Naveed Aman Khan
Control on power and energy shortage is the need of the time. To bring industrial revolution in the country Pakistan has set up several power and energy projects along CPEC. Most of these projects have started making up deficiencies of power and energy. Rest of the projects will get completed in a year or so. These projects will certainly meet the power and energy needs of the valued industries of Pakistan. Pakistan is going to become huge economic market for China and rest of the world because of CPEC. New Pakistani industrial zones have been set up. Once power and energy shortage is timely and properly addressed industries in the country will start production on round-the-clock basis. This production will provide competitive market in the country. This production will defiantly increase exports to the entire world markets. Gwadar has made things easier and economical for Pakistan. Pakistan is going to have an industrialization wave in a few months because of the addition of manufacturing and production units including laptop and mobile assembly plants from China. Our country would benefit from technology transfers and spillovers from China, which is currently partnering with Pakistan in building network of roads and highways along with participating in power projects in US$ 62 billion CPEC project. Transfers and spillovers from China into Pakistan are expected with China- Pakistan Economic Corridor.
Other industries which may see relocation of complete industrial units and transfer of technology include low end textile manufacturing and basic food processing. Fertilizer, steel, automobile, chemicals, plastic, toys, sanitation and pipes manufacturing industries may also see a similar trend. In the auto sector, an inflow of conventional vehicles and associated spare part businesses may be expected in Pakistan. Crossover sedans and pickup trucks, together with complementary products and services, like spare part businesses, could find their way into the market of Pakistan. The government must strive to ensure that entrants help spur a competitive environment and not instead become part of the cartelization that is being observed in varying degrees in segments such as cement and auto manufacturing.
The small-scale segment of Pakistan economy has suffered because of cheap inflow of Chinese products. High inflows of Chinese consumer durable commodities, and non-availability of their local substitutes, present indications that local entrepreneurs are losing ground in the domestic market. Currently China is in the implementation stages of its China Pakistan Economic Corridor projects in Pakistan worth over $62 billion mainly in infrastructure, roads railways and power production. China and Pakistan also identified nine sites as priority Special Economic Zones in Pakistan under CPEC.
Few of the Chinese investors have found Pakistani business partners to set up auto and parts manufacturing projects in the country. With China moving towards high end production to address climate issues, many existing practices, equipment and infrastructure could become obsolete in the near future.
Shutting down or disposing of these industries would not be feasible, while transferring the machinery to developing economies could act as an attractive alternative. Pakistan not only has an edge over possible competitors when it comes to attract such technology transfers due to geographical proximity and a policy of strategic alliance, but with CPEC an actualizing step towards the One Belt One Road initiative, it also shows closer compatibility with China’s new growth model. There exists a mismatch between the current level of domestic labour skills and the level required to handle advanced equipment, operate new machines and carry out adequate research and development, said the SBP. The share of medium skilled workers in the total labor force is less than both the average of lower middle income economies. Furthermore, the share of workers with at least a basic level of education is lower than India and only marginally better than that of Vietnam.
The economy would have to adjust to allow a transitional period where workers from China arrive to work and train their counterparts in Pakistan. However, the contractual nature of this employment must eventually ensure the transfer of skills to the latter. Pakistan must also reassess the implications of its Free Trade Agreement with China in the light of developments under CPEC. Historically, it has benefitted China more than it has Pakistan, putting a strain on the already skewed trade balance between the two economies. It is necessary that Pakistan gains supportive concessions in tariffs from China of an equivalent magnitude as those enjoyed by the ASEAN economies in order to engage on a relatively equal footing.
For the development of the country, political stability in Pakistan is mandatory. It is the need of the time that all the political parties and the leaders develop one point consensus in favor of CPEC. Surely speaking CPEC is a corridor of our success and prosperity ahead. Fortunately Pakistan successfully has overcome terrorism. The entire world once again has decided to move to Pakistan for investment and transfer of technology. This is all because of control on law and order situation, production of power and energy projects and CPEC.