CPEC Future Prospects & Economic Reforms
PAKISTAN and China have been trying their best to stimulate the China-Pakistan Economic Corridor (CPEC) since its inception.
But unfortunately, some pseudo intellectuals, paid NGOs and self-centric media outlets have been playing in the hands of foreigners to pollute the real spirits of CPEC. It seems that they do not have any sense of nationalism but plenty of notorious agendas.
While Prime Minister Imran Khan and a Pakistani delegation was in China to attend the opening ceremony of Beijing Winter Olympics one of the leading media houses of the country intentionally published a report of Asian Development Bank titled “Economic Corridor Development in Pakistan: Concept, Framework and Case Studies” and thus circulated negative sentiments against CPEC, the lifeline of Pakistan’s economy and guarantor of its future as described by Premier Imran Khan.
The said report indicated flaws in the country’s strategic geopolitical potential and suggested improvement in regional and international economic connectivity to get any benefit from CPEC and termed structural reforms vital to achieve optimal benefits.
However, greater regional connectivity always depends upon geopolitics and CPEC stands for geo-economy.
Thus this report’s assumption is not correct. It further elaborated that if CPEC is successfully implemented; Pakistan can harness its strategic geopolitical location, improve its regional and international economic connectivity, enhance industrial development and become an economic hub for Central, South and West Asia.
By saying this in complicated manners it intentionally undermined CPEC’s real potential by attaching its efficiency and efficacy with structural reforms of private sector development thus purposefully created doubts about strategic orientations of CPEC.
The report observed that tax reforms are essential to broaden the tax base and enhance the perceived fairness of the tax system. Infrastructure built under the CPEC should be fully utilised to expand trade and regional cooperation.
It seems that the timing of this report and consequently its publication in the country has some close liaison among the hidden enemies of prosperity and people alike which tried to portray CPEC as an average project.
Moreover, the absurd correlation of CPEC with the domestic tax system, reforms and other segments of the national economy are rather misleading and misconceived. Thus intentionally CPEC was put in the line of fire.
The study says Pakistan should transform its economy through export-led growth. In this connection, CPEC would play a very important role in the country by establishing Special Economic Free Zones and relocating Chinese firms.
Thus CPEC has direct correlation with the export capacity building mechanism of the country because the economy works in integration not isolation. The report pinpoints many policy flaws in the macro-economy of the country which actually has nothing do with CPEC, its utility, orientation, scope and significance.
CPEC is a concept and cooperative model to stimulate different sectors of the economy. CPEC is a holistic approach to develop the national economy. Moreover, it is a platform which provides important inputs for rapid growth in the country.
CPEC has nothing to do with poor export performance of the country or low productivity and a lack of competitiveness.
It surfaced because of an unfavourable trade policy environment, wrong economic and financial assumptions and inconsistent policies of the government.
Furthermore, CPEC is not answerable to an overvalued exchange rate and escalation of tariff on imported raw material and intermediate goods that resultantly contributed to a fall in exports, resulting in a consistently large trade deficit, which stood at $32.8 billion in FY2019. On the contrary, CPEC stimulated the energy sector and geared up infrastructural development and thus further consolidated economic conditions of the country.
It may further enhance the manufacturing capacity of Pakistan. The current economic meltdown is the result of various complicated reasons in which CPEC does not play any negative role.
In addition to this, the increase in interest rates to 13.25pc in 2019 had substantially raised the cost of capital to firms which may further dampen investment and exports. Thus CPEC does not have any role in the monetary policy of the country.
It is suggested that the government should expedite the development of the nine special economic zones (SEZs) planned along the CPEC routes and focus on labour, capital, technology, knowledge, innovation and structural transformation
. Moreover, more focus should be given to the development of the agriculture sector in CPEC phase-II so that a balanced economic policy would be implemented.
The said report indicated that urbanised and industrialised, challenges such as infrastructure deficits, overstretched public services and environmental stress should be addressed as soon as possible.
However, CPEC phase-II initiation of green projects, agriculture development, climate change engineering and ecological development would provide an ideal platform to curb these irritants of the economy in the country.
On the contrary, Pakistan and China signed a five-year Industrial Cooperation Framework Agreement (ICFA) to re-energise the CPEC during the recent visit of PM Imran Khan and thus successfully negated all misconceptions and misperceptions about CPEC.
According to the text of the ICFA, Pakistan has agreed to take responsibility of the Chinese lives and property, in addition to providing “special beneficial support for water and power supply that are necessary to develop SEZs and provide efficient and favourable policy support for Chinese enterprises which are intending to invest or have already invested in the Pakistani SEZs”.
The signing of the ICFA under CPEC is a first “serious” step by the government during the past three-and-a-half years to put the multibillion initiative of President Xi back on track.
Pakistan will facilitate the Chinese businesses in an efficient manner in accordance with the domestic law.
It will also improve the domestic business environment, provide policy support for Gwadar Free Trade Zone, Rashakai SEZ and other SEZs, guard the safety of enterprises and employees investing in the country, provide special beneficial support for water and power supply which are necessary to develop the SEZs and provide efficient and favourable policy support for Chinese enterprises which are intending to invest or have already invested in the SEZs.
In wide-ranging talks with Chinese Premier Li Keqiang, Prime Minister Imran Khan underscored the importance of Pakistan and China working together to promote shared objectives of peace, stability and development in Afghanistan and regional connectivity.
During their meeting, the Premiers of Pakistan and China reviewed the entire gamut of bilateral ties including discussions on the bilateral economic and trade relations, onward march of CPEC and important issues of regional and global concern.
PM Khan appreciated the transformational impact of CPEC on Pakistan’s infrastructure, energy, socio-economic development and improvement in livelihoods of the people.
He underlined that Pakistan was committed to high quality development of CPEC through its mutually reinforcing industrial, trade, health, digital and green corridors.
To conclude, CPEC has become a strategic asset which badly needs a specific national narrative to mitigate all false news. Healthy contribution of the Press, not the puppetry journalists, sensible policy makers and not the pseudo intellectuals is the need of the hour.
Economic flaws, financial crunch and imbalanced spells of development may be streamlined with the successful completion of CPEC projects, especially in energy (green), agriculture, social development, AI, ICT and health. Thus national unity must be our mantra.
