CPEC: a positive outlook

Published: August 28, 2016
A member of Pakistan Navy is seen at the Gwadar port in Pakistan's Balochistan Province April 12, 2016. PHOTO: REUTERS

A member of Pakistan Navy is seen at the Gwadar port in Pakistan's Balochistan Province April 12, 2016. PHOTO: REUTERS

A member of Pakistan Navy is seen at the Gwadar port in Pakistan's Balochistan Province April 12, 2016. PHOTO: REUTERS The writer is the federal minister for planning, development and reform

On July 5, 2013, a memorandum of understanding (MoU) on the China-Pakistan Economic Corridor (CPEC) was signed between the governments of China and Pakistan on the occasion of Prime Minister Nawaz Sharif’s first foreign visit after assuming power. The Ministry of Planning, Development & Reform of Pakistan and the National Development and Reform Commission of China were entrusted the responsibility of translating the vision of their respective leaderships into reality. Within a year that MoU was turned into an understanding on a portfolio of Chinese investment of $46 billion in various projects. Besides this, a significant commitment was made by Pakistan from its resources for CPEC-related projects. Within a short span of three years, despite a loss of eight months due to domestic political crises, projects worth $18 billion have been actualised. Moreover, investment projects worth $17 billion are in the pipeline with completing formalities to be launched within a year or so. This is a remarkable story of devotion, commitment and hard work of Pakistani and Chinese colleagues who are involved in the CPEC.

‘CPEC’s western route to be ready by 2018’

When others were writing off Pakistan as an economic partner, China showed trust in us and Pakistan has always cherished its friendly ties with China. But the CPEC is going to turn this friendship into a strategic economic partnership. In 2014, there were 12 other countries that were investing more in Pakistan in terms of foreign direct investment (FDI) than China. Today Chinese FDI in Pakistan has reached the number one spot.

The CPEC is going to serve as a gateway for trade not only for China and Pakistan, but for the whole region. Better connectivity in the region is going to improve trade among Pakistan, China, Iran, Afghanistan and the Central Asian Republics. No country in the region should feel threatened by the CPEC as everyone in the region would benefit from it due to enhanced economic activity and trade. Pakistan envisages the CPEC as a peace-enabler because when connectivity and trade increases between countries, they tend to avoid conflicts. Thus it is not a hyperbole to regard the CPEC as a game changer for Pakistan and South Asia.

At the same time, we should not get complacent. Previously we have missed golden economic opportunities. In the 1960s, Pakistan was provided with a chance to revolutionise its agriculture via seeds of high-yield varieties. This was so promising that it was dubbed as the ‘green revolution’. Pakistan did in fact increase its agricultural output after the introduction of these high-yield varieties. But the gains were moderate at best. The key constraint was that advantages of new technologies were not widespread. Small landholders in particular and remote parts of Pakistan in general, could not benefit from green revolution technologies.  On the other hand, countries of East Asia used the same technologies to transform their economic journey. The likes of South Korea and Taiwan produced massive surpluses in their agriculture sectors. They effectively channeled that surplus towards industrialisation.

Pakistan has been provided with a golden opportunity — the CPEC. It has all the right ingredients to transform the country’s socioeconomic landscape. Now it is time for every Pakistani to realise the importance of this project. Every one of us needs to chip in with our unique contribution to make it a success story and a case study for the rest of the world. Among other things the desideratum, of an advanced industrialised economy are infrastructure and energy. Pakistan is currently facing huge deficits in both areas. Thus it is in our immediate interest to build new infrastructure and reduce energy deficits. Moreover, inclusive growth, which is integral for sustainable peace and prosperity, cannot be realised without industrialisation. In order to industrialise, a developing country requires investment in infrastructure and energy to support and facilitate production, distribution and exchange of goods and services. Investments in infrastructure and energy require huge sums of capital. Furthermore, the dividends of these projects mature in the medium to long run. Less-developed countries like Pakistan have capital constraints so it puts them in a catch-22 situation. On the one hand, it is quintessential that a less-developed economy undertake large-scale investments but on the other hand due to scarcity of capital and low human development, these countries can’t afford to allocate all resources towards infrastructure and energy. An effective and pragmatic policy has to consider these trade-offs.

Controversy over CPEC: K-P, FATA residents threaten protest outside Chinese Embassy 

Another key aspect that less-developed countries needs to be wary of is the uneven development within a country. Capital (investment) goes to places where it can amass the highest rate of return. Remote and under-developed parts of a country do not have networks of forward and backward linkages. As a result, returns to capital would be low in those places. Thus capital would go to places which already have some level of infrastructure in place. This reinforces uneven development and it leads to social conflict in a society.

Being cognisant of these factors, our government has taken up a daunting task i.e., to spur economic growth in concurrence with lifting historically marginalised and disadvantaged areas. In Vision 2025 we stipulated ‘inclusive and sustainable economic growth’ as our way forward. The conceptualisation and actualisation of the CPEC’s western route is a testimonial to our commitment towards materialisation of inclusive and sustainable growth in Pakistan. By taking fruits of development to under-developed areas, the CPEC will not only fulfill the huge gaps in infrastructure and energy needs, it will also empower historically disadvantaged people and places of Pakistan including Balochistan, Khyber-Pakhtunkhwa and Gilgit-Baltistan.

The transport route of CPEC is going to connect Kashgar (China) to Gwadar Port (Pakistan) via three alignments, western, central & eastern, which pass through all provinces. The rail network will be upgraded and modernised with Peshawar-Karachi ML1 in the first phase, on which speed of trains will increase from 80km/hr to 160km/hr. Besides the rail network will be expanded towards Gwadar and Quetta to be linked with Peshawar. All infrastructure projects are on concessional terms with the Chinese government proposing a panel of three reputed firms, with the lowest bidder getting the contract.

On the energy front, more than $35 billion are in IPP mode. These are private sector investments coming under our energy policy, which is open for all. These projects would not only reduce our energy deficit but is also going to bring down the cost of generation with cheaper power. After 70 years, the CPEC is harnessing the commercial potential of our indigenous coal in Thar to produce electricity.

Gwadar is a gateway for the CPEC. It is changing rapidly and it is going to be one of the most robust cities of Pakistan in the future. A new port, airport, expressway, technical college, hospital, university, city infrastructure, and water projects etc. are some of the concrete changes Gwadar is and will be experiencing. Economic activity has already accelerated multifold. By the end of this year, Gwadar will be connected with Quetta via Sorab and with Sukkur via Khuzdar bringing connectivity to the most underdeveloped areas of Balochistan with the rest of the country. DI Khan will be connected with KKH via a new route agreed in the All Parties Conference. On the other end of the CPEC, GB will be transformed into a model of new eco-economy bringing prosperity for people while safeguarding its rich environment.

‘Federal govt has dodged Chinese govt over CPEC’

These infrastructure and energy sector projects are government-led initiatives. But when it comes to industrial cooperation between the two countries, both recognise that private business initiatives are highly important. Therefore, business-to-business networks between Chinese and Pakistani counterparts are an integral aspect of the CPEC. Joint ventures between private enterprises of both countries would be key to expanding the frontiers of innovation, technology and trade. To synchronise the economic and business needs of both countries, industrial and special economic zones are going to be established in every province. The CPEC-Summit taking place today in Islamabad is a first major initiative in this regard. The key to the CPEC’s success is a broader consensus among all major stakeholders. Everyone was heard out and if anyone had any concerns, those were addressed immediately. Unlike previous mega-projects, the CPEC is inclusive, based on the welfare of historically disadvantaged areas. This makes its continuous and long-term success our nation’s first and foremost priority.

Published in The Express Tribune, August 29th, 2016.

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Reader Comments (24)

  • curious2
    Aug 28, 2016 - 11:45PM

    So how many Pakistani jobs were added with the initial $18 Billion and how many are expected to be added with the $17 Billion that’s in the pipeline? Also – 75+ percent of CPEC is associated with power production … which only leaves about $11 Billion to accomplish ports, pipelines, airports, railways and all the other hoopla that politicians are promoting – that really make sense? Lastly .. how does Gwadar become a “gateway” for anything … Pakistan business doesn’t need it and the railway to China isn’t expected to be completed/functioning until 2030.Recommend

    Aug 29, 2016 - 12:01AM

    failure of cpec means bankruptcy for Pakistan.Recommend

  • pk
    Aug 29, 2016 - 12:32AM

    And thus once again Pakistan will be the land of Milk & honey. Recommend

  • Iralan
    Aug 29, 2016 - 2:01AM

    Author instead of gloating should start work at full scale and remove all the impediments and red tape which is plentiful in Pakistan
    Include all provinces and just don’t build roads but start making factories along the connecting roads and manufacture appliances Goods engineering solar and computers to new a few.
    Current lot is still living in paper pencil era and neighbor countries are crossing the digital age . So don’t humiliate self and catch up soon or otherwise will be too late. Just building road is a ticket to no where. Have countries invest in it
    Gulf ,Saudi ,west if wants to and China Russia.Recommend

  • ajeet
    Aug 29, 2016 - 2:56AM

    Pakistanis don’t have any bania class to make good business decisions, though they are good in leather, people and meat exports due to their religion.Recommend

  • Observer
    Aug 29, 2016 - 4:06AM

    As things are moving now, it clearly points towards a future no too distant, where Pakistan is just another province of China, with a special status perhaps … and who knows, that might work well for China and the people of Pakistan too … !!Recommend

  • Abhijeet
    Aug 29, 2016 - 7:34AM

    Some tragedies happen in slow motion, as it is happening since 1947. Indians threw the British out after a prolonged struggle, vowing never to allow a foreign power to invade and enslave people of this region. One part of India separated to create Pakistan. China is now being given the red carpet to come and set up shop here. What India wants to prevent on its soil, Pakistan is welcoming with open arms. Pakistan and China cultures are as different chalk and cheese. This is merely a friendship of convenience. The Chinese are nobody’s friends. Once they settle down in Pakistan, they will start to attack India. The freedom Indians fought for would come to nought after all.Recommend

  • Pnpuri
    Aug 29, 2016 - 8:35AM

    Interestingly india is not mentioned in article Indo china trade is to the tune of 70 billion. Will china like to use CPEC for trade with india. Article is silent about this important aspect. Indo china trade is larger than combined pak china trade and possible trade through Gwadar port.Recommend

  • Asad
    Aug 29, 2016 - 10:42AM

    You guys are praying hard for it, we know that!Recommend

  • Hari Om
    Aug 29, 2016 - 2:57PM

    Pakistan grossly overestimates the benefits that will accrue to her from regional countries given willful geographic blindness that pretends that India, Afghanistan, Tajikistan, Kyrgzstan and Kazakstan do not have land borders with China and besides pretends that Iran and India do not have direct sea lines of communication with China. Pakistan in conjuring benefits under CPEC also pretends that Kashgar, Xinjiang and China’s Western region and not the East Coast, is China’s economic hub.Recommend

  • Parvez
    Aug 29, 2016 - 3:03PM

    @curious2: You are correct….So, as per news reports, why is the Indian Defence Minister going to Washington at the end of the month to sign a treaty allowing US troops logistical access to Indian bases ( US boots on Indian soil )…….are you so afraid of the CPEC ( you should not be ) or has India abandoned its non-aligned position and succumbed to Americas charms…….interesting days ahead. Recommend

  • Feroz
    Aug 29, 2016 - 3:08PM

    While wishing CPEC all success, the way the project has been conceived and the secrecy attached to it raises grave doubts. Ideally the $ 46 billion being invested by Pakistan should be evenly spread across the four provinces, so opportunities and benefits can be availed by all. Baluchistan and KPK could even be allotted a higher share being backward Provinces. The Western route should be the focus because alienation is rampant there. To falsely believe that CPEC will be a panacea for all problems, would be to court disappointment.Recommend

  • Zubair
    Aug 29, 2016 - 4:22PM

    Mr. Ahsan Iqbal, would you dare to write an article that gives actual information on province wise share along with project name, cost, current status, mode of investment etc. so that your honesty on CPEC is vividly displayed before the country?

    Will you inform the people of Pakistan that which province got how much of share and in which Project?

    These information are PRIME but most CONCEALED by your ministry. Also, We beg you that don’t call the projects of other donors like ADB etc. as CPEC project. (for example Zhob to Dikhan is ADB project not CPEC).

    Waiting anxiously for your reply and article both. Recommend

  • Sri Varahadev
    Aug 29, 2016 - 4:40PM

    Article yet again affirms fact that Pakistan has completely missed the point that CPEC is a cleverly packaged Chinese marketing ploy to keep Pakistani market open to Chinese capital goods and infrastructure project exports, that to at high profit margins by expedient of charging high interest rates on tied loans and squeezing tax concessions from GOP, during a time of sluggish global growth.

    Pakistan should note that CPEC is more correctly expanded to read “Conning Pakistanis to Enrich China” and talk of it being “gateway for trade” “for the whole region” is bunkum.Recommend

  • Pakistani
    Aug 29, 2016 - 6:12PM

    Why All Indian are so jealous of Pakistan?…
    Why All of you read Pakistani newspaper daily and make your comments?
    Dont you have any work to do expect to be jealous?Recommend

  • Ramdar
    Aug 29, 2016 - 7:03PM

    @Pakistani: All Indians would mean 1.25 bn people. An insignificant percentage read Pakistani media. Afterall, one does get affected by neighbor’s actions, especially one like Pakistan. Afghans would agree. Be assured, Indians are not jealous of Pakistanis. They could be jealous of Chinese.Recommend

  • udayan majumdar
    Aug 29, 2016 - 10:11PM

    Indeed, we are living in interesting times…let’s see, how far Pakistan suceeed.. modernise nd weed out extremism from ur country and be prosperous .Recommend

  • udayan majumdar
    Aug 29, 2016 - 10:14PM

    That’s funny, cos we love to read.Recommend

  • pakistani bloach
    Aug 29, 2016 - 10:31PM

    Indians flock to any post related to cpec to post negative comments.one of there favourite comment is “pakistan going to be china’s province”. There jealousy is so obvious in their comments that one just prays this cpec to be completed asap. Every indian whose mother wont give him second chapati has become an economic master if you read their comments related to cpec.these trolls are burning turning and twisting since cpec has started.we pakistanis should take these comments in a positive manner cause when your enemy is not happy about something you going to do, trust me its good for you.Recommend

  • Buzzkill
    Aug 29, 2016 - 10:40PM

    Wow such a positive & rosy outlook indeed. If one were to read these articles by Pakistani authors about CPEC one would think that Gwadar would replace all the ports of the world and all of the world’s trade would be done through the CPEC. Goodluck Lol. Recommend

  • Fakiha
    Aug 30, 2016 - 11:17AM

    whatever, Imran Khan is about tosabotage this project.Recommend

  • Fakiha
    Aug 30, 2016 - 11:19AM

    whatever, imran khan is attempting hard to sabotage this projectRecommend

  • Sami
    Aug 30, 2016 - 11:30AM

    Just wanted to say that the reason why route has changed to more of Punjab is because Punjab is the most stable peaceful region of Pakistan. MQM is destroying Sindh while tribal people in our western provinces are all about fighting. The border with Afghanistan is not too safe either, there are intelligence agencies from enemy countries working day and night in western borders trying to destroy Pakistan. Recommend

  • Parvez
    Aug 30, 2016 - 3:11PM

    @udayan majumdar: I have a fair idea where Pakistan is headed. I can guess America’s intent with this deal …….. what puzzles me is the sharp departure from a policy of tepid non-alignment that worked well for India…….to literally allowing US boots on Indian soil. Do you honestly think it’s in India’s long term interest ? Recommend

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