CAREC Institute Supports Build-up of Trade and Transit Potential in Pakistan
Urumqi, Xinjiang, People’s Republic of China (PRC) – 27 November 2020 – The Government of Pakistani has achieved significant improvements at a key border crossing with Afghanistan by mitigating bottlenecks and congestion, following the recommendations in a policy brief published by the Central Asia Regional Economic Cooperation (CAREC) Institute, an intergovernmental organization that promotes economic cooperation in Central and West Asia.
While Pakistan has made significant efforts to improve its border crossings in recent years including approving a National Transport Policy in 2018, the policy brief found that border-crossings along CAREC corridor 5 – a key trade and transport route running through Pakistan into Afghanistan – were particularly time-consuming and costly due to regulatory barriers, inadequate road infrastructure, and a lack of coordination among other reasons.
In one instance, approximately 4,000 trucks were stuck at the Torkham crossing with Afghanistan in July 2020, due to delayed clearance at Karachi seaport in part because of a lack of automation at the border crossing.
The findings were shared with the Government of Pakistan in the form of the Corridor Performance Measurement and Monitoring (CPMM) Policy Brief, an analytical brief that highlights opportunities to improve efficiency along the country’s major economic corridors. It is one of a series of country specific policy briefs designed to help policy makers in CAREC’s 11 member states across Central and West Asia – including Pakistan – make evidence-based public policy decisions.
For the past several years, the government has been implementing a series of initiatives to improve the situation. These include signing an agreement with Afghanistan to exchange customs information, enhancing the capacity of border agencies, and hiring specialist staff. The government also realigned processes at Jamrud-Torkham to shift the process from Torkham to Michini and Jamrud, and improved the clearance procedure to expedite cross-border movement of cargo at Torkham. In addition, the government has assigned perishable and other essential goods imported from Afghanistan with priority clearance, cutting clearance time to 60 minutes from 160 minutes for other goods.
“All these positive developments and resolution of an unprecedented COVID-19 related congestion in the summer 2020 at Torkham is a classic example of inter-agency cooperation,” said Syed Shakeel Shah, Director at the CAREC Institute. “This shows what can be achieved when various levels of government – federal, provincial, district – pursue a single objective, coupled with much-needed political will and support. ADB, the CAREC Institute, and the CAREC Program remain committed to providing to our members an independent assessment of the situation in their countries, and equipping the governments with the ground level corridor monitoring data and analysis and international best practice to help uplift good governance, policy development, service standards and livelihoods of people across CAREC member countries.”
Background on Pakistan-Afghanistan border crossings
Both Pakistan and Afghanistan are members of the CAREC Program and Institute. They share activities along CAREC corridors 5 and 6. For years, transit through these corridors was hampered by visa and other impediments. Currently, there is a road pass mechanism available for Afghan traders which is issued by the consulate in Jalalabad and is valid for six months. Afghan exports to India through Wagha are also allowed in Afghan registered vehicles under the same rule by presenting the letter of guarantee by appropriate Afghan authorities as envisaged in the Transit Rule 484-B.
In 2020, the Federal Board of Revenue (FBR) of Pakistan has reactivated BCP Angoor Ada for bilateral trade and enhanced its human resources and related facilities at BCP Ghulam Khan to facilitate transit of Afghan traders. Besides, a new visa policy was approved for Afghanistan which will facilitate acquisition of multiple entry visas for Afghan traders to expand bilateral economic ties between the two countries. The Directorate General of Transit Trade was empowered through a necessary legal framework and resources and regional directorates at Gwadar, Sost, and Wagha were notified to handle transit related matters expeditiously.
Pakistan reaffirmed its commitment to honor bilateral and international trade obligations as agreed in the World Trade Organization (WTO) Trade Facilitation Agreement (TFA). The growth rate of Afghan transit trade (despite COVID-19 in 2020) reflects this commitment, namely between 2017-19, transit trade between Pakistan and Afghanistan has been growing at 40% annually (in USD), and a 2% increase (in USD) was recorded in 2020 as compared with 2019 (130,000 TEU over 125,000 TEU).
Besides, an MOU was signed between the two countries to exchange information between Afghanistan’s ASYCUDA and Pakistan’s WeBOC systems which will facilitate establishment of a crucial link between the customs. Major civil infrastructure works are underway at Torkham and Chaman BCPs which will enhance the capacity of all border agencies, including customs, as it has provision for the state-of-the-art non-intrusive equipment. The process of recruitment of dedicated staff for handling transit trade has been initiated and it is scheduled to complete in 18 months. The government made additional efforts to assess all processes at Jamrud-Torkham and realigned them to shift the process from Torkham to Michini and Jamrud. The FBR revisited the clearance procedure and made further improvements for the expeditious cross-border movement of cargo at Torkham. Further, perishable goods imported from Afghanistan and essential goods have been assigned priority clearance with an average clearance time of 60 minutes as opposed to 160 minutes for other goods.
Additionally, the National Logistic and Freight Policy under the ambit of the Ministry of Communication has been approached to declare trucking as an industry. This initiative will encourage private sector to obtain requisite governmental support and subsidized loans as enjoyed by several other sectors. Priority is granted to the railway development as well. Pakistan Railways has been instrumental in operationalizing Azakhel railway dry port and major civil works under China-Pakistan Economic Corridor (CPEC) is expected to bring drastic improvements in this regard. The development of the ADB-funded CAREC-RIBS (Regional Improvement of Border Services Project) will ensure dedicated railway lines for transit cargo.
To address the risk of smuggling, the Prime Minister of Pakistan approved a Border Management Initiative (BMI) to install fences along the 2,500 km long porous Pakistan-Afghanistan border. Moreover, the rationalization of tariff on smuggling prone goods is also underway under the auspicious of the Ministry of Commerce.
Pakistan customs has conveyed repetitively its zero-tolerance policy towards unofficial payments. Customs has officially communicated helpline numbers through banners and stickers for reporting any illegal demands/payments.
The Central Asia Regional Economic Cooperation (CAREC) Program is a partnership of 11 countries – Afghanistan, Azerbaijan, the People’s Republic of China (PRC), Georgia, Kazakhstan, Kyrgyzstan, Mongolia, Pakistan, Tajikistan, Turkmenistan, Uzbekistan – and development partners working together to promote development through cooperation, leading to accelerated economic growth and poverty reduction. It is guided by the overarching vision of “Good Neighbors, Good Partners, and Good Prospects.” Since its inception in 2001 and as of today, CAREC has mobilized almost $40 billion in investments that have helped establish multimodal transportation networks, increased energy trade and security, facilitated free movement of people and freight, and laid the groundwork for economic corridor development.
About the Corridor Performance Measurement and Monitoring
The Corridor Performance Measurement and Monitoring (CPMM) mechanism is an empirical tool designed by the ADB CAREC Program to assess and track time and cost of moving goods across borders and along the six CAREC corridors. In 2020, the Asian Development Bank and the CAREC Institute entered into a partnership for future administration and implementation of the CPMM to draw on respective strengths of each partner and deliver an enhanced set of CPMM products to CAREC’s member countries. These briefs presented an opportunity to utilize CAREC Program and CAREC Institute knowledge products for developing analytical materials that can be applied as inputs for evidence-based public policy initiatives. Country specific briefs captured significant developments that have taken place in a specific country, listed challenges, and identified opportunities for improving efficiency along CAREC corridors traversing through that country.
About CAREC Institute
CAREC Institute is an intergovernmental organization, jointly governed by 11 member countries, with an international organization status in the PRC, dedicated to promoting economic cooperation among CAREC members through research, capacity building, policy advocacy, and partnerships. The Institute acts as a knowledge connector among the five CAREC clusters – economic and financial stability; trade, tourism, and economic corridors; infrastructure and economic connectivity; agriculture and water; and human development – to ensure coherence in design and implementation of policies, programs, and projects to promote regional economic cooperation and integration, where integration is defined as a strategy that promotes the benefits of collective and collaborative activities among member countries through economies of scale, more vigorous intra-regional trade, expansion of markets, shared information platforms for exchange, and harmonized frameworks for social and economic interaction.
About the Asian Development Bank
The Asian Development Bank (ADB) is a multilateral development bank that is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. It assists its members and partners by providing loans, technical assistance, grants, and equity investments to promote social and economic development. Established in 1966, it is owned by 68 members—49 from the region. ADB is the secretariat of the CAREC Program.