By Qamar Bashir
Like many other Pakistanis, I have also been pondering why did CPEC touted as game changer, harbinger of development and prosperity has almost completed its first phase and has launched its second phase but inversely, the country is in deep financial and economic difficulties, country is faced with worst form of inflation, the investment is almost negligible and GDP growth is even negative hopes for growth and development in coming years is minimal.
This situation can be interpreted in two ways. One, that Pakistan could have been in even worse financial and economic situation than we are facing currently as current dire financial and economic outlook has to do with our own lack of purpose, absence of clear direction, lack of competence and efficiency, and second interpretation is that the CPEC project was not well conceived. It lacked effectiveness and therefore was not helpful in improving the financial and economic standing of the country.
This is a known and documented fact that despite its potential, CPEC has encountered several significant hurdles in Pakistan that have hindered its swift, efficient, and result-oriented implementation, subsequently impacting its
anticipated contribution to GDP growth. Political instability and governance issues have led to policy inconsistencies,
adversely affecting the continuity of CPEC projects. Bureaucratic inefficiencies and red tape have resulted in delays and escalated costs, while security concerns in certain regions pose additional risks to project timelines. Financial constraints due to high debt levels and balance of payment crises have limited the government’s
ability to finance these projects, increasing reliance on external borrowing.
Furthermore, the lack of a skilled workforce has impeded progress in specialized
areas. Environmental and social challenges, including land acquisition and
displacement concerns, have added layers of complexity.
Additionally, differing priorities across provinces have led to challenges in
coordination and resource allocation, affecting uniform development. Global and
regional geopolitical dynamics, especially involving key players like China, the
US, and India, have also influenced investment flows and strategic prioritization.
While the initial phase of CPEC focused on establishing essential energy and
infrastructure foundations, the broader economic impacts are expected to
materialize more significantly in Phase II, provided these multifaceted challenges
are effectively addressed.
Let us now build an argument around the second premise that CPEC was and is an
effective project and helped in contributing to GDP growth while keeping the
governance factor as constant. In such a scenario where Pakistan exhibits
responsible governance, efficient government functioning, a fair judiciary, a
motivated parliament, and a favorable business and investment climate could
significantly impact its GDP growth.
With a total investment of over $ 62 billion in CPEC-I, a number of high value
projects were initiated in all critical areas including development of coal, hydro,
wind, and solar power plants such as the Sahiwal Coal Power Plant, the Port Qasim
Coal-fired Power Plant, the Suki Kinari Hydropower Station, and several wind
farms in Sindh province. These projects collectively added thousands of megawatts
to Pakistan's national grid. Substantial investment was made in transport
infrastructure to improve connectivity and facilitate trade including Karachi-
Lahore Motorway (M-9), Upgradation of the Karakoram Highway (KKH) Phase-
II(Havelian-Thakot section), Multan-Sukkur Motorway (M-5) and Orange Line
Metro Train in Lahore. This phase developed Gwadar Port and related
infrastructure, including the Gwadar International Airport, Eastbay Expressway,
and the development of a Free Zone to enhance trade activities.
It laid fiber optic cable from Rawalpindi to Khunjerab, which enhanced
telecommunications in the northern areas of Pakistan. Metro lines, green lines, and
a 2000 km fast train to improve urban and inter-city mobility, making cities more
business-friendly and enhancing trade efficiencies making Pakistan into a regional
trade hub, further boosting logistics, manufacturing, and service sectors.
The completion of Phase II is expected to foster industrialization and socio-
economic development. This includes the growth of Special Economic Zones
(SEZs) to attract foreign direct investment and boost exports. Focusing on mining,
industry, green and low-carbon development, health, space cooperation, digital
economy, and development cooperation. Transition towards clean and renewable
energy sources anticipated to reduce Pakistan's dependence on imported fossil
fuels, thereby helping to decrease the depletion of foreign exchange reserves.
There has been an increase in academic and cultural cooperation between Pakistan
and China, with many Pakistani students studying in China. This interaction is
expected to strengthen the bond between the two nations and contribute to
Pakistan's educational growth.
Emphasizes on agricultural cooperation, including crop breeding, pest control, and
the expansion of crop cultivation and plans to increase sesame cultivation and
exports to China, aiming to bolster the agricultural sector. Green and low-carbon
development, health, space cooperation, digital economy, and development
cooperation and export of agricultural products to China.
Both CPEC-I and 2.0 will only achieve their full potential only if Pakistan removes
all hurdles hampering their speed and effectiveness. This was perhaps the
realization at the apex policy making institutes of Pakistan which resulted in the
constitution of the Special Investment Facilitation Council (SIFC). Having been
established with high ambitions to transform the country's economy by attracting
significant Foreign Direct Investment (FDI), SIFC, involving key figures from
both the government and the armed forces, focuses on sectors like defense
production, agriculture, mines and minerals, energy, and IT. Its primary goal is to
draw $100 billion in FDI and achieve a nominal GDP of $1 trillion by 2035. This
initiative is seen as a potential game-changer for the economy, particularly by
addressing bureaucratic hurdles and providing a streamlined process for investors
and business groups.
Moreover, the SIFC's strategy includes addressing issues like political instability,
inconsistent economic policies, and bureaucratic hurdles, which have previously
deterred foreign investment in Pakistan. It aims to foster an investment-friendly
environment, enhance investor confidence, and improve the ease of doing business.
The council's multifaceted approach also emphasizes the importance of export-
oriented investments, policy reforms, investor protection, public-private
partnerships, and skilled workforce development.
The Special Investment Facilitation Council (SIFC) can be instrumental in
harnessing the full potential of the China-Pakistan Economic Corridor (CPEC)
through several strategic initiatives. Firstly, SIFC's role in streamlining investment
processes is crucial. By simplifying and expediting the investment procedures,
SIFC can significantly attract both domestic and foreign investments into CPEC
projects. This involves reducing bureaucratic hurdles, offering a one-window
operation for all clearances and approvals, and ensuring that the investment
process is smooth and investor-friendly.
Moreover, SIFC’s ability to enhance coordination among various government
departments, provincial governments, and CPEC stakeholders ensures better
alignment of projects with national and regional development goals, leading to
more efficient and effective project implementation.
Secondly, SIFC's potential to drive policy reforms and address security concerns is
pivotal for CPEC's success. By advocating and facilitating necessary policy
reforms, SIFC can create an enabling environment for CPEC projects,
encompassing areas such as land acquisition, labor laws, tax incentives, and
regulations for special economic zones. Additionally, collaborating with security
agencies to ensure the safety of CPEC projects is critical, as it instills confidence
among investors and contractors.
Furthermore, promoting transparency and accountability in the execution of CPEC
projects will build trust among all stakeholders, including local communities and
international investors, thus ensuring the smooth execution and completion of
projects.
Lastly, SIFC can contribute significantly to inclusive economic growth and
sustainable development through CPEC. This involves ensuring that the benefits of
CPEC are evenly distributed across different regions of Pakistan, addressing
regional disparities, and fostering inclusive growth.
Encouraging private sector participation is also essential, as it can lead to more
innovation, efficiency, and public-private partnerships, which are vital for the
corridor's success.
Additionally, aligning CPEC projects with workforce development, skill
enhancement, and job creation will ensure the long-term sustainability of these
projects.
By leveraging Pakistan’s diplomatic relations to attract international investors and
partners, SIFC can broaden the scope and impact of CPEC, turning it into a
catalyst for Pakistan's economic transformation.
In essence, SIFC’s comprehensive approach encompassing streamlined investment
processes, policy advocacy, security enhancement, transparency, equitable
development, private sector engagement, and international collaboration is key to
unlocking the full potential of CPEC. This multifaceted strategy is crucial for
transforming CPEC into a driving force for Pakistan’s economic growth and
