Pakistan, Uzbekistan move to establish banking channels for trade facilitation

Pakistan and Uzbekistan have initiated discussions to establish direct banking channels aimed at facilitating trade transactions and expanding economic cooperation between the two countries.

According to representatives from both sides, the plan includes setting up correspondent banking relationships, launching local currency trading mechanisms, and introducing digital payment and trade financing systems to streamline cross-border business operations. 

The initiative follows Uzbekistan Airways’ successful expansion into Pakistan, which officials said has encouraged Uzbek financial institutions to explore opening branches in Karachi, Lahore, and Islamabad.

Speaking to Business Recorder, representatives from Uzbekistan’s Chamber of Commerce and Industry and the Pakistan-Uzbekistan Trade Centre said these measures could significantly boost bilateral trade. Uzbek Ambassador Alisher Tukhtaev, during a visit to the All Pakistan Textile Mills Association (APTMA), highlighted potential for joint ventures in textiles, emphasizing that both governments are working to enhance mutual market access and investment.

He said Uzbekistan’s low energy costs and abundant cotton supply offer attractive opportunities for Pakistani investors. The ambassador added that both nations have signed multiple agreements, including a Preferential Trade Agreement and a tax convention, while talks between the State Bank of Pakistan and Uzbek banks on financial cooperation are under way.

Tukhtaev also pointed out that direct flights between the two countries have reduced travel time to just 90 minutes, facilitating business travel and trade. He said trilateral transit trade discussions involving Pakistan, Afghanistan, and Uzbekistan are in advanced stages and will further improve connectivity once finalized.

APTMA Chairman Kamran Arshad underscored the need to strengthen formal banking channels, expedite the signing of a Free Trade Agreement, and develop joint ventures in textiles. He also highlighted issues including the absence of reliable banking mechanisms, language barriers, and logistical challenges through Afghanistan that continue to hinder trade.

Trade officials said the establishment of banking links and digital systems would mark a major step in realizing the target of deepening bilateral economic relations between Pakistan and Uzbekistan.