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Business with Iran

Business with Iran

Pakistan and Iran have close cultural and religious relations, but the two countries are not too close to establish strong economic relations. Both have failed to reap the benefits of potential trade as well as investment opportunities knocking each other’s doors. The countries are geographically close, but economically apart. However, illegal trade between the two countries never stopped, rather it flourished during the years of international sanctions on Iran. According to newspaper reports, the State Bank of Pakistan is now willing to allow the country’s banks to resume ties with their Iranian counterparts. Once the financial relations are established, it will definitely curb illegal trade on both sides of the border. According to an SBP official, central bank-to-central bank contact is necessary for permissible money transactions and it will help boost trade activities in the region. As Pakistan and China are working on infrastructural projects, Iran can also enhance its trade with China through the economic corridor passing through Pakistan.

Earlier due to international sanctions on Iran, the economic relations between the two countries remained at the lowest ebb. The trade volume fell to $431.76 million in 2010-11 from $1.32 billion in 2008-09 despite the fact both the countries have a preferential trade agreement. However, the time has come not only to revive the economic relations, but also establish close partnership in the areas of mutual trade, investment, technology and energy sectors. It is hoped that strong banking relations will allow importers of Iranian goods to open the letters of credit and lifting of sanctions will pave the way for revival of bilateral and multilateral arrangements to promote investment and cooperation. Pakistan is one of the best rice producers in the world and Iran is the world’s second top importer of this commodity and the mutual trade will be in the best interest of the two nations. The lifting of sanctions will revive the mega projects signed between the two countries such as Pakistan-Iran gas pipeline project and import of 1,000 megawatts electricity from Iran.

It seems the government is still unprepared to take prompt action in establishing economic relations with Iran as lethargy will only allow India and other hostile nations to take over the market meant for Pakistan. Iran can be a major market for the Pakistani meat and rice while two way trade between the two countries can be enhanced to $2 billion. If the LNG import from Iran is considered the lifeline of Pakistan, the importance of Pak-Iran gas pipeline project has not any less importance.