The 18th Summit of Shanghai Cooperation Organization (SCO) has recently concluded in the Eastern China’s coastal city of Qingdao. The SCO is a political, economic, and security organization, the creation of which was announced on 15 June 2001 in Shanghai by the leaders of China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, and Uzbekistan. It is the largest regional establishment in the world in terms of geographical coverage and population and is one of the world’s most powerful organizations. Both India and Pakistan officially became member states of SCO on the 17th Meeting of Heads of State Council of SCO in Astana on June 9, 2017. So, this was the first SCO summit since Pakistan and India became full members of the body. It has yet to be seen how India and Pakistan will behave as full members of the SCO given their acrimonious relationship in the past.
The SCO’s eight-member states now include China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, Uzbekistan, India and Pakistan. Afghanistan, Belarus, Iran and Mongolia have observer status. Armenia, Azerbaijan, Cambodia, Nepal, Sri Lanka and Turkey are dialogue partners. The recently concluded 18th SCO Summit 2018 is extremely relevant in the backdrop of ever-growing importance of Belt and Road Initiative for its member countries. If we combine the SCO with the China-proposed Belt and Road Initiative (BRI), the SCO member states will improve cross-border logistics conditions and increase capacity. Some major joint projects have been completed in the states, including roadways, railways and power plants. China has so far built 21 economic and trade cooperation zones within the SCO countries.
The 18th Summit has adopted six core values of Shanghai Spirit as its key focus: mutual trust; mutual benefit; equality; consultation; respect for diverse civilizations; and pursuit of common development. The Summit will also announce new measures to build joint security. Combating terrorism, separatism and extremism, drug trafficking and cybercrimes are among the top priorities. The Summit will also roll out a blueprint for common development, particularly through the BRI. It will also approve a five-year plan on SCO’s Treaty of Long-Term Good-Neighborliness, Friendship and Cooperation.
The economic integration and connectivity are the main pillars to galvanize economic growth, create job opportunities, expand trade, improve competitiveness and usher prosperity in the region. Pakistan attaches great importance to its trade relations with the SCO countries and desires to significantly raise the volume of its trade with the member states. It has always stressed the need of a world class logistics and financial infrastructure for the speedy movement of goods and people in the region of SCO. BRI is a major initiative that would help achieve the core objectives of SCO.
On the sidelines of 18th Summit of SCO, 14th council meeting of Shanghai Cooperation Organization Interbank Association (SCO IBA) was held between 4th and7th June 2018 in Beijing, China. During this meeting, Habib Bank Limited (HBL) was officially granted the status of member bank. HBL became a partner bank under SCO IBA on August 8, 2014 and is now the first and only commercial bank representing Pakistan on this forum. With its elevation in status as member bank, HBL is positioned to play an integral role in the promotion of regional trade, investment and finance. HBL was the first bank from Pakistan to receive a license for setting up a branch in China. It was also the first South Asian bank to receive permission to set up its banking operations in Urumqi, the largest city in the province of Xinjiang, which borders Pakistan along the traditional Silk Route. HBL’s Urumqi Branch is now fully functional and the bank is in the advanced stage of consultation with Chinese banking regulator to commence its 2nd branch in Beijing.
Financial institutions in developing economies often rely on correspondent banking relationships to provide access to the global financial system and underpin trade finance. Establishing and maintaining a correspondent bank network is expensive. However, financial institutions may extend the reach of their internal electronic proprietary payment systems to their overseas branches and couple that payment system with an account-to-account collection and delivery system. When the regulatory and technological conditions for more efficient trade services converge, the result can be a smoother and hopefully less expensive flow of funds between member countries.