Pakistan proposes use of Karachi Port for Bangladesh-China trade

Pakistan has proposed that Bangladesh use the Port of Karachi, managed by the Karachi Port Trust (KPT), for trade with China, a move that Islamabad believes would open an alternative maritime route and strengthen regional connectivity.

The proposal is likely to be discussed and possibly finalised during the upcoming Bangladesh-Pakistan Joint Economic Commission (JEC) meeting scheduled to be held in Dhaka on 27 October, the first such meeting in nearly two decades.

Economic Relations Division (ERD) sources said the session will also review the signing of a memorandum of understanding (MoU) between the Bangladesh Shipping Corporation (BSC) and the Pakistan National Shipping Corporation (PNSC) to enhance direct maritime trade links.

Officials familiar with the matter said Pakistan's offer to use the Karachi Port is significant in the context of regional connectivity and the China-Pakistan Economic Corridor (CPEC). 

The arrangement could facilitate the movement of goods between China and Bangladesh through Karachi, or vice versa, they added.

Pakistan is keen to formalise cooperation between the two national shipping corporations through an MoU that would enable both state-owned entities to participate directly in bilateral trade. This move is expected to make direct shipping links more regular and reliable, while reducing reliance on third-country ports.

Last year in November, the first direct cargo vessel from Karachi arrived at Chattogram Port, marking the first direct maritime contact between the two countries in over five decades. 

Following this development, Islamabad expressed interest in forming a joint working group on maritime cooperation.

First JEC meeting in 20 years

According to the ERD, the ninth Bangladesh-Pakistan JEC will be held in Dhaka nearly 20 years after the last session, which took place on 12 September 2005.

A preparatory meeting chaired by ERD Additional Secretary Mirana Mahrukh was held last month, on 29 September, to finalise the agenda for the JEC discussions.

Bangladesh's delegation at the discussions will be led by Bangladesh's Finance Adviser Dr Salehuddin Ahmed, while the Pakistani team will be headed by Ahad Khan Cheema, federal minister for Economic Affairs.

According to ERD officials, increasing Bangladesh's exports to Pakistan will be one of the main issues on the table.

During the 2023-24 fiscal year, Pakistan exported goods worth $661 million to Bangladesh, while Bangladesh's exports to Pakistan stood at just $57 million, reflecting a substantial trade deficit for Dhaka.

The commerce ministry is currently working to identify products that Bangladesh could competitively export to Pakistan, with discussions expected to cover potential sectors at the JEC meeting, the officials said.

Pakistan's main exports to Bangladesh include cotton and yarn, fabrics, chemicals, pharmaceuticals, iron and steel, and plastic goods, while Bangladesh exports jute and jute products, ready-made garments, ceramics, leather goods, and pharmaceuticals to Pakistan.

'A new opportunity for bilateral trade'

Dr M Masrur Reaz, chairman and CEO of Policy Exchange Bangladesh, said the proposed shipping and port access could mark "a new opportunity for trade expansion between Bangladesh and Pakistan."

"After nearly 15 years of political limitations, relations between the two countries are improving, creating a favourable environment for trade," he said. "Pakistan is one of South Asia's largest economies, and while Bangladesh's economy is growing rapidly, its exports to Pakistan remain limited."

Currently, annual bilateral trade between the countries is worth around $800 million, with Bangladesh's exports accounting for a small portion. "A direct shipping line via Karachi Port could help Bangladesh expand its exports, particularly in ready-made garments, knitwear, leather and footwear, agro-processed goods, and IT and digital services," he added.

He further noted that the resumption of visa and air connectivity between the two nations is already boosting tourism and business contacts, reviving people-to-people and business-to-business ties.

Moreover, the use of Karachi Port could also help Bangladesh expand into other South Asian markets, while a direct shipping line with China would save both cost and time, Dr Reaz said. 

"Pakistan, as one of South Asia's major economies, represents a vital market for Bangladesh's export diversification," he added.

Likely discussions at JEC meeting

According to ERD sources, several new cooperation proposals are likely to be discussed at the upcoming JEC meeting.

A MoU between the Pakistan Halal Authority (PHA) and the Bangladesh Standards and Testing Institution (BSTI) is currently in process and is expected to move forward during the meeting.

Pakistan has also proposed providing technical assistance to help develop Bangladesh's sugar industry, which will likely be discussed at the meeting as well.

Meanwhile, the two countries are expected to discuss allowing Pakistan to participate in the international open tender process for supplying paper and ink used in printing security materials, ERD sources said.

Other areas of discussions include Pakistan's interest in providing technical training in Bangladesh's banking sector; cooperation to improve the breeds of livestock with import of high-quality cattle semen; strengthening collaboration with Bangladesh in areas such as vaccine development, research, and other health-related initiatives under a joint venture. 

Furthermore, Islamabad has shown interest in adopting Bangladesh's family planning and reproductive health model. 

Other agenda items include Pakistan's offer to assist in digital identity and passport digitisation, a proposal to provide 500 new scholarships for Bangladeshi students, and a plan to establish a Pakistani university campus in Bangladesh.

The two countries are also exploring cooperation in disaster management, including data sharing on vehicles and accident statistics, the sources said.