Pakistan to purchase oil and gas on Barter Trade, minimizing dollar dependence
ISLAMABAD, Jun.4(Gwadar Pro) - Pakistan Ministry of Commerce on Friday issued an SRO for “Business-to- Business (B2B) Barter Trade Mechanism” with Iran, Afghanistan and Russia to reduce dollar dependence.
The development is expected to shore up Pakistan’s forex reserves and increase quantum of trade, allowing state- owned enterprises and private sector entities to engage in both the import and export of goods.
As per the Ministry’s official notification, Pakistani traders can now export 26 Pakistani products to these countries and can import Crude Oil, Petrol, Diesel, Gas, LNG, LPG. The initiative is expected to give relief to the people of Pakistan.
The government identified some 26 goods that can be exported to Afghanistan, Iran and Russia, including milk, cream, eggs and cereal, meat and fish products, fruits and vegetables, rice, salt, pharmaceutical products, finished leather and leather apparel, footwear, steel and sports goods.
The products that can be imported from Afghanistan include fruits and nuts, vegetables and pulses, spices, minerals and metals, coal and its products, raw rubber items, raw hides and skins, cotton, and iron and steel.
From Iran, Pakistani importers are allowed to import fruits, nuts, vegetables, spices, minerals and metals, coal and related products, petroleum crude oil, LNG and LPG, chemical products, fertilizers, article of plastics and rubber, raw hides and skins, raw wool and articles of iron and steel.
From Russia, Pakistani traders will be allowed to import pulses, wheat, coal and related products, petroleum oils including crude, LNG and LPG, fertilizers, tanning and dying extracts, articles of plastic and rubber, minerals and metals, chemicals products, articles of iron and steel, and items of textile industrial machinery.
The development was highly applauded by the local business community in Pakistan.
According to the notification, importers and exporters on the Federal Board of Revenue’s active taxpayers list and subscribed to the Pakistan Single Window (FEW) System would be eligible for barter trade.
“Application for authorization of import and export of goods under the B2B barter trade facility shall be submitted online by the trader or their authorized agent through the online system to the regulatory collector,” the notification said.
The trade of goods under a B2B Barter Trade arrangement will be allowed on the principle of “import followed by export” and export would meet the value of imported goods.
Barter Trade Mechanism was adopted in many countries due to the economic sanctions, high inflation and limited access to international financial systems.
Due to economic sanctions and limited access to international financial systems, Iran in the past has engaged in barter trade arrangements with countries like India, Turkey, and Russia and traded oil for goods such as food, machinery, and equipment.