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1- PAK-IRAN ECONOMIC TIES
2- TEXTILE EXPORTS: THREATS AND OPPORTUNITIES
3- NCR: EXTRAORDINARY PERFORMANCE

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PAK-IRAN ECONOMIC TIES

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Establishment of joint investment company proposed

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From SHAMIM AHMED RIZVI,
 Islamabad

Jan 10 - 16, 2005
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The two-day official visit of Iranian Foreign Minister to Pakistan last week has further strengthened the close ties between two countries. Iranian guest Dr. Kmal Kharrazi, in his meeting with the Prime Minister Shaukat Aziz, reviewed the progress on the various decisions taken in the meeting of the joint Pakistan-Iran Ministerial Commission last year.

Talking to the Iranian Foreign Minister, Prime Minister Shaukat Aziz said that close ties between Iran and Pakistan were a source of strength and peace in the region. He reiterated his government efforts to expand bilateral relations specially in trade and cover broad areas including cultural, social, political and economics. He said that establishment of joint ventures and banks between the two countries will further promote economic relations.

After two days of successful deliberations of the joint Pak-Iran Ministerial Commission in Islamabad in March 2004, the two countries had signed seven agreements and Memorandum of Understanding for upgrading and setting up of the existing process of economic cooperation and boost their trade and business relations. The agreements included a joint investment company, avoidance of double taxation, preferential trade, gas pipeline, banking and anti-smuggling measure. The Pakistani delegation was led by Shaukat Aziz while Iranian Minister for Transport Ahmed Khurram headed his team. Then, Prime Minister, Mir Zafarullah Khan Jamali and the visiting first Vice President of Iran Dr. Mohammad Raza Ared witnessed the signing ceremony.

JOINT COMPANY

The joint investment company was to be set up initially with a net paid up capital of $ 25 million. The gas pipeline project was approved for the bulk supply of gas from Iran to Pakistan specially in the border areas and subsequently expanding it to connect the Pakistan existing gas supply network. There are strong possibilities that this project will be expanded to India which badly needs gas bulk supply.

It was noted in the meeting that the existing level of bilateral trade between the two countries in the region is only $350 million, as against which the potential to expand the trade flows was estimated at not less than $3 to $4 billion. In this context it was emphasized that a closer monitoring of the pace of implementation of the new agreements would have to be given due attention with a view to ensuring speedy progress towards the achievement of the desired goal of enhancing bilateral trade and economic cooperation in other fields. It is encouraging to note that Iran has indicated linking of the rail facilities from Kirman to Zahidan which would make it possible for Pakistan to connect the railway transport system up to Europe via the Syrian town of Latakia. At the same time Pakistan would modernize and upgrade its railway line from Quetta to Zahidan. The proposal to establish a joint investment company is expected to initiate investment activity on the basis of joint ventures between the private sectors of the two countries. It may be mentioned here that similar joint venture companies established with Libya, Kuwait and Oman are already operating in Pakistan and contributing significantly to industrial development. The proposal for adopting preferential tariff treatment of imports between the two countries is a good development. The meeting of the Joint Ministerial Commission of Pakistan and Iran reflected a new bid to review the markedly slow pace of progress in expansion between the two countries in spite of the fact that both are founder member of the Economic Cooperation Organization.

In order to supplement its additional gas requirement by 2009, Pakistan has decided to go ahead with the Pakistan-Iran gas pipeline without waiting for Indian decision. They have decided to go ahead with the project without Indian participation. India could join in at a later stage.

Sources informed that Iranian government officials in their meeting with Pakistani authorities have consented to bring the gas pipeline from South Paras gasfield to Pakistan border. Pakistan would now be required to lay pipeline from Pak-Iran border to Sadiqabad. The gas could then be transmitted to the distribution system of both Sui Northern Gas Pipeline Limited (SNGPL) and Sui Southern Gas Pipeline Limited (SSGC). Both Iran and Pakistan have the expertise and competence to lay gas pipelines of top international quality. They might not require any outside assistance in this regard though Asian Development Bank (ADB) is coordinating with both countries for soft-term financial assistance.

 

 

Besides reviewing the progress of work on different projects, Prime Minister Shaukat Aziz and Dr. Kamal Kharrazi discussed the regional issues.

The Prime Minister briefed the Iranian Foreign Minister about the composite dialogue between India and Pakistan. He said Pakistan wants to discuss and resolve all issues in tandem particularly the Jammu & Kashmir dispute, in line with aspirations and wish of the people of Pakistan.

Iranian Foreign Minister appreciated Pakistan's efforts for peace in the region. He stated that Iran was keen to further develop its close ties with Pakistan particularly in the areas of the trade and investment. He renewed invitation for Prime Minister to visit Iran, which the Prime Minister Shaukat Aziz accepted to undertake in the first quarter of 2005.