China Pakistan Economic Corridor (CPEC) is a project which is termed as a major game changer for Pakistan where a world of opportunities await beyond the horizon. With increasing number of projects being conceptualized, the business and investment prospects are gradually becoming more lucid. Day by day, new opportunities are getting ripened along the coastline of Pakistan which are entwined with host of challenges including provision of security, infrastructure and utilities.
A full system of monitoring and surveillance will be built in cities from Peshawar to Karachi, with 24 hour video recordings on roads and busy marketplaces for law and order. CPEC also seeks to create an electronic monitoring and control system for the border in Khunjerab, as well as run "safe cities" projects. The safe city project will deploy explosive detectors and scanners to cover major roads, case-prone areas and crowded places in urban areas to conduct real-time monitoring and 24 hour video recording. Signals gathered from the surveillance system will be transmitted to a Command Center. There is a plan to build a pilot safe city in Peshawar, which faces a fairly severe security situation in northwestern Pakistan, following which the program will be extended to major cities such as Islamabad, Lahore and Karachi.
The success of the project would depend on how well, the managers, are able to provide secure business environment, developing investor confidence and make all the amenities available through the country particularly in Gwadar which is the focal point of CPEC and 'One Belt, One Road (OBOR) Project'.
Gwadar has its own significance being a major warm water deep seaport which is located at the mouth of Persian Gulf and outside the Straits of Hormuz. It is near to the key shipping routes used by the mainline vessels in the region with connections to Africa, Asia and Europe and enjoys high commercial and strategic significance.
The Economic benefits of Gwadar port would not only be limited to the port activities like Trans-shipment, containerized cargo, rather it would provide opportunities for trade with landlocked Central Asian Republics (CARs) and Afghanistan; promotion of trade and transport with Western China. This project would also extend peripheral benefits by unlocking the development potential of the locality and socio-economic uplift of Balochistan.
The current Gwadar Port infrastructure includes three multipurpose berths (Each 200 meters long), one 100 meter service berth, 4.7 km long approach channel dredged to 14.4m at outer channel, 13.8m at inner channel / turning basin and 14.5m depth alongside berth. It has the capacity to handle 50,000 DWT bulk carriers @ 12.5 meter maximum depth.
Gwadar project also entails establishment of shipping-related industries, Oil storage, refinery and petro-chemicals, export processing industrial zones etc. A desalination plant has been set-up at Gwadar Port to supply 100,000 gallons/day of drinking water to ships calling Gwadar Port. It further includes construction of several other uplift projects like building the East-Bay Expressway, construction of Breakwaters, dredging of Berthing Areas & Channels, Pak-China Technical & Vocational Institute, Infrastructure Development for Free Zone & EPZs, Necessary Facilities of Fresh Water Treatment, China-Pakistan Friendship Hospital (Up-gradation of existing 50 bedded hospital), Coal-based Power Plant at Gwadar and construction of Gwadar International Airport. Moreover, the road that is under consideration from Gwadar to Saindak, would be the shortest route between Central Asia and the sea.
The ongoing work on infrastructure and energy related projects will encourage Greenfield industrial setups, but it is the focus on high tech and value additive industries that will provide the real platform for competitive trade in the global economy. Though, the development would benefit many other sectors mainly large-scale manufacturing, construction, transport, warehousing, electricity generation, and electricity and gas distribution. For the southern zone including Sindh, the CPEC plan recommends that "Pakistan develop petrochemical, iron and steel, harbor industry, engineering machinery, trade processing and auto and auto parts (assembly)" due to the proximity of Karachi and its ports. As new industrial units set up near Gwadar, there will be further requirement of businesses from the retail and services sectors like health, education, transport, recreational activities, IT software, telecom, call centers, professional advisory, consultancy and financial services. The area is currently experiencing a development boom in the construction sector. Current policies strongly favor investments in the real estate, renewable energy, transport, hospitality, e-commerce and engineering sectors, offering healthy and sustained returns on investments for savvy investor.
The businesses would flourish by capitalizing on the abundant availability of young skilled and unskilled labor at low cost, raw materials, well developed infrastructure, advance IT and telecom network, transport, water, electricity and gas along with port facility for external trade. Logistics companies will operate a large storage and transportation system for agrarian produce. Storage bases will be built first in Islamabad and Gwadar in the first phase, then Karachi, Lahore and another in Gwadar in the second phase, and in between 2026-2030, Karachi, Lahore and Peshawar will each see another storage base.
Joint ventures of local businesses with the Chinese in Special Economic Zones (SEZ) under the CPEC umbrella would bode well for domestic industrialization. Technology transfer should be the key factor in establishment of SEZs. Pakistan also needs support from in develop its comparatively advantageous industries such as mining and agriculture and various manufacturing sub-sectors.
China and Pakistan are at different levels of industrial development. Pakistan's exports to China are mainly raw material and products of primary nature, like yarn, rice and ethanol. Contrarily, Pakistan's imports from China include industrial equipment, electrical and electronic equipment amongst many other items. Pakistan needs to develop industries in sectors like are meat, sea food, fresh fruit and milk processing, metal ores and concentrates, medical instruments and marble with the help of Chinese technical know-how and have surplus enough to export these items to China. China is a large importer of above mentioned items, and the only deterrent to Pakistan in exporting these items is lack of quality for salability in Chinese market, and inability to pass regulatory tests.
The provision of enabling business environment is inevitable for the success of this mega project which is still not visible in the policies at the moment. The government's unabated efforts to raise tax revenues by imposing further taxes and doing away with exemptions wherever possible has greatly squeezed the local manufacturers' capacity to face the intense global competition not only in the export market but even in their home ground resulting in massive increase in imports. Grey economy is also flourishing through smuggling via ATT and other border areas in connivance with powerful lobbies which has also severely impacted the genuine business. Smuggling and other illegal ways of trade should be controlled and culminated. Such illegal trade hurts the tax collection and renders the domestic industry uncompetitive as the smuggled products are sold at quite cheaper competitive rates. In this respect, irrelevant and exorbitant regulatory duties for protecting local importers should be done away in order to curb smuggling.
Unfortunately in the last few years, Industry and Trade in the private sector have suffered set-backs because the cost of doing business sky-rocketed. High costs of Industrial inputs including raw materials, gas, electricity, manpower and working capital made it difficult for many industries to survive and run profitably. The high cost of doing business along with intense global competition will continue to hamper export and investment growth. This calls for fast track measures to improve operational efficiencies, reduce time lags and minimize service charges while also eradicate corruption from government offices by taking to task the culprits with an iron hand and incorporating information technology to minimize human interactions.
Pakistan has a chance now - CPEC provides that chance - it strives to rid Pakistan of its infrastructural bottlenecks. Pakistan needs to solve its governance issues in tandem and increase its productivity level. It needs to induce self-reliance in all spheres of life; it needs to promote the use of indigenously made products in its own ranks.
There is a dire need for public dialogue on Pakistan's dwindling exports, and that of a long-term national trade strategy to be developed by all relevant ministries ie commerce, finance, industry etc., provincial governments and Chambers of Commerce. Further, the strategy should include formation of a committee (in a pattern similar to the Council of Common Interests) which should oversee the implementation of the strategy and serve as a basic dispute resolution platform for stakeholders.
On a collective basis, Chambers of Commerce and Industry should strive to further increase collaboration with the government and the politicians. Chambers should take a more participative role in the government, and enhance their role from advisors to stakeholders. With the concerted and sincere efforts of all the stakeholders in policy making and implementation, concrete results are likely to be achieved causing the economy to grow exponentially.
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