CPEC Opportunities
The small and medium enterprise (SMEs) can be considered as the industrial and enterprising foundation of Pakistan. Around 90% of the existing enterprising can be classified as SMEs which accounts for over 3.2 million enterprises. These are contributing to over 80% of non-agriculture work force, 40% to the annual GDP and contribute 35% in the value addition. Contrary to the importance of SMEs, these are lacking in financial and other resources; scarcity of working capital, lack of educated manpower, shortfall of research and development capabilities, limited access to new technologies & practices, lack of branding, marketing and communication skills. On the other hand, the CPEC is bringing a lot of opportunities in different sectors including; energy (electricity generation and transmission, oil and gas exploration and distribution), infrastructure (road, rail, sea, aviation, pipelines, ICT parks and enterprising), real estate, Gwadar Port and Smart Port city ad Industrial Parks development and management, trade, agriculture, tourism, financing and people to people linkages. SMEs due to its aforementioned limitations are not able to strongly link with the CPEC projects and prospects. Keeping in view the mentioned scenario, there is an urgent need for business entrepreneurs to understand the CPEC needs and opportunities and fulfill these through our SMEs
Pakistan has been blessed with a lot of tourism opportunities across the country. Some of the prerequisites for promotion of tourism are; security, connectivity (road/rail/aviation, telecommunication/3G/4G), facilitation (boarding, lodging, services), sites development, branding and marketing. After the inception of CPEC, most of the aforementioned pre-requisites have been addressed including improvement in security situation, connectivity and energy related services. However, facilitation and sites development and promotion are the potential areas for private sector to focus on besides the various CPEC routes and axis. Following are some of the options; • Eco Tourism – In GB, Northern KPK and AJK • Cultural Tourism – In Central KPK, all across Punjab and Sind • Desert Tourism – Balochistan and Eastern Sind • Agricultural Tourism – Punjab and Sind • Costal Tourism – Southern Balochistan and Southern Sindh
CPEC is an inclusive initiative and its projects are carried out across all the different provinces and the regions in various sectors; energy (electricity generation and transmission, oil and gas exploration) and infrastructure (road, rail, sea, aviation, pipelines, ICT parks and enterprising), Gwadar Port and Smart Port city ad Industrial Parks development and management. Also agriculture, tourism, financing and people to people linkages are on key cooperation agenda. Recruitment agencies can scale up their capacity, identify the skills gap in Pakistan for the aforementioned sectors and fill the gap in consultation with the general constructor or vendors carrying out the projects.
CPEC is talk of the town in Pakistan and seek wide attention in China and abroad. The CPEC routes and axis are passing through beautiful scenic regions of Pakistan and China. It includes beautiful valleys of Xinjiang Autonomous region, the world highest Khunjerab border pass and highest peaks of Himalayas, long tunnels and blue water lakes, all the way spanning through Pakistan up to the virgin beaches at Gwadar. There exist a huge potential for development and communication of media documentaries and joint production of China Pakistan films to promote understanding of cultures of both the countries and in a way support entertainment and peaceful coexistence.
China is keen to establish collaborative research centers focusing particularly on agriculture and seed sector of Pakistan. Agriculture is the most important sector of Pakistan and accounts 19.53% of GDP and the employed bulk of the total employed up to 50% workforce. It has recorded a growth of 3.46% in the year 2017 (economic survey 2016-17). A collaborative research between China and Pakistan would help to enhance productivity and add value in the agriculture sector of Pakistan. It would open new avenues of growth in Pakistan and would positively affect the lives of people by providing better jobs to the masses. It carries more prospects for all the stakeholders working in the agriculture value chain from seed to market and boost agricultural exports.
Fishing is the most prominent economic activity along the coastline of Gwadar district, contributing to employment, income generation and export revenues for the locals. Almost half of the population is either directly or indirectly involved in the fishing industry and about one-fourth of the total fish caught in Pakistan is from Gwadar. Gwadar has immense potential for the development of coastal aquaculture for fish farming. Development of aquaculture could be expected to provide significant direct employment for the locals and exports of fresh fish and shrimp through Gwadar to the Middle East and frozen bulk product to China, Japan, Vietnam and Far East. It will promote further development of feed production, packaging and export processing industries in and around Gwadar. Moreover, this will attract investment for the development of canning industry in Gwadar which will ease the pressure on Karachi port as the advanced processing of fish caught from Gwadar is being done in Karachi right now. Development of these industries would not only timely meet domestic demands but boost export of fish and fish products to many countries of Europe, Middle and the Far East.
China Pakistan Economic Corridor connects through 27 Muslim counties of Asia and Africa. Hence, the significance of Islamic Finance cannot be ignored. The Islamic Finance is a vehicle for long-term development with enormous potential that has not yet been fully explored in Pakistan. The global Islamic Finance industry has reached a size of over US$ 2 trillion. A critical area where Islamic banks can use Islamic Financing in adjusting the risk-sharing structure of these projects. Regulation, Taxation, Capital Markets and Awareness are the four main sub-committees of the Implementation Committee for Islamic Finance. Islamic financing could be promoted under CPEC for inclusive development of the region.
CPEC is considered as an initiative of livelihood improvement of the people of Pakistan and China, especially in the deprived regions. To achieve the said consideration a strong social entrepreneurial community is required across the country to support the ongoing developments across the country, suggest ways and means to policymakers to make these sustainable, initiate small interventions to connect the fruits of projects with the societies and accordingly communicate the proceedings through different mediums to leverage the true narrative of CPEC.
CPEC offers great socioeconomic opportunities in the form of Gwadar Free Port (Warm water deep sea port at the apex of trade intensive the Arabian Sea), Regional Connectivity (CPEC connecting China to Central Asia, South Asia and Middle East) and Investment Friendly Environment i.e. one window operation in nine priority Special Economic Zones (SEZs) across the country. Moreover, investment under CPEC is the biggest overseas investment by China so far which will help Pakistan economy grow and become stronger. The CPEC project portfolio will be a confidence booster and attract investments especially in the SEZs planned in the framework of the initiative. SEZs promote industrialization and economic growth through sustainable development. SEZs and Industrial Parks under CPEC provide business opportunities to Small and Medium Enterprises (SMEs) in the country. Chinese are investing in the whole world and are relocating its industry which is their “Go Global” strategy and therefore views Pakistan as a potential and strategically located country to relocate their industry for shared cooperation. SEZs will help the country to meet global competitiveness challenges by: • Creating industrial clusters having world class infrastructure • Providing investor facilitation to enhance productivity • Reducing cost of doing business • Generating employment • Reducing poverty • Enhancing Exports • Providing investment opportunities for local and overseas Pakistanis and International Investors
Pakistan has a strong real estate market and has achieved a high growth rate in previous years. The high growth rate is attributed to robust demand from seasonal investors, genuine buyers, and better security situation in Pakistan. This trend has been supported by the developments under CPEC with property prices rising by nearly 70% in Gwadar. Also, Balochistan’s government has introduced a new state of the art housing schemes to stir up real estate activity in the area. With the CPEC project taking shape in years to come, property prices are further expected to increase especially along the routes and its various axis. This will boost the real estate market by building investor confidence, which will result in accelerating the economic activity.
Financial inclusion means that individuals and businesses have access to useful and affordable financial products and services that meet their needs-transactions, payments, savings, credit, and insurance that delivered in a responsible and sustainable way” (World Bank). New International commercial banks are shifting to Pakistan; it’s a good omen that the Bank of China has established its branch in Pakistan. It would bring new and modern financial products which will support and upgrade the existing financial system.
Services sector of Pakistan grew by 5.98% and accounted for a share of 59.59% in GDP of Pakistan (economic survey, 2016-17). Financial and accounting services carry a great potential to expand and grow. We have certified organizations and certified education system in Pakistan (CA, ACCA and ICMA etc.). These services will have more potential in near future. Accounts and Financial Associations like ICAP, ICMA, etc. need to work jointly with other countries to ease the movement of certified professionals in and out of Pakistan. This would be another potential area which will increase the job numbers in Pakistan and ultimately the quality of life.
CPEC is a long-term multi-sectorial portfolio hence the role of research and support of Think Tanks and higher education institutes (HEIs) working across Pakistan and China is inevitable to make CPEC a long-term sustainable initiative. Evidence-based research and policy recommendations about the seven key cooperation areas mentioned in the CPEC long-term plan are required by the policymakers. The center of excellence for CPEC, PIDE, MoPDR being the official thank tank on CPEC (cpec-centre.pk) would be happy to receive the research and share it to the relevant convener of the joint working groups (JWGs) of the CPEC.
- CPEC will play a key role in enhancing the trade through shifting the mode of transportation. Currently about 86% of trade is done through the sea and only 2% through the land. The availability of improved infrastructure (rail and road network) will help to increase in trade through decrease in transportation and transaction cost. China is the largest trading partner of Pakistan. About US$16bn of trade with China occurs mainly through the sea (97%) and only 1% through land. A significant fraction of trade with China will be diverted to the land route after the completion of the project.
- Agriculture export receipts has dropped more than 15% for the year 2015-16. Agriculture export to China constitutes 15% of total exports of Pakistan. Due to lack of linkages with manufacturing a great percentage of agrarian products are exported in the raw form. China is taking keen interest to invest in agribusiness to add value. Textile industry also lost competitiveness due to low value addition which is also considered for the investment and value addition to increase the export.
- Marble and mineral processing, food processing and packaging, and leather have great potential in maintaining the trade balance.
- Financial inclusion through CPEC: Financial inclusion means that individuals and businesses have access to useful and affordable financial products and services that meet their needs- transactions, payments, savings, credit and insurance that delivered in a responsible and sustainable way” (World Bank). New International commercial Banks are coming to Pakistan, just like Bank of China has established its branch in Pakistan. It brings new and modern financial products those can support the existing financial system.
- Financial integration by bancassurance: Bancassurance is an arrangement in which a bank and an insurance company form a partnership so that insurance company can sell its products to the bank’s client base. This could be implemented by agreement of understanding and strategic alliance etc. This opportunity is purely for the financial sector firms like banks and insurance companies, which could prospectively benefit from the higher degree of financial integration within Pakistan as well as with Chinese financial institutions.
- Opportunities for consultancy and brokerage services: There are new opportunities to provide consultancy and brokerage services for Chinese and Pakistani investors. Chinese and other foreigners might be reluctant to invest in Pakistan because they are not well aware of Pakistani financial environment, so Pakistani experts (Consultants) have opportunities to provide consultancy and brokerage services to these people.
- Opportunities for real estate business: The Gwadar port city is expected to soon become one of the most in-demand real estate investment destinations in Asia. CPEC is poised to give tremendous boost to the real estate industry in Pakistan, which even otherwise, has a promising outlook, given that a 2.8% annual population growth rate (source: Federal Bureau of Statistics, 2016) entails that more housing projects will need to be established. Real estate corporations have opportunities for the housing schemes and commercial buildings.
- Rapid Urbanization under CPEC is creating agglomeration economy with opportunities in the sectors of real estate, urban infrastructure, construction, and municipal service delivery. CPEC projects are expected to create smart cities that would have technological and knowledge spillovers ensuring sustainability.
- CPEC brings investments from the Pakistani private sector in ‘Low-carbon Urban Transportation’ and other ‘Clean Technologies for Cities’. In this regard, private sector in Pakistan can access to the international climate finance through Green Climate Fund (GCF) and other global funding opportunities.
- CPEC an economic corridor can become an ‘environmental corridor’ if the mechanism for development of the ‘Regional Renewable Energy Trade’ between China & Pakistan is formulated & implemented. Benefiting from the Chinese experience, Pakistan can move on the path of GREEN DEVELOPMENT.
- As the first phase of CPEC has been completed, now the next phase is industrialization. For industrialization there should be sustainable and secure energy. China-Pakistan can adopt Oil and gas pipeline, and transmission lines model to connect its energy base. Gwadar port will greatly enhance connectivity of other provinces and areas with Baluchistan to facilitate further development. It is very close to geographical positions of oil and gas resources in the Middle East, offering low cost and much convenience. Adjacent to booming gulf countries, it enjoys convenient and fast transportation and low transport cost and risks. Large-sized cargo ships, oil tankers and passenger liners can conveniently berth as it is adjacent to the world’s main shipping lines. As the channel of Gwadar Port is short and deep, with a big transshipment area, ship turning takes a little time.
- The development of Special Economic Zones (SEZs) is also a mandate of Belt and Road Initiative (BRI) and in line with this, 9 SEZs are also prioritized in Pakistan. The SEZs are placed in naturally rich regions to tap the regional potential of Pakistan. These SEZs will have the potential to attract FDI, to expedite industrialization process and improve the export base for manufacturing, food and minerals processing, herbs, wood and fisheries.
- Potential Chinese industries which are interested to relocate in SEZs in Pakistan includes light engineering, footwear, leather and textile which are labour intensive and will open job opportunities for unskilled labour. Some SEZs like Mohmand Marble zone and Quaid-e-Azam Apparel Park are dedicated to add value in marble and textile products respectively and improve the export base.
- Special incentives will be given to those enterprises in SEZs which will add 20% and more value in the products and to high tech related industries.
- As first phase of CPEC has been completed, now the next phase is industrialization. For industrialization there should be sustainable and secure energy. China-Pakistan can adopt Oil and gas pipeline, and transmission lines model to connect its energy base. Gwadar port will greatly enhance connectivity of other provinces and areas with Balochistan to facilitate further development. It is very close to geographical positions of oil and gas resources in the Middle East, offering low cost and much convenience. Adjacent to booming gulf countries, it enjoys convenient and fast transportation and low transport cost and risks. Large-sized cargo ships, oil tankers and passenger liners can conveniently berth as it is adjacent to the world’s main shipping lines. As the channel of Gwadar Port is short and deep, with a big transshipment area, ship turning takes a little time.
- According to the international labor organization, CPEC would bring more than 400,000 jobs to the country while the Applied Economic Research Centre has estimated that the mega initiative would provide around 700,000 direct jobs between 2015 and 2030. The Planning Commission’s data shows even more promising results, with CPEC generating around 800,000 jobs in the next 15 years. Besides, there will be a positive multiplier effect and more indirect and induced jobs will be created. Pakistan is about to gain a lot from these opportunities as there would also be a noteworthy increase in the annual economic growth of the country. CPEC created job opportunities are not only for laborers but also for professionals. For instance Port Qasim Coal Power Project conscripted hundreds of engineers to be sent to China for training. Being educated in China, and acquainted with the Chinese technologies and values, Pakistan has a prodigious competitive edge with this opportunity.
- The MoU has been signed between Suzhou Vocational University and Education Department of Gilgit-Baltistan.
- The functions of CPEC CCC are as follows: Sino-Pak Students Exchange, Academic Research and Seminar, Vocational Education, Chinese Culture Experience Camp, Teachers Exchange and so on. CPEC CCC will cultivate the talents especially for “B&R” and CPEC, it will become the Brand Program in the field of Sino-Pak education and culture communication.
- CCC has a great piece of plan which is hundred talents of personnel education plan, in this plan, at least 100 students from Pakistan will be trained in higher education in China and get job offers. As a great piece of plan in 2017, CPEC CCC will offer them free tuition for the whole study.
- CPEC will boost tourism in 73,000 sq. km region in Gilgit-Baltistan. This will be creating job opportunities for the local people and will further multiply the income prospects of the locality of GB. This is going to benefit not only the local people but it will also transcend its positive implication to other parts of the country.
- Also, Northern areas of the country for ecological tourism and southern coastline for coastal tourism have potentials to be tapped.
- CPEC Consortium of Business Schools: The consortium aimed at setting the course of academic collaboration between the two countries Pakistan & China. Top 10 business schools from both countries are the part of this consortium.
- Such initiatives will reshape the relationship of the universities with society by turning the former into an active player in economic development through creating scientific technological knowledge and innovation that goes beyond mere teaching and research but application of technological knowledge for the development in various fields.
- Scholarships for Pakistani students: CPEC is like a catalyst for economic development in terms of providing educational facilities. Chinese scholarships increased to 600 a year under CPEC for Pakistani students for the year 2016-17 from all over Pakistan. Moreover, about 131 students got scholarship certificates that further enhances the education exchanges programs in the times to come.