Spanning nine time zones, Russia is the largest country on earth in terms of surface area, although large tracts in the north and east are inhospitable and sparsely populated. This vast Eurasian land mass covers more than 17million sq km, with a climate ranging from the Arctic north to the generally temperate south. In 1992 Russia's per capita income was less than $280 which touched last year to $18,500. This was all possible due to the aggressive economic policies and activities taken by the Putin's party in 1999. I have not seen a single country with such rapid economic growth that put them among the 8 Largest Economies of the world and become the member of G8.
Russia's GDP growth was 0.9% in March 2014 compared to 1.3% in March 2013, reported the Ministry of Economic Development. Also, the Department has updated the dynamics of GDP on an annualised basis in January and February of this year, thus increasing the performance to 0.7% and 0.9%, respectively (compared with the initial 0.5% and 0.3%). The above changes have been associated with the revision of macroeconomic indicators for 2011-2013. Statistics Service re-calculated the quarterly GDP dynamics for the years indicated and identified a lower base figure in the assessment for the first quarter of this year. In January-March 2014 Russia's GDP growth previously assessed in 0.8%. According to the ministry, the increase in GDP, with the exception of seasonal and calendar factors, was 0.1% in March compared with February.
In general, the first three months of Russia's GDP, excluding seasonal factors, fell by 0.5% compared to October-December 2013. Thus, the reduction of the dynamics has been reported after the first three quarters of sequential growth (April to December 2013).
According to the ministry, the March economic performance was mainly caused by an increase in trade (4.0%) and industrial production (1.4%), which was supported by increased production in the manufacturing industry (3.5%) and mining Industry (0.6%). Factors affecting the declining growth in March 2014, the Ministry pointed to a negative trend pretax oil and gas exports, the decline in the construction industry (down 3.1%), which was, in turn, cause a reduction in the demand for investment (decrease 4.3%).
Pakistan and Russia Relationship: Before I talk about the Pak Russia relationship, we must know that Russia always helped Pakistan in strategic areas such as, they helped Pakistan to send our first Satellite Badar to space, first oil & gas exploration, built furnace oil based power plants of 950MW in Guddu and Muzafargarh and gave us a gift of Pak Steel Mill.
Russia and Pakistan, more than ever, are set to strengthen co-operation and modernisation of their relationship. Both countries have a greater benefit from such co-operation. Russia's growing economy can provide a good market for trade and investment for Pakistani businessmen. Russia's GDP is more than $2.50 trillion and is highly dependent on other countries in terms of, semi finished products and consumer products. Pakistan is profitable to export to this growing market. Russian observer status in the Organisation of Islamic Conference (OIC) and its relations with other Islamic states allow assuming that Moscow adopted a soft policy towards the Muslim world. Pakistan can help Russia to seek membership in the OIC, while Moscow can lobby membership of Pakistan in the Shanghai Co-operation Organisation (SCO). Some of the important areas in which Pakistan needs Russia's co-operation on this energy, education, agriculture, oil and gas, mining, aerospace and defense industry.
Recent Development:
Pakistan and Russia have co-operated with each other, developing close relations in all areas, whether it be energy, military and technical sphere, trade, international relations, education and so on. Pakistan and Russia are under development roadmap of co-operation in the energy sector. During a series of negotiations, the Russian-Pakistani working group, held various meetings in Islamabad in October 2012 to launch co-operation at a significant level. Russian companies are contributing to the development of infrastructure, the Pakistani oil and gas industry - especially gas pipelines, which are positioned as lifelines to Pakistan, including gas pipeline Turkmenistan-Afghanistan-Pakistan-India and Pakistan-Iran. These companies are also involved in the development of power plants in Muzafargarhe (three turbines of 470 MW) and Tarbela (three turbines of 470 MW) project, CASA-1000, (transmitting the power generation from Turkmenistan, Tajikistan, and Kyrgyzstan to Pakistan) the Russia has provided 500 million US dollars for the CASA-1000 and corporation in expansion of Pakistan Steel Mill, and the delivery of equipment manufactured at Power Machines. As for military-technical co-operation, Russia provides different levels of support. Pakistani military commanders launched a series of high-level visits to Russia to promote co-operation in the military sphere and in the sphere of defense, especially air defense.
Imports from RF:
To face the challenges of Globalisation the Government of Pakistan had carried out economic reforms to make Pakistan's economy competitive. Russia is in a position to assist us in developing our infrastructure, modernisation of our Industrial and agriculture sector, Human resource development and boosting the competitiveness of our industries. Russia can help us in the development of Water & power, oil & gas and heavy industrial complex. Chemicals, fertilisers, wood pulp, iron & steel etc, can be imported at very competitive prices.
Exports to RF:
Pakistan is the 3rd largest textile exporting country in the world where as Russia is the 3rd largest textile importing country in the world after USA & EU. These facts are providing tremendous opportunities for the promotion and development of textile trade between the two countries, in addition Pakistan can exports to Russia rice, sports goods, leather goods, surgical instruments, pharmaceuticals and many more. The consumer goods market in Russia consists of 2.27 trillion dollar and if a proper strategy is adopted than Pakistan can surge its consumer goods export to Russia up to one billion dollars within a year. Therefore it has become imperative for Government and private sector to work jointly in providing the trade facilities on huge scale in removing the trade barriers, which are hampering our exports.
Our policy makers have made targets to double the export which is quite possible if the new markets and products are identified and a proper strategy is made then there is no point that our exports are increased.
Russia has great potential in Textiles where market size is about $75B and our export is only $180M compared to China USD15Billion plus and Turkey more about $10Billion. Pharmaceutical has gap of $20Billion and there are only two companies exporting about $5million. Fruit and Vegetable has market of about $8billion and our exports are hardly $100million. Sports goods have market of $3.75billion and our exports are less than $5million. Leather has about $2.5 billion and our exports are less than $3 million. Rice has a gap of about $1billion and our exports are less than $3million.
We need to focus on the numbers and need to make our marketing strategies on war footing basis to capitalise the opportunities lying in the Russian market. Generally in Pakistan, Russia is known as Moscow and St. Petersburg only whereas the real market is its regions such as Siberia, Ural, Tatarstan, and Bashkortostan. Only Siberia's consumer GDP is more than 6 Central Asian Countries ie Tajikistan, Kazakhstan, Azerbaijan, Kyrgyzstan, Uzbekistan and Turkmenistan.
Last year Russia has banned imports of Food items from EU which has created $10 billion gap and out of it we have opportunity of $2billion for fruits and vegetables and the rest are meat, milk and dairy, fish and other food items. Unfortunately, we are busy in other things and did not pay any attention to capitalise this great opportunity.
If we are serious in attaining our export targets, we need to organise single country exhibitions round the year in all the regions of Russia including Moscow and St. Petersburg for the introduction of Pakistani products and to show our existence in the market, participation in the local exhibitions, Frequent visits of businessmen to Chambers and Associations for B2B meetings, display centers in all the regions, establishment of branch of National Bank of Pakistan in Russia to ease the payment issues, to negotiate to sign PTA (preferential trade agreement) which would lead us to FTA (free trade agreement).
From last year, due to the conflict of Russia and Ukraine, USA and EU have imposed economic sanctions upon Russia forcing the later to get out of the Ukraine which seems not possible as Russia has its own strategic interests in Ukraine and will never go out of there. For Pakistan, this is a great opportunity to offer our economic co-operation and making our position strong in the Russian Market eventually will make our bilateral relationship stronger. Our Policy maker must look into it and contemplate that how we can capitalise the given opportunities. We must now forget cold war era and should have eye on our economic interests from wherever we get it be it USA, EU, Russia and any other part of the world.
(The writer is Chairman Pak Russia Business Council FPCCI)