KARACHI, August 30, 2024 – Reza Babak Afghahi, Chief Executive of Iranian Ta’min Petroleum & Petrochemical Investment Company (TAPPICO), emphasized the importance of eliminating unofficial trade between Iran and Pakistan, advocating for the enhancement of official trade channels.
During a meeting at the Karachi Chamber of Commerce & Industry (KCCI), Afghahi highlighted that a significant portion of Iranian products were entering Pakistan through unofficial means. This practice undermines both economies, and Afghahi urged for stronger bilateral trade ties to bolster the official trade volume.
Afghahi noted that many Iranian products, including petrochemicals and other goods, were currently reaching Pakistani markets via unofficial channels. This issue prompted the Iranian delegation’s visit to Pakistan, aimed at exploring strategies to redirect all such products through official trade routes. “By strengthening connections between both countries’ business communities, the official trade volume and profitability could be significantly enhanced, benefiting both economies,” Afghahi stated.
Accompanied by Commercial Attaché of the Iranian Consulate in Karachi, Morad Nemati, Afghahi met with key members of the KCCI, including its President, Iftikhar Ahmed Sheikh, and other senior representatives. He pointed out that Pakistan’s imports from Iran, including LPG, methanol, motor oil, grease, carbon black, and other petrochemicals, could be locally produced through joint ventures with Iranian companies. “Last year, Pakistan imported these products from various countries at a cost of $5 million, an expenditure that could be reduced through strategic partnerships,” Afghahi explained.
Addressing concerns about international sanctions on Iran, Afghahi urged the Pakistani business community not to be deterred. He clarified that most sanctions imposed on Iran were politically motivated and should not affect business decisions. “Despite the sanctions, Iran managed to export goods worth $200 million to the United States,” he said, encouraging Pakistani businesses to explore opportunities for collaboration regardless of the sanctions.
Afghahi stressed the importance of leveraging Iran’s raw materials, knowledge, and expertise to create more employment and business opportunities in Pakistan. “Instead of providing finished goods, it is better to supply raw materials to Pakistan. This approach allows for value addition, benefiting both domestic consumption and exports,” he suggested.
Earlier in the meeting, KCCI President Iftikhar Ahmed Sheikh expressed the need to enhance the trade volume between Pakistan and Iran, which currently falls below its potential. He highlighted several barriers that need to be addressed to boost bilateral trade to an estimated potential of $10 billion. “Reducing trade barriers, streamlining customs procedures, improving ease of doing business, and supporting SMEs are essential steps to enhance exports and deepen economic integration,” Sheikh stated.
Sheikh also underscored the absence of a formal banking channel as a major obstacle that hinders trade and bilateral exports. He called for the swift finalization of a Free Trade Agreement (FTA) and the establishment of a joint free zone, which could stimulate investment and boost economic integration.
Sheikh emphasized that stronger collaboration between Pakistan and Iran could not only address energy and economic needs but also foster greater regional connectivity, stability, and prosperity. “Joint ventures, technology exchanges, and capacity-building initiatives are crucial to enhance energy cooperation and diversify trade,” he added.
Highlighting the importance of infrastructure development, Sheikh suggested establishing border markets and expanding rail and road networks to strengthen cross-border economic cooperation and curb illegal trade. “These measures would enhance formal trade between the two countries,” he noted.
He also invited Iranian investors to capitalize on the business opportunities presented by the China-Pakistan Economic Corridor (CPEC) through investments and joint ventures in the nine special economic zones, which offer substantial incentives to both foreign and domestic investors.
Afghahi and Sheikh’s discussions reflect a shared commitment to fostering stronger economic ties between Iran and Pakistan, emphasizing the need to prioritize official trade channels and collaborative ventures for mutual benefit.
