CENTRAL Asian States refer to the five countries located in the central region of the Asian Continent. These countries are Kazakhstan, Uzbekistan, Turkmenistan, Kyrgyzstan, and Tajikistan. They share historical, cultural and economic ties with each other and with their neighbours, including Pakistan. Collectively, these countries have a population of approximately 77 million, with Kazakhstan housing about 19 million, Uzbekistan around 35 million, Turkmenistan 6 million, Kyrgyzstan 7 million and Tajikistan 10 million.
The Central Asian region is rich in natural resources, particularly hydrocarbons, with Kazakhstan and Turkmenistan boasting substantial oil and natural gas reserves. Pakistan can benefit from these resources to meet its energy needs. The Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline project exemplifies this potential, aiming to transport natural gas from Turkmenistan to Pakistan, India, and Afghanistan. Additionally, the hydropower potential in Kyrgyzstan and Tajikistan presents another avenue for electricity imports. These resources can significantly contribute to Pakistan’s energy sector, reducing its reliance on traditional energy imports and enhancing energy security.
Trade and commerce can also be greatly enhanced through partnerships with Central Asian countries. These nations provide new markets for Pakistani products such as textiles, pharmaceuticals, and agricultural goods, while also serving as sources for minerals, machinery, and other imports. Improving infrastructure and connectivity is crucial for facilitating these trade relationships. Projects like the China-Pakistan Economic Corridor (CPEC) aim to extend links to Central Asia, facilitating direct trade routes. Gwadar Port, a key component of CPEC, can function as a logistics hub for Central Asian exports, giving these landlocked nations access to the Arabian Sea and broader international markets.
Investment opportunities abound, with potential for joint ventures in sectors like agriculture, textiles, mining, and energy. The establishment of Special Economic Zones (SEZs) along trade routes can attract investments from Central Asian states, fostering economic collaboration. Pakistan’s strategic location and participation in regional organizations like the Economic Cooperation Organization (ECO) further strengthen its position as a trade gateway.
According to the Ministry of Foreign Affairs, Pakistan’s trade with Central Asia, while growing, remains modest compared to other regions. In 2022, trade with Azerbaijan was $28 million. For the fiscal year 2023, trade with Tajikistan reached $36.46 million, with exports at $12.09 million and imports at $24.38 million. Kazakhstan’s trade volume in 2022-23 was $139.33 million, favouring Pakistan with $132.73 million in exports and $5.58 million in imports. Trade with the Kyrgyz Republic was $11.05 million, with Pakistan exporting $10.99 million and importing $0.069 million. Turkmenistan had a total trade volume of $8.41 million, with exports at $2.234 million and imports at $6.17 million. Trade with Uzbekistan in 2021 was $126.05 million, with Pakistan exporting $88.18 million and importing $37.87 million.
The total trade volume between Pakistan and the Central Asian countries is estimated to be around $400-500 million annually. This figure includes both imports and exports and reflects the untapped potential for increasing trade in this region. Pakistan primarily exports textiles, pharmaceuticals, surgical instruments, rice, and sports goods to these markets, while importing minerals, oil and gas, chemicals, and machinery from them. The energy sector, particularly natural gas from Turkmenistan, plays a crucial role in this trade dynamic.
Despite promising prospects, trade between Pakistan and Central Asia faces several challenges. Geopolitical instability in Afghanistan disrupts crucial transit routes, while limited direct transport links and underdeveloped infrastructure within Central Asia create logistical bottlenecks. Pakistan contends with competition from regional powers like China and India, who offer alternative trade routes. Non-tariff barriers such as complex customs procedures, currency exchange issues, and inconsistent trade regulations also pose significant obstacles. Additionally, political and economic uncertainties within Central Asian countries contribute to an unpredictable trading environment.
Pakistan aims to be a crucial trade link between Central Asia and the global market, investing heavily in infrastructure projects like roads, railways, and pipelines. This includes participation in the China-Pakistan Economic Corridor (CPEC), which provides a direct route to warm-water ports on the Arabian Sea. To facilitate trade, Pakistan is pursuing free trade agreements with Central Asian countries and working to improve trade finance, customs procedures, and regional connectivity. Acknowledging the need for a stable Afghanistan as a transit route, Pakistan is enhancing cooperation on this front. Engagement in regional organizations such as the Shanghai Cooperation Organization (SCO) will further improve trade relations and foster economic collaboration.
The stabilization of Afghanistan and the completion of infrastructure projects like CPEC are expected to significantly boost trade volume between Pakistan and Central Asia. With these developments, Pakistan’s trade volume with Central Asian states is expected to rise significantly, potentially reaching billions of dollars annually. The energy sector, particularly natural gas from Turkmenistan, will continue to play a crucial role in this trade dynamic. Pakistan’s commitment to becoming a key trade partner for Central Asia, along with its strategic initiatives and investments, positions it as a potential major trade hub in the region.
The relationship between Pakistan and the Central Asian states holds immense potential for economic growth and development. By addressing the challenges and leveraging the opportunities, Pakistan can significantly enhance its trade and economic ties with these nations. Continued investment in infrastructure, strong regional cooperation, and a focus on fostering stability in Afghanistan will be essential for realizing this potential. As Pakistan strengthens its position as a trade gateway to Central Asia, the economic benefits are likely to extend beyond the region, contributing to broader global economic integration and prosperity.
—The writer is Director at Institute of Humanities and Art, Khwaja Fareed University of Engineering and Information Technology, Rahim Yar Khan.
(anwar.farooq@kfueit.edu.pk)
