Kazakhstan’s persuasions of greater regional connectivity | By Dr Mehmood-ul-Hassan Khan


Kazakhstan’s persuasions of greater regional connectivity

FORMATION of interim setup in Afghanistan is the first “giant” step towards greater regional connectivity.

Central Asia Region (CAR) has remained isolated because of its own “geographical paradoxes” and constant political instability and “deterioration” of law & order in Afghanistan.

The Republic of Kazakhstan has been “striving” hard to overcome its natural ironies to achieve optimal level of regional connectivity.

In this regard, the strategic “vision” of its President Kassym-Jomart Tokayev and multi-vector foreign policy of Kazakhstan has already achieved sustainable bilateral relations with all the regional countries of CAR.

Now Kazakhstan is rigorously pursuing greater regional connectivity with outer-regional countries like Pakistan.

In this connection, Kazakhstan participated in the Central Asia Regional Economic Cooperation (CAREC) Program since 1997, embracing a vision of cooperation with its neighbours to achieve a new era of development and prosperity through greater regional connectivity.

Kazakhstan is the founding member of CAREC. It is working with other member countries to overcome barriers to growth and connectivity and to place the region at the heart of Eurasia’s trade and commerce as global markets increasingly integrate.

Kazakhstan involved one of the CAREC Program’s earliest initiatives. In 2000, it started to rebuild the road between the commercial city of Almaty and the Kyrgyz Republic capital of Bishkek.

The route became an integral part of CAREC Corridor 1, one of the six CAREC corridors in current version of Silk Road, which stretches from China to Azerbaijan, in the Caucasus, and farther west to Europe and from south Kazakhstan to the ports of Pakistan.

Moreover, Kazakhstan is also a member of Quadrilateral Traffic-in-Transit Agreement (QTTA) which will greatly facilitate regional integration for economic development as it would provide an alternate transport corridor between CAR and Pakistan. China, Kyrgyzstan and Tajikistan are also members of QTTA.

In this connection, its Khorgos Gateway (KGW) connects Kazakhstan to China by rail. It will soon enter the record books as home to the world’s biggest dry port. The policy makers of Pakistan may also consider utilizing this point/dry port to enhance bilateral trade & commerce activities with the entire CAR in the days to come.

In terms of economic corridor, Kazakhstan is the “connecting hub” of Chinese One Belt & One Road Initiative (BRI) and Pakistan’s CPEC flagship project may be clubbed to achieve the ultimate goal of greater regional connectivity. Kazakhstan is the largest republic of the CAR and the ninth largest in the world in territory.

It is the biggest economy of CAR US$180 billion. It is the biggest recipient of Foreign Direct Investment (FDI) US$350 billion in the last thirty years.

Due to constant and comprehensive structural reforms, Kazakhstan has become a major transport and logistics hub in the region, linking the large and fast growing markets of China and South Asia to those of Russia and Western Europe by road, rail and a port on the Caspian Sea.

In this context, Kazakhstan is the ideal trade gateway to a market of about 150 million consumers in the Caspian Sea countries, 50 million in Central Asia and 300 million in Western China.

It has a number of specific economic zones which have various tax benefits which has created favourable environment for seeking more and more inflow of FDI.

With the vast development in the technology sector, the government is looking into making the conditions for foreigners to do business in Kazakhstan with benefits. It will further enhance digital cooperation between Pakistan and Kazakhstan.

Ironically, despite the ongoing global economic crisis in terms of COVID-19 pandemic, Kazakhstan remains the largest economy in Central Asia and with much unfulfilled potential.

Interestingly, the crisis has placed a renewed focus on logistics, digital technologies and the financial sector due to which its macro-economy has outperformed all other regional economies during 2019-2020 and prospects are even much brighter and healthier in 2021.

Due to rigorous implementation of its structural reforms in 2020, Kazakhstan further improved its standing in the World Bank’s Ease of Doing Business Report, where it ranked 25th out of 190 countries.

Moreover, it has made significant improvement recently in starting a business, dealing with construction permits, registering property, getting credit and resolving insolvency.

Kazakhstan also has the second largest oil reserves and the second largest oil production after Russia among the former Soviet Republics. Thus energy cooperation should be enhanced between Pakistan and Kazakhstan as soon as possible.

In this context, the Astana International Financing Centre (2018) provides special tax incentives, easy visa and greater employment regimes for companies looking to invest in Kazakhstan.

The AIFC Court and International Arbitration Center has a unique judicial platform having separate and independent entity from Kazakhstan judicial system provide a common law court system for the resolution of commercial disputes.

Nevertheless, KPMG’s report (2020-2021) suggested that there should be more e-platforms to deliver key public services including remote education to rural areas; online trade solutions; cargo transportation; development of digital products in the financial sector; IT solutions to track productivity of remote work; modernization of telecommunications networks due to high workload; financing and investment in airports and capital-intensive projects in mining and agriculture, among others, which would definitely enhance its macro-economy and greater regional connectivity.

Kazakhstan’s government has implemented 43 reforms acknowledged by the World Bank Doing Business Report since 2008. Its “Business Roadmap 2025” correlates with Kazakhstan 2050 Strategy, which aims to position the country among the 30 most developed nations by 2050.

The Heritage Foundation’s Index of Economic Freedom (2019-2020) rated Kazakhstan as “moderately free” and ranked it 39th out of 180 countries, well above neighbouring China 103 and Russia 94 which is a great achievement.

Its overall score increased by 4.2 points over the previous year due to a large increase in the fiscal health score.

Being a prominent regional expert of Kazakhstan & CIS, I suggest to extend mutual cooperation in textile, cotton products, pharmaceuticals, food items, engineering equipment and machinery and construction enterprises in which rigorous commercial diplomacy will play pivotal role.

Even, Sialkot exporters may be ready to establish international standard “Pakistan Trade Centre” in Kazakhstan to boost mutual ties.

One of the Sialkot private companies showed keen interest to start at least “chartered flights” between the two countries.

—The writer is Director, Geopolitics/Economics Member Board of Experts, CGSS.

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