ISLAMABAD: The World Bank is actively considering financing of the ‘Trans-Khyber Pass’ project which will serve as gateway for Pakistan’s trade to Central Asia’ and give further impetus to growing Pak-Afghan trade.

The Peshawar-Torkham expressway as a gateway to Central Asia will leverage the Afghan-Pakistan Transit Trade Agreement (APTTA) signed in 2010, and will facilitate access to potential new regional markets.

In this regard, Pakistan has formally submitted the project to the World Bank for possible financing while the bank is seriously considering the project. It is expected that the World Bank’s soft window, the International Development Association (IDA) will provide $375 million for the project, according to informed sources.

Under the project, a comprehensive master plan covering spatial dimensions for regional development leveraging the corridor development will be prepared. The plan will take a more holistic view and focus on promoting inclusive growth by expanding economic opportunities in backward regions and linking cities and towns with urban centres and industrial clusters.

Further, it will consider future growth by improving access to markets, stimulating trade and investment and boosting productivity and efficiency through associated network externalities and agglomeration effects.

The spatial approach will be followed to identify shared infrastructure needed and services geared towards specific industries, as well as economic projects such as secondary roads, micro-dams, wholesale markets and storages which are critical for the development of the value-chains and the corridor.

One of the key features of APTTA, which became operational in 2011, is that it provides reciprocal transit trade privileges to Pakistan to enter Central Asian markets and Iran, unlike the Afghanistan Transit Trade Agreement (ATTA) which was signed in 1965.

This provides much potential growth, with Pakistan’s exports to Central Asian Republics at only $28 million in 2015, although on an upward trend since 2000. According to the World Bank, the construction of Peshawar-Kabul motorway will contribute to improve this volume because of higher efficiency and savings of time and costs.

Sources said that the Peshawar-Torkham expressway will yield even further benefits if expansion of APTTA to include Tajikistan, Kyrgyz Republic, and Turkmenistan materializes. Recently, Tajikistan has requested to be part of a ‘Trilateral Transit Trade Agreement’ and several expert level group meetings among Afghanistan, Pakistan and Tajikistan have been held during the past one year.

A draft trilateral transit trade agreement has been prepared and Pakistan has provided its consent to it. The Kyrgyz Republic and Turkmenistan have also indicated their interest to be part of the transit trade agreements with Pakistan and Afghanistan, sources said. While Pakistan’s overall trade has declined in the past few years, Afghanistan has emerged as one of the major trading partners after the United States, European Union and United Arab Emirates. Despite political and recent border tensions, the transit and bilateral trade has remained intact and has been growing at a faster pace, which shows the political commitment to enhance economic cooperation.

During 2005-14, according to official figures, exports from Pakistan and imports from Afghanistan grew at a CAGR of 4.9 per cent and 22.1pc respectively. Informal trade is estimated to be very large, given the two countries share a 2400km long porous border. Average trade levels more than doubled from $1.0 billion on average during 2005-07 to $1.9bn on average during 2013-15, although the last three years have noted a decline in exports.

The two countries have resolved to work together for enhancing bilateral trade to $5bn by December 2017 through effective trade facilitation measures and by promoting business to business interactions.

Afghanistan has emerged as a major export market accounting for 7.9pc of exports in 2015, behind only the EU (28pc), US (16.6pc) and China (8.8pc). From the Afghanistan’s perspective, Pakistan is its second largest source of imports (17pc in 2014), after Iran (19pc). On the export side, Pakistan is the largest export destination with 33pc of exports in 2014, followed by India at 28pc.

The anchor of the Peshawar-Torkham Economic Trade Corridor is a new expressway which will provide a reliable and safe driving environment with higher travelling speed. The existing Peshawar-Torkham road is part of the National Highway N-5 that goes through the famous Khyber Pass which has great historical significance and has been an important trade route between Central and South Asia.

Published in Dawn November 13th, 2016