Thursday, June 19, 2014

Finland-Pakistan Trade: Revisiting the Potential

Majyd Aziz

The introduction of mobile phones in Pakistan brought about a brand that became a familiar and household name all over the country. Nokia was the dominating brand and ruled over the airways. Few consumers knew the country of origin and probably the Nokia distributors never needed to advertise the fact that Finland is the birthplace of Nokia (of course, the ‘nationality’ has since been transferred to Microsoft of USA). Over the years, cell phones have become a necessity rather than a luxury and gradually 130 million Pakistanis became cell phone users. This surge in usage resulted in the advent of a multitude of brands, mostly cheap gadgets from China or Korea’s Samsung. Nokia lost its leading market share while other heavily-advertised and affordable brands took center stage.

This narrative is a manifestation of how bilateral trade becomes hostage to one commodity or one brand or depending on a very narrow product base. This scenario drastically impacts on the imperatives of enhancement of bilateral trade and inducing investment in various sectors. Pakistan’s bilateral trade relationship with Finland has lost its luster. As is the norm in Pakistan’s export regime, the domestic exporters also are dependent on very few items of exports and there has not been any revolutionary diversity to expand the product base. Ergo, Pakistan’s exports to Finland are restricted to few textile and leather items.

Pakistan and Finland bilateral relations were established on 12 January 1951 and are based on cooperation in national security and economic development. Apart from the trade relations, Finland is also one of the ten countries that support the Multi-Donor Trust Fund. This Fund, administered by the World Bank, is financing the reconstruction and development work in Khyber-Pakhtunkhwa, Federally Administered Tribal Areas and Balochistan. Recently, being the member of EU, Finland supported the campaign that enabled Pakistan to achieve GSP Plus status in EU.

A survey of bilateral trade for the last five years reflects a downward trend in Finland’s exports to Pakistan while exports from Pakistan are on the rise. In 2009, Finnish exports were $418 million and subsequently dipping to $281 million, $110 million, $70 million and $63 million in the next four years. On the other hand, Pakistan’s exports that were $35 million in 2009 ascended the export ladder registering export figures of $52, $ 71, $72, and $75 in the next four years. What is prominent is that the main Finland exports were primarily the mobile phones that amounted to $ 372 million, $ 200 million, $57 million, $31 million and $18 million in the last five years. This trend is apparently due to either the low demand for Nokia due to excessive imports from China or, it is possible, that most of the Nokia phones could be entering the Pakistani markets via Dubai. In the case of Pakistan’s exports, the contribution of textiles is $23 million, $33 million, $53 million, $54 million and $ 56 million while the exports of leather goods were from $5 million and settling down to a maximum $10 million.

The desire and the determination to revisit the trade scene and chart out a pragmatic course led to Mr Rauli Suikkanen, Roving Ambassador of Finland accredited to Pakistan, (the Embassy of Finland in Islamabad has been closed down since 2012, not necessarily due to any law and order situation) making another focused journey to Pakistan. His presence in Karachi also reflected the need to build up the trade figures and create a favorable perception of the importance of Karachi inspite of the law and order situation. He was very ardent in his motivational interaction with an elite section of Karachi’s trade and industrial community at a business breakfast.  He informed his audience that Stora Enso, a Finnish paper manufacturer, has set up a factory in Kasur while Vaisla, a high-tech equipment manufacturer, is one of several Finnish companies that have been working in Pakistan. He was very optimistic about the increase in trade traffic and said that even though trade is less at this moment but there is a substantial potential for increase in the coming years.

The Finnish diplomat very artfully plugged Finpro, the Finnish trade, internationalization and investment development organization that is expected to provide impetus for growth in bilateral trade. The opening of Finpro offices in Karachi and Lahore are testimony to the action plan of the Finnish government to get Pakistan back on the radar of Finland’s trade and industry. Finpro will offer focal points for Finnish companies that want to look at business opportunities in Pakistan. He informed that Finland Pakistan Trade Council which was not active for past thirty years has now started activities in a very committed manner and the first ever Finland Pakistan Business Summit was organized in Islamabad in February 2014. Fifteen Finland companies and around thirty-five to forty Pakistani companies participated in the Summit that also had a high participation by the Pakistan government and certain cooperatives. The next similar event will be organized in Helsinki in August 2014.

His task list during this visit also included discussions on the preparation of the broad-based agenda, including trade and investment, for the 2014 Inter Ministerial Meeting planned for August 2014 in Islamabad. The onus now lies on the Pakistani government to take the stakeholders into confidence so that a doable agenda is structured. Moreover, an important item on the agenda should be identification and presentation of new products that Pakistan could favorably be exported to Finland.

The fact that Finland is way ahead in many modern technologies and inventions is one more reason for Pakistan to take benefit of the available opportunities. Finland can also assist Pakistan in achieving formidable advancement in agriculture, horticulture, dairy and livestock. At the same time, both countries can take mutual advantage of the rich mining resources of Pakistan, especially in Balochistan. Finland is very highly developed in mining equipment while the mining sector in Pakistan has not realized its true potential due to archaic mining processes and non-availability of hi-tech equipment. Finpro should undertake a comprehensive study of the mining sector and introduce mining equipment through joint ventures, technology transfers, long-term financial credits, and expert advice and guidance. This will enable more Finnish involvement as well as enabling a paradigm shift in the lucrative and highly demanded mineral sector. It would also definitely lead both countries to a more strengthened and stable economic partnership.

Finland and Pakistan are moving on the right track. Finland is appreciative of the fact that a democratic order is in place in Pakistan and Ambassador Suikkanen underscored the continuation of democracy to strengthen the Pakistani economy. Pakistan, with a population nearing 190 million, can also learn from the fact that Finland, with only 5.50 million denizens, is considered one of the ideal countries in the world to live, where the corruption rate is the lowest in the world, and where the educational system is also deemed to be the best. Henry Ford, the US automobile tycoon, made a very poignant remark when he said that “Economy has frequently nothing whatever to do with the amount of money spent, but with the wisdom used in spending it.”

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