Pakistan set eyes on Central Asian countries in bid to expand trade

In a bid to diversify its trading partners, Pakistan looking to expand commerce is now looking towards neighboring countries especially Central Asia.

Talking to Bloomberg, Advisor to Prime Minister on Trade and Investment Abdul Razak Dawood informed that a new trade pact will be finalized with Afghanistan by June, as the nation seeks to enhance its trading ties with the Central Asian countries.

“We’re too restricted to a few countries -- North America, European Union and China,” said Dawood. “But there is a much bigger world,” he added while informing that Pakistan plans to increase trade with Central Asian nations including Uzbekistan, Tajikistan, Turkmenistan, Kyrgyzstan, and Kazakhstan to about $1.5 billion a year from less than a billion.

Last month, Dawood while talking to Business Recorder stated that Pakistan is among the few countries with very low trade with our neighboring countries. “I am a big believer in regional trade, and that’s why the Ministry of Commerce has gone on a fast track with Afghanistan and Uzbekistan to open up the whole of Central Asian Republic region.… I’m looking at a time when Afghan and Uzbek trucks will go all the way to Karachi, and our trucks will go right through to Afghanistan, cross the border of Uzbekistan and eventually sell to the Central Asian Republics,” said Dawood.

As per the central bank figures, Pakistan relies heavily on a handful of trading partners i.e. US, EU and China. With Pakistan's total $66 billion of annual trade recorded in the year ended June 2020, China accounted for $11.2 billion and North America $6.76 billion.

Days ago, the World Bank in its recent report "Pakistan Development Update" estimated that Pakistan’s potential annual exports are at US$ 88.1 billion, about 4 times the actual current level.

However, in order to achieve these figures, the World Bank said that Pakistan needs to target high-potential Asian destinations rather than low potential African, Latin American, or Pacific Islands ones.

The Pakistan government also needs to negotiate market access with high potential destinations. Central Asian republics are a high potential for Pakistan, because of high missing exports to those countries, and because of their import dynamism, said the report.

Whereas preferential trade agreements with Uzbekistan or Kazakhstan should be priorities, along with the negotiation of agreements on transit trade with Afghanistan to facilitate physical access to those markets, the report suggested.