FOCUSING ON TRADE AND INVESTMENT

Since gaining independence, Pakistan has proven to be a reliable friend and strong ally of Azerbaijan. For many years, the political relationship between the two countries has been characterised as "brotherly". Numerous acts of mutual support at the international level, as well as an extensive bilateral legal framework consolidating the positions of strategic partnership based on mutual trust, further prove this. The leaders of the two countries have visited each other regularly, further strengthening the ties between them. During the most recent official visit to Baku by the Pakistani Prime Minister, Shahbaz Sharif, the focus was on multilateral aspects of economic relations, particularly trade and investment.

Billion-Dollar Investment

In 2024, the trade turnover between Azerbaijan and Pakistan exceeded $22 million, marking a substantial increase compared to previous years. However, as experts from both sides state, this figure does not reflect the trade potential between them, especially given the high level of political partnership and alliance.

"We devoted a significant part of our discussions to the trade and economic sphere and mutually expressed regret that our trade turnover is only a few tens of millions of US dollars. There was a consensus that this figure was not representative of the true potential for trade and investment between the two countries. Following his meetings with President Ilham Aliyev in Baku, the Pakistani prime minister stated that there was a desire to increase trade turnover, and that there were ways in which this could be achieved. The Pakistani prime minister agreed with his Azerbaijani counterpart that the strength of their friendship, political understanding, unity of thought and action at international level and in international forums was well known.

Both parties are confident that the situation will change in the near future thanks to Azerbaijan's extensive programme of investment in Pakistan's economy, which was announced during Aliyev's state visit to Islamabad last summer. As was revealed several months ago, Pakistan has already presented specific projects, and now the Azerbaijani side is evaluating them. The projects cover both spheres of infrastructure development, energy, mining and other areas. Following comprehensive negotiations in the Azerbaijani capital, the leaders of the two countries announced their intention to finalise the coordination of the projects within one month, with official agreements on the implementation of this commitment to be signed during Ilham Aliyev's visit to Pakistan in April. The acceleration of the implementation of the investment programme will undoubtedly lead to new opportunities for expanding economic cooperation. Preferential trade conditions are also a key element in the growth of trade turnover between the two brotherly countries. The exemption of rice imported from Pakistan by Azerbaijan from duties has had a significant impact on the positive dynamics in the statistics of the volume of Pakistani imports to Azerbaijan. The decision to impose this exemption was made in 2022 for a period until 31 December 2027, and prior to this, a 15 per cent customs duty was applied. During his visit to Baku, the Pakistani prime minister signed over 10 significant bilateral agreements, with memoranda of understanding on energy cooperation being a particular highlight. Pakistan, which is experiencing an energy deficit, is looking for various ways to solve problems in this field. The recent agreements between Azerbaijani and Turkish companies, particularly those concerning oil trade and refining, are of significant value. The State Oil Company of Azerbaijan's agreement to supply liquefied natural gas to Pakistan has been extended for a further two years. Speaking on the occasion, Aliyev said, "I am confident that the energy cooperation, which at present focuses on energy supply to Pakistan, will expand to encompass numerous other domains."Transport was another key sector of economic relations discussed during the visit. Azerbaijan's proactive promotion of two significant international projects, North-South and East-West, on its territory has undoubtedly generated numerous prospects for enhanced collaboration in this domain. The leaders underscored their commitment to exploring a comprehensive approach to regional cooperation, encompassing the establishment of connections between the entities overseeing ports, railway infrastructure, and other transportation and logistics networks. Sharif said, "I can assure you that Gwadar port can play a most crucial role in promoting our trade, both domestic and foreign, and I believe we should focus on this." He added that the Pakistani side is ready to work on developing transport projects. In addition, special emphasis in discussions between the delegations during the visit was placed on cooperation in the defence sector. "Azerbaijan has already purchased defence industry equipment from Pakistan, and we are very satisfied with its quality. We will certainly continue this cooperation. At the same time, we also discussed the possibility of joint production of defence industry products, which will be another important sector of our cooperation," Aliyev said. He noted that Azerbaijan already exports defence industry products to more than 30 countries and expects that after the establishment of joint production with Pakistan, the geography of supplies will expand.

"When the Azerbaijani delegation visits Pakistan in April, this will be a priority item on the delegation's agenda. We will be ready for serious and sincere discussions and negotiations on this issue," Sharif added. Finally, the proposal was made to consider the possibilities of joint production of pharmaceutical products in Azerbaijan, given Pakistan's fairly well-developed pharmaceutical industry and the registration of 90 of its medicines in Azerbaijan.

This move is set to mark a new era in the trade and economic relations between the two nations. A number of significant decisions have also been taken, which are expected to further strengthen the political and economic alliance between the two countries. Notably, there has been an expressed intention to establish a permanent information office that will serve as a conduit for the exchange of data on economic projects, legal nuances, and other relevant information between the business communities of the two countries. The establishment of a Chamber of Commerce of Pakistan in Baku is also planned (the Chamber of Commerce of Azerbaijan already operates in Islamabad), as well as its representative offices in other cities of Azerbaijan. These offices will collect information in real time, exchange it and pass it on to potential traders and investors. As we can see, the leaders of the countries are focused on the speedy implementation of the agreements reached in real projects and their reflection in bilateral trade and economic statistics.

EXTRA NEWS

Azerbaijan and Pakistan strengthen cooperation in the stock market

The Baku Stock Exchange (BSE) and the Pakistan Stock Exchange (PSX) signed a memorandum to strengthen bilateral cooperation. The online signing ceremony was attended by representatives of both exchanges, who emphasised the importance of strengthening bilateral relations and contributing to the development of their respective capital markets.

The purpose of the memorandum is to strengthen cooperation in the capital markets of Pakistan and Azerbaijan, and to stimulate the development of the financial sector in both countries. Through the partnership, BSE and PSX will share their experience in market operations, their development and the best regulatory tools. The main areas of cooperation will include "dual listing", the development of joint products, and the exchange of experience on market operations and regulations.

The signing of the memorandum is expected to pave the way for closer ties in the financial sector of Azerbaijan and Pakistan, and to have a positive impact on the overall economic growth and investment climate in both countries.