Pakistan-Turkey Bilateral Trade — an Ambitious Aim of $5 billion
‘Two countries, one nation’ is how one can describe the relations between Turkey and Pakistan in four words. The two nations share a bond that is older than the foundation of the two modern states. From the Baghdad Pact — an earlier version of CENTO — to the D-8, Turkey and Pakistan have been, and are, part of different transnational alliances.
In 2019, the volume of bilateral trade between Turkey and Pakistan was some $865 million, signaling that the two countries need to work proactively on finalizing a framework for enhancing their economic relations. The leaders of both nations — during the sixth meeting of the High-Level Strategic Cooperation Council held in Islamabad in February 2020 — took note of this and aspired to increase the volume to $5 billion a year, a level that may be achievable if deliberated and worked upon properly.
Both emerging economies have their strengths and challenges. The main export items of Turkey to Pakistan have been communication tools, cameras, machines, and textiles — while textile fibers, plastic, cotton, polyester, and organic chemicals are among the products Pakistan exports to Turkey.
Pakistan, with a population of some 220 million people, has a huge consumer base and multi-million dollar investments of Turkish companies Hayat Kimya — the fifth-largest branded diaper manufacturer in the world — and Arçelik , in the form of its acquisition of Dawlance — one of the largest home appliance manufacturers in Pakistan — among others, are a reflection of this. During the pandemic, the South Asian nation was also able to draw manufacturing orders from some of the world’s most renowned brands, including Hugo Boss AG, Guess? Inc., Target Corp. and Hanesbrands Inc.
Turkey, on the other hand, because of its unique geographical location — and trade agreements’ network — provides an excellent opportunity to access some 945 million customers in different parts of the world, from Chile in South America to South Korea in East Asia. The decision of the world’s largest retailer, Walmart, to shift some of its orders to Turkish firms in the aftermath of disruptions in supply chains amid the pandemic is a testament to Turkey’s competitiveness in the global value chains. If anyone wants to visualize the success of a joint venture in Turkey, one must look at Ford Otosan — a joint venture between American automaker Ford and Koç Holding, Turkish largest industrial conglomerate and the parent company behind Arçelik — that, in 2019, achieved exports of the vehicle and spare parts to 96 countries in five continents. The country has also, recently, laid the cornerstone for the first indigenous car plant.
Turkey and Pakistan are working toward finalizing a free trade agreement, which, once concluded, can, indeed, push bilateral trade to new levels. In addition to the trade of goods, companies in both countries can also enhance cooperation in services and investments. There lies an opportunity for Turkish companies to invest in infrastructure, real estate — and tertiary healthcare — sectors in Pakistan, which have room for advancement. The entrepreneurs and investors from both countries can also explore the offerings of the free zones in each other’s territory, and the existing network of free trade agreements — including Pakistan’s free trade agreement with China — by investing in export-oriented sectors. The governments of both countries are already working together to enhance cooperation in the defense sector. Energy exploration is another area where there can be a possibility of collaboration between the two countries.
The economic center of gravity of the world appears to be shifting (back) to Asia, and with such collaborative efforts, the two countries can exploit the true potential of their strengths and play an enhanced role in global trade.