Seiz­ing the CARs mar­kets

Enterprise - - Exports -

Af­ter the dis­in­te­gra­tion of the Soviet Union, the Cen­tral Asian Re­publics have gone through a tran­si­tion. From cen­tral­ly­con­trolled set­ups they have trans­formed into mar­ket-based economies. Re­cent ex­change of vis­its at the top level have led to sig­nif­i­cant agree­ments for pro­mo­tion of trade and in­vest­ment be­tween Pak­istan and the re­publics of Ta­jik­istan, Kyr­gyzs­tan and Uzbek­istan.

Amid the ef­forts for im­prov­ing land and air com­mu­ni­ca­tions with China and sign­ing of the Afghan Transit Trade Agree­ment, Pak­istani goods, ser­vices and in­vest­ment see a size­able mar­ket in the five Cen­tral Asian Re­publics. The prospects look en­cour­ag­ing in the fol­low­ing con­text:

In the back­ground of Pak-China de­vel­op­ments, the air cargo ser­vice link­ing Islamabad with Kash­gar in China is im­por­tant in terms of Kash­gar’s strate­gic lo­ca­tion close to the borders of Pak­istan, Uzbek­istan, Kyr­gyzs­tan, Afghanistan and In­dia. There­fore, the treat­ment of Kash­gar as spe­cial eco­nomic zone and an im­por­tant air lo­gis­tics base has high ben­e­fits for Pak­istan’s ac­cess to the Cen­tral Asian mar­ket.

The air­port also has con­sid­er­able po­ten­tial to serve as a transit point on the Silk route, con­nect­ing China, Mid­dle East, Cen­tral Asia and Europe. More­over, strate­gic talks be­tween China and Pak­istan over build­ing rail links be­tween the two coun­tries re­veal that Torkhum in Pak­istan would also be linked with Jalal­abad in Afghanistan.

China’s con­tacts with Kaza­khstan, Ta­jik­istan and Uzbek­istan are lead­ing the coun­try to play a cru­cial role for Pak­istan in the re­gion. The ge­o­graph­i­cal prox­im­ity of Cen­tral Asian Re­publics to China has ac­cel­er­ated in­tra-re­gion trade. This is an op­por­tune time for Pak­istan to seize the Cen­tral Asian mar­ket by play­ing a pro-ac­tive role in re­gional fo­rums like the Shang­hai Co­op­er­a­tion Or­gan­i­sa­tion and the Cen­tral Asia Re­gional Eco­nomic Co­op­er­a­tion.

The sec­ond con­text is en­abled by the new Afghan Transit Trade Agree­ment be­tween Pak­istan and Afghanistan, which is be­ing viewed as vi­tal for pro­mot­ing bi­lat­eral trade be­tween the two coun­tries and also for the trans­porta­tion of Pak­istani ex­ports to the CAR re­gion through Afghanistan.

Due to se­cu­rity con­cerns, trade through Afghanistan is viewed skep­ti­cally and there are sug­ges­tions for the pre­ferred route through China. How­ever, the agree­ment with Afghanistan pro­vides a safe pas­sage for Cen­tral Asia by ad­dress­ing the is­sue of il­le­gal tax col­lec­tion by the parochial war­lords in Afghanistan and the is­sue of smuggling of trade prod­ucts back into Pak­istan.

The route through Iran to Cen­tral Asian Re­publics pro­vides the third al­ter­na­tive. In this con­text, the Ira­nian free trade zone of Chaba­har can play an im­por­tant role, along with the mu­tual ben­e­fit of uti­liz­ing the Gwadar port.

Eco­nomic ex­perts in Pak­istan sug­gest that the three dis­cussed op­tions must be uti­lized si­mul­ta­ne­ously through the plat­form of the Eco­nomic Co­op­er­a­tion Or­ga­ni­za­tion (ECO), which can ben­e­fit Pak­istan with a freight train (Islamabad-Tehran-Is­tan­bul), al­low­ing deeper pen­e­tra­tion into Cen­tral Asia us­ing both Iran and Tur­key.

Po­ten­tial ex­ports to Cen­tral Asian mar­kets would in­clude ce­ment, en­gi­neer­ing goods, jew­ellery, sta­tion­ary, food items, cos­met­ics and hand­i­crafts. Pak­istan al­ready ex­ports var­i­ous prod­ucts to the re­gion, such as ce­re­als, frozen fish, fruits and veg­eta­bles, medicines, med­i­cal/den­tal/sur­gi­cal in­stru­ments, leather and leather prod­ucts, car­pets, tex­tile fab­rics, knit­ted gar­ments, ce­ram­ics/kitchen wear and bath­room fit­tings, fur­ni­ture and con­fec­tionary.

The per­for­mance of the Trade De­vel­op­ment Au­thor­ity of Pak­istan is per­ti­nent in this re­spect. With 2001-10 al­ready fin­ish­ing as a record year for Pak­istani ex­ports, these are ex­pected to cross $22 bil­lion in 2010-2011 as more than 15 new ex­port projects are be­ing launched by TDAP

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