Pakistan Becoming A Transit Trade Hub Through Digital Transformation



Ahmed Reza Khan,

Director General, Transit Trade, Karachi.

Pakistan is a country gifted with a prized geography and location. The country is located at the crossroads of Central and South East Asia, with China as its neighbor in the North East, India in the East, and Iran and Afghanistan in the west.

Pakistan has about 990 KM coastline harboring its deep sea ports at Karachi and Gwadar. Through Afghanistan and China, Pakistan has access to six Central Asia States whereas Afghanistan and the Central Asian States are landlocked.

Pakistan has the potential to develop and promote a transit economy by linking these land-locked countries with the Middle-East, Africa and Europe through its transit corridor and seaports.

Since 1990, Pakistan has been a part of multiple agreements; the most significant ones being South Asia Free Trade Agreement, Afghanistan Pakistan Transit Trade Agreement (APTTA), Economic Coordination Organization (ECO), Transit Transport Framework Agreement (TTFA), Quadrilateral Traffic in Transit Agreement (QTTA), Central Asian Regional Economic Corridor (CAREC) and the China Pakistan Economic Corridor (CPEC).

By way of CPEC, Pakistan’s Gwadar Port opens a gateway to the Indian Ocean, providing Afghanistan and Central Asian States a wonderful opportunity for marine trade, thus, promoting regional connectivity, economic diversification and sustainable growth in the whole region.

The United Nations Convention on the Law of the Sea, 1958 and Article V to the General Agreement on Tariffs and Trade (GATT), under the framework of the World Trade Organization (WTO), provide the freedom of transit for the land locked countries.

Since Pakistan is a member of the United Nations and a signatory of the World Trade Organization, fulfilling its international commitments, it is providing transit facility to Afghanistan through Afghan Transit Trade Agreement (ATTA) 1965 which was revised in 2010 under the name of the Afghanistan-Pakistan Transit Trade Agreement (APTTA).

At present, the negotiations are underway to sign a new Transit Trade Agreement between Pakistan and Afghanistan this year which will cater to the changed international trading environment and technological advancements.

In 2020, transit goods worth US$ 5403 million landing at Pakistan’s seaports were transported to Afghanistan. During this year, the lockdown resulting from Covid-19 calamity posed an unusual challenge before Pakistan Customs.

As a result of lockdown, thousands of containers got stuck at the sea port causing massive congestion at the port terminals. However, with effective strategy, the situation was brought to normal within two months.

Lowering of transaction cost and adding more predictability to the trading environment is the priority of the Government of Pakistan. In this regard, Pakistan Customs took special measures to simplify the procedures in transit flow so as to enhance the ease of doing business coupled with reduction in cost of doing business.

To facilitate the Transit Trade and to avoid congestion at Torkham border crossing point on 2nd December, 2020, FBR notified transit operations at Ghulam Khan Customs Station (GKK) which falls under North Waziristan Tribal District of Bannu division. GKK shares borders with Afghanistan and, after Chaman and Torkham, it is the most utilized trade route in Pakistan.

It also provides for the shortest route to Afghanistan for the traffic coming from Karachi. Customs staff has been deployed along with the configuration of Customs computerized System (WeBOC) at GKK for transit operations.

With the aim of developing a comprehensive infrastructure for smooth and effective flow of transit and bilateral trade, Pakistan Customs (in collaboration with Asian Development Bank) is pursuing the construction of state of the art border crossing terminals at Torkham, Chaman and Wagha.

The master plan for these three border terminals has already been approved under the Integrated Transit Trade Management System (ITTMS) regime, and development work has commenced under the supervision of a dedicated Project Management Unit (PMU) of FBR.

The multi-million dollar project envisages revamping the entire infrastructure including integrated administrative offices, widening of roads, new angled vehicle parking, installation of multi traffic lanes, erection of new pedestrian processing facilities along with new canopies and bridges. Installation of new equipment, such as cargo X-ray scanning, vehicular weighbridges, scanning and detection equipment for multi-entry and exit pedestrian lanes also form part of the project.

Moreover, new Information and Communication Technology (ICT) hardware and software will be installed as part of the transition to a Single Window System. The project aims at providing and implementing all internationally recognized best practices in transition and handling of cargo and passengers at the border terminals.

Pakistan acceded to the Customs Convention on the International Transport of Goods Under Cover of TIR Carnets (TIR Convention 1975) on 21st July 2015. By 2017, it had issued TIR rules and developed the TIR module for Full Container Load and Less than Container Load consignments under TIR operation by road. With the activation of TIR in Pakistan, so far 33 TIR operations have been successfully completed with the number rising from 8 in 2018 to 15 in 2020.

Pakistan Customs has also developed an Intermodal Module for Afghanistan-Pakistan Transit Trade under TIR for the movement of goods brought through ships and transported through roads from Karachi Ports to the Customs Border Stations of Torkham and Chaman.

Pakistan is also one of the 15 countries who expressed their interest in establishing eTIR for full computerization of TIR procedures. The project has started with the help of the United Nations Economic Commission for Europe (UNECE).

In a nutshell, Pakistan is fast moving towards becoming a transit hub and important transit corridor by expanding its transit trade with other regional countries through bilateral trade agreements and under multilateral Convention of TIR with the up-gradation of its infrastructure.

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