Revival of Pakistan’s East Asia Policy – A Pathway to Economic Diversification

Pakistan has been reviving its economic policy to strengthen its commercial ties with the variety of the states. The growing commercial ties with the Gulf States, as evident by the visits of Saudi Arabian Crown Prince, Muhammad bin Salman, and Qatari Emir, Sheikh Tamim bin Hamad Al-Thani, in 2019 along with the thriving collaboration on CPEC with China, has reflected the economic diplomacy of Pakistan. To diversify the national economy, Pakistan has developed its “East Asia Policy”, originally endorsed in 2003, which aims at having the growing economic partnership in terms of trade and investments with the ASEAN states. Pakistan has already achieved the Sectoral Dialogue Partner (SDP) status with ASEAN and already holds the Free Trade Agreement (FTA) with Malaysia and Mutual Recognition Agreement with Indonesia. With Malaysia, Pakistan’s trade stands at around $2 Billion while Indonesia has removed 30 per cent of its import duties on 20 of Pakistan’s exports in 2019.

The combined GDP of ASEAN states is around $3 trillion and possesses a huge potential for Pakistan. Pakistan can utilize the advantage through multiple channels that also includes the proactive outreach to the Pakistani diaspora residing there, which can undertake the lobbying. Since Pakistani labour is in demand in the Gulf States, the trend can also be initiated eastwards. Pakistan has already signed the Memorandum of Cooperation with Japan in 2019 for “Specified Skilled Workers” which expands the work opportunities for Pakistanis in Japan. Since Pakistan is struggling economically and its exports to the ASEAN and Southeast Asian states have decreased systematically, exporting its human resource to such states might help in compensating and would allow the policymakers of those states to ponder upon initiating the comprehensive economic partnership with Pakistan.

As of 2020, the exports of Pakistan to ASEAN states stands at $0.993 Billion while imports are $6.18 Billion, which reflects the huge trade deficit unfavourable to Pakistan. Although Pakistan enjoys cordial and uninterrupted relations with the ASEAN states, yet Pakistan could not achieve the status of Full Dialogue Partner (FDP) status with ASEAN, which is compelling in pitching up more business opportunities. The prime barrier for Pakistan’s access to FDP status is Singapore, which blocked Pakistan’s admittance in 2018 owing to Indian pressure – the latter has been successful in achieving the same status in 2014. Apart from this, Pakistan’s East Asia Policy has always been neglected due to other priorities like the War on Terror. Due to the security-centric approach, the economic perspective has always been side-lined. Resultantly, Pakistan’s relation with the ASEAN could not reach the level of full-blown engagement and has always remained below the potential.

In recent times, however, there has been a renewed desire to revive Pakistan’s foreign policy after the gradual emergence of domestic political stability within the country, coupled with the success of the fight against terrorism. Pakistan’s economic liberation has also helped Islamabad to develop a more flexible and effective foreign policy to attract investment to the country. ASEAN states are the vital platforms to test foreign policy in terms of economic ties. The conditions are ripe for Pakistan to prioritize Southeast Asia in its foreign policy and, in line with this, to correct the neglect in Pakistan-Southeast Asia relations. Doing so should breathe new life into Pakistan’s “Vision East Asia” policy. Since Pakistan has always looked towards the Middle East and Afghanistan, both of which have suffered chaos and instability, and towards West for the economic aid – the relations with which are not warm as for now – venturing towards East provides Pakistan with an alternative and vibrant option.

With the fast-paced development of CPEC, the conditions are ripe for Pakistan to prioritize Southeast Asia in its foreign policy.

Moreover, Pakistan also presents itself as a reliable partner for ASEAN and Southeast Asian states to combat terrorism. Pakistan preserves the vast experience in fighting the terrorism within its territory and is hailed as the success story among the international community. Pakistan can assist the ASEAN states in overcoming the insurgencies, smuggling and human trafficking. The ASEAN states also face the threat of Islamic militancy and hence, Pakistan could provide significant assistance in counter-insurgency operations. Moreover, the supply of military hardware and training the troops are some features, which make Pakistan an important state for the ASEAN and Southeast Asian countries. Malaysia, in this regards, has already shown interest in the purchase of JF-17 thunder fighter jet, which is the joint project of Pakistan and China. In more commercial terms, Pakistan is a consumer economy and has a huge market base, which could enable the businesses to invest inside Pakistan.

CPEC has proved to be the cornerstone for Pakistan’s economy. However, CPEC is the part of China’s Belt and Road Initiative (BRI), which connects the markets of Southeast Asia to across Europe. Pakistan can leverage CPEC for increasing its collaboration with Southeast Asian states. Apart from the ASEAN and Southeast Asian region as a whole, Pakistan should focus on strengthening bilateral relations. The maritime route of Southeast Asia has the immense potential to transform into the global trade hub and bilateral relations of Pakistan with these states would help Pakistan in tapping such opportunity. Through this route, Pakistan is expected to advance its relations with the Small Island Developing States (SIDS) and to the oceanic countries like Australia and New Zealand. The SIDS would prove helpful for Pakistan in expanding its vote bank in the UN while Australian and New Zealander investments can proliferate the industrial potential of Pakistan.

The bilateral relationships with Japan and South Korea are imperative. The collaboration in the automobile sector with Japan is vital. Pakistan’s automobile sector is facing the challenges mainly due to the rising prices of vehicles and the absence of security measures installed in the vehicles. Japan being one of the largest producers of cars is an attractive option with which cooperation can be extended. The major step in this regard has already been taken by launching the Japan-Pakistan Business Cooperation Committee (JPBCC) in 2019. Under this forum, the invitation to Japanese investors inside the free economic zones of CPEC has already been sent out. Apart from automobiles, the cooperation in artificial intelligence and electronics is also not only feasible but required as well. South Korea is yet another nation in East Asia with which Pakistan can acquire benefits. South Korean Economic Development Cooperation had designated Pakistan as the “priority partner” in 2018. This has enabled both the states to collaborate in the areas of climate change, education, culture and trade. South Korea is also the pivot of global technologies especially in the areas of telecommunication. Apart from the aforementioned factors, both Japan and South Korea are attractive destinations for Pakistani students. In both these states, the expensive tests like IELTS and SAT are not required in most of the universities while the monthly stipend exceeds many times than that of European universities. Hence, Pakistan needs to actively engage with both these Asian Tigers to enter into an advantageous relationship.

Pakistan’s relations with East Asian and Southeast Asian states are not new. The cooperation dates back to the establishment of SEATO when Pakistan and Southeast Asian states were the part of US-led block in the Cold War. Today, Pakistan’s relations with these countries are dominated by its Islamic identity, which is why the cooperation with Malaysia and Indonesia is vibrant while with other countries like Singapore, Thailand, and South Korea, Pakistan’s policy has yet to take the giant leap in diplomacy. ASEAN is a significant organization having its influence in major world’s institutions like UN. It carries the weight in major decision-making, especially the global economic policies. Pakistan needs to utilize this forum to put up its case regarding regional policies, counter-terrorism operations and most important one – the Kashmir issue. Other major powers like China and India are already working on a variety of projects with the ASEAN nations. China, despite its differences with the ASEAN, is now in a constructive partnership. Similarly, the Indian ties with Japan and South Korea are strengthened which helped the former in developing itself as the IT hub of the globe. Pakistan also requires to expand its options and start the dialogue process to institutionalize its relationship with the ASEAN and Southeast Asian states. In the quest of becoming a dominant regional and global power and an attraction for the trade and investment for the regional economies, Pakistan needs to channelize every possible resource for the revival of its economy and to amplify and project its soft power.

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About Faraz Naqvi 2 Articles
The author is an MPhil scholar of International Relations based in Islamabad, Pakistan. His areas of interest are the Middle East, South Asia, Foreign Policy, and Terrorism.