CPEC & cost benefit of SEZs  

Sultan Mahmood Hali

 China Pakistan Economic Corridor (CPEC) is picking up pace in Pakistan too. Whereas our countrymen, politicians and opinion builders have managed to grasp the essence of the advantages this mega project will accrue to Pakistan, one aspect whose efficacy is yet to sink in is the benefit from Special Economic Zones (SEZ), which have been planned as an integral part of CPEC.

It has been brought out that beyond the initial phase of the CPEC; there are plans to establish SEZs in the Corridor where Chinese companies will locate factories besides inviting local industries to become a part of the Industrial Parks, which will become a focal part of the SEZs. Extensive manufacturing collaboration between the two neighbours will include a wide range of products from cheap toys and textiles to consumer electronics and supersonic fighter planes. The basic idea of an industrial corridor is to develop a sound industrial base, served by competitive infrastructure is a prerequisite for attracting investments into export oriented industries and manufacturing. Such industries have helped succession of countries like Indonesia, Japan, Hong Kong, Malaysia, South Korea, and Taiwan, China and now even Vietnam rise from low-cost manufacturing base to more advanced high-end exports.

As a country’s labour gets too expensive to be used to produce low-value products, a happy marriage with a lesser developed country enables cheaper labour to produce cost effective goods and facilitate the developing country also to climb to prosperity. Once completed, the CPEC, with a sound industrial base and competitive infrastructure combined with low labour costs, is expected to draw growing FDI from manufacturers in many other countries looking for a low-cost location to build products for exports to rich (The organization for economic cooperation and development) OECD nations.

Borrowing the concept from corporate China, the establishment of SEZs along the CPEC where Chinese factories will be located is likely to boost the manufacturing sector. The idea of SEZs has already been a successful phenomenon, besides China, in Japan, Indonesia, Hong Kong, Malaysia, South Korea, Taiwan and Vietnam where low-cost manufacturing provides the impetus to the production of high-end exports; thus it is expected that this time-tested methodology will bear fruit in Pakistan as a success story.

Recently, a visiting group of journalists from South Asia was afforded the opportunity to tour Beijing, Suzhou and Shanghai, their industrial hubs as well as their planning divisions and share their experience and thought process to obtain an insight into the concept of SEZs. This scribe was fortunate to be part of the group.

The advantage of establishing SEZs is that they become the cradle of industries which entail investment, commerce, planning, comprehensive management, Foreign Capital  Investment, economic and social development.  SEZs’ contribution to growth in GDP, and national economy are immense. The area, size and share of prime industry in economy are allocated. Generally economies suffer from the scarcity of resources, which comprise land, labour and capital. Pakistan is bestowed with unskilled labour and land as well as the raw material required by certain industries. It faces the shortage of skilled labour and capital. By establishing SEZs under the aegis of CPEC, Pakistan’s iron brother China will cater for technical training of its manpower while investments will also be taken care of by Chinese business houses. The project is rife with opportunities, which must be taken advantage of.

China will ensure the availability of optimized economic structure, quality and efficiency of growth while the financial managers of Pakistan need to ensure that the service functions and international finance centers are capable of receiving foreign direct investment as well as cope with the innovations in science and technology. By concentrating on infrastructure building, which encompass the construction of roads, railways, bridges and tunnels, SEZs can enable a growing economy to rise to its true potential.

The success of China is that it has partnered its SEZs in its own underdeveloped region with developed ones, so that financial support as well as industrial base of the developed region can benefit the under developed one, while the accruing benefits can be shared by both, making it a win-win partnership.

Chinese Ministry of Foreign Affairs had organized the visit of the South Asian Journalists under the agenda of international capacity cooperation and meticulously planned a seminar on the subject, where Chinese experts from International Cooperation Center of National Development and Reform Commission exchanged their views with the visitors. Tour of China Communications Construction Company (CCCC), which is engaged in investment, design and construction of transportation and infrastructure, was an eye opener. The conglomerate, which possesses the world’s leading capacity in port engineering and construction, road and bridge engineering and construction, dredging and reclamation, building giant container crane manufacturing is a capability worth marveling. To prove the point, tours of CCCC’s flagship projects which are an essential ingredient of China’s One Belt One Road initiative, including the Deep Sea Yangshan Port, Shanghai Zhenhua Heavy Industry and Shanghai Dredging and the massive Hutong Yangtze River Road and Railway Bridge were undertaken. It is reassuring that Pakistan’s deep sea port of Gawadar has caught the interest of CCCC.

Our hosts found it imperative to enable us to visit the China Railway Group as well as physically inspect the ongoing tunneling process at Beijing-Zhangjiakou Expressway. Projects of such immense proportions speak volumes of the giant strides China has undertaken in this essential field while CPEC is likely to benefit from this expertise. To sink in the message, Chinese Ministry of Foreign Affairs enabled the visitors to travel from Beijing to Suzhou and Shanghai by high speed trains, which have an impressive service in efficiency, engineering and comfort.

Touring Suzhou Industrial Park and discussions with Suzhou as well as Shanghai’s Development and Reform Commission senior officials provided an insight into the thought process that is entailed in the planning and execution of economic and social development of their respective areas including the establishment of Industrial Parks.

The lessons learnt left deep impressions on the visiting journalists. China’s harnessing its resources for facilitating the execution of major projects involved in industrial development is a facet, which can benefit all developing nations. Optimizing industrial structures, improving efficiency, promoting trade and commerce, inculcating training programs for management and leveraging feedback so that shouldering responsibility can be achieved effectively are norms that can be adopted by economic, financial, industrial, trade and commerce planners in our part of the world too and the result is discernible in China for all to see and emulate.

Since energy is a common denominator, the harnessing of renewable and clean energy from alternate sources is essential to meet the ever growing demands of industry as well as satisfy the challenges of global warming. Establishing SEZs in Pakistan will necessitate energy efficiency and the application of new energy through capacity cooperation. Safe, secure, economic and clean supply of energy can be achieved through an optimized energy mix. The optimal use of off shore wind turbines and solar panels is a proficient method of meeting the acute energy requirements.

The big question is: are Pakistan’s planners fully up to speed to benefit from China’s efficiency, technological advancements and more importantly, its largesse in the capacity building of Pakistan’s workforce?

 

Share this post

PinIt
    scroll to top