Baku, February 27, AZERTAC

Ahsan Hamid Durrani, Pakistani expert, director of the Policy Research Center was interviewed by the Azerbaijan State News Agency (AZERTAC).

-What are the key areas of economic cooperation between Azerbaijan and Pakistan? What measures can help increase trade turnover between the countries?

- The economic cooperation between Azerbaijan and Pakistan is thriving across several exciting areas that promise mutual prosperity. Trade stands out as a cornerstone, with Pakistan offering textiles, agricultural products, and pharmaceuticals, while Azerbaijan brings energy resources, petrochemicals, and its own agricultural strengths to the table.

Energy is another key focus—Pakistan’s growing demand aligns perfectly with Azerbaijan’s oil and gas expertise, opening doors for potential pipeline projects or LNG deals.

Tourism is gaining momentum too, boosted by cultural exchanges and easier visa policies that let people experience each other’s rich histories. Education is also a growing tie, with scholarships and institutional links building bridges for the future.

Investment rounds out the picture, with both nations eager to pour resources into infrastructure, manufacturing, and tech ventures. To push trade turnover toward that $2 billion goal, a few smart steps could work wonders: streamlining logistics by cutting tariffs, simplifying customs, and leveraging routes like the Baku-Tbilisi-Kars railway or Gwadar port; hosting regular business forums and expos to spark new deals, building on the momentum from the recent visit; setting up a joint economic commission to target high-potential sectors and solve bottlenecks; incentivizing private sector tie-ups, especially in textiles or energy; and tapping into digital trade platforms to connect smaller businesses.

With this kind of momentum and practical action, Azerbaijan and Pakistan have everything they need to turn their economic partnership into a powerhouse of growth and opportunity.

-What are the forecasts for increasing trade volumes between the countries in the coming years?

- Forecasting the increase in trade volumes between Azerbaijan and Pakistan in the coming years involves looking at their current trade dynamics, recent agreements, and stated ambitions. Both countries have expressed a clear intent to significantly boost their bilateral trade, with a target of reaching $2 billion in trade turnover, as highlighted during Pakistani Prime Minister Shehbaz Sharif’s visit to Azerbaijan in 2024. This is a substantial leap from the $100 million mark achieved in 2023, which itself was a sharp rise from $28.1 million just two years earlier. The rapid growth—more than tripling in a short span—suggests a strong upward trajectory, driven by mutual enthusiasm and concrete steps.

That said, hitting $2 billion won’t happen overnight. If we assume a steady annual growth rate of 25-30%—not unreasonable given the 2020-2023 surge—trade could climb to $500 million by 2027 and approach $1 billion by 2029, potentially reaching the target by 2030 with aggressive policy pushes. Optimists might argue it could happen sooner, say by 2028, if energy deals (like LNG) and infrastructure investments kick in fast. Pessimists, though, might point to logistical hiccups, regulatory snags, or global economic headwinds slowing things down, stretching the timeline past 2030. The Lahore Chamber of Commerce’s call for $1 billion annually in the next few years reflects this mix of ambition and realism.

- How can trade agreements signed in 2024 and the development of transport corridors contribute to increasing trade turnover between Azerbaijan and Pakistan?

- Key drivers point to a promising outlook. The Preferential Trade Agreement and Transit Trade Agreement signed in 2024 are game-changers, easing barriers and expanding market access for goods like Pakistan’s rice—now duty-free in Azerbaijan—and Azerbaijan’s energy exports, which Pakistan desperately needs as an oil-importing nation. The opening of the Azerbaijan Trade House in Lahore in early 2025 further signals intent to streamline business ties, especially in textiles, agriculture, and energy. Add to that the potential of transport corridors, like Pakistan’s push to join the North-South Transport Corridor and Azerbaijan’s Baku-Tbilisi-Kars railway, and you’ve got a recipe for smoother, cheaper trade flows. Defense exports, such as Pakistan’s JF-17 jets, could also juice up the numbers if deals materialize.

-Azerbaijan plans to invest up to $2 billion in the Pakistani economy. What additional incentives can be offered to attract Azerbaijani investors to Pakistan?

- Azerbaijan’s planned $2 billion investment in Pakistan’s economy is a significant boost, and Pakistan could sweeten the deal with tailored incentives for Azerbaijani investors. Offering tax holidays or reduced rates on profits from key sectors like energy, infrastructure, and trade—where Azerbaijan already shows interest—could be a strong pull. Streamlined business setup processes, such as a dedicated one-stop facilitation center for Azerbaijani firms, would cut red tape and build confidence.

Pakistan could also provide land lease subsidies or free access to Special Economic Zones (SEZs), which already offer duty-free imports and utilities perks. Guaranteeing profit repatriation in Azerbaijan’s preferred currency, alongside political risk insurance, would further ease concerns. Finally, co-investment opportunities in high-return projects like motorways or LNG terminals could seal the deal, leveraging Azerbaijan’s expertise and Pakistan’s market potential. These steps could make Pakistan an irresistible destination for Baku’s capital.

-What are the prospects for cooperation between Azerbaijan and Pakistan in the energy sector? Are there any plans for joint construction of energy infrastructure or development of mineral deposits?

- Azerbaijan and Pakistan have promising prospects for energy sector cooperation, driven by mutual interests and recent agreements. Key areas include oil and gas trade, with Azerbaijan’s SOCAR supplying LNG to Pakistan since 2023 under a one-year deal, and plans to expand this with four new agreements signed in 2025.

Pakistan seeks Azerbaijan’s expertise in oil refining and exploration, while Azerbaijan eyes Pakistan’s growing energy market. Joint initiatives include potential equity stakes by SOCAR in Pakistan’s refineries and gas storage projects. In February 2025, both nations agreed to collaborate on renewable energy production and transmission, with Pakistan exploring participation in the Azerbaijan-led Green Energy Corridor. Discussions on joint oil pipeline construction, like the White Oil Pipeline, are underway, alongside mineral resource development, formalized by a 2024 MoU on geology and minerals. Azerbaijan’s $2 billion investment pledge in Pakistan, announced in 2025, could fund these energy and infrastructure projects, strengthening bilateral ties.

-What place do Azerbaijan and Pakistan occupy in the economic integration of the region? What initiatives can help create a single economic space between the countries?

- Azerbaijan and Pakistan play pivotal roles in regional economic integration, with Azerbaijan as a Caspian energy hub and Pakistan as a South Asian trade gateway. Azerbaijan links Europe and Asia via the East-West Corridor, while Pakistan’s Gwadar Port ties into the China-Pakistan Economic Corridor (CPEC), boosting connectivity. Their growing trade—$100 million in 2023—and Azerbaijan’s $2 billion investment pledge in Pakistan signal deepening economic ties. To create a single economic space, they could harmonize tariffs through their 2024 Preferential Trade Agreement, co-develop transport links like the Baku-Tbilisi-Kars railway and Gwadar routes, and establish a joint investment fund for energy and infrastructure. Aligning with initiatives like the ECO Trade Agreement and hosting cross-border business summits would further unify their economies, enhancing regional prosperity.