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Pakistan looks east to South Korea

By Korea Herald
Published : Aug. 31, 2014 - 21:00
There are essentially two Pakistans. One made familiar by gruesome suicide bombings, U.S. drone strikes and heavy political wrangling in headlines around the world.

Another Pakistan ― unfortunately, perhaps less familiar to outside observers ― is focused on getting down to business, according to Zakaria Usman, president of the country’s chambers of commerce and industry, an umbrella organization encompassing more than 50 business groups.

Usman led a delegation of Pakistani business and trade leaders to Seoul from Monday to Wednesday to meet with South Korean counterparts on ramping up trade ties, including a possible free trade agreement.

He described his visit as a “logical next step,” after Prime Minister Chung Hong-won visited Pakistan in April. “What we need is to build personal relationships in the South Korean private sector,” Usman said in an interview with The Korea Herald in Seoul on Wednesday.

During the four-day trip four months ago, the prime minister met with Pakistani President Mamnoon Hussain and Prime Minister Nawaz Sharif, tightening bilateral ties in the political, economic and development sectors. They signed MOUs for enhanced cooperation on energy, trade and investment. Chung’s Pakistan trip marked the highest-ranking South Korean overture toward Pakistan in the 30 years since bilateral diplomatic relations were established in 1983.

The executive, who spent a career building companies engaged in the construction and manufacturing sector, said that South Korean-Pakistani economic ties were now really taking off.

“We need to take this opportunity to transform our strengthening relationship into a free trade agreement,” he said. “It would benefit both of our countries.” 

Zakaria Usman, Pakistani president of the Chambers of Commerce and Industry, speaks during an interview with The Korea Herald at a hotel in Seoul on Wednesday. (Philip Iglauer/The Korea Herald)


Trade between South Korea and Pakistan has steadily increased over recent years. Total trade last year was $1.3 billion compared to $800 million in 2007, an increase of about 60 percent in five years.

However, during those years, South Korea has inked a slew of trade agreements opening up markets to both foreign imports and competitive Korean export products like flat-screen TVs, cellphones and cars. South Korea has free trade deals with nearly 50 countries, but Pakistan has largely been left out of that process. Usman said he hopes to change the trade game Pakistan is playing with its East Asia partners, and South Korea in particular.

“We need to lower tariffs on Pakistani mangos, for example. There are many tariffs on Pakistani products, including fruits and vegetables, that give us a disadvantage, compared to other South Asian countries like India,” he said.

Usman and members of his delegation met with senior officials from the Korea Chamber of Commerce and Industry, the Korea International Trade Association and the Korea Trade-investment Promotion Agency. They also discussed with their South Korean counterparts the implementation of the MOUs signed four months ago.

In addition to mangos, another key product is salt for use in industrial processes and deicing roads. Ismail Suttar, chief executive of HubSalt and here with the delegation, inked a multimillion dollar deal to provide industrial salt for a South Korean manufacturer. Suttar said that although Pakistan currently provides just 5 percent of Korea’s deicing salt, he expects that could jump to 40 percent within the next few years.

“I think if we work hard and have good relations, well, then I believe we can go in the next few years to $2 billion annually, by 2015, for example,” Usman said. That would mean an increase in two-way trade of 70 percent in just two years. “But it is actually possible here,” he said. “And if we can finalize an FTA quickly, then that number would increase to $3 billion annually very quickly.”

Usman said that his country can compete with China for South Korean foreign direct investment, because manufacturing labor costs in Pakistan are lower.

“You know now manufacturing labor costs are becoming too expensive in China for foreign investors, so this is the time for South Asia to replace China,” he said.

He also pointed out opportunities in the energy sector. The country plans to double its power generation capacity by adding 25,000 megawatts of coal-fired, nuclear and other plants over the next 10 years, according to the “Pakistan Vision 2025” plan.

Pakistan, with 180 million people, is the world’s sixth-most-populous country and has long been touted by development experts as a country with huge potential for economic growth. But for years, political instability has hindered the economy.

After national elections last year in May, Prime Minister Nawaz Sharif ― who led Pakistan in its first democratic transition of power since becoming a nation in 1948 ―managed a comparatively stable political environment.

That is until recently. In just three weeks, the situation has been upended. Thousands of protesters have poured into the capital city of Islamabad, and encamped in the city center. Though Sharif vowed on Thursday to uphold Pakistan’s constitution and take steps to boost the economy, his hold on power looks increasingly tenuous.

The turmoil has distracted military leaders from battling Taliban insurgents. It also is reportedly jeopardizing the disbursement of an International Monetary Fund loan. The money is needed to partially fund the “Pakistan Vision 2025,” which also seeks to bring electricity to an estimated 30 percent of the population without reliable access to electricity by increasing the amount of power the country generates.

Usman departed for Manila, Philippines, Thursday for three days on the second leg of a two-nation Asia trip. He returned to Pakistan on Saturday.

By Philip Iglauer (ephilip2014@heraldcorp.com)

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