Turkish investors and businessmen to expand their investments in various areas of Pakistan. PM Sharif, who has traveled to Turkiye to attend the swearing-in ceremony of President Recep Tayyip Erdogan, held separate meetings with the representatives of several Turkish companies and Industrial giants in Ankara on Saturday. The Primer called for establishing strategic collaboration in multiple sectors including energy, agriculture, information technology (IT), and construction. The discussions spanned around expanding trade and investment ties to maximize mutual gains from available opportunities in Pakistan and to enhance cooperation in key sectors of the economy through the direct presence of Turkish enterprises and via joint ventures with Pakistani counterparts.

Pakistan and Turkiye have long-standing fraternal strategic relations in all domains including trade and investment, IT, power generation, renewable energy, Science and Technology, Defense and security, and Culture and Tourism. Both nations are linked by multiple bonds of religion, language, culture, and history. Their bilateral cooperation has witnessed a sharp rise in multiple fields particularly in Security and defense collaboration as well as joint defense manufacturing and production between the two brotherly nations in recent years. Historically, the Muslims of the Indo-Subcontinent, especially the Pakistani nation have a historic affiliation with Turkiye dating back to World War I and the prestigious Ottoman Empire and they still envisage the revival of the great Khalafit-e-Usmania under the revolutionary leadership of Tayyip Erdogan. Meanwhile, these historic religious and cultural sentiments had always remained crucial in the transformation of the Pak-Turkiye friendship and Strategic cooperation throughout history.

Pak-Turk economic and trade cooperation has grown many folds in recent years and over 100 Turkish firms are currently working in multiple fields in Pakistan. The Pakistani successive governments had worked actively to engage more Turkish companies to come and invest in the country. Currently, the volume of bilateral trade between Turkiye and Pakistan is around $600 million which is quite nominal as compared to the decades long bilateral relationship of both nations. Over the years, Pakistan and Turkey could not transform their historic diplomatic and political relationship into a viable trade and economic partnership because of their strict trade regime and conflicting business priorities.

Presently, the bilateral trade between the two countries is in favor of Turkiye while Pakistan products including textiles, surgical instruments, and sports goods have no significant share in Turkiye’s imports due to the high tariff regime imposed by the Turkish authorities that reduced Pakistan’s export to Ankara by almost 69% in recent few years. Presently, both nations had set the target of the bilateral trade at $ 5 billion per annum and taking multiple measures to achieve that magnificent goal that had not been achieved so far. Pakistan and Turkiye held multiple rounds of talks to conclude a Free Trade Agreement (FTA) but could not forge consensus over tariffs, customs duty, and other trade issues and finally, both nations struck a Preferential Trade Agreement (PTA) last year that might help them to achieve an overwhelming target for their bilateral trade in the coming years.

The Republic of Turkiye is an emerging market and newly industrialized economy, that not only enjoys the dividends of a free European market but also vigorously expands its trade and investment in the Middle East, Central Asia, and Eastern Europe. Realistically, foreign trade and investment as well as exports largely depend on domestic trade and manufacturing policies, internal peace, cost-effective manufacturing, and high-quality products of any country. Meanwhile, in a business-friendly environment, the confidence of local traders and entrepreneurs is of utmost importance prior to lobbying for foreign investment that attracts multinational firms to grab their share of the market, however, Pakistan’s case is totally different from the rest of the world.

Currently, local businesses are at a halt, the energy crisis ruined the industry, and high production costs badly hurt the Country’s exports, thus foreign firms are interested to work in specific sectors that guarantee them money back guarantee such as construction, energy production, etc but such mechanisms do not support the national economy in the long run. The government must first build the confidence of local businesses through the provision of a conducive environment, business-friendly legislation, and an uninterrupted supply of cheaper energy so Pakistani exports compete in the world. At the same time, Pakistan needs to learn from Turkiye, which has exemplary diplomatic and trade relations with Islamabad but kept imposing high tariffs on Pakistani goods and did not okay GPS Plus status for Pakistan in line with the approval of the EU community. Pakistani Strategists must adopt rational policies and focus on domestic businesses and industries to build a sustainable economy so foreign investors volunteer to invest in Pakistan to make their fortune, otherwise, no businessman deals in loss ever.