Market Access Series 2020-21: The Republic of Kazakhstan
In order to promote Pakistan’s trade with its non-traditional trading partners, the Pakistan Business Council (PBC) has initiated under its Market Access Series, Country Profiles of major non-traditional trading partners of Pakistan. This profile of the Republic of Kazakhstan is the second in the Central Asia Series 2020 – 21 and follows an earlier one on the Republic of Uzbekistan.
The Republic of Kazakhstan is a transcontinental country with a total area of 2.7 million square kilometers. The population of Kazakhstan in 2019 was estimated at 18.5 Million.
A comparison of the economic profiles of Pakistan and Kazakhstan is shown in the table below.
| PAKISTAN | KAZAKHSTAN | |||||
|---|---|---|---|---|---|---|
| ECONOMIC INDICATORS | 2017 | 2018 | 2019 | 2017 | 2018 | 2019 |
| Population (Millions) | 207.9 | 212.2 | 216.6 | 18.0 | 18.3 | 18.5 |
| GDP (Current US$, Billions) | 304.6 | 314.6 | 278.2 | 166.8 | 179.3 | 181.7 |
| GDP Per Capita (Current US$) | 1,465.0 | 1,482.3 | 1,284.7 | 9,247.6 | 9,812.6 | 9,812.4 |
| GDP Growth (%) | 5.6 | 5.8 | 1.0 | 4.1 | 4.1 | 4.5 |
| Inflation (%) | 4.0 | 2.5 | 8.6 | 11.2 | 9.2 | 7.6 |
| FDI, net inflows (Current US$, Billions) | 2.5 | 1.7 | 2.2 | 4.7 | 0.2 | 3.6 |
| Official Exchange Rate (LCU per US$, period average) | 105.5 | 121.8 | 150.0 | 326.0 | 344.7 | 382.7 |
Kazakhstan has the second largest population among the Central Asian countries, but the country’s population is still
approximately a twelfth of the population of Pakistan. Pakistan also has a higher GDP than Kazakhstan with a
difference of US$ 96.5 Billion between the GDPs of the two countries. However, the GDP per capita of Kazakhstan is
almost eight times that of Pakistan.
In 2019, Kazakhstan ranked 25th in the world on the Ease of Doing Business Indicator. The country also ranked 62nd on the Logistics Performance Indicator (LPI) in 2018.
The Republic of Kazakhstan is part of numerous multilateral organizations and trade blocs including the UN, CIS, WTO and the EAEU. The country also has a central role in the Chinese led Belt and Road Initiative due to its geographic location along with its vast energy and mineral resources.
The figure below shows Kazakhstan’s trade with the world.
Kazakhstan’s exports increased by 26.0 percent while its imports increased by 25.0 percent during the 2015-19 period. This led to an increase of 26.0 percent in the trade surplus between 2015 & 2019.
The Russian Federation and China are the top trading partners of Kazakhstan while Uzbekistan is the main trading partner in the Central Asia region. Italy, South-Korea, Turkey and France also remain among the top 10 trading partners of Kazakhstan.
The top export commodities of Kazakhstan to the world are mineral fuels, iron and steel, ores, copper, chemicals and cereals among others while the country’s top imports from the world are machinery, iron and steel, vehicles other than railway, mineral fuels, plastics and pharmaceutical products.
Pakistan’s exports to Kazakhstan were more than twice compared to the country’s exports to the rest of the Central Asian countries combined for the 2017-19 period.
The figure below shows bilateral trade of Pakistan with Kazakhstan.
Pakistan’s exports to Kazakhstan increased by 550.0 percent while its imports from Kazakhstan decreased by 77.0 percent increasing the trade surplus of Pakistan with Kazakhstan by 805.0 percent for the 2015 – 19 period.
In 2019, Pakistan’s exports to Kazakhstan were US$ 83.5 Million while its imports from Kazakhstan were only US$ 0.8 Million resulting in a trade surplus of roughly US$ 82.6 Million.
Pakistan’s main exports to Kazakhstan are cereals, fruits, oil seeds, pharmaceutical products and vegetables, while the country’s main imports from Kazakhstan are chemicals, vegetables, raw hides and skins, coffee, tea, spices, oil seeds, fruits and live animals.
The table below shows Pakistan’s export potential for exporting top 25 export products to Kazakhstan at HS-06 Level.
*All Values in US$, Thousands
| HS CODE | PRODUCT LABEL | PAKISTAN’S EXPORTS TO KAZAKHSTAN 2019 | KAZAKHSTAN’S IMPORTS FROM WORLD 2019 | PAKISTAN’S EXPORTS TO WORLD 2019 | INDICATIVE TRADE POTENTIAL 2019 |
|---|---|---|---|---|---|
| TOTAL | Top 25 Products | 82,652.00 | 331,904.00 | 4,459,625.00 | 270,841.00 |
| 100630 | Semi-milled or wholly milled rice, whether or not polished or glazed | 32,338.00 | 11,619.00 | 1,786,251.00 | – |
| 100640 | Broken rice | 26,639.00 | 32.00 | 255,729.00 | – |
| 120740 | Sesamum seeds, whether or not broken | 6,332.00 | 2,224.00 | 40,445.00 | – |
| 080450 | Fresh or dried guavas, mangoes and mangosteens | 5,599.00 | 472.00 | 101,633.00 | – |
| 100620 | Husked or brown rice | 2,555.00 | 254.00 | 232,924.00 | – |
| 080529 | Fresh or dried wilkings and similar citrus hybrids | 2,346.00 | 695.00 | 101,282.00 | – |
| 070190 | Fresh or chilled potatoes (excluding seed) | 1,998.00 | 1,483.00 | 114,157.00 | – |
| 300390 | Medicaments consisting of two or more constituents mixed together for therapeutic or prophylactic … | 1,442.00 | 22,252.00 | 11,256.00 | 9,814.00 |
| 300510 | Adhesive dressings and other articles having an adhesive layer, impregnated or covered with … | 695.00 | 4,637.00 | 1,569.00 | 874.00 |
| 300439 | Medicaments containing hormones or steroids used as hormones but not antibiotics, put up in … | 500.00 | 47,538.00 | 77,014.00 | 47,038.00 |
| 080510 | Fresh or dried oranges | 228.00 | 3,122.00 | 2,057.00 | 1,829.00 |
| 081090 | Fresh tamarinds, cashew apples, jackfruit, lychees, sapodillo plums, passion fruit, carambola, … | 220.00 | 3,815.00 | 7,456.00 | 3,595.00 |
| 901890 | Instruments and appliances used in medical, surgical or veterinary sciences, n.e.s. | 218.00 | 107,678.00 | 405,512.00 | 107,460.00 |
| 080390 | Fresh or dried bananas (excluding plantains) | 217.00 | 32,124.00 | 33,109.00 | 31,907.00 |
| 090220 | Green tea in immediate packings of > 3 kg | 187.00 | 2,027.00 | 216.00 | 29.00 |
| 090230 | Black fermented tea and partly fermented tea, whether or not flavoured, in immediate packings … | 184.00 | 19,629.00 | 6,127.00 | 5,943.00 |
| 070310 | Fresh or chilled onions and shallots | 176.00 | 21,631.00 | 67,479.00 | 21,455.00 |
| 071010 | Potatoes, uncooked or cooked by steaming or by boiling in water, frozen | 151.00 | 61.00 | 11,987.00 | – |
| 420329 | Gloves, mittens and mitts, of leather or composition leather (excluding special sports gloves) | 149.00 | 3,011.00 | 230,084.00 | 2,862.00 |
| 110100 | Wheat or meslin flour | 143.00 | 1,713.00 | 122,965.00 | 1,570.00 |
| 300410 | Medicaments containing penicillins or derivatives thereof with a penicillanic acid structure, … | 79.00 | 15,926.00 | 9,757.00 | 9,678.00 |
| 621132 | Men’s or boys’ tracksuits and other garments, n.e.s. of cotton (excluding knitted or crocheted) | 68.00 | 6,132.00 | 27,476.00 | 6,064.00 |
| 411200 | Leather further prepared after tanning or crusting incl. parchment-dressed leather”, of sheep … | 65.00 | 70.00 | 22,681.00 | 5.00 |
| 630260 | Toilet linen and kitchen linen, of terry towelling or similar terry fabrics of cotton (excluding … | 63.00 | 17,826.00 | 787,444.00 | 17,763.00 |
| 300590 | Wadding, gauze, bandages and the like, e.g. dressings, adhesive plasters, poultices, impregnated … | 60.00 | 5,933.00 | 3,015.00 | 2,955.00 |
In 2019, Pakistan had an export potential of US$ 270.8 Million for exporting the top 25 export commodities to Kazakhstan. Pakistan has potential for export expansion of rice, wheat, black tea, guavas, mangoes, wilkings, oranges, bananas, onions, tamarinds, surgical instruments, pharmaceutical products, gloves and textile articles in Kazakhstan. Other products for which a market can be developed in Kazakhstan include sugar, sugar confectionery, polyethylene, T-shirts, Portland cement, articles of bedding, mandarins, footwear, food preparations, women’s or girls’ trousers and flat-rolled products of iron.
The logistics route Pakistan exports’ currently use to reach Kazakhstan is the Afghanistan Corridor, which is a major impediment in trading activities with Kazakhstan as it gives rise to informal trade between the two countries along with increased transit time and transportation costs. The other major issue is the non-availability of reverse cargo. Furthermore, there are no direct flights currently available from Pakistan to Kazakhstan making the export of perishable products difficult.
The lack of formal banking channels further hinders trade between the two countries as Pakistani exporters face difficulties in getting their payments through formal channels and using Letters of Credit (LC) is difficult in Kazakhstan.
For promoting trade, the Government of Pakistan should coordinate with the Government of China in order that the China Corridor is functional for Pakistan to export to Kazakhstan efficiently along with providing a reverse cargo service. Pakistani government should ensure the availability of direct cargo flights from Pakistan to Kazakhstan. Ministry of Commerce (MOC) needs to work on making the transportation routes from Pakistan to Kazakhstan known and functional for transporters.
The Government of Pakistan should coordinate with Government of Kazakhstan to open up subsidiaries or desks of Pakistani banks in Kazakhstan so that trade occurs through formal channels. Furthermore, The State Bank of Pakistan (SBP) could make receivables discounting possible in order for Pakistani exporters who export to Kazakhstan to obtain short term loans against accounts receivables.
Trade Development Authority of Pakistan (TDAP) is advised to organize trade exhibitions for rice, guavas, mangoes, wilkings, pharmaceutical products and surgical products in Kazakhstan so that Pakistani products become widely known in the country.
Pakistan should focus on signing a Free Trade Agreement with Kazakhstan in order that Pakistan can benefit from duty-free trade with Kazakhstan in the long run and capitalize on the opportunity of rapid export expansion in the country. The PBC is a private sector not-for-profit advocacy platform set-up in 2005 by 14 (now 85) of Pakistan’s largest businesses. PBC’s research-based advocacy supports measures which improve Pakistani industry’s regional and global competitiveness. More information about PBC, its members, objectives and activities can be found on its website: www.pbc.org.pk
