CAREC urged to turn transport infrastructure into economic corridors

Entering a new phase, the Central Asia Regional Economic Cooperation (CAREC) programme aims to transform transport infrastructure into commercially productive economic corridors, backed by more than $7.5 billion in financing through 2030 to strengthen regional trade, investment and connectivity.

According to the Asian Development Bank (ADB), CAREC has mobilised cumulative investment of $60.2 billion over 25 years, helping improve more than 20,000 kilometres of roads and railways across its 11 member countries. The ADB has contributed $19.9 billion to the programme.

Despite these investments, trade among CAREC countries accounted for only around 5% of their total trade in 2025, highlighting the need to connect transport infrastructure more effectively with production centres, logistics facilities and cross-border markets. The ADB also aims to mobilise approximately $3 billion in private-sector financing as part of the next phase.

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Dr Faisal Javaid, an international relations expert specialising in regional connectivity, author and Deputy Director at the Office of Research, Innovation and Commercialisation (ORIC), told Wealth Pakistan that CAREC’s next phase should focus on transforming transport corridors into commercially viable economic corridors.

He said regional countries needed to integrate transport, trade, production, energy and digital systems to facilitate the movement of goods, services, investment and people.

Reducing the cost and time of cross-border movement through harmonised customs procedures, digital documentation, single-window facilities and better coordination among border agencies would be essential to achieving this objective, he added.

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Dr Javaid emphasised that the next generation of regional investment should extend beyond roads and railways to include logistics centres, dry ports, warehouses, cold-chain facilities and industrial clusters along major transport routes.

Such facilities could connect regional transport networks with agricultural markets, manufacturing centres and export-oriented industries, helping countries generate greater economic returns from existing infrastructure while creating opportunities for investment and employment.

He said the development of commercially viable economic corridors required a coordinated approach in which transport infrastructure was supported by efficient trade procedures, reliable logistics services and stronger links between producers and markets.

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Dr Javaid also called for greater emphasis on digital and energy connectivity, including digital customs systems, electronic certificates, cargo tracking and interoperable payment mechanisms.

Implementing regional arrangements, such as TIR-based transit facilitation and integrated single-window systems, could further reduce transaction costs and border delays, provided they align with national regulations and applicable international agreements.

The proposed shift towards economic corridors comes as CAREC marks its 25th anniversary, providing an opportunity for participating countries to reassess how regional infrastructure investments can generate stronger trade flows and wider economic benefits.

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While the programme has helped expand transport connectivity across Central and East Asia, the relatively low share of intra-regional trade indicates that physical infrastructure alone has not been sufficient to unlock the region’s full commercial potential.

For Pakistan, the evolving CAREC agenda carries particular significance as the country prepares to assume the programme’s chairmanship in 2027.

Dr Javaid said Pakistan’s upcoming chairmanship could provide a platform to promote a more commercially oriented regional agenda connecting Central Asia, China, South Asia and the Arabian Sea.

Better integration with regional transport networks could help landlocked Central Asian economies improve access to international markets while creating opportunities for Pakistan to expand transit trade, exports and investment, he said.

He emphasised that Pakistan should use the opportunity to promote practical measures aimed at improving cross-border trade facilitation, strengthening logistics infrastructure and connecting domestic production centres with regional markets.

Mujtaba Arshad, Research Associate at the Centre of Excellence for CPEC at the Pakistan Institute of Development Economics (PIDE), said CAREC corridors provided a strategic framework for strengthening connectivity between Central and East Asia and South Asia.

He said improved regional transport links could eventually provide landlocked Central Asian countries with access to Pakistan’s seaports, including Karachi, creating opportunities for trade diversification and more efficient movement of goods.

However, Arshad cautioned that this remained a longer-term objective rather than an established Central Asian trade route, as several physical connections and institutional arrangements still needed to be developed before commercially viable cross-border railway freight services could become operational.

He said the proposed modernisation of Pakistan Railways’ Main Line-1 (ML-1) could play an important role in addressing part of this connectivity gap.

Improving ML-1 could strengthen Pakistan’s domestic freight and passenger transport services while creating more efficient links between production centres, logistics facilities and seaports.

Arshad said that if financing was secured and implementation progressed alongside the development of necessary cross-border connections, the railway could become an important component of Pakistan’s wider regional connectivity network under CAREC.

Such development would also complement the objectives of the second phase of the China-Pakistan Economic Corridor (CPEC 2.0), particularly its emphasis on industrial cooperation, trade facilitation and improved transport connectivity.

The CPEC Action Plan for 2025-2029 calls for a practical financing and implementation plan for ML-1 to support connectivity under the initiative.

The action plan also identifies Gwadar’s potential as a gateway for trade with Afghanistan, Central Asia and markets beyond the region, reinforcing the importance of linking port development with inland transport networks and cross-border trade arrangements.

However, experts stressed that realising the commercial potential of regional corridors would require more than the completion of major infrastructure projects.

Competitive freight rates, reliable transport services, efficient port operations, coordinated customs procedures and investment in missing cross-border links would be necessary to attract sustained trade flows and private-sector participation.

The ADB’s planned financing of more than $7.5 billion through 2030, together with its target to mobilise around $3 billion in private investment, could drive this transition by helping CAREC countries develop infrastructure more closely integrated with economic activity.

For Pakistan, the planned 2027 CAREC chairmanship offers an opportunity to advance regional coordination on trade facilitation, logistics development and transport connectivity while strengthening links between Central Asian markets and Arabian Sea ports.

Experts believe the success of CAREC’s next phase will depend on how effectively participating countries combine infrastructure investment with regulatory cooperation, efficient border management and commercially viable transport services, ensuring that regional connectivity translates into sustainable growth in trade, investment and employment.

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