PM's meetings with Azerbaijan officials could bring in $2bn investments

Prime Minister Shehbaz Sharif discussed expanding bilateral trade with Azerbaijan’s President Ilham Aliyev. According to reports, a staggering $2 billion in investments could pour into Pakistan as a result of the boost in economic ties with the Central Asian country. 

Along with the agreement to promote commercial activities between both economies, both premiers discussed supporting joint defence production ventures.

In a conversation with Shehbaz Sharif, Ilham Aliyev reportedly outlined his willingness to visit Islamabad around April of this year. The reason for his planned visit is to formalise the agreed-upon investment arrangements officially.

As per credible reports, Shehbaz Sharif oversaw the signing of a plethora of economic agreements, notably the Sale and Purchase of LNG cargoes related to the Master LNG Sale and Purchase Agreement.

Moreover, officials from Pakistan’s Frontier Works Organization (FWO) and Pakistan State Oil Company (PSO) inked an agreement with Azerbaijan’s national State Oil Company. The aforementioned agreement pertained to bilateral cooperation on the Machike-Thallian Tarujabba White Oil Pipeline Project.

Currently, bilateral trade value sits at a measly $40 million, which Shehbaz Sharif believes does not adequately display the true strength of the ties between both ‘brotherly’ countries.

On the occasion, Prime Minister Shehbaz underscored the need to enhance the bilateral trade, as the current trade of $40 million hardly reflected the strong relationship between the two brotherly countries. He spoke to the Pakistan-Azerbaijan Business Forum in Baku, discussing the need to expand commercial activities between both countries.

Moreover, he thanked Ilham Aliyev for removing import tariffs on Pakistan’s basmati rice. The removal of the aforementioned import duties spells great news for Pakistani farmers as they could now secure lucrative export contracts with Azerbaijan-based importers.

This could help plug the gap in the cash-strapped nation’s trade deficit, which has historically remained high. Additionally, a rise in export revenues could help keep the rupee stable as it has over the last year.

Shehbaz Sharif highlighted that tackling high tariffs could allow for trade to reach respectable levels. However, his claim about trade volume rising by a colossal $1.96 billion seems extremely ambitious. For reference, the rise represents an improvement of 4,900 percent from the current bilateral trade position.

However, he claimed that it was possible if relevant stakeholders put their ‘acts together’. Four Memorandums of Understanding (MOU) have already been signed, marking the start of a potential rise in trade volume. The majority of the MOUs pertain to the oil sector.

Under one of the MOUs, Pakistan’s northern areas will be equipped with pipeline infrastructure as currently, under 33 percent of total oil is transported via Pipelines in Pakistan.