April 22, 2020
In an exclusive online interview with Afghan Studies Center (ASC), Dr. Vaqar Ahmed, Joint Executive Director, Sustainable Development Policy Institute (SDPI), shed light on the impact of COVID19 pandemic on Pakistan’s economy and trade, particularly with its neighboring landlocked country, Afghanistan, and the systematic measures that can be adopted in case of a prolonged lock-down.
ASC: How does the COVID-19 impact Pakistan’s economy and trade with other countries in the region?
Dr. Vaqar Ahmed: Thank you for having me. I am very grateful for your invitation. COVID19’s impact on developing countries will be profound. In Pakistan’s context, we can see that while our aggregate local demand was already under pressure, now the global demand has also come under pressure. Along with the sluggish oil prices and their impacts on the global markets, we are faced with a trade shock where the exporters are receiving a lower demand from the foreign countries for their export items. As for the local situation, since there is low growth, the pressures will be phenomenal in the coming days.
What we also know is that there are going to be multiple rounds of COVID19. What concerns me the most is whether we are prepared for those or not. We do know that is that this is only the first round of the trade shock and these trade shocks are occurring due to two main reasons.
Firstly, because international supply chains have been disrupted, there are border closures. Within countries there are logistical issues and then there are challenges around the hygiene, and quarantine facilities at ports and land route stations that handle trade.
Secondly, this disruption is going to impact lives, people and jobs, which are going to be associated with the productive sectors of the economy. We have not just seen this in the case of industry or services but also in the case of agriculture. With many countries lacking capacity to employ safe agricultural livestock practices, you are looking at farmers being affected as well. So any sort of response in these developing countries will have to take into account not only the macro-level pressures which COVID19 will bring about but also micro-level and welfare pressures.
ASC: How will this emerging situation impact the Pak-Afghan trade which was already at a low ebb and how can we mitigate the impact?
Dr. Vaqar Ahmed: I think we are already observing a negative impact of COVID19 on both Pakistan and Afghanistan’s bilateral and transit trade. We are seeing that export consignments have been stranded and Pakistan needs export receipts now more than any other time. Exporters have been telling us that their consignments, particularly of perishable items, have been lying stranded at the moment due to border closure. So, while the Prime Minister has asked to liberalize measures at the Pakistan-Afghanistan border for trade, but still there is lack of clarity around the SOPs on what is allowed to pass and what is not allowed to pass through the border. We need to reach a quick clarity in this regard. We were in a meeting yesterday with a leading food exporter of Pakistan who was telling us that their containers are stranded at the border post.
Secondly, I think there is an opportunity in crisis as well and the Government must respond to that, i.e., look into COVID19 related needs of Afghanistan and how we can quickly increase exports to Afghanistan – such as exports of Personal Protective Equipment (PPE), health products, pharmaceutical, and so on. There is also an opportunity of increasing health services trade with Afghanistan, such as providing increased diagnostic facilities.
Thirdly, on transit, it is important to mention that Pakistan has recently operationalized Gwadar port which will now be able to carry consignment which are bound for Afghanistan. Now we need clarity on whether the transit facilities announced on Gwadar port can also be used during the COVID time and whether it is allowed to Afghan importers. Also, are there certain SOPs or safety measures which can be adopted during this time. Pakistan tends to, of course, gain in terms of increased revenue from Gwadar port and the transit receipts.
ASC: If the pandemic situation lingers on for months, how do we go about it? What new SOPs or protocols do you suggest should be adopted to do business as usual along with keeping COVID 19 in check? Or do we need a new prototype to trade in the backdrop of this global pandemic?
Dr. Vaqar Ahmed: I think this is a very important question. This calls for establishing at the level of both governments a high powered working group with representation from the business community and relevant think tanks which can advise the government on how to continue to conduct transit trade for Afghanistan in the coming days, especially in times of a prolonged lockdown. I understand that countries have taken measures. Who want to facilitate landlocked countries, of course, see this as an opportunity.
Hence, this is the time to establish a high powered working group at the level of both governments and make some decisions around what sort of SOPs can be maintained in the longer time. Having said this, one of the best practices that I have noticed in terms of border management and deciding what to allow, what not to allow (of course there are certain items that have to go to Afghanistan based on humanitarian grounds and the country being landlocked), is closer cooperation between border officials as they are best placed to understand how much the border facilities are well-endowed and capacitated in terms of preventing a localized outbreak and taking care of compliance with SOPs and ensuring that necessary human resource to keep a check on the right kind of transit flows is available at the border post.
In the past, what we have seen is that the closer coordination between the mid-tier border officials was very necessary. They need to be talking to each other more frequently, almost on a daily basis, on what should pass through. Lastly, may I also mention that there are UN and WHO guidelines on how to conduct such trade in food and health items at least which are necessary for any country. So if we or other neighbors of Afghanistan do not cooperate or facilitate Afghanistan and Afghanistan lands into trouble or has a much worse outbreak of corona virus, it will in turn also affect the neighbors. So this issue of what needs to be done under a prolonged lock down needs to be taken very seriously.
© Afghan Studies Center (ASC) and Center for Research and Security Studies (CRSS), Islamabad.
