CPEC & Kazakhstan Evolving Economic Interest in South Asia | By Dr Mehmood Ul Hassan Khan

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CPEC & Kazakhstan Evolving Economic Interest in South Asia

CHINA-Pakistan Economic Corridor (CPEC) is re-gaining momentum in the country which has further brightened its role as a connecting bridge between Central Asia and South Asia Regions.

Moreover, the incumbent government is working on a policy to enhance trade and connectivity with Central Asia through Afghanistan and Iran and has already taken several measures to materialise this policy. Most recent policy decision to import coal from Afghanistan has given new impetus to the concept of greater regional connectivity.

In this connection, the Russian decision to block Kazakhstan’s oil supply has further enhanced chances of sustainable and diversified greater regional connectivity.

Thus the government of Kazakhstan is striving hard to promote constructive dialogue with Pakistan in terms of diverse sectors of economy, trade & commerce, joint ventures, agriculture, infrastructure development, energy cooperation, sport goods, pharmaceutical, textile, rice and fruits etc.

Moreover, even Kazakhstan’s evolving economic interest in South Asia has a security paradigm shift.

The increasing military cooperation between Pakistan and Kazakhstan clearly indicates convergence of their mutual security preferences and priorities in the region and beyond in terms of peace and stability in Afghanistan, anti-terrorism, anti-drugs, money laundering and anti-human trafficking.

Thus economic integration, social cohesion and political consultation of both sides would be vital to achieve the dreams of greater regional connectivity.

In this context, H.E. Yerzhan Kistafin the ambassador of Kazakhstan in Islamabad has been pursuing diversified and innovative diplomatic tools to further enhance the mutual trade up to US$ 1 billion.

Interestingly, China has become a trustworthy and strategic partner to Central Asia in terms of investment, connectivity, transport, joint ventures, digitization and infrastructure development.

In this connection, Chinese One Belt & One Road has revolutionized regional economies in terms of diversification of resources, means of survival, productive channels and of course connectivity. Furthermore China+Central Asia (C+C5) format has become a policy dialogue mechanism for further strengthening of bilateral and trilateral partnerships.

On the other hand, the government of Pakistan’s transition from geo-politics to geo-economy has further consolidated prospects of greater regional connectivity between Central Asia and South Asia.

In this regard, Federal Minister for Commerce Syed Naveed Qamar said Pakistan and Afghanistan have finalised and implemented the main operational part of Afghanistan Pakistan Transit Trade Agreement (APTTA 2021) which would ensure free movement of trucks between the two countries.

Good thing is that transit trade agreements are also being negotiated with Kazakhstan and Tajikistan while the Pak-Uzbekistan Preferential Trade Agreement (PTA) was signed on March 3rd, 2022.

In this connection, Pakistan and Kazakhstan have great potential to enhance cooperation in many fields and if both countries facilitate their private sectors, the annual bilateral trade volume could surge from the current level of below $25 million to $500-1000 million.

While visiting, the Islamabad Chamber of Commerce and Industry (ICCI) Kazakhstan ambassador Kistafin pointed out that many Pakistani products including fruits, vegetables, pharmaceuticals, surgical instruments and leather goods had a great potential in his native country.

He pleaded that Pakistani exporters should step up efforts to enhance exports of these products to the Kazakhstan market. He shared numerous good opportunities with Pakistani companies for joint ventures and investment in various sectors of Kazakhstan’s economy.

It is suggested that a proposed railway link, built between Kazakhstan, Turkmenistan and Iran, could be extended to Pakistan to promote bilateral trade and people-to-people contact.

The leadership of both countries has agreed on a roadmap; promoting trade is the key component of this roadmap. Thus amalgamation of BRI and CPEC is necessary for forming a strategic partnership between two sides.

Both countries should focus on establishing air, road and railway links in order to boost two-way trade.

Regular exchange of trade delegations and holding single-country exhibitions on a reciprocal basis is vital to identify new potential areas of mutual cooperation.

Interestingly, the relations of Pakistan and Kazakhstan have now entered into a new chapter of mutual cooperation with prime focus on commerce, trade and regional connectivity.

The prospects of stability in Afghanistan, the emerging multi-polar world order, the progress of the Belt and Road Initiative (BRI) in Central Asia and South Asia are healthy signs for bilateral trade and investments.

So CPEC is the flagship project of BRI that offers the Central Asian countries access to the warm waters of Gwadar and Karachi sea ports. Over 120 projects of BRI are operating in Kazakhstan for its significance as a global transit hub and 1300 Chinese companies are working in Kazakhstan. Thus both countries have the same Chinese benchmark to work jointly in the days to come.

Mutual trade cooperation has been on the rise since the arrival of Kazakhstan ambassador Kistafin in Pakistan. Lots of MOUs have been signed between many private companies to further enhance bilateral trade between two countries.

In this connection, during 2021 Habib Syndicate, LLP Aktobe Rail and Section Work, LLP Intra Construction and JSC Kazak Exports signed a joint venture of US$ 500 million to carry out track rehabilitation from Sukkur to Karachi. Moreover, mutual cooperation in the field of pharmaceutical is gaining momentum.

Serious negotiations are being carried out to excel in this sector between private sectors of both sides. LLP S.K. Pharma, the main procurement company and single distributor in Kazakhstan, and the Pakistan Pharmaceutical Association with its 42 representatives had a very comprehensive and constructive dialogue. Hopefully it would further enhance mutual cooperation in the sector of health capacity building, surgical equipment, pharmacy and other associated fields.

Kazakh-Pakistan Business Forum, Joint Business Council (JBC) and lots of expos and exhibitions, have been arranged to further enhance mutual cooperation in pharmaceutical products, textiles, surgical instruments, sports goods, as well as other diverse sectors of the economy.

After a trade volume of USD 65 million between Pakistan and Kazakhstan in 2019, a growth of 58 percent was observed in 2020 with a trade of USD 103 million.

Now, in only first six months of the current financial year, trade quantum of USD 101 million has been reached.  However, it is far below the real potential.

Availability of smooth and diversified trade routes through road, rail, air and sea would be most effective in achieving true potential of bilateral trade between Pakistan and Kazakhstan.

According to Kazakhstan official data (December 2021), in 2021, more than 1 million containers with 23.8 million tons of transit cargo passed through Kazakhstan, indicating that it is advancing its Eurasian transit hub role which would also further stimulate its diversification of trade and route policy towards South Asia.

The Caspian Pipeline Consortium pipeline which ends in Russia’s port of Novorossiysk, accounts for 80 percent of Kazakhstan’s oil exports.

Thus, the Russia-Ukraine conflict is aggravating efforts by Central Asian governments to broaden ties with other neighbouring regions and to overcome infrastructural, trade and socio-cultural limitations. Thus the role of BRI & CPEC is a befitting proposition.

The start of direct flights from Karachi to Almaty this year would boost people to people contact between the two friendly countries. Initially two flights in a week would be started from Karachi to Almaty and the number will increase up to 5 in coming months. Moreover, cooperation in tourism and sports could bring two nations even closer.

Most recently a large exhibition of Pakistan (Gilgit-Baltistan) products was arranged in the largest metropolis Almaty. Moreover, various business groups, tourist groups visited Pakistan and Kazakhstan was keen to sign a memorandum of understanding (MOU) regarding tourism with Pakistan.

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