During last three years (2003-2005) bilateral trade between Kazakhstan and Pakistan did not exceed $10 million"

Apr 03 - 09, 2006

Though Pakistani leadership frequently talks about geo-strategic position of the country located at the energy corridor of Central Asia providing an edge over others in the region, yet practically speaking other countries in the region including India and China were stealing the show.

According to Gali Shaimakov, Commercial Counselor, Embassy of Kazakhstan "unfortunately, the contemporary development of trade and economic relations between our countries is at a quite low level. During last three years (2003-2005) bilateral trade between Kazakhstan and Pakistan did not exceed $10 million". While Kazakhstan-India bilateral trade grew by more than 2 times and in absolute terms exceeded $300 million during the same period.

Gali added that besides the fact that the cost of lint is not high in Kazakhstan, tariff rates of electricity and natural gas are also low - electricity 0.03 - 0.04 per kilo watt and gas 0.09 MCF.

In 2005 total volume of Kazakhstan-China bilateral trade exceeded $5 billion. Ms. Bakhyt Sayakova, Attaché, Embassy of Kazakhstan in Islamabad gave a presentation and took part in interactive discussion with the members. Earlier, Ameen Bandukda, Chairman, SITE Association of Industry gave a brief introduction of SITE Association. He hoped that the two countries could greatly benefit from each other experience, bilateral trade and investment between the two countries. End

Average monthly wage in Kazakhstan is bout 300 YSD. Talking about access to infrastructure, Gali said that Kazakhstan has extensive network of railway and motor- highways that link the country with Russia, China, Uzbekistan and other countries. World Bank recently made a statement about its intention to invest 3 million US$ for development of Kazakhstan's cotton-textile sector in the framework of four-year program, which will provide Kazakhstani producers with access to marketing research of the world cotton industry.

The Kazak diplomat speaking at SITE Association of industry observed that there are vast opportunities lying ahead for the Pakistani investors in Special Economic Zone (SEZ) "Outustik", Kazakhstan.

Gali Shaimakov said that Special Economic Zone (SEZ) "Outustik" was established in July 2005 and is one of the initial steps towards creation of cotton-textile cluster in the South Kazakhstan oblast' (region) (SKO). 500 million US$ of private investments is expected to be attracted to the said SEZ.

The SEZ covers the territory of 200 hectares, which is advantageously located in terms of transport and heating infrastructure. More than 15 spinning, weaving and sewing units are expected to be setup in the SEZ. The fenced territory of the SEZ is located near the administrative center of the region - Shymkent city. Gali said that the SEZ "Outustik" offers the following favorable conditions for potential investors. Textile companies working with the SEZ will be exempted from corporate income tax, land tax and property tax and partly from value added tax (similar to Sales Tax in Pakistan). Certain simplification of the customs procedures is also envisaged for the investors. Taking about assesses to raw materials, he said that cotton is produced in the SKO only.

In 2004 gross production of raw-cotton in Kazakhstan was 402 thousand tons, which was processed into 140 thousand tons of lint. At the present 90% of lint is exported. The volume of cotton production is expected to increase to 700 thousand tons in three years. Discussing the access to markets Gali said that Kazakhstan is located geographically advantageously in the region, where there is high demand for cotton yarn.

The demand of yarn in the Asian-Pacific Countries is 16.5 million tons a year, European countries - 1.6 million tons a year, Commonwealth of Independent States (CIS) - 0.6 million tons a year. According to estimates, annual growth rate of consumption of textile and garments is 2.2% by 2010 it will be 62 million tons.

Starting from 2002 Kazakhstan obtained investment level of credit rating from leading rating agencies and continues to confirm it from year to year. Adequate judicial base that is to protect the rights of investors has been formed. The Law of Kazakhstan "On SEZ" and other legal acts, which clearly define the procedures of obtaining incentives, protection from the change in laws and other important issues for investors, regulate the activity of SEZ. In South Kazakhstan region annually 250-400 thousand tons of cotton is cultivated.

Besides, Law and Protection of Investments is on, and the banking system of the country is considered to be the best in the former Soviet Union. All these facilitated the active participation of foreign investors in textile sector. A branch of National Bank of Pakistan is functioning in Astana. GDP is 9.5% and inflation rate is 6%. Labour force by occupation - industry 30%, agriculture 20% and services 50% and unemployment rate is 8.8%. Industries functioning in Kazakhstan are oil, coal, iron ore, manganese, chromites, lead, zinc, copper, titanium, bauxite, gold, silver, phosphates, sulfur, iron and steel; tractors and other agricultural machinery, electric motors, construction materials and industrial production growth rate is 10%.

Gali said the historical documents, which started the development of Kazakh - Pakistani cooperation in all spheres of life, which are of interest to our countries, was signed during the first official visit of N. Nazarbayev,

President of Kazakhstan, to Pakistan in February 1992. And necessary legal base between Kazakhstan and Pakistan aimed at long-term prospect was laid during this visit.