Weak prep work for regional integration

In yesterday’s op-ed section of this newspaper, Dr Shamshad Akhtar, the former SBP governor and current executive secretary of UNESCAP, flagged an important issue of getting the infrastructure right for the one belt one road initiative.

She wrote that OBOR corridors “will entail higher benefits if partner countries lower cross border transaction costs and import tariffs, for instance a 30 percent decline in both of these would generate economic gains of 1.8 percent growth in GDP for China and anywhere from 5.3 to 16.9 percent GDP for other participating member countries. Our analysis suggests that a 1.0 percent improvement in trade facilitation procedures, quality of transport infrastructure and ICT will deliver 1.5, 0.7 and 1.4 percent increases in exports, respectively.”

Data from the World Bank’s Logistics Performance Index (LPI) shows that Pakistan has fared better (with 2016 LPI score of 2.92) than the average South Asian score (2.62) and the average of lower middle income group of 2.40.

However, when compared to key players in the regional OBOR countries – the players with whom Pakistan will hopefully interact in the context of north-south and east-west corridor – Pakistan’s standing in logistics infrastructure is rather poor, with little improvement visible in the last nine years.

In fact, compared to its neighbours (sans Afghanistan, which is too poor), improvements in Pakistan’s LPI scores have been far less across most of the six key dimensions, which are namely: (a) efficiency of the clearance process (i.e., speed, simplicity and predictability of formalities) by border control agencies, including customs; (b) quality of trade and transport related infrastructure (e.g., ports, railroads, roads, information technology); (c) ease of arranging competitively priced shipments; (d) competence and quality of logistics services (e.g., transport operators, customs brokers); (e) ability to track and trace consignments; and (f) timeliness of shipments in reaching destination within the scheduled or expected delivery time.

With plans of CPEC, CASA, and TAPI, the country is moving in the direction of regional integration. In order to reap the full potential of this integration, Pakistan does not only need to boost its hard integration-related infrastructure but also the soft ones, such as state capacity.

Does the state have the capacity to negotiate or deal in matters related to energy diplomacy or regional integration? Does Pakistan have adequate representation in the offices of emerging financial forces such as the Asian Infrastructure Investment Bank or the BRICS’s New Development Bank? The answer is a resounding ‘no.’

While her neighbours are busy training their government employees in these fields or hiring technocrats for the same, the situation in Pakistan can be gauged by the fact that even the Planning Commission’s CPEC Centre of Excellence is yet to take off despite having been established for more than a year. In fact, its founding executive director Dr. Safdar Sohail has now been replaced quietly and to date there is little that we know about the Centre’s plans and capacity to deliver on those plans. Need one say more!