ISLAMABAD: Pakistani banks has allowed direct transit trade transactions with CARs, WealthPK reported on Thursday.
According to the report, the Ministry of Finance said transit trade to Central Asian Republics (CARs) through Iran does not involve any payment or trade settlement with Iranian bank, person or entity, and Pakistani banks are free to carry out trade transactions in line with import or export orders.
The Ministry of Finance said in a statement that Azerbaijan is neither subject to any United Nations Security Council (UNSC) sanctions nor declared as high-risk jurisdiction by the State Bank of Pakistan (SBP). Therefore, it said, Pakistani banks are free to carry out trade transactions with Azerbaijan, as long as no sanctioned items or entities are involved.
Nevertheless, the banks carry out cross border transaction as per their risk appetite and in light of their correspondent relationship with rest of the world, said the statement.
The National Assembly’s Standing Committee on Finance in its recent meeting discussed issues regarding prolonged and cumbersome due diligence by Pakistani banks over the use of Iran (Taftan border) as a transit country and anti-money laundering (AML) requirements set by the SBP.
The members of the committee shared their observations regarding the issues being faced by the business community of CARs, including Azerbaijan, and Pakistan due to banking system and lack of interest by the private banks. The committee directed the SBP to come up with viable solutions to the problems being faced by the business community within 30 days.
Experts believed that there is great potential for increase in Pakistan’s trade with CARs by resolving issues and barriers in this regard. The Ministry of Commerce said it is taking steps to enhance engagement with CARs and also to enhance connectivity with these countries under its initiative of regional connectivity, the report added
The Ministry of Commerce in collaboration with Trade Development Authority of Pakistan (TDAP) recently organised Pakistan Uzbekistan Business Forum (PUBF) in Tashkent. Official details provided by the ministry showed that in financial year 2020-21, Pakistan’s total trade with Azerbaijan, Iran, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, Uzbekistan, Afghanistan and Turkey remained $3.044 billion which is far below its potential, and needs to be increased significantly.
In present circumstances, top government officials and experts are advising traders to use Transports Internationaux Routiers (TIR) Convention for their trade with CARs to avoid any problem.
Adviser to Prime Minister on Commerce Abdul Razak Dawood had said in a statement that Pakistan needs to go for geographic diversification of exports by using TIR Convention as it guarantees export to Europe and Central Asia via Iran and Afghanistan.
He added that unfortunately, Pakistan never used the TIR Convention under which traders can send their goods to various European and Central Asian countries through land routes via Iran, Turkey and Afghanistan. Under the TIR, trucks carrying goods in containers, once checked and sealed in the home country, cannot be stopped and checked at any border on the way.
The National Logistics Cell (NLC) also recently sent a consignment for Turkey and Azerbaijan via Iran under the TIR.
Pak-CARs relations under CPEC
China Pakistan Economic Corridor (CPEC), considered the flagship project of China’s proposed Belt and Road Initiative (BRI), is not only a game changer for Pakistan but also it is creating massive opportunities for the entire region including CARs. It will boost Pakistan’s trade with CARs and open new doors of trade opportunities in the region.
It provides an opportunity for Pakistan to diversify its exports and increase trade relations with CARs and the entire region. -INP
