Phase II of CPEC and the new Kazakhstan:
China Pakistan Economic Corridor (CPEC) is now on a rollercoaster. The incumbent government has been trying its best to remove all barriers to its earlier completion since its beginning. On the other hand, the Republic of Kazakhstan has become an ideal country for CPEC participation because of its “booming economy”, “massive industrialization”, strong political will for greater regional connectivity, and above all diversification of means of transportation. Especially the concept of New Kazakhstan has further consolidated its statehood, macro-economy, and society alike. Thus prospects of CPEC connectivity with Kazakhstan are bright. “Phase II of CPEC and the new Kazakhstan” is discussed in a detail by the author.
Time and again, Kazakhstan’s Ambassador to Pakistan Yerzhan Kistafin has reiterated its resolve to extend all-out cooperation with Pakistan to meet its growing energy needs which is indispensable for economic growth. Most recently, during his visit to the Quetta Chamber of Commerce and Industry (QCCI), he met with the numerous business leaders of the province.
He promised early approval of visa applications sent through the QCCI and consequently would issue visas to the businesspeople without any delay. He pledged that Kazakhstan would further enhance its cooperation in trade, industry, and education.
He urged that investors of both countries should play a positive and productive part in further strengthening bilateral trade relations by investing on a reciprocal basis. He mentioned that Kazakhstan has educational, tourism, and business opportunities that should be tapped by Pakistani businessmen.
On the contrary unending instability and uncertainty in Afghanistan encouraged many regional countries to follow a holistic and comprehensive means to overcome this perpetual hurdle in the greater regional connectivity by avoiding it through the implementation of the Quadrilateral Traffic in Transit Agreement (QTTA) which is a transit trade deal between China, Pakistan, Kyrgyzstan, Kazakhstan and Uzbekistan for facilitating transit trade.
Obviously, the QTTA provides an alternative gateway to Central Asia by completely circumnavigating Afghanistan. Pakistan would use the Karakorum Highway, which connects Gilgit-Baltistan to China’s Xinjiang region which links with the Central Asian States. Pakistan would support the desire of many CIRs to become part of the QTTA.
Kazakhstan has since long been expressing seriousness to implement the QTTA, which will enable Pakistan to export its products under QTTA to Central Asia.
In this connection, Kazakhstan is also very keen to invest in Pakistan’s ports as it wants to have access to the market of Middle East countries and beyond. This expected investment will also help increase the regional connectivity for trade among the regional economies.
Kazakhstan ambassador Kistafin said Gwadar port has immense potential for trade and Kazakhstan is keen to exploit the port to increase its trade with other countries. In this context, he proposed that there are various areas of cooperation between the two brotherly countries specifically in tourism and sports which could bring the two nations even closer.
Most recently, for further strengthening of bilateral relations, a large exhibition of Pakistan (Gilgit-Baltistan) products was arranged in the largest metropolis Almaty. Moreover, various business groups and tourist groups that visited Pakistan and Kazakhstan are keen to sign an MoU regarding tourism in Pakistan.
Interestingly, the Republic of Kazakhstan is the starting point and connecting hub of the One Belt One Road Initiative (BRI).
Kazakhstan shares a border to the East with China. It borders Russia to the North and Kyrgyzstan and Uzbekistan and Iran to the South. It has an ideal “geographical” location for connecting China and the West through important routes under the flagship of BRI.
Today two of the six economic corridors of BRI pass through Kazakhstan connecting China with Europe, Iran, and Western Asia. Mainly the New Eurasian Land Bridge and the China-Central Asia-West Asia Corridor pass through it.
Connecting trade hub:
Interestingly, the unending Russia-Ukraine conflict has now transformed the so-called landlocked status of Kazakhstan into land-linked. It has now become an ideal connecting hub for trade between China and the EU. BRI comprises 51 mega projects of US$35 billion in Kazakhstan, in which US$3.5 billion is invested in the International Centre for Border Cooperation Khorgos and a dry port on the eastern border with China.
Its remarkable investment includes the Shalkar-Beyneu Railways, the Zhezkazgan-Suksanl Railways, the Kuryl Seaport, the Unified System of Management “NOMAD” and Almaty-Sha Railway Line, Almaty bypass railways, etc. Thus Kazakhstan is the “jewel” of BRI in Central Asia and beyond and CPEC is the flagship project of the BRI.
Furthermore, Kuryk Seaport has direct access to railway tracks which has already enhanced its “strategic” value. The port is well located at the intersection of the East-West and North-South trade corridors (Iran, India, and Russia) creating one of the fastest multinational routes for cargo delivery.
It is meant to perform multi-tasks mainly to increase Kazakhstan’s trade activities with the Caspian Sea Region (CSR) and the transit potential of the Caspian Sea.
Furthermore, the Khorogos International Centre for Border Cooperation has been one of the important projects of BRI which supports Kazakhstan’s state program of Nurly Zhol. It is indeed an entry point for Chinese goods shipped to Asia and Europe. Thus Kazakhstan has an important place in BRI which has already further enhanced its socio-economic ties, geopolitical affiliation, and geostrategic orientation with China. It has actually further diversified its energy supplies.
To conclude, CPEC and Kazakhstan have now become complementary partners of greater regional connectivity and immense socio-economic prosperity. In this connection, many companies of Kazakhstan have shown keen interest to invest in Pakistan, especially in railways, infrastructural development of ports, pharmaceutical, sports, and tourism sectors. Kazakh-Pakistan Business Forum was held in Almaty.
It was attended by more than 100 representatives of the business circles of the two countries. The Pakistani business was represented by manufacturers of pharmaceutical products, textiles, surgical instruments, and sports goods, as well as a number of other companies.
In recent times, a Joint Business Council (JBC) comprising the Federation of Pakistan Chambers of Commerce & Industry (FPBCCI) and the Chamber of International Commerce of Kazakhstan has been established that would further improve bilateral trade relations by getting together private business companies.
In another development, the Federal Cabinet has allowed the Kazakh Air Company SCAT Airlines to operate in Pakistan to start air travel between Pakistan and Kazakhstan, enabling direct air travel between the two countries and helping boost bilateral trade. Hopefully, a direct air corridor will be established this year.
The Trade Development Authority of Pakistan (TDAP) organized the first-ever Engineering and Health Care Show at Expo Centre Lahore where the relevant SMEs displayed their products. A larger number of Kazakhstan private companies rigorously participated in this event.
I suggest that business-to-business links, reactivation of the Bilateral Business Council, diversification of trade mix, signing of PTA/FTA, and cooperation in education, culture, media, tourism, and CPEC would be game-changer for both the countries. Moreover, reciprocal trade houses in Islamabad and Khorogos International free trade center would act as a balancing act for further promotion of bilateral trade.
Meaningful custom incentives, the start of preferential items/sector trade, speeding up of non-trade items, media cooperation, and formation of the corridor of Knowledge would be the way forward. The Center for South Asia & International Studies (CSAIS) would play a vital role in the days to come.
This Article is written by Dr. Mehmood Ul Hassan Khan, Director at The Center For South Asia and International Studies, Islamabad. Moreover, a regional expert on China especially in CPEC and BRI.