Muhammad Saleem

Barter trade with regional countries should be promoted to reduce reliance on the US dollar and shield the national economy from the negative impact of its fluctuations. Rehan Naseem, President of the Faisalabad Chamber of Commerce and Industry, told WealthPK that most businessmen favor barter trade with regional countries as it’s an easy way to avoid reliance on the US dollar.

He pointed out that last year the government joined hands with Russia for barter trade in agriculture, a decision the Faisalabad chamber hailed, and urged the government to sign similar agreements with other neighbouring countries, including China. Under the barter trade agreement, Pakistan exports rice, mandarins, and potatoes to Russia, while the latter ships chickpeas and lentils to Pakistan.

Naseem emphasised that such agreements are advantageous for Pakistan as the country can reduce its dependence on the US dollar in foreign trade. The Faisalabad chamber president noted that China is rapidly increasing its influence on the international economy, and Pakistan should cash in on the opportunity. He said Chinese entrepreneurs are helping to strengthen Pakistan’s economy by establishing their businesses here.

Naseem suggested Pakistan should start trading with China in its own currency, as this will ultimately help Islamabad reduce its reliance on the US dollar. Salamt Ali, former central chairman of the Pakistan Hosiery Manufacturers and Exporters Association, told WealthPK that businessmen need a level playing field to boost exports and generate jobs. “The high rates of electricity, gas, and raw materials are eroding profit margins and undermining international competitiveness.”

“To tackle these issues head-on, we must promote trade relations with the regional countries,” he emphasised. He pointed out that this approach could help stabilise the country’s economy as Pakistan has signed Free Trade Agreements (FTAs) with different countries. He urged the government to come up with a practical and long-term comprehensive strategy to fully utilise these agreements.

“If we implement these agreements, they will not only give our exports a much-needed push but also reduce our over-reliance on the US dollar,” he said. Ali said that China has already proposed bilateral trade in yuan (RMB) and similar arrangements should be explored with other countries. “By adopting this approach, we could shield ourselves from the ripple effects of US dollar fluctuations in the open market.”

Muhammad Zahid, a member of FCCI, said that in November 2023, the then South African High Commissioner to Pakistan, Mthuthuzeli Madikiza, informed the chamber members that Pakistan’s share in South Africa’s $100 billion import market was negligible.

Zahid said the High Commissioner urged entrepreneurs of Faisalabad to aggressively enter this market and start barter trade. He suggested that Pakistan could export mangoes in exchange for avocados under a barter system. However, he mentioned that direct contact between the business communities of both the countries is crucial for such a system to succeed.

“Entrepreneurs alone cannot establish a barter system with any country – it is the responsibility of the government to come forward and create the necessary framework for the businesses to follow,” Zahid added. He said ballooning foreign debt had hit the economy and pushed millions below the poverty line.

“To avoid foreign loans and ease pressure from the US dollar, it is prudent to start barter trade with regional countries. The government should negotiate and sign new barter trade agreements with other interested nations.”

Credit: INP-WealthPk