CAREC enters new phase with $7.5bn plan to build trade corridors by 2030

ISLAMABAD: The Central Asia Regional Economic Cooperation (CAREC) programme is entering a new phase aimed at turning transport infrastructure into commercially useful economic corridors. More than $7.5 billion in financing is planned by 2030 to strengthen regional trade, investment and connectivity.

According to the Asian Development Bank (ADB), CAREC has mobilised a total of $60.2 billion in investment over the past 25 years. This helped improve more than 20,000 kilometres of roads and railway tracks across its 11 member countries. The bank has provided $19.9 billion for the programme.

Despite these investments, trade among CAREC countries in 2025 stood at only about 5 per cent of their total trade. This shows the need to link transport infrastructure more effectively with production centres, logistics facilities and cross-border markets. The bank has also set a target of mobilising about $3 billion in private-sector investment in the next phase.

Dr Faisal Javed’s proposals

Dr Faisal Javed, an expert on regional connectivity, author and Deputy Director at the Office of Research, Innovation and Commercialisation (ORIC), told Wealth Pakistan that the next phase of CAREC should focus on turning transport corridors into commercially viable economic corridors.

According to him, regional countries will have to integrate transport, trade, production, energy and digital systems to ease the movement of goods, services, investment and people. For this, it will be necessary to reduce the cost and time of cross-border movement through harmonised customs procedures, digital documentation, one-window facilities and better coordination among border agencies.

Dr Javed stressed that the next phase should go beyond roads and railways to include the building of logistics hubs, dry ports, warehouses, cold storage and industrial centres along major transport routes. These facilities can link regional transport networks with agricultural markets, industrial production centres and export-oriented industries. This would help countries gain greater economic benefits from existing infrastructure and create new investment and job opportunities.

He said an integrated strategy is needed to develop commercially viable economic corridors, in which transport infrastructure is backed by efficient trade procedures, reliable logistics services and strong links between production centres and markets.

Dr Javed also urged greater emphasis on digital and energy connectivity, including digital customs systems, electronic certificates, cargo tracking and compatible payment systems. He said regional arrangements such as TIR-based transit facilities and integrated one-window systems could further reduce business transaction costs and border delays, provided they are in line with national regulations and relevant international agreements.

Significance for Pakistan

The proposal comes as CAREC marks its 25th anniversary. The occasion gives member countries a chance to reassess how investment in regional infrastructure can increase trade volumes and wider economic benefits. Although the programme has helped promote transport links in Central and East Asia, the relatively small share of intra-regional trade shows that building infrastructure alone is no longer enough to tap the region’s full trade potential.

CAREC’s changing priorities are particularly important for Pakistan, as the country prepares to chair the programme in 2027. According to Dr Javed, the chairmanship could offer an opportunity to advance a regional agenda that links Central Asia, China, South Asia and the Arabian Sea on a commercial basis.

He said better integration with regional transport networks could help landlocked Central Asian countries improve access to international markets, while creating opportunities for Pakistan to increase transit trade, exports and investment. According to him, Pakistan should promote practical steps to facilitate cross-border trade, strengthen logistics infrastructure and connect domestic production centres with regional markets.

ML-1 and Gwadar

Mujtaba Arshad, Research Associate at the Centre for CPEC at the Pakistan Institute of Development Economics, said CAREC corridors provide an important strategic framework for linking Central and East Asia with South Asia. He said improved regional transport links could eventually give landlocked Central Asian countries access to Pakistan’s seaports, including Karachi, creating opportunities for trade diversification and more efficient movement of goods.

However, Arshad cautioned that this is currently a long-term goal, not an established trade route for Central Asia. According to him, several land links and institutional arrangements remain to be put in place before commercially viable cross-border rail freight services can begin.

He said the proposed upgrade of ML-1, Pakistan Railways’ main track, could play an important role in partly filling this connectivity gap. Improving ML-1 would strengthen freight and passenger services in Pakistan and also create more efficient links between production centres, logistics facilities and seaports.

According to Arshad, if funds become available for the project and its implementation moves forward alongside the development of necessary cross-border links, the railway could become an important part of Pakistan’s wider regional connectivity network under CAREC. He said such progress would also help achieve the objectives of the second phase of the China-Pakistan Economic Corridor, particularly in industrial cooperation, trade facilitation and improved transport links.

The CPEC action plan for 2025 to 2029 stresses the need to prepare a viable financing and implementation plan for ML-1. The plan also points to Gwadar’s potential to serve as a gateway for trade with Afghanistan, Central Asia and markets beyond the region. This highlights the importance of linking port development with inland transport networks and cross-border trade arrangements.

Conditions for success

Experts stressed that completing large infrastructure projects alone will not be enough to tap the commercial potential of regional corridors. According to them, competitive freight rates, reliable transport services, efficient port operations, harmonised customs procedures and investment in incomplete cross-border links will be needed to promote sustained trade and private-sector participation.

The ADB’s proposed financing of more than $7.5 billion by 2030 and its target of mobilising about $3 billion in private investment could help drive this transformation. It would help CAREC countries develop infrastructure that is more closely tied to economic activity.

For Pakistan, chairing CAREC in 2027 offers an opportunity to advance cooperation on trade facilitation, logistics development and transport links. It could also strengthen connections between Central Asian markets and Arabian Sea ports.

According to experts, the success of CAREC’s next phase will depend on how far member countries combine infrastructure investment with regulatory cooperation, effective border management systems and commercially viable transport services, so that regional connectivity becomes a source of lasting growth in trade, investment and employment.