Pakistan aims high with trade hub plan

ISLAMABAD: Pakistan focuses on leveraging its geo-economic location to transform into a trade and transit hub for goods destined to Afghanistan and central Asian republics, commerce adviser said on Saturday.

Adviser to Prime Minister on Commerce on Investment Razak Dawood said the government wants to make Pakistan a hub for trade, transit and transshipment for Afghanistan and central Asian republics (CARs).

“Our trade must be based on secure, open, consistent, reliable and legal movement of goods at the Afghan border along with enhanced connectivity with Afghanistan and CARs,” Dawood said in a twitter message. “This is a long-term vision and, through our current engagement with Afghanistan and Uzbekistan, we are laying down the foundation for its implementation.”

The landlocked Afghanistan relies on products’ inflows from Pakistan to meet its consumer needs. Pakistan is also used as a transit corridor for supply to the neighbouring country, fetching revenues for the tax authorities. Around 10,000 containers of Afghan transit trade land at Pakistan’s port every month.

Dawood said Pakistan planned to leverage its geo-economic location in the region to enhance its international trade. The government is currently engaged with Afghan government and work on revision of the Afghanistan-Pakistan transit trade agreement is in final stages, while negotiation on preferential trade agreement is also underway, according to the commerce ministry. The decision is expected this month.

High transit and transportation cost is a real barrier in the transit trade with only National Logistics Cell allowed to handle Afghan transit. This is against competition and keeps transport fares at the higher side, said an analyst.

Permission to private transporters for Afghan Transit will promote fair market practices and bring down transport fares, he said.

State-run Trade Development Authority of Pakistan (Tdap) agreed that the cross-border trade slowed in the recent past due to strict monitoring and increasing cost of transit and bilateral trade. The volume of trade between Afghanistan and Pakistan has slumped to less than $1 billion from $3 billion in the past.

Tdap said a key concern for the stakeholders is higher transit cost with Afghanistan that is shifting to other neighbouring countries like Iran that offers competitive rates, better consignment handling facilities and cost-effective transportation.

“High cost of transportation and hefty deposits by shipping companies for transportation containers are discouraging Afghan importers to deal with Pakistan,” Tdap said in a report last year.