Pakistan, Afghanistan to increase trade

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ISLAMABAD – Pakistan and Afghanistan have agreed to strengthen trade ties and double annual bilateral trade by 2015, after a two-day Joint Economic Commission (JEC) meeting January 16-17 in Islamabad.

“The key objective of meeting of the JEC held after a gap of three years was to promote bilateral trade, to resolve issues related to transit trade between the two countries, review Pakistan’s (US) $300m grant (Rs. 27 billion or 14.9 billion AFN) and to strengthen capacity-building programmes for Afghanistan,” Fazal Abbas Mekan, additional secretary of the Pakistani Ministry of Commerce, told Central Asia Online.

In fiscal year 2010-2011, Pakistani exports to Afghanistan were $2.3 billion (Rs. 207 billion or 114 billion AFN) and imports were US $172m (Rs. 15.5 billion or 8.5 billion AFN). The JEC agreement seeks to raise bilateral trade to US $5 billion (Rs. 451 billion, 248 billion AFN) by 2015.

Afghan Minister of Finance Hazrat Omar Zakhilwal led his country’s delegation, including deputy ministers and senior officials of various ministries.

The US $300m one-time Pakistani grant includes support for a variety of projects, such as the expansion of the Torkham-Jalalabad highway, and delivery of 200 trucks, 100 buses, more than 50 ambulances and mobile medical units, 10m schoolbooks and other items.

The countries also agreed to establish a joint chamber of commerce and industry. Pakistan has offered to host the inaugural session of the proposed chamber, and display centres for industrial exhibitions will be set up in Karachi and Kabul.

Conferees noted with satisfaction that annual bilateral trade had risen during the past four years from $850m to $2.5 billion (Rs. 77 billion to Rs. 225 billion or 42 billion AFN to 124 billion AFN), Pakistani Finance Minister Hafeez Shaikh, reading from a joint statement, said.

The Afghan side is also seeking assistance in oil and gas exploration, power generation, construction and mining, to develop untapped mineral deposits worth some US $1 trillion (50 trillion AFN or Rs. 90 trillion) which some say could transform the country into one of the world's leading mining centres. Pakistan has offered machinery and equipment to Afghanistan. The state-owned Water and Power Development Authority also promised to help Afghanistan develop hydroelectric power generation on the Kabul River to export energy in the region.

Similarly, the national flagship Oil and Gas Development Company Limited said it would help Afghanistan in oil and gas exploration while Pakistan's two state-owned gas utilities, Sui Northern Gas Pipelines and Sui Southern Gas Company, will help develop the Afghan transmission network, Shaikh said.

Potential unrealised

The countries haven’t been able to exploit their immense bilateral trading potential, even though their leaders desire to do so, Zakhilwal said.

Seeking investment from Pakistan, he said investors from all over the world were coming to Afghanistan but Pakistani investors had been reluctant, based on the misperception they were not welcome. “Afghanistan will welcome Pakistani investment in exploration, (hydroelectric) power, constructing and mineral sectors,” he said.

If obstacles to Afghan transit trade through Pakistan could be removed, bilateral trade would soar, he said, urging the promotion of access to trade. Afghanistan can become a “land bridge” between South Asia and Central Asia, he said.

The conferees reviewed progress on 29 Afghan projects that are benefiting from the Pakistani $300m (Rs. 27 billion or 14.9 billion AFN) grant, he said, adding the two countries agreed to expedite completion of the Torkham-Jalalabad highway within one year. The cost of the commitments Pakistan has made under that grant, according to some estimates, now exceeds $450m (Rs. 40.6 billion or 22.3 billion AFN) because of delays and inflation.

Pakistan, he said, has asked Afghanistan to provide an obstacle-free route that would enable construction of the planned Chamman-Spin Boldak-Kandahar railway line to begin. Participants also discussed setting up the Liaquat Ali Khan Engineering faculty in Bulkh, Afghanistan, the Nishtar Kidney Centre in Jalalabad, 2,000 scholarships for Afghan students, the CASA-1000 regional electricity project and the Turkmenistan-Afghanistan-Pakistan-India natural-gas pipeline.

During his visit, Zakhilwal also met with Pakistani Petroleum Minister Dr Asim Hussain and discussed the supply of jet fuel to Afghanistan. Hussain sought permission for state-owned Pakistan State Oil to begin operations in Afghanistan. The Afghan delegation assured him of Afghanistan’s complete co-operation with the company.