Pakistan to sign FTA with China to bridge trade deficit

Pakistan’s federal cabinet on Tuesday approved a draft of Free Trade Agreement (FTA) to be signed with China during Imran Khan’s upcoming visit to Beijing. (Shutterstock)
Updated 23 April 2019
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Pakistan to sign FTA with China to bridge trade deficit

  • Islamabad’s trade deficit with Beijing widened to $9.7 billion in fiscal year 18
  • China to provide market access to 90 percent of Pakistani commodities at zero rated duty

ISLAMABAD: Pakistan’s federal cabinet on Tuesday approved a draft of Free Trade Agreement (FTA) to be signed with China during Prime Minister Imran Khan’s upcoming four-day visit to Beijing, said the PM’s special assistant on information and broadcasting Dr. Firdous Ashiq Awan. 

The move is aimed at helping Islamabad bridge its trade deficit with China that has widened over $9 billion.

In recent years, China has emerged as the largest trade partner of Pakistan and pledged over $60 billion infrastructure development program in 2013, known as the China-Pakistan Economic Corridor (CPEC) – a network of roads, pipelines, power plants, industrial parks, and a port along the Arabian Sea.

“The FTA with China will help us protect our local industry, and bridge the gap between exports and imports of both the countries,” Awan said while terming it a “great achievement” of Pakistan.

Pakistan has been struggling to sign a second phase of the FTA with China for the last eight years to boost its exports to Beijing and this would now be inked on April 28 by the commerce ministers of both the countries.

Islamabad’s trade deficit with Beijing widened to $9.7 billion in the last fiscal year, according to State Bank of Pakistan, as Chinese imports to Pakistan increased to $11.458 billion against the exports of just $1.744 billion. The officials say the earlier FTA with China was in favour of Beijing and discouraged Pakistani exports.

“The new FTA will help bring trade parity with China,” she said.

Under the second phase of the FTA, China is expected to provide market access to 90 percent of Pakistani commodities at zero rated duty, while Pakistan would give China market access to 65 percent tariff lines. These incentives to Pakistan would be equivalent to the duty-free market share already enjoyed by the countries of Association of East Asian Nations (ASEAN) from China.

“China was initially reluctant to sign a new FTA with Pakistan, but Prime Minister Imran Khan’s successful diplomacy during his last visit to Beijing helped materialize it,” the prime minister’s special assistant said while briefing media after the cabinet’s meeting.

Prime Minister Khan is visiting China from April 25 to 28 to attend the 2nd Belt and Road Forum in Beijing, along with a ministerial delegation and 450 members of business community. In addition to participating in the Belt and Road Forum, the Prime Minister would also hold bilateral meetings with President Xi Jinping and Premier Li Keqiang.

“Our businessmen will interact with Chinese investors and corporate sector to bring investments in Pakistan,” she said, “if the economy gets strengthened, we will be able to provide jobs to our youth.”

To a question, she said the government has received financial support from friendly countries including Saudi Arabia, United Arab Emirates and China to stave off a balance of payments crisis. “This support also helped us negotiate a better loan deal with IMF,” said Awan.

About the proposed tax amnesty scheme for undeclared local and offshore assets, she said the government’s economic team has been fine tuning it to ensure the scheme’s effectiveness in strengthening the country’s fragile economy. “This will be a comprehensive document and unveiled soon,” she added.


Saudi mall operator Arabian Centres bucks retail malaise as profits surge

Updated 21 August 2019
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Saudi mall operator Arabian Centres bucks retail malaise as profits surge

  • Mall operator defies online shopping pressure by lowering discounts to tenants, boosting occupancy and rental revenues

LONDON: Arabian Centres, the Saudi mall operator which went public in May, said first-quarter consolidated net profit almost trebled to SR227 million ($60.53 million) as occupancy edged higher across its shopping centers. Revenues increased by about 2.5 percent over the year to SR572.5 million.

The results helped to propel the group’s shares 3 percent higher on Tuesday.

The group said that it boosted performance by offering lower discounts to its tenants which helped to drive rental revenues. Like-for-like occupancy across all malls increased  to 93.2 percent from 92.4 percent in the year earlier period. Finance costs fell by about 65 percent from a year earlier to SR73.9 million.

FASTFACT

 

27 - Arabian Centres plans to expand its mall portfolio to 27 within four years.

Retailers across the Middle East are coming under increased pressure as more consumers shop online, while at the same time, tourists are spending less in dollar-pegged economies because their purchasing power has been cut by the strength of the greenback. Still, in Saudi Arabia, the under-served retail market is expected to receive a boost from rising investment in the entertainment sector, especially new cinemas.

“Faced with the rising challenge of online shopping, the brick-and-mortar retail segment has sought to diversify its offering to secure its customer base, providing an increased range of leisure and entertainment facilities,” said Oxford Business Group, in a report analyzing emerging trends in the Saudi retail sector.

“The reintroduction of cinemas to the Kingdom in April last year ... is expected to increase retail footfall,” it said.

Arabian Centres, majority-owned by Fawaz Alhokair Group, listed its shares on the Tadawul stock exchange in May — the first to do so in the Kingdom under Rule 144a, allowing the sale of securities, mainly to qualified institutional buyers in the US.

The group aims to expand to 27 malls within four years.