Trade ties between Pakistan and Afghanistan have
started taking a new shape. There are indications that the growing
volume of trade from Pakistan, for the first time, is going to cross $
one billion mark at the end of the current financial year.
Pakistan has always been a major source of supplies
goods for Afghanistan but unfortunately most of the cross border trade
used to be transpired through illegal channels in the past. This was not
possible without connivance of the corrupt causing losses to the
national revenues. The corrective measures, recently taken by the two
governments have produced results but still there is much room for
Pakistan has reduced the number of items on the
negative list and more items are also being reduced on the negative
list. This negative list was a major cause of illegal trade and those
items in negative list were used to be traded through illegal channels.
Besides saving duty and taxes, another reason
contributing towards illegal trade was the absence of traveling
facilities between the two countries. The Afghan government has now
agreed to ease traveling difficulties and has decided to issue
three-month multiple visas to intended business men from Pakistan.
The two governments have recently agreed to enhance
bilateral trade for which linkages in banking; roads, air and
communications sectors are being established.
It may be pointed out that the two governments have
allowed four Pakistani banks to open their branches in Kabul. Out of the
four licenses issued to Pakistani banks, National Bank has started
operations in Kabul some three months back while the remaining three
banks including First Micro Finance Bank, Habib Bank and the Standard
Chartered Bank are in the process of establishing their branch network.
So far, the National Bank of Pakistan is the only foreign bank operating
in Kabul, but competition is building up with first Micro Finance Bank,
majority owned by the Agha Khan Fund for Economic Development, the
Standard Chartered preparing to open soon.
On the occasion of recent visit of Hidayat Amin
Arsala, Vice President of Afghanistan, the Finance Minister Shaukat Aziz
has said that the bilateral trade between the two countries was growing
rapidly. The total volume of trade between the two countries was
estimated at $620 million in the previous year which is expected to take
quantum jump a year to a record level of $ one billion at the end of the
The transit trade with Afghanistan has also picked up
and a lot of the bottlenecks with regard to transit trade are also being
The reconstruction process of Afghanistan with the
financial support from the developed countries offers great
opportunities for the countries in the region in general and to Pakistan
in particular due to its close vicinity with that country. The
reconstruction process through now started picking up yet it is delayed
due to disturbed conditions prevailed for a long time in that country.
The reconstruction process however proved to be a
windfall for the ailing cement sector in Pakistan. Currently, those
cement units located in the NWFP and Upper Punjab are running over 90
percent of their capacity due to increasing demand of cement in
Afghanistan. Besides cement sector, the allied construction industries
have also started gaining from the situation.
Pakistan had earlier announced a package of $100
million to participate in the reconstruction process of that country. In
this regard, the funds will be utilized for construction of
Jalalabad-Torkham road for which tenders have also been issued. The
construction of this road will start next month. Besides construction of
the road, Pakistan has also announced construction projects for an
academic block in Jalalabad and Kabul Universities and a kidney centre
in Jalalabad. Other projects to be supported by Pakistan are including
an artificial limb center in Kandahar and an information technology
center in Mazare sharif.
Pakistan was also working on the technical
feasibility study for laying a railway track from Chamman to Kandahar,
that will made Kandahar a central place for transit trade to Central
Asia besides providing a link with Karachi port. Another major
development in the area of communication links with Afghanistan and the
Central Asian States is the development of Gwadar port being development
with the assistance of Asian Development Bank. As far as the air links
were concerned, PIA has also started three weekly flights to Afghanistan
and these links are going to open up Afghanistan for trade with rest of
The Afghan finance minister Ashraf Ghani is also
coming Pakistan to participate in the Economic Coordination Organization
(ECO) meeting to be held in Islamabad at the end of the current month.
This is for the first time that ECO economic ministers are meeting to
discuss ways and means to enhance cooperation between the member
The most important factor for stability in the region
is the return of normalcy in Afghanistan. Once political and economic
stability returns to Afghanistan much larger projects like cross border
gas and oil pipelines from Central Asia are also in store which promise
for economic glory in the region.