Pakistan exported a total of US$270 mln worth of naphtha to Japan in 2010. However, this naphtha was not sent directly to Japan as Pakistan lacks naphtha processing or cracking facility.
Japan imports naphtha from Pakistan via some other countries – South Korea and/or Singapore, where it is processed, as per fibre2fashion. Under the customs rules, a product has to undergo at least two processes for a change in the name of the country of origin. Since Pakistani naphtha undergoes only one process in South Korea or Singapore, it lands up in Japan as a product of Pakistan. Therefore, it makes economic sense to mull a Pakistan-Japan naphtha joint venture- Japan will then get the naphtha at a cheaper price and Pakistan will get a good price as well.