SCO blesses Pakistan with commerce bonanza
The SCO Emblem.
By Yasir Habib Khan
With full member status of Shahnghai Coorporation Organization (SCO), Pakistan is poised to receive infinite economic windfalls in the days ahead.
The new profile will benefit $ 300 billion economy of Pakistan to realize its dream of reaching 6 percent GDP growth rate in 2018.
SCO’s grand landmass from China, Russia, Tajikistan, Uzbekistan, Kyrghzstan, Kazakhstan and more offers new vista of regional connectivity that has potential to inject trade and economic impetus to all contracting states including Pakistan.
Being almost one-fourth of the world’s population, SCO states are easily accessed to Pakistan due to their geographical location and proximity. Pakistan has a chance to make its inroads into the important economies to offset its trade deficits.
Critical analysis lays bare the fact that Pakistan's overall trade with SCO member states stays low despite embedded potential. The State Bank of Pakistan (SBP) in a report reveals that Pakistan export with China sinks causing trade imbalance. In the first half of 2016-17, exports to China ebbed to $770 million against $1,028m a year ago. Bilateral trade with Russia remained around $419.34 million against $484.47m in the last year, showing a fall of $65.13m or 13.45 per cent. Pakistani business community sees $ 500 million trade prospects with Eurasian countries each and continues to struggle to materialize the dream.
On emergence as SCO’ permanent member state, Pakistan is on good footing to bolster its relations with Russia and central Asian countries to reap financial and economic benefits with full-spectrum.
Terming SCO’s official full membership to Pakistan as a jackpot, Economist Haris Hameed says that some gains have already been made as a good start for avid economic growth.
“In the backdrop of SCO, Pakistan-Russian ties have touched new height when hammered a $2 billion deal for the construction of a gas pipeline from Lahore to Karachi. Pakistan and Uzbekistan inked an extradition treaty and pumped up significant efforts in infrastructural connections,” he opines.
Setting aside CPEC, another significant route connects Pakistan Tajikistan and Afghanistan under Trilateral Transit Trade Agreement (TTTA). The passage will be highly instrumental in speedy trade between Pakistani and Tajikistan.
Since Tajikistan wants oil imports from Kuwait through Gwadar sea ports to other parts of the world, Pakistan gears up to capitalize the situation. Tajik Foreign Minister Sirojiddin Aslov’s wish for more direct investment from Pakistani investors to tap Tajikistan natural resources will give rise to bilateral trade opportunities.
Quadrilateral Agreement on Traffic in Transit (QATT) among Pakistan, China, Kazakhstan and Kyrgyzstan is going to be reality soon. It will help foster mercantile traffic in transit amongst the signatories aspiring to deepen trade link further. SCO players are now working to induct Tajikistan into its fold on its request.
With accession of Pakistan as full member of SCO, trade magnitude among Turkmenistan, Uzbekistan, Tajikistan and Pakistan will mark a new dawn. These central Asian states will exploit Pakistan to trade through the Arabian Sea to South, Southwest Asia and the Middle East taking advantage of shortening distances of approximately 1200-1300 kilometers. This inter-connectivity will prove to be boon for Pakistan economy.
Pakistan’s entry into SCO has many impacts on country’s position in the region and the world over improving its ranking on economic landscape.
Pakistan debt burden is growing each day. It is supposed to repay 11.5 billion US dollars to various international monetary institutions till 2018. Situation sounds alarms but Pakistan stays clam. Reason is liaison with SCO as full member supplemented by CPEC.
It is because of this miraculous double-impact alliance that Pakistan becomes the 122 most competitive nation in the world out of 138 countries ranked in the 2016-2017 edition of the Global Competitiveness Report published by the World Economic Forum. Spillover effects go on as Pakistan’s performance in the World Bank Group's Doing Business Report 2017 has improved from 148 to 144 out of 190 countries reflecting its business friendly image.
There are strong proposal to establish SCO development bank to fiancé and fund various projects. Pakistan being beneficiary of SCO, will avail the financial facilities to encourage businessmen to launch joint ventures and multiple investment plans.
SCO Inter Bank Consortium which aims to make a good contribution to strengthening financial cooperation and promoting trade and economic cooperation between the member states is an alternative funding source for Pakistan.
The Action Plan for 2020 for the implementation of the SCO Development Strategy towards 2025, as well as plan of activities on Further Development of Joint Projects in the SCO framework for 2017-2021, will leave far reaching positive consequences on the banking sector of Pakistan. Habib Bank Limited of Pakistan has already partnered with SCO IBC and has developed working framework with other SCO IBC including the Development Bank of Kazakhstan, the State Development Bank of China, the Settlement & Savings Company of the Kyrgyz Republic (RSK Bank), the Russian Bank for Development and Foreign Economic Affairs (Vnesheconombank), the State Savings Bank of the Republic of Tajikistan (Amonatbonk) and the National Bank for Foreign Economic Activity of the Republic of Uzbekistan.
If a proposal of establishing free trade area comes into force among SCO states incorporating Pakistan, Gawadar free zone, special economic zones and industrial parks along the CPEC will enjoy flourishing commerce and investment activities.
Pakistan Commerce Minister Khurram Dastgir Khan has already welcomed SCO countries to utilize Pakistan’s ports once the China-Pakistan Economic Corridor is completed to get access to trade routes through the Arabian Sea.
According to research paper “Significance of Shanghai Cooperation Organization – Pakistan’s Perspective written by Dr Muhammad Saif ur Rehman, Pakistan’s permanent admission to SCO as a full member will be incredible both in regional and global context.
Pakistan is ideally positioned to serve as a hub for promotion of trade and energy corridor, hence possesses capability to make a yielding contribution to SCO and provide a feasible link between SCO states and South Asia.
Pakistan’s official induction in SCO will open many vistas of mutually beneficial economic cooperation between two sides. Economic opportunities will aim at earliest possible materialization of trade & energy corridor, research paper concludes.
(The author is a senior investigative journalist based in Pakistan. He works as special contributor for China Plus, English news service of China Radio International and South China Morning Post. He also works for The New International and Pakistan Today. )