German Review


Germany is the 8th largest investor in Pakistan
by Prof. Dr. Noor Ahmed Memon, Dadabhoy Institute of Higher Education.

The economy of Germany is a highly developed social market economy. It is the largest national economy in Europe, the fourth-largest by nominal GDP in the world, and fifth by GDP (PPP). According to the IMF Germany is one of the founding members of the European Union and the Eurozone.

Germany remains one of the vocal and staunch supporters of Pakistan and has taken extreme measures to aid the South Asian country in its economic and governmental hardship. Commercial trade between Islamabad and Berlin has also been essential in recent years.

Germany maintains a cordial diplomatic presence in the country, with an embassy in Islamabad, a consulate in Karachi and honorary-consulate in Lahore, Peshawar, and Quetta.

Germany is the eighth largest investor in Pakistan, and several German multinationals are operating in Pakistan. Germany has also extended active support to Pakistan's initiatives with the EU for providing greater market access to Pakistani exports to EU.

In Pakistan, German businesses are symbolized by multinational corporations, who are mainly located in Karachi and Lahore, and on the other hand, by Pakistani trading agents who represent the majority of the German companies in the areas of machinery, chemical and pharmaceuticals, instruments, automotive, and related equipment and services.

Approximately, 35 German multinationals are engaged in Pakistan. The majority have their production plants and offices in the metropolitan city of Karachi and at least another 5 companies have merged with other multinationals being headquartered in the port city.

Another five German companies located in Lahore and one in Quetta, of all the multinational companies present in Pakistan, 55% of them are from the pharmaceutical and chemical industries. The services sector comprises of 15% of companies followed by the transport sector and textiles machinery with 5% each.

Germany is one of the most popular destinations for young Pakistan researchers wishing to pursue a PhD, along with the United States, the United Kingdom and Australia. More than 4000 young people from Pakistan are currently studying in Germany. In 2018, 656 students and researchers from Pakistan received funding from the German Academic Exchange Service (DAAD).

German-Pakistan development cooperation began in 1955. The German government has pledged approximately 3.5 billion euros in project support, of which some 3.1 billion has already been disbursed over the years. This development cooperation focuses on support for the energy sector, good governance and business.

Pak-German Trade

Pakistan was one of the first Asian countries to establish relations with Federal Republic of Germany (West Germany). These relations are based on shared values of democracy, pluralism, and respect for human rights, cultural and religious diversity and economic liberalism. Since inception in 1951, Pakistan Germany relations have been on an upward trajectory. Germany has been a prominent trading partner of Pakistan and has always extended its support for the betterment of the country in both commercial and social sectors.

Trade between Pakistan and Germany is conducted in freely convertible currency in terms of the Trade Agreement signed in 1957 and Germany is Pakistan's largest trading partner within the European Union. In the year 2018 -19 the bilateral trade with Pakistan stood at US$ 2.39 billion. German exports to Pakistan amounted to US$ 1.09 billion and German imports from Pakistan US$ 1.31 billion. During the past five year’s balance of trade remained in Pakistan’s favour. Pak-German trade data as highlighted in Graph 1.

Exports: Germany is a good market for Pakistani textile products especially readymade garments, bed wear cotton fabrics and knitwear. The main items of exports included cotton fabrics, towels, synthetic textiles, carpet and rugs, cotton yarn, bed wear, cotton bags and other made-ups textiles, besides textile and clothing articles. Export of textile and other products from Pakistan to Germany are given Table 1.

Table 1: Export of textile and other products from
Pakistan to Germany
   (Major Items)
                                                                           Value : US$ 000

Items

2018-19 2017-18 2016-17

 Cotton fabric

88,269 98,956 96,356

 Readymade garments

286,967 324,659 307,802

 Knitwear (Hosiery)

244,263 218,624 181,868

 Bedwear

240,824 240,845 210,449

 Towels

38,972 42,273 43,604
 Textile made ups. 36,844 42,450 31,591
 Tents and canvas. 778 597 1,535
 Artsilk & synthetic textiles. 14,540 15,210 7,620

 Rice

13,540 10,083 6,679

 Leather tanned.

7,499 12,383 12,019

 Leather garments

66,949 82,397 77,957

 Leather gloves

25,925 24,113 20,684

 Footwear

31,029 32,549 26,218

 Sport goods

42,061 47,740 45,268

 Carpets and rugs

5,268 6,174 6,420

 Surgical instruments

51,557 51,729 46,718

 Fruits

7,649 7,248 8,181

 All other items

102,066 10,4970 105,031

 Total

1,305,000 1,363,000 1,236,000

 Source: Trade Development Authority of Pakistan.

Imports: Pakistan’s main imports from Germany are chemical products, textile machinery, electrical goods, motor vehicles and iron goods. Import of the major products from Germany to Pakistan include Machinery 20%, Electrical Machinery and Equipment 20%, Vehicles 17%, Mineral Fuels 13%, Pharmaceutical Products 7%, Plastics and Articles thereof 6%, Optical 5%, Organic Chemicals 5%, Iron and Steel 4%, Articles of Iron or Steel 3%.

Import of Textile Machinery: Germany’s export of modern machinery for textile to Pakistan, especially for the value-added textile sector would help Pakistani textile manufacturers improve the quality of their products and reduce the cost of doing business. German sales textile machinery to Pakistan are divided among these main sectors: 73% dyeing, finishing and printing machines, 24% accessories, 21% spinning machines, 3% knitting machines, 6% weaving machines and 5% other machines. Import of textile machinery (Major items) from Germany to Pakistan in terms of Pak Rupee are given Table 2.

Table 2: Import of Textile Machinery from
Germany to Pakistan
   (Major Items)
                                                                             Value : US$ 000

Machinery

2018-19

2017-18

Quantity Value Quantity Value

 Carding machines (Nos)

98 1,496 34 434
 Drawing / Roving machines (Nos) 63 594 39 170

 Blow Room machinery (Nos)

73 460 6 127
Textile Spinning machines (Nos) 86 3,006 173 1897

 Cone / Bobbin Winding machines
 (Nos)

36 832 19 297
 Textile Fibre machines (Nos) 68 456 29 92
  Weaving (shuttles machines)
 (Nos)
15 24 35 65
 Flat Knit machines (Nos) 66 154 250 133
 Auxiliary machines (Nos) 63 124 97 223
 Tops and Flats Card Clothing
 (000 Kg)
31 166 36 147
 Card Clothing (000 Kg) 30 154 33 125
 Spindles Flyer Ring travelers
 (000 Kg)
66 404 58 291
 Sinkers Needles (000 Kg) 23 115 65 297
 Drying machines (Nos) 7 134 76 49
 Dyeing machines (Nos) 42 338 129 321
 Mercerizing machines (Nos) 7 70 24 104

 Source: Pakistan Bureau of Statistics.

References

  1. German Textile Machinery Association (VDMA).

  2. Pakistan Bureau of Statistics.

  3. State Bank of Pakistan-Annual Reports.

  4. Trade Development Authority of Pakistan.

  5. Various press releases.

 
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