Since the olden times, cities like Quetta, Peshawar, Taxila, Multan and Debal from the areas of Pakistan were linked to the trade routes of ancient Silk Road while famous places like Otrar, Taraz, Turkestan, Sairum and Almaty from Kazakhstan were also connected. Then, well before the birth of Pakistan and Kazakhstan, All India Muslim League under the chairmanship of Quaid-e-Azam Muhammad Ali Jinnah, adopted a resolution on February 23, 1942 at Delhi. In this resolution, it was urged on the Government of India to make proper arrangements and provisions for Muslim Kazakhs who, compelled by Soviet atrocities, had migrated to India during 1926-1939. Consequently, they were settled peacefully in northern parts of India (northern areas of current Pakistan).
Followed by these historic associations, Pakistan was among the first countries to recognize Kazakhstan when it appeared on the world map in December 1991. Diplomatic relations between the two brotherly countries were established when Mr. Nursultan Nazrbayev, the first President of Kazakhstan visited Pakistan in 1992. Both nations have had a journey of cordial relations, mutual understanding and a common approach toward global issues. However, the prospects of stability in Afghanistan, the emerging multipolar world order, the progress of Belt and Road Initiative (BRI) in Central Asia and South Asia are opening new vistas of opportunities for bilateral trade and investment cooperation in coming days.
Kazakhstan is the richest country of Central Asia with 18.2 million population, exports of US$ 49.3 billion (59% oil & allied products and 24% metal & chemicals), export partners including China (15%), Russia (12%) and France (9%), Forex reserves of US$ 30 billion, and its economy being divided into 10 special economic zones (SEZs). Pakistan and Kazakhstan share membership in various forums like Organization of Islamic Cooperation (OIC), Economic Cooperation Organization (ECO), Shanghai Cooperation Organization (SCO), Central Asia Regional Economic Cooperation (CAREC) and Conference on Interaction and Confidence-Building Measures in Asia (CICA).
Along with Pakistan, China and Kyrgyzstan, Kazakhstan are also part of Quadrilateral Transit and Trade Agreement (QTTA) for transit traffic and trade relating to CPEC aimed at providing access to Gowadar port. Due to security issues of Afghanistan, the QTTA presents an alternative gateway for Central Asia to Gowardar port by completely circumnavigating Afghanistan. It would link landlocked Central Asia to China’s Xinjiang region that is connected with Karakoram Highway towards sea port of Gowadar.
Moreover, Kazakhstan has a special economic zone of Khorgos on Chinese border with an area of 450 hectare. It has a railway track changing facility also due to gauge difference between China and Kazakhstan that facilitates rail cargo between China and Europe. Having insight of future trade and commerce, certain Pakistani companies have already registered with Khorgos Dryport. Khorgos too is linked with Kashgar. Hence, Central Asian countries can optimize Khorgos-Gowadar Axis to carry out trade with South Asia, Middle East, Africa and Pacific region through Gowadar port.
Above structures can realize the immense potential of bilateral trade and commerce. If Pakistan can export precious stones, jewelry, textile, cotton, chemical and pharmaceuticals, agricultural and food products, vegetables, shoes, leather items, sports and medical equipment and construction material etc., Kazakhstan can export meat, machinery and equipment, fertilizers, coal, iron and nonferrous metals, seed, oil and energy, mining and agricultural products, in particular wheat etc.
There is a huge scope for private-public joint ventures between both countries. It has been observed that before the onset of COVID-19, some negotiations at certain level were going on for a number of projects. Pakistani companies like M/S Habib Syndicate and Fauji Fertilizer Company Ltd. (FFCL) were discussing on a joint venture to establish a US$ 200 million Soda Ash plant in Pavlodar (SEZ for chemical & petrochemical industries) near Nursultan, the capital of Kazakhstan. The project has local partners as well and is likely to be backed by sovereign guarantee. Again, B.I.Group is the largest construction company in Kazakhstan with a turnover of $ 1.2 billion. Its activities include development and civil construction, construction of motorways, infrastructural & industrial construction and manufacture & realization of building materials. Negotiations of Pakistan’s National Logistic Cell (NLC) for joint venture with B.I.Group were being made before the pandemic.
The government of Kazakhstan has established Astana International Finance Center (AIFC). The Center is poised to be a financial hub for Central Asia, the Caucasus, the Eurasian Economic Union (EAEU), the Middle East, West China, Mongolia and Europe. Objectives are to attract investment into Kazakhstan, to develop security market, to integrate Kazakhstan with international capital market, to develop insurance market, banking services, Islamic finance and to achieve international recognition as financial center.
AIFC provides a number of privileges to create favourable conditions for increase of foreign investment. Potential Pakistani investors can tap the opportunities being provided by AIFC.
For promotion of Urdu language and literature, Pakistan Embassy, business community and National Bank of Pakistan coordinated their efforts and established Jinnah Center in the Faculty of Oriental Studies at Al-Farabi Kazakh National University Almaty, in July 2019.
In this backdrop, the existing trade volume of US$ 25 million between Pakistan and Kazakhstan does not commensurate with the opportunities available. At SCO Council of Foreign Ministers in 2019, both countries resolved to take bilateral trade to US$ 1 billion, but actual potential is much more than this.
The following policy guidelines are proposed to achieve the real development of bilateral relations between Pakistan and Kazakhstan:
* Chambers of Commerce in both countries must institutionalize their coordination to bring together the business communities by seminars, visits and exhibitions.
* Institutional research should be carried out to explore the preferred sectors for future.
* Both countries could promote joint ventures under sovereign guarantees.
* A facility may be negotiated with the government of Kazakhstan to allow Pakistani exporters to re-export their goods to other Eurasian countries including Russia.
* Establishment of Pakistan Trade Center at eminent locations of Almaty, Khorgos, Shimkin and Nursultan would boost bilateral trade.
* A collaboration of Astana International Financial Center (AIFC), Pakistan Stock Exchange (PSX) and the Trade Development Authority of Pakistan (TDAP) would be helpful for business, investment and financial integration.
* Direct air corridor must be established by PIA and Air Astana, besides issuance of on-arrival-visa to promote tourism and people to people contacts.
* Along with BRI, the Central Asia Regional Economic Cooperation (CAREC) Program of Asian Development Bank should be materialized early whose Corridor No.5 also connects Central Asia to Gowadar and Karachi ports of Pakistan.
* Already signed MOU between National Export and Investment Agency “KAZNEX INVEST” JSC and Trade Development Authority of Pakistan (TDAP) to arrange exhibitions, exchange business delegations and hold seminars on trade must be utilized.
* Two railway links of Kazakhstan-Turkmenistan-Iran and Pakistan-Iran-Turkey must be joined to establish rail connectivity between Islamabad and Nursultan.
* Already established Pakistan-Kazakhstan Intergovernmental Commission (IGC) should be activated for cooperation in diverse fields.
Regional connectivity of Central Asia and South Asia largely depends upon the bilateral ties of Pakistan and Kazakhstan. Therefore, enormous economic potential highlighted above is needed to be utilized for mutual benefit of the both countries as well as the region.
The writer is Country Manager of a Pakistani bank in Kazakhstan, with interest in Central Asian studies. He can be reached out at rafeeq_kz@yahoo.com.
