Pakistan, Kyrgyzstan sign agreement on $2 Billion growth trade turnover for two years: what does the new deal mean
Pakistan and Kyrgyzstan have signed an agreement to develop trade turnover to two billion within two years. The deal is a significant step towards developing relations with the Central Asian republic.
The agreement was reached on the eve of Prime Minister Shehbaz Sharif’s meeting with the President of the Kyrgyz Republic, Sadyr Zhaparov, devoted to trade, investment, transit, and energy cooperation.
Despite the current trade turnover of Pakistan and Kyrgyzstan, which is only $16 million. The new $ billion, the target of two billion is several times higher, indicating the desire of both countries to develop relations.
Pakistan-Kyrgyzstan Trade Target: $200 Million
An agreement on trade with a target of 2 billion is one of the results of Prime Minister Shehbaz Sharif’s recent visit to Kyrgyzstan. As reported, the initial understanding was to adopt a memorandum on mutual trade development between Pakistan and Kyrgyzstan.
Nevertheless, Prime Minister Shehbaz offered to sign an agreement, noting that a document would help achieve the target. The deal was signed in Bishkek.
In addition, Pakistan and Kyrgyzstan have agreed to develop an action plan to improve trade and optimize the trade process to benefit both countries.
Why Is $2 Billion Target Significant?
Although currently, Pakistan and Kyrgyzstan’s trade turnover only accounts for about $16 million. Reaching $ billion, for both countries, this indicator should be much higher. More precisely, for Pakistan and Kyrgyzstan to reach a trade turnover of 2 billion, their commercial ties need to be developed several times.
For Pakistan, closer economic ties with Kyrgyzstan would allow it to enter the Central Asian market more broadly. For Kyrgyzstan, trade with Pakistan is also vital because Pakistan can act as an intermediary in transit trade between South Asian countries and products from the Central Asian republic.
Thus, the agreement is of great importance to Pakistan, which is eager to develop trade and investment ties with other countries. At the same time, it is worth noting that economic cooperation with neighboring states is one of Pakistan’s priority areas in the long term.
Focus on Trade, Investment, and Joint Ventures
Pakistan and Kyrgyzstan have agreed to jointly develop priority sectors and adopt measures to facilitate joint ventures. The sides indicated several priority areas for economic cooperation, including agriculture, food processing, textiles, pharmaceuticals, mining, light industry, halal products, digital technologies, energy, tourism, education, and science.
In addition, Pakistan and Kyrgyzstan are interested in localizing as many technologies as possible and establishing joint ventures.
Such an agreement will be beneficial for companies since, in addition to traditional trade, it will also be possible to develop supply chains through joint production.
Transit Trade Is also on the Table
One of the most critical aspects of the agreement is the development of transit trade between Pakistan and Kyrgyzstan.
Pakistan and Kyrgyzstan have agreed to adopt a transit trade framework between the two countries that could optimize trade between Pakistan and Kyrgyzstan and facilitate transit trade between Pakistan and other Central Asian countries.
The development of transit infrastructure will create many opportunities for companies from both countries. On the one hand, Pakistan has natural access to natural harbors, making it more attractive for transit trade than other countries. On the other hand, the development of roads and transit infrastructure will create opportunities for local transport companies in Kyrgyzstan, a landlocked country.
In addition, Pakistan and Kyrgyzstan want to harmonize customs, transit, and administrative procedures to optimize trade. If this goal is achieved, Pakistan can become an intermediary in transit trade between other Central Asian countries and their trade partners.
Pakistan Seeks Closer Economic Ties With Central Asia
Pakistan has always strived to strengthen economic ties with Central Asian countries. This region has vast opportunities for developing trade, infrastructure, energy, and transit ties. At the same time, the natural barriers that separate Pakistan from the region have hindered free trade between the countries for many years. The deal with Kyrgyzstan shows Pakistan’s desire to remove some of these barriers and develop sustainable economic ties with another Central Asian country.
This agreement will enable Pakistan and Kyrgyzstan to increase their trade turnover and invest in joint ventures. In addition, this deal will be another step towards creating a free trade zone between Pakistan and Kyrgyzstan, which will remove many barriers for companies from both countries.
Energy Cooperation Between Pakistan and Kyrgyzstan
Another critical aspect of the agreement is energy cooperation between Pakistan and Kyrgyzstan. The sides have agreed to establish a Joint Working Group on Energy to identify areas of cooperation in electricity, hydropower, renewable energy, energy, infrastructure, and modern technologies.
In addition, Pakistan and Kyrgyzstan reaffirmed their interest in the CASA-1000 program, connecting Central Asian countries with electricity in Pakistan.
For Pakistan, energy cooperation with Central Asian countries is of particular significance, as it has a growing need for electricity. Closer economic ties with Kyrgyzstan in this area will enable Pakistan to meet its increasing demand for electricity.
Cooperation in Digital Technologies, Blockchain, and Virtual Assets
In addition to traditional areas of economic cooperation, Pakistan and Kyrgyzstan have also agreed to cooperate in the field of digital technologies, including blockchain and virtual assets.
According to the joint statement, the countries will seek to expand trade and investment ties in the information technology sector to create cross-border investment platforms, develop financial market infrastructure, and localize innovative technologies. This agreement will create many opportunities for technology companies, financial institutions, and start-ups from Pakistan and Kyrgyzstan.
At the same time, adopting legal, financial, and regulatory frameworks and coordinating the interests of state and private actors will be necessary for the implementation of this plan.
Tourism and Education: Other Areas of Collaboration
Finally, Pakistan and Kyrgyzstan have agreed to develop tourism and education. Both countries are interested in attracting more tourists from each other’s countries. In addition, Pakistan and Kyrgyzstan have agreed to adopt a joint action plan to ensure traveling between the countries.
The agreement to develop tourism potential is another step towards economic cooperation between Pakistan and Kyrgyzstan. In particular, the development of infrastructure and the introduction of various benefits will enable local hotel owners and restaurant owners to earn more money.
What Will the Agreement Mean for Pakistan?
If implemented, the agreement on the development of trade turnover to two billion will bring many benefits to Pakistan.
The First trade improve with Kyrgyzstan will allow exporters of the Pakistan to find new customers in the market of central Asia. Pakistan has high number of opportunities in the textile, pharmaceutical, food processing, and agricultural sectors so the increased exports to Kyrgyzstan and other countries of central asia will get the beneficial effect on the local producers.
Second, closer transit trade ties will allow Pakistan to become a major intermediary between Central Asian countries and external markets. This will create many business opportunities for transport companies in Pakistan.
Finally, joint investment projects will be beneficial for both countries, as they will allow Pakistan and Kyrgyzstan to attract foreign investors and develop their economies. In particular, closer economic ties with other Central Asian countries will reduce Pakistan’s dependence on China.
Meeting the $2 Billion Target Will Be Challenging
Challenges Ahead: Implementation Is Key
While the agreement itself does not present any challenges, its implementation may be complicated. Adopting an action plan to optimize trade and investment relations between Pakistan and Kyrgyzstan will be a complex task.
The responsibility for implementing the plan will rest with businesses, which will have to take advantage of the opportunities provided by the agreement. In turn, Islamabad and Bishkek can help companies by providing the necessary support and assistance in implementing specific initiatives.
A New Era for Pakistan-Kyrgyzstan Trade Ties
The agreement to develop trade turnover to two billion is a significant step in economic ties between Pakistan and Kyrgyzstan.
Pakistan and Kyrgyzstan enjoy good political and diplomatic relations, and the agreement shows Islamabad’s and Bishkek’s interest in developing trade and investment ties.
Final Thoughts
Pakistan and Kyrgyzstan trade turnover is currently only $200 million trade target is ambitious, especially considering that bilateral trade currently stands at only around $ billion. However, the agreement provides a basis for developing economic ties between Pakistan and Kyrgyzstan. It remains to be seen if Islamabad and Bishkek will take the necessary steps to increase trade turnover and optimize trade relations.
If Pakistan and Kyrgyzstan manage to overcome the challenges ahead, trade between the two countries will soon be worth several billion. In particular, the development of transit infrastructure and optimized customs procedures will create new business opportunities for local exporters and Pakistani transport companies.