Despite the good wishes of the governments of China and Pakistan, the operationalization of CPEC Phase 2.0 has not yet achieved any substantial progress. Even high-profile statements, meetings and joint declarations have not enabled it to flourish in the country.
Undoubtedly, CPEC Phase 2.0 has many short- and long-term socio-economic benefits for Pakistan, but unfortunately, due to many national, regional and international complex and complicated reasons and conflicting realities, it has not been fully pursued or implemented. Mainly, emerging Pak–US ties, the rapidly changing geopolitical landscape in the Middle East and the surge in terrorism have badly affected the pace and productivity of CPEC Phase 2.0 in the country.
New hope has emerged in the shape of the formation of Pakistan’s Special Economic Zones (SEZs) under the flagship of CPEC Phase 2.0. Fortunately, these SEZs have expanded from seven in 2019 to 44 by 2025, following the notification of 37 new zones through coordinated efforts led by the Board of Investment, which should be highly commended. Hopefully, the increase in SEZs will be a value addition in achieving the strategic goal of quality development and qualitative industrialization.
In a most recent meeting, the Project Management Unit of the CPEC Industrial Cooperation Development Project (PMU CPEC–ICDP) reviewed progress on industrial cooperation and SEZ development under Phase II of the China–Pakistan Economic Corridor.
According to news reports, officials said that PMU CPEC–ICDP serves as the implementation arm of the BOI for industrial cooperation under CPEC, with the BOI acting as Pakistan’s lead agency for the Joint Working Group on Industrial Cooperation alongside China’s National Development and Reform Commission. Since its establishment in 2019, the unit has supported the expansion of the SEZ framework and investor facilitation.
During the said meeting, the briefing highlighted progress on the Karachi Industrial Park, development initiatives for a Gilgit-Baltistan SEZ and approval of a land lease policy for BQIP, aimed at addressing structural issues faced by investors. The minister was also informed of the BOI’s role in facilitating utility provision to SEZs to help move projects from planning to operational stages.
Interestingly, officials have dubbed Pakistan–China business-to-business engagement as central to Phase 2.0 and specially mentioned the B2B Investment Conference held during the Prime Minister’s visit to China in September 2025, which led to the signing of more than 160 MOUs and joint ventures. A follow-up mechanism is in place to convert commitments into investment activity, which must be systemized as soon as possible.
It is a good omen that the long-term plan for CPEC industrial cooperation has been finalized and is being implemented through an action plan aligned with the transition to CPEC 2.0, focusing on export-oriented manufacturing, technology transfer and value addition, with SEZs positioned as anchor platforms.
The higher authorities were also briefed on planned initiatives in 2026 to mark 75 years of Pakistan–China diplomatic relations, aimed at deepening industrial cooperation. Minister for Board of Investment Qaiser Ahmed Sheikh emphasized continuity and institutional capacity as key to sustaining momentum under CPEC Phase II and reaffirmed the government’s commitment to investor facilitation and policy coordination.
Since the BOI serves as the lead Pakistani agency for the Joint Working Group (JWG) on Industrial Cooperation, with China’s National Development and Reform Commission (NDRC) as the counterpart lead agency, integrated efforts should be initiated to start work on the proposed 44 SEZs in the country.
Sincere efforts should also be started to align CPEC Industrial Cooperation with the government’s “Uraan Pakistan” 5Es Framework, particularly in advancing exports, enhancing competitiveness and promoting sustainable economic development through joint-venture-based industrialization. Hence, a fair assessment of Uraan Pakistan making it feasible for CPEC Phase 2.0 must be developed.
The government of Pakistan should engage the private sector and companies to make investments in building SEZs under the flagship project of CPEC Phase 2.0 in the country.
The government and all main stakeholders should attract more and more inflows of investors and investments through policy coordination and effective implementation of the CPEC Phase 2.0 industrial cooperation initiatives, which will hopefully further brighten the scope of building the proposed 44 SEZs in the country. Hence, all federal and provincial stakeholders should ensure a predictable, transparent and investor-friendly environment for domestic and foreign investors for the construction of the 44 proposed SEZs throughout the country.
To conclude, the incumbent government should promote the BOI’s structured approach to investment promotion and investor outreach, particularly with Chinese enterprises.
There is an urgent need to achieve an export-oriented economic development model through rigorous qualitative industrialization, digitalization, AI, quantum technologies and, last but not least, green means, gearing the economy, community and enterprises towards greater productivity and diversity through CPEC Phase 2.0 in the country. Hence, SEZs of humanoids, robotic manufacturing, green technologies (solar, wind, lithium batteries, EVs, etc.), agricultural drones, disaster management, biomedical equipment and technologies and vaccine SEZs must be built and incorporated in the most recently announced 44 SEZs in the country.
There is an urgent need to study the models of Chinese SEZs, including the integration of even small towns and cities for a specific industry and its products and the same may also be implemented in Pakistan in the days to come.
The author is Executive Director at the Centre for Knowledge and Public Policy.
