Barriers Impeding Regional Export: Ishaq Dar’s Insights

January 11, 2025 Mahi Bukhari

KARACHI: Deputy Prime Minister and Foreign Minister Ishaq Dar has highlighted trade barriers as a critical challenge to regional economic growth in South Asia. Addressing the South Asian Federation of Accountants (SAFA) Conference on “South Asia’s Economic Outlook — Challenges and Opportunities,” held in Karachi, he emphasized that both tariff and non-tariff barriers must be addressed to unlock the region’s export potential.

Despite accounting for 25% of the global population, South Asia’s intra-regional trade remains below 5% of its total trade volume. This stark contrast reflects the need for comprehensive reforms and collaborative efforts among neighboring countries.

South Asia: One of the Least Integrated Regions in Trade

South Asia lags behind other regions in trade integration. Ishaq Dar stated that intra-regional trade in South Asia is minimal compared to other economic blocs like ASEAN, which has achieved 25% of global trade share despite its smaller population.

Key Barriers Hindering Regional Trade

High Tariff Rates: Excessive tariffs increase the cost of goods, discouraging trade within the region.
Non-Tariff Barriers: Regulatory hurdles, complex customs procedures, and border restrictions impede smooth trade.
Lack of Infrastructure: Poor logistics and transport networks hinder efficient cross-border trade.
Political Instability: Geopolitical tensions among South Asian nations discourage long-term trade agreements.

Proposed Solutions by Ishaq Dar

Preferential Trade Agreements (PTAs): Simplify trade regulations and lower tariffs to encourage regional trade.
Logistics and Border Reforms: Streamline customs procedures and invest in modern infrastructure to enhance efficiency.
Collaborative Discussions: Strengthen diplomatic ties and promote shared economic goals to foster unity.

Untapped Renewable Energy Potential in Pakistan

While discussing Pakistan’s economic challenges, Ishaq Dar identified the energy crisis as both a hurdle and an opportunity. He emphasized that Pakistan has significant untapped renewable energy resources, including:

Solar Energy: Vast potential for harnessing sunlight to generate power.
Wind Energy: Coastal areas offer opportunities for wind-based energy production.
Hydropower: Pakistan’s rivers provide ample opportunities for sustainable hydropower projects.

Benefits of Renewable Energy

Energy Security: Reduced dependency on imported fossil fuels.
Cost Efficiency: Renewable energy is more cost-effective in the long run.
Environmental Sustainability: Helps combat climate change by reducing carbon emissions.

Ishaq Dar stressed that South Asia should collectively invest in renewable energy innovations. Sharing technology and expertise can lead to a greener, more sustainable future for the region.

Digital Transformation and Accountancy Export

The digital age presents challenges and opportunities for South Asia. Ishaq Dar emphasized the need to leverage digital assurance programs and promote the export of accountancy services. Pakistan, with its talented pool of accountants, has immense potential in this domain.

Pakistan’s Strength in Accountancy

Initiatives like ICAP (Institute of Chartered Accountants of Pakistan) are positioning the country as a hub for accountancy services.
Digital tools and training programs are enabling professionals to compete on a global scale.

Dar stressed that aligning accountancy services with global standards can enhance Pakistan’s reputation as a reliable service provider, opening new export avenues.

Economic Cooperation for a Unified South Asia

The challenges faced by South Asia transcend national borders. Whether it’s economic recovery, climate change, or technological disruptions, these are global issues requiring regional solutions. Ishaq Dar reiterated the importance of fostering cooperation among South Asian nations to address shared challenges.

Steps Toward Economic Unity

Joint Policy Initiatives: Regional finance ministers must collaborate on policies benefiting the common man.
Trade Facilitation: Establishing free trade zones and harmonizing regulations across borders.
Energy Sharing Agreements: Collaborative investments in renewable energy infrastructure.

Ashfaq Tola, the newly appointed SAFA President for 2025, echoed similar sentiments, emphasizing that South Asia’s trade potential is vastly underutilized. He pointed out that Asean’s success serves as a model for South Asia to emulate.

The Path Forward: Policy Reforms and Collaboration

To address the barriers to regional trade and economic growth, the following steps are critical:

Reduce Tariffs and Non-Tariff Barriers: Simplify trade regulations and eliminate unnecessary restrictions.
Invest in Infrastructure: Build roads, railways, and ports to facilitate smoother cross-border trade.
Strengthen Regional Institutions: Empower organizations like SAFA to drive economic integration.
Promote Renewable Energy Collaboration: Share technologies and resources to build a sustainable energy future.
Leverage Digital Transformation: Use digital tools to enhance trade efficiency and promote exports.

FAQs on South Asia’s Trade Barriers and Opportunities

1. Why is South Asia’s intra-regional trade so low?

South Asia’s intra-regional trade is below 5% due to high tariffs, non-tariff barriers, inadequate infrastructure, and political tensions.

2. What can South Asia learn from ASEAN?

ASEAN’s success lies in its robust trade agreements, collaborative economic policies, and investment in infrastructure. South Asia can replicate this model to enhance trade integration.

3. How can Pakistan leverage renewable energy for economic growth?

Pakistan has significant untapped potential in solar, wind, and hydropower. Investing in renewable energy can reduce dependency on fossil fuels, lower costs, and combat climate change.

4. What role does digital transformation play in South Asia’s trade?

Digital tools can streamline trade processes, reduce transaction costs, and promote the export of services like accountancy.

5. What are the key steps to overcome trade barriers in South Asia?

Key steps include reducing tariffs, investing in infrastructure, fostering regional cooperation, and promoting renewable energy innovations.

Conclusion

South Asia, despite its vast population and resources, remains one of the least integrated regions in terms of trade. Addressing barriers like high tariffs, inadequate infrastructure, and political instability is crucial to unlocking the region’s economic potential.

Pakistan, with its renewable energy resources and skilled workforce, has an opportunity to lead this transformation. By fostering regional collaboration, investing in infrastructure, and leveraging digital tools, South Asia can achieve sustainable growth and economic stability.