Pakistan may guarantee letters of credit (L/Cs) for business with Iran as the two countries aim to strengthen their trade and investment links.

The two countries are particularly keen on energy cooperation and L/Cs may be available for other targeted sectors.

L/C guarantees

International sanctions imposed on Iran have made it difficult for the Islamic republic to do business with other countries.

But since Pakistan is keen on doing more business with Iran, the State Bank of Pakistan has said it expects to begin guaranteeing L/Cs for trade with Iran.

Trade expansion

The two countries aim to increase bilateral trade from the current annual US$1.2 billion to US$4 billion by 2014.

Later this month the two countries expect to sign four agreements to boost trade in the areas of energy, financial services, media and technical cooperation.

Energy cooperation

Iran and Pakistan are keen on developing energy cooperation agreements and have ambitious plans to develop a major Iran-Pakistan gas pipeline.

Tehran is expected to provide financial support for the project and contribute to the development of gas-fuelled power stations in Pakistan.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.