Mauritius: potential market for engineering goods

Pursuant to the policies of the government of Pakistan aiming at accelerating exports growth, a result-oriented action plan is currently being prepared by the Engineering Development Board, with focus on analysing input issues, impediments to growth and technological needs of various engineering sub-sectors with a view to competing in international markets. The plan is also expected to identify strengthening existing markets, and exploring new ones, for export of Pakistani engineering goods and services.
In this context, Mauritius, a small-island state having strong and friendly relations with Pakistan, offers promising opportunities as a potential market for Pakistani engineering goods, in particular. A Preferential Trade Agreement (PTA) was signed between the two countries in July 2007 that has not been availed effectively though, and was made operational only in October 2010. Currently, the volume of two-way trade is minimal - to the level of $28.203 million (year 2009-10), including exports from Pakistan of $27.506 million. Pakistani exports to Mauritius are limited to commodities like cotton, rice, cereal and fruits.
There is a need to shift the present pattern of commodity-based trade to capital goods and industrial sector. Pakistan can adequately export its indigenously manufactured machinery and equipment to Mauritius. PTA Mauritius concession list to Pakistan already includes electrical machinery and equipment and parts, telecommunication equipment etc. There are many other areas for which machinery and technical services can be offered to Mauritius. The first and foremost is sugar sector, for which Mauritius is known globally. At present, there are eleven sugar factories with 1,500 to 6,000 tons cane crushing capacity and producing 620,000 tons of sugar annually from sugarcane planted on an area of 72,000 hectares.
Almost 90% of sugar produced annually has been traditionally exported to the European Union (EU) countries under special agreement known as ACP/EU Sugar Protocol. Performance of sugar industry, which is dominated by private sector, has, however, declined in recent years. Also, the preferential access is no more available. To ensure its efficiency, viability and competitiveness, sugar sector is being restructured and modernised. For the purpose, a "Multi-Annual Adaptation Strategy-Sugar Sector Action Plan 2006-2015" is being implemented phase-wise at a total cost of Euro 675 million.
EU, which has played a pivotal role in reforming the sugar sector in Mauritius, has contributed Euro 300 million to the development of agricultural and social sector of the plan. At present the industry has been meeting all its requirements of machinery and equipment from traditional sources of France and South Africa. Now Mauritius is looking for new sources of financial and technological assistance, primarily from developing countries. It is planned to undertake major BMRE of sugar factories, keeping in view economy of scale and thus closing down a few inefficient small units. Use of bagasse for generation of electricity to be sold to grid is to be optimised and ethanol distilleries are planned for each restructured sugar factory.
Pakistan has credible references to supply machinery and equipment for sugar industry, domestically as well as abroad. Two complete sugar mills have been installed in Bangladesh. One sugar mill was commissioned in Indonesia on turnkey basis. A large number of equipment for sugar industry has been supplied recently to the USA, Italy, Sudan, Nigeria, Somalia and other countries by Pakistani engineering companies. Pakistan can offer cane mills, centrifugals, clarifiers, boilers, pumps and a variety of other products for the Mauritian sugar industry. The products conform to international standards and are competitive price-wise.
Mauritius has a strong economy and is a financial and trade hub for emerging Africa. The World Bank ranks Mauritius as the best place in Africa, and 24th in the world, to do business. It has free port where goods intended for reshipment can be received and stored without payment of duties. In this perspective, the Mauritian government has now focused on expanding and diversifying its manufacturing sector targeting regional markets. Its existing Economic Processing Zones have 568 enterprises and industries actively engaged in manufacturing of textiles, light engineering and food products.
Two Industrial Parks dedicated to the SMEs have recently been constructed in Mauritius for setting up production units for chemicals, non-electrical machinery, transport equipment etc, having attracted substantial foreign investment. Pakistan can participate in the establishment of light engineering industry and the SMEs through joint ventures or under technical co-operation agreements. Currently Mauritius needs huge volumes of cement to meet its growing demand as construction of housing, hotels, factories, roads and other infrastructure is developing rapidly. As the existing domestic mineral sector is small, the government plans to establish cement clinker grinding plant based on imported clinker.
This could be another area of great interest to Pakistan that has a well-established cement industry, whereas a cement clinker grinding plant has been exported to Bangladesh. In the past there has been exchange of business delegations between the two countries, both from public and private sectors, which has helped Pakistan to showcase its capabilities in capital goods manufacturing and light engineering sectors. Efforts have been renewed recently to promote trade relations and technical co-operation between the two countries. A high-level delegation from Mauritius visited Pakistan in February 2010, having acknowledged that "many products of Pakistan match the standards of EU, while remaining economical".
There is also scope for providing technical services and expertise in management in the fields of sugar, cement, textiles and light engineering industries. Pakistani engineering consultancy services have valuable experience in preparation of feasibility studies, project planning, detailed designing, construction supervision and other services related to industrial, communication, power generation and transmission and infrastructure sectors. World Bank, IFC, and African Development Bank are financing a number of projects in Mauritius and major Pakistani consulting firms are already registered with these institutions.
Given the right environment, Pakistan can promote substantive economic and trade relations with Mauritius. To avail the favourable conditions prevalent in Mauritius for export of Pakistani engineering goods and services, it is imperative that the PTA, which would lead to signing of a Free Trade Agreement (FTA) in future, be rationalised and consolidated to cover various other engineering goods in demand in Mauritius. Likewise, the existing Pakistan-Mauritius Joint Working Group mandated to promote bilateral trade and economic relations should be strengthened in its substance, widened in its scope, and made vibrant to derive short-term results.
The recently established Commercial Section at the Pakistan High Commission in the Port Louise can play a crucial role in creating the enabling environment for promotion of export of capital goods. Appointing effective agents may be the first step towards achieving the goal. Pakistan Mission should arrange visit of the delegations of Mauritius Sugar Authority, of the Ministry of Agro Industries and Food Security, Mauritius Sugar Producers' Association and Mauritius Development Bank to see design, engineering, manufacturing and commissioning facilities for sugar industry and selected modern sugar mills installed by the local engineering industry.
This should be followed by the visit of a Pakistan delegation consisting of experts in sugar technology, design/manufacturing and technical services from public and private sectors, to meet the sugar producers and financing agencies in Mauritius, besides the related government officials. Availability of soft term credit facilities from Pakistan should be looked into, which may play decisive role in marketing Pakistani engineering goods and services effectively.
(The writer is retired Chairman of State Engineering Corporation)