The completion of the China-Pakistan Economic Corridor (CPEC) will reduce the trade cost for central Asian countries by 11.5 per cent and for Asian Pacific region by 25.3 per cent, by 2020. This was stated by Professor Mark Goh of the National University of Singapore during his address at the 32nd Annual General Meeting and Conference of the Pakistan Society of Development Economists (PSDE) here on Tuesday.
Delivering the 'Allama Iqbal Lecture' on 'Role of Productivity, Quality, and Innovations in Making China-Pakistan Economic Corridor (CPEC) Work for Pakistan,' he said that to make CPEC successful, every province must have an industrial park for manufacturing and exporting products. He said the CPEC would ensure that there is no congestion from Shanghai to Gwadar and the vehicles move at a minimum speed of 60 kilometres per hour. This would mean completing the distance in 41 hours, which is a reduction by 82 per cent in the total time consumed.
Professor Goh emphasised that by 2020, the CPEC will reduce the trade cost to Central Asia by 11.5 per cent and to Indonesia by 25.3 per cent. A one-day loss in transportation decreases the value of exports by one per cent. Similarly, trade-improving transparency can result in 7.5 per cent increase in trade. Instead of doing politics on the project, there is need to focus on wellbeing of the people, he added.
Discussing the role of connectivity, Professor Goh said that connectivity is of two kinds, including hard connectivity and soft connectivity. Hard connectivity is infrastructure development, including roads, ports and ICT structures, whereas soft connectivity is knowledge sharing and institution building.
He highlighted that the CPEC aims to improve infrastructure as billion of dollars have been dedicated to build 2,442 kilometres long road to link Kashgar to Gwadar. Goh stressed the need to keep five factors in consideration while selecting the corridors. These factors are current traffic volume of people and cargo; prospects of economic and traffic growth; capacity to increase connectivity between countries and people; potential to mitigate delays and other hindrances besides economic and financial sustainability.
He stressed upon the need for creating new processes that are cost and time effective and for that Pakistan needs to create business houses that can deal directly with the already established Chinese business houses as this would reduce both cost and time. Thus, there is a need to develop business-to-business trade instead of business-to-consumer trade.
Addressing the seminar Vincent Palmade, World Bank leading economist South Asian region, in his presentation from book titled "South Asia's Turn: Policies to Boost Competitiveness and Create the Next Export Powerhouse," said the South Asia could become the fastest growing exporting region of the world. He explained if the regional authorities implement a set of policy actions aimed at improving the business environment, connecting to global value chains (GVC), leveraging clusters and strengthening firm capabilities.
Vincent Palmade who is co-author of the book presenting the salient features of the book said that it discusses what the South Asian region needs to gain competitiveness. He said that South Asia has the potential to change and Pakistan can play a pivotal role in boosting growth as it has a large market and has immense potential. However, he said the productivity of Pakistani firms is quite low, especially of the small medium enterprises (SMEs). The skill intensity of Pakistani exports is low and although the ICT and tourism sectors are doing well, much more needs to be done. Similarly, productivity of the Chinese firms is quite high as compared to that of the Pakistani firms. He stressed that there is a great potential in Pakistan and the conditions are favourable as in present scenario Pakistan has excellence in the production of Basmati rice, but market regulations are restrictive. Similarly, Pakistan's sporting goods, surgical instruments, and leather apparel industries have the potential but the business environment is not conducive. He said there are four policy levers, adding those should be taken into account. These are improvement in business environment, connecting global value chain, leveraging agglomeration economies and strengthening firm capabilities.
Palmade said that the services sector is expected to grow and boost productivity. He said the World Bank is also trying to help Pakistan in boosting trade and regional integration.
Dr Asad Zaman, President PSDE and Vice-Chancellor Pakistan Institute of Development Economics (PIDE) in his address said the next hegemony of the world would be Asia, led by China. In transitional times, he said, the power is up for grabs. The transition also creates opportunities to redefine the world and it is the scholars who carry the day by redefining the world.
Dr Zaman said when the leadership changes hands it is the leader who sets the terms and the followers do not have much choice but to look at the world the way the leaders want them to see it. The VC PIDE said that there also existed an ancient Silk Road which is being revived through CPEC.
Secretary PSDE, Dr Ejaz Ghani in his address highlighted the growing interest in the annual general meeting and Conference of the PSDE, and said that this year 140 papers were received, of which 32 were selected after a careful screening process. He apprised the audience that just like the past, this year scholars from many countries including Canada, UK, USA, China, Singapore, Germany, and Tajikistan have come to participate in the AGM.