Executive Summary

Cross-border trade with Afghanistan and other Central Asian Republics (CARs) has many
dimensions. It has transit trade, bilateral trade, illegal trade not only from Afghanistan but also
with other neighboring countries. There are almost four functional borders with this country
which not only connects with this country but also with other adjacent countries. The mainly
borders are Torkham, Kharlachi, Ghulam Khan, Angoor Ada and Chaman. Different types of
trade being done from these borders. The Kharlachi Borders also having significant role in trade
with Afghanistan as well as other countries.

Pakistan wants to link Kharlachi Border by rail that will not only connect this with Afghanistan but
also Central Asian Republics (CARs), SAARC, Russia and other neighboring countries to boost
trade and new markets opportunities. Pakistan links with these countries are improving with
passage of time to increase trade opportunities. The country has a little bit sustained GDP
growth although there are some negative shocks to disturb it economic growth but still having
potential growth indicators for future perspectives. It has identified various types of growth
drivers for country development e.g., developing human and social capital, achieving sustained
indigenous inclusive growth, governance, energy, water and food security and other key
derivers for economic development and growth. Besides this, it also has some transport, trade,
export promotion and logistic strategic policies for better and sustained growth.

Khyber Pakhtunkhwa has sustained economic growth pattern from 2015-16 to 2021-22 in terms
of agriculture (2.30% CAGR), industries (CAGR 5.06%) and Services sector 3.69 percent
respectively. There are various types of development policies and plans initiated for its growth
and sustainability (Economic Recovery Plan 2020-23, Tribal Decade Strategy & Accelerated
Implementation Program, Annual Development Program, KP Industrial Policy, KP Commerce &
Trade Strategy, KP Digital Policy, KP Mineral Policy). There are some other development
assistance projects from international donors for its growth and development.

Pakistan has an important strategic location with Central Asia, seaports, CAREC and other
important countries. The China Pakistan Economic Corridor (CPEC) will also connect it with rest
of the countries. Although Pakistan has trade deficit but there is significant expansion in export
(25.5%) during 2022. Pakistan exports compound annual growth rate (CAGR) from 2000-01 to
2021-22 is 6 percent while imports 10 percent of similar period. The trade statistics with
Afghanistan shows that share of exports to this country is volatile. During 2010-11, its share
was 8 percent which reduced to 2 percent in 2021-22. On the other hand, the imports from
Afghanistan have also reduced during this period. The bilateral trade statistics also shows that
exports to Afghanistan and imports from this country has decreased from 2014-15 to 2020-21
period. The share of both exports and imports with SAARC countries has also reduced from
2012-13 to 2020-21 from 13.7 percent (share in total export) to 7.0 percent while imports share
in total from 5.1 percent to 1.6 percent.

Pakistan also has blessed with sea trade opportunities along the Arabian Sea. The three major
ports are Karachi Port, Gwadar and Muhammad Bin Qasim port. These ports have significant
connectivity with Western China, Afghanistan and Central Asian Republics. The statistics from
2000-01 to 2021-22 shows that the trade volume through these ports has increase significantly.

The trade comparative analysis with neighboring countries shows that there are some volatilities
across years. The exports volume of Afghanistan to Pakistan, China, Iran and India shows
positive with Pakistan (CAGR 7.15%), India (21.39%) and China (32.20%) from 2014-15 to
2018-19 while negative with Iran (-15.24%). On the other side, the imports volume to Pakistan,
China, Iran and India shows negative with Pakistan (-4.86%), Iran (-8.87%) while positive with
India (36.52%) and China (3.38%) from 2014-15 to 2018-19 respectively.

Pakistan imports volume border-wise through Turkham, Kharlachi, Ghulam Khan and Angoor
Adda/Tank shows that there is increase by considering 2019-20 and 2020-21 trade statistics.
The data shows that dutiable value growth is -23% on Turkham Border, -12% Ghulam Khan
while positive from Kharlachi 213% and Angoor Adda/Tank by 28%. On the other hand, duty free
value growth and import value growth shows positive for the same period from these borders
accordingly. The exports value growth positive (33%) from these borders during 2019-20 and
2020-21. The Kharlachi border having highest growth of 80% export growth during this period.
The Torkham border trade statistics shows that almost there were 53570 import vehicle (2019-
20) and 42742 (2020-21) while export volume during this period was 53912 and 137664
respectively.

The Kharlachi borders having import trucks volume 4040 (2019-20) and 12898 (2020-21) while
export was 13187 (2019-20) and 30955 (2020-21). There is significant increase in import as well
export volume from this border. The Ghulam Khan border represents that the import trucks
volume was 8563 (2019-20) and 6152 (2020-21) while export volume was 15191 (2019-20) and
23536 (2020-21). The other border Angoor Adda/Tank represents 2563 (2019-20) and 8869
(2020-21) imports trucks while export volume during 2020-21 was 13712 respectively.

Pakistan trade with Central Asian Republics having significant role. The historical data from
2009-10 to 2020-21 shows that Kazakhstan export stands at CAGR 23.58 percent while
Tajikistan 0.31 percent, Uzbekistan 25.28 percent and Turkmenistan -4.42 percent. The import
statistics shows that Kazakhstan stands at CAGR 22.12 percent while Tajikistan -17.20 percent,
Uzbekistan -11.12 percent and Turkmenistan -17.38 percent during this period.

The study forecasted trade volume based upon historical data by applying econometric
techniques, e.g., Autoregressive Integrated Moving Average (ARIMA Model) of various macro
indicators as well as trade indicators to assess the forecasted volume to evaluate for this study.

The study conducted field surveys in the project areas to asses the existing situation of the
transport facility and market assessment. The transport profile and market survey conducted
shows that there are various transport agencies functional across the area. The transport
surveys include transport profile surveys, traffic count surveys and origin-destination surveys.
The transport surveys conducted in all major locations of the project areas to assess the
existing/functional transport agencies in the area for 24 hours both for transport agencies and
for passengers’ assessment. The survey results indicates that there are almost 64 transport
stands functional in the project area which not only serves the local transport facility but also
regional level.

On the other side, the existing passenger’s volume has been assessed. There are various types
of passengers moving from one place to other ones. There are almost 300 international
passengers in and out from Kharlachi Border while local passengers are 3061 and regional
2108 for adjacent areas of the country. The existing passenger’s volume has been forecasted till
the life of the project (2050) based upon field survey and historical data. The field survey
(willingness to use/pay) shows that almost 50 percent local as well regional will use this facility if
available. So, it is assumed that 50 percent passengers will be diverted to this facility when
available and the growth pattern for the local as well as regional is based upon Kohat division
historical population growth data from 1901 to 2017. By considering these parameters the
average annual passengers forecast till 2050 is presented in following table:

Passengers
2023 2025 2030 2035 2040 2045 2050
Type
109,
International 500 112,479 115,538 118,681 121,910 125,226 128,632
558, 574, 589, 606, 623, 640, 658,
Local 633 086 966 286 058 293 005
384, 395, 406, 417, 429, 440, 453,
Regional 710 352 288 527 077 947 144
1,052,8 1,081,9 1,111,7 1,142,4 1,174,0 1,206,4 1,239,7
Total
43 16 93 95 45 66 82
Source: Consultant Estimates
For freight forecast, various parameters have been evaluated local as well as future
interventions. Three possible scenarios have been developed e.g., High Growth Scenario,
Medium and Low level. In base case, it is assumed that it will increase as per existing situation
while for others scenarios various assumptions has been considered. The existing growth
pattern of 7 percent used for base case till the life of the project (2050) while for high growth
scenario, it is assumed that 7 percent existing and 3 percent generate traffic/trade considered. It
indicates that 10 percent growth is assumed till the project life under high growth scenario while
7 percent under medium while 5 percent under low scenario. The other main assumptions under
each case are presented in following table:

Assumptions
Years
Diverted Trade
2023 Base Case High Medium Low
2025 0% 5% 5% 5%
2030 0% 10% 10% 7%
2035 0% 15% 15% 10%
2040 0% 20% 20% 15%
2045 0% 25% 20% 15%
2050 0% 30% 20% 15%

Based upon these parameters and assumptions, the freight demand forecast is presented in
following table:
Without Project With Project
Base Case High (Optimistic) Growth Medium (Normal) Growth Low (Pessimistic) Growth
Year Scenario Scenario Scenario
s Import Export Tota Import Export Total Import Export Total Import Export Total
s s l s s s s s s
2023 1.51 1.15 2.66 1.51 1.15 2.66 1.51 1.15 2.66 1.51 1.15 2.66
2025 1.68 1.22 2.89 1.82 1.52 3.34 1.82 1.46 3.27 1.82 1.45 3.27
2030 1.86 1.29 3.15 2.43 2.27 4.71 2.43 2.07 4.50 2.25 1.89 4.13
2035 2.06 1.37 3.43 3.36 3.40 6.76 3.35 2.99 6.35 2.86 2.50 5.36
2040 2.29 1.45 3.74 4.59 4.90 9.49 4.58 4.22 8.80 3.78 3.42 7.20
2045 2.54 1.54 4.08 6.12 6.78 12.9 5.81 5.45 11.26 4.71 4.34 9.05
0
2050 2.82 1.63 4.45 7.97 9.03 17.0 7.04 6.68 13.7 5.63 5.27 10.8
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