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CPEC and Economic Revival

Pakistan is a populous country –with a youth bulge, is in need of jobs. At present, our economy needs stimulus: some big economic projects which could provide jobs to the youth, consume local industries capacities and help improve local industries’ quality, productivity, and technology.

China sponsored China-Pakistan Economic Corridor (CPEC) is one such project-with an investment portfolio of $60 billion, which could jump start our economy and has been heralded as ‘game changer’ for our economy. The CPEC project could be broken into two clear phases: first phase involves establishment of rail and road linkages from Gawadar to China, and establishment of SEZs along the CPEC. Second phase would involve generation of long term economic activity through transit of goods between Gawadar and China, and export of goods by companies established in SEZs through Gawadar port. Most of the committed investment through CPEC is targeted at improving generation capacity and transmission capability in the energy sector of Pakistan. Recently, a Chinese company has shipped power equipment to Pakistan for the country’s first USD $ 1.7 billion worth of transmission project under the CPEC framework.

However, it is not clear how Pakistan will benefit from rail and road linkages and SEZs established under CPEC framework? Will Pakistan end up as a transit route for goods, or will actively integrate its local industries with economic activities related to CPEC. For instance, in energy projects have our heavy industrial sector (such as Heavy Mechanical Complex (HMC), Heavy Industries Taxila (HIT), Pakistan steel mills been engaged to consume their capacities? and whether help has been provided to them to upgrade their HR, technological and production capabilities? And what is their share of the total value of project? Recently, it has been pointed out that Pakistan’s industry lacks productive capacity and skilled manpower, and does not have requisite technology to integrate with Chinese companies. Thus, it is not clear what level of economic activities would be generated in Pakistan through CPEC e.g. what level of local skilled manpower would be employed, and what would be value addition to our local industry through CPEC.

READ MORE:   CPEC: A way forward to strengthen cultural ties

Therefore, the Government of Pakistan (GoP) needs to initiate few steps. First, engage local industries to attune them to the requirements of CPEC project requirements. Second, make amendments, if necessary, in CPEC project framework to train and employ local skilled workforce, and consume local industries production and help upgrade their technologies, if the GoP wants to lessen rampant unemployment in the country.

Source: The Nation

Date: 20/01/2020

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