Recommendations for the development of SEZs under CPEC | By S M Hali


Recommendations for the development of SEZs under CPEC

SEZs have come a long way since their inception. Different countries adopted regulations and parameters of their operation conducive to their own specific environment and conditions, Pakistan has a tried and tested module in the shape of Chinese SEZs.

The key to this model is that SEZ integration and management require adequate governmental interventions and regional planning. Some recommendations are offered here for optimum utilization of the opportunity.

There is a need to develop an apolitical body led and staffed by technocrats to oversee the establishment of SEZs, and urban development under CPEC.

The proposed body should have a long-term vision because economic transformation can take decades. In this regard, it is important for policymakers to undertake joint actions in order to promote synergies and coordination among the different players.

Successful zones use a “holistic” or “systematic” approach. This approach involves all the important aspects (both “soft” and “hard”) for building a conducive industrial or business ecosystem.

Successful SEZ programs necessitate strong government support as part of the long-term national development strategy; a robust legal and regulatory framework and strong institutions, including effective one-stop-shop services; prototype design for broader national reforms; strategic location with sound infrastructure; strong commercial viability and significant economic and social returns; and an awareness of potential environmental concerns, and a willingness to address them to create an environmentally sustainable operation.

To make the SEZs an integral part of a long-term development strategy, planning must be fully integrated into national or regional industrial policies and economic development strategies, based on real market demand.

Sound legal and institutional frameworks with strong and long-term, well-coordinated government commitment should be established with a predictable and transparent legal and regulatory framework to ensure the clarity of roles and responsibilities of various parties, and to provide protection and certainty to the developers and investors as well as ensure that the zones attract the right investment.

Creation of an attractive business environment, including efficient public services (such as a one-stop shop) and good infrastructures is imperative.

Operations must be carefully planned, designed and managed because developing a zone is a very expensive undertaking.

Ensuring the availability of strong human power can be made through skills training, customized and specialized education that generate, upgrade and deepen knowledge and skills.

Continuous technological and industrial learning, innovation, upgrading enhances productivity and sustains long-term competitiveness to keep pace with technological and industrial innovation.

Strategic and strong connectivity among individuals, firms, countries and regions is increasingly understood as a key factor in achieving competitiveness and sustainable, inclusive economic growth.

Linkages with the local economy must be created while a good balance between industrial development and social/urban development will create dividends.

An independent monitoring and evaluation system is essential because SEZ programs are very expensive and highly risky endeavors, meriting a close watch to avoid wastefulness, pilferage and industrial espionage.

Legislation must be put in place and implemented effectively to stipulate the performance criteria of zone programs, and to set conditions for handling the transitions necessary when zones reach the end of their productive life cycles, and/or for dealing with underachieving programs.

Environmental and sustainability issues can be addressed through the creation of Eco-Industrial Parks (EIPs), which cover a wide spectrum of approaches but lead to more sustainable economic development.

EIPs can help reduce the operational cost and greenhouse gas emissions, and as a spill-over impact they can lead to cleaner production by avoiding air emissions that most conventional power plants cause.

The impact of green factories or buildings is far more holistic, leading to multiple benefits in terms of energy and water consumption saved, emissions avoided and reduced waste.

The roots of EIPs go back as far as the late 19th century in European industrial zones. However, the concept truly began to develop in the post-World War II period in Denmark, Germany and Finland in an unplanned, organic way as a result of resource constraints and high energy costs.

These early steps mainly arose in the form of industrial symbiosis and efficiency measures. In the 1990s, other European countries and non-European developed countries such as the United States, Japan and Canada started incorporating EIP concepts, partially or fully, in their design of industrial zones.

In the 2000s, Japan, China and South Korea boosted their efforts to support EIPs with national policies as a means to strengthen their global competitiveness.

Hence, over the past five years, EIPs have become a prominent global tool for industrial zones/parks, while retrofit activities continue in over 40 countries.

In case of Pakistan, the local employment opportunities and capacity building should be the main focus that should be achieved with mutual consultation and understanding between both China and Pakistan.

Moreover, industrial cooperation under CPEC will help us to attract those labour-intensive industries and jobs that will definitely change the destiny of Pakistan, if executed with due diligence.

Prior to the advent of China’s economic reforms, in 1979 China’s GDP per capita was lower than Pakistan. However, presently China stands at US $ 8069 while Pakistan is still stuck between US $ 1400 to 1500.

The key to Pakistan’s success in CPEC is China’s wholehearted support but have we geared ourselves to  make optimum utilization of the opportunity? China has all the experience that Pakistan needs but the need of the hour is to keep all the differences aside and leave no stone unturned to make CPEC an exemplary economic development project between China and Pakistan for the rest to follow.

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