Kicking-off CPEC

In the good news segment, the 7th Joint Cooperation Committee of China Pakistan Economic Corridor is scheduled to be held later this month. One of the key items on the agenda will be the much-awaited finalization of the CPEC long term plan, whereas another key item may be the finalization of the special economic zones (SEZ) proposed in its earlier round.

One can only hope that this time the whole of the plan will be shared with the public, a sentiment that is echoed across various sections of the society. A failure in transparency cannot be accepted when the long term fate of millions of Pakistanis is at stake, for good or bad. Before the plan is signed off, it should also be debated on the floor of the parliament, even if PML-N’s majority means that opposition, if any, cannot stand the winds of change.

As for the second item likely on the agenda table, some explanation is warranted at the outset. Sources in the federal Board of Investment say the current list of SEZs is a proposed list rather than the final list as is being misread by certain quarters. Ergo, an addition or deletion from that list may be on the cards. Many stakeholders inquire BR Research about the exact plan of the proposed SEZs. Well, based on this column’s interaction with relevant quarters so far, it’s safe to say that it’s okay if people are confused and unclear about the exact plans.

Even the Board of Investment as well as China’s National Development and Reform Commission – the so-called expert group on SEZs – also weren’t very clear about the details until at least two weeks ago when they were travelling across Pakistan to check out some of the proposed SEZs and meet relevant stakeholders in consultative workshops. Perhaps, the upcoming JCC will hammer out some of these details.

One area that some eyes are set on is who will benefit from the additional incentives given to the SEZs; the incentives being provision of plots in easy installments, mark-up support, freight subsidy, one-window operation and ensured supply of utilities.

As per the last notification, certain projects would be preferred over others for inclusion in the SEZ. Those projects include the ones that have JV with Pakistani enterprises, that prefer Pakistani workforce, especially of that locality, and the ones that are least dependent on imports. That’s all hunky dory but the operative word here is that it is a ‘preference’ and not a ‘condition’, which is why many local players are raising their eyebrows. And this is exactly why the Planning Minister needs to be come forward and explain the situation to the public.

Lastly, the JCC should consider kick starting Afghan transit trade from Gwadar sooner than later. Afghan transit may not be a CPEC topic, but there are at least two reasons why Afghan transit trade should be discussed at such a forum.

For one it will set the ball in motion; the Afghans are already in talks with Gwadar port operator and other city and federal level authorities. And if they start doing business via Gwadar, the port will operational in the here and now, rather than waiting for a grand utopian future. The port operator would also start earning some revenues, and there would be something to show to the world, because international headlines matter too.

At current pace of progress, stakeholders think it would take about a year for Afghan transit trade to migrate to Gwadar from Karachi. (See also October 30, 2017, Brief Recording section for the interview of Chairman Pakistan-Afghanistan Joint Chamber of Commerce and Industry [PAJCCI]). But if the JCC picks up on the subject, things could move fast.

Second, while there are reasons to believe that Chabahar is not a competition to Gwadar in the long term, it does not mean that Pakistan should lose its Afghan transit to Iran. (See BR Research’s Gwadar & Chabahar: Competition of what? May 30, 2016)

Already 40 percent of transit trade has been reportedly lost to Iran, according to Chairman PAJCCI. With India shipping its first consignment of wheat to Afghanistan via Chabahar earlier this week, the race for transit trade is on. There is no reason why Pakistan should lose the transit trade business; not especially when Gwadar port is up and running, the road network from Gwadar to Quetta is in place, and so is the security enroute. Time to kickstart Gwadar is now.