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Connecting Places, People, and Profits in Pakistan

Video | 29 August 2019

Upgrading Pakistan’s transport network will boost regional trade flows, and allow Pakistan to benefit from its position as a transit artery for goods passing through its Arabian seaports on the way to other countries in South and Central Asia, and to the People’s Republic of China.

ADB has been assisting Pakistan on the upgrading of its north-south highway highways, high-speed motorways, and provincial farm to market and intercity connections, maintain road assets, and ensure safety on the roads being rehabilitated or constructed.

ADB is also working with the government to improve infrastructure at key border crossing points with neighboring countries, strengthen transport policies and regional trade in line with government’s vision and CAREC’s Transport and Trade facilitation Strategy.

Pakistan is member of the Central Asia Regional Economic Cooperation, or CAREC, program, which groups together 11 countries and development partners to promote sustainable development through cooperation.

Transcript

In Pakistan, the Central Asia Regional Economic Cooperation or CAREC program provides a unique platform to leverage its geographical position.

The program provides economic corridors linking to both international trade and domestic production.

“Road transport is obviously very important for Pakistan because of the size, geography and population,” says Xiaohong Yang Country Director of the ADB Pakistan Resident Mission.

“If you see Pakistan is all the way from seaports and seaside to the highest mountains in the world.”

The infrastructure upgrades and trade facilitation improvement will enable Pakistan to unlock trade and tourism potential

“Railways here is a century old and built by the British. It is still up and running but is in need of a lot of enhancements,” says ADB’s Yang.

“But railways are the future and fundamental to ship things all the way from Karachi and other new ports to be constructed all the way to the Northern Areas and to the other Central Asian countries though Pakistan. It is very essential for transport, trade and people connectivity.”

Only 4% of freight in Pakistan travels by rail. The remaining 96% is moved on the roads.

With an eye to the future, GoP has purchased 55 locomotives from GE that are saving 9 billion rupees annually.

“Continued investment in rail is a win-win situation for Pakistan,” says Sarim Sheikh, CEO GE, Pakistan and Central Asia.

“If this continues we can anticipate moving production of these engines to Pakistan as well. This could lead to the turnaround for Pakistan railways.”

“It takes about 4-5 days by road transportation. Let’s say you are sending a truck load of fabric, it takes 4-5 days to reach Lahore,” says Schahab Ahmed, a Partner at Seagold Logistics.

“If you take the freight train it will be there in 48 hours and it will be 30-35% cheaper than using road transportation.”

“Once this chain opens up, it will go through central Asian countries and then come to Pakistan which will lead to trade increase and improvement between Afghanistan, Pakistan and Central Asian countries.”

“You can see immediately when you are talking about the efficient use of an asset like a port, which is very expensive for a country, you need to have not only roads and port capacity but also consistency and coordination between port, road and rail. You need a consistent strategy. If you have too much capacity on the port and insufficient on road and rail, you can’t move the goods as desired!” says Adnan Rehman, a MMP, Technical Consultant National Transport Policy.

“So it is almost imperative for the different transportation modes to talk to each other because we are now in a world of multimodal and intermodal transportation, and the individual transport modes by themselves are no longer relevant because we talk about door-to-door supply chains which necessitates  different transportation modes.”

“It is somewhat worrisome that trade has declined in the share of GDP. And there are many reasons for this but one of the reasons is that there are lack of effective policies for logistics, trade and international transportation in Pakistan. Therefore, acceding to international conventions, such as the TIR and CMR conventions, is very important. We think if this transition is made, Pakistan will not only increase its international transportation capacity but also increase the trade volume hugely, and we do believe there is a huge potential for increasing trade between Pakistan and its neighbors in the region, in particular through China with Central Asian Republics.”

“Our objective as the National Committee is to promote investment and trade with Pakistan. And the Commerce Ministry is also very interested because they want to promote regional trade with this kind of connectivity measures. Pakistan’s regional trade is a very small percentage. Most countries’ regional trade is about 40%. In Pakistan it is hardly 5%, if that even,” comments Tariq Rangoonwala, Chairman, National Committee ICC, TIR Convention Center.

Transport is recognized to be the life-blood of a developing economy, providing access to health, education, jobs and markets.

Roughly 2 percent of GDP is lost annually because of an inadequate transport system in Pakistan.

Additionally, development aid cannot be realized without an adequate transport system to facilitate use.