CPEC: from idea to realisation
The next all-important phase of CPEC is Industrial Cooperation
The writer is an independent consultant who has worked in areas of investment and development banking, education, regulation and fintech
We hit the jackpot of being the flagship project of the multi-continental trade and communication web of the fastest-growing and most dynamic economy of the world, and we are close to botching the opportunity.
Of course, there has been significant progress. We got the early harvest projects done, built the highways and the power projects, beefed up Gwadar. But these were linear straightforward projects. We are good at implementing brick and mortar projects. Still, they are key, and have set up the foundation to build the next all-important phase of CPEC: Industrial Cooperation.
What exactly does that mean? This is the code word for developing and populating Special Economic Zones (SEZs), attracting Chinese industries, fleeing expensive labour and stricter standards to Pakistan instead of Vietnam and Indonesia, and giving a shot-in-the-arm to re-industrialising Pakistan.
CPEC has alternate futures. At a basic level, there is a highway network snaking through a country that doesn’t stay dark because of chronic power outages. This has already been largely built. At a mid level, Pakistan could leverage this highway web to lay a network of SEZs and streamline its existing industrial clusters. At the highest level, Pakistan could grab the Chinese dragon by its neck and ride its meteoric rise all the way to a developed-country status.
What has happened so far? The project to set up SEZs has proceeded gingerly. The provinces that are leading this effort have been hustling to the maximum to try to launch the SEZs, but the bureaucratic process through which the SEZs are supposed to be approved and developed has been putting on the brakes. The Pakistani side waits for the Chinese to approve, and take the lead in development. The Chinese insist that their role is only advisory. Expectations and working styles on each side are different. This results in a snail speed, where the development should be zipping along.
What is the government’s role? First, to finalise the overall agreement and lay the foundation of infrastructure and power. This it has already done. Next, the government must boost the prospects of CPEC and fully empower Pakistan’s private sector leverage to the hilt by being the ultimate information clearinghouse for CPEC. All information regarding the CPEC projects, plans and agreements must be in the public domain. Suppressing the CPEC information will result in it achieving a drastically sub-optimal outcome.
Pakistan has a dynamic private sector, and it needs to start working in over-drive to ride the CPEC wave. The SEZs must be developed by the provinces, better still by the private sector subcontracted by the provinces. Though it is important to involve key CPEC firms so that they hand-hold and channel Chinese investment into Pakistan, the process must be championed and powered by the Pakistani private sector, in all provinces.
Another missing piece is research. While several research organisations have been formed, the depth and kind of research needed to fuel the CPEC-based industrial web to flourish in Pakistan has not happened. Some significant efforts have been made by regular universities, such as the Lahore School of Economics, which has mapped the clusters and sectors that can leverage CPEC in Punjab. This is a hint towards what works: building new organisations is challenging and takes time. Pakistan’s best bet is to empower and fund Pakistan’s best universities to spearhead CPEC research.
Yet another missing piece is the human resource supply road map. Once projects start coming online, they will acquire the human resource needed. If relevant and sufficient expertise is available locally that will obviously be the first choice, for convenience and minimising cost. But if it isn’t, then Chinese companies will import labour from China. At the moment, national organisations such as the Pakistan Technical & Vocational Education & Training Reform are acting, but not with the intensity needed. The actions and programes of all human resource supply organisations need to be directed by a national CPEC HR requirement plan. Pakistan owes this to its youth.
Published in The Express Tribune, August 15th, 2018.
Of course, there has been significant progress. We got the early harvest projects done, built the highways and the power projects, beefed up Gwadar. But these were linear straightforward projects. We are good at implementing brick and mortar projects. Still, they are key, and have set up the foundation to build the next all-important phase of CPEC: Industrial Cooperation.
What exactly does that mean? This is the code word for developing and populating Special Economic Zones (SEZs), attracting Chinese industries, fleeing expensive labour and stricter standards to Pakistan instead of Vietnam and Indonesia, and giving a shot-in-the-arm to re-industrialising Pakistan.
CPEC has alternate futures. At a basic level, there is a highway network snaking through a country that doesn’t stay dark because of chronic power outages. This has already been largely built. At a mid level, Pakistan could leverage this highway web to lay a network of SEZs and streamline its existing industrial clusters. At the highest level, Pakistan could grab the Chinese dragon by its neck and ride its meteoric rise all the way to a developed-country status.
What has happened so far? The project to set up SEZs has proceeded gingerly. The provinces that are leading this effort have been hustling to the maximum to try to launch the SEZs, but the bureaucratic process through which the SEZs are supposed to be approved and developed has been putting on the brakes. The Pakistani side waits for the Chinese to approve, and take the lead in development. The Chinese insist that their role is only advisory. Expectations and working styles on each side are different. This results in a snail speed, where the development should be zipping along.
What is the government’s role? First, to finalise the overall agreement and lay the foundation of infrastructure and power. This it has already done. Next, the government must boost the prospects of CPEC and fully empower Pakistan’s private sector leverage to the hilt by being the ultimate information clearinghouse for CPEC. All information regarding the CPEC projects, plans and agreements must be in the public domain. Suppressing the CPEC information will result in it achieving a drastically sub-optimal outcome.
Pakistan has a dynamic private sector, and it needs to start working in over-drive to ride the CPEC wave. The SEZs must be developed by the provinces, better still by the private sector subcontracted by the provinces. Though it is important to involve key CPEC firms so that they hand-hold and channel Chinese investment into Pakistan, the process must be championed and powered by the Pakistani private sector, in all provinces.
Another missing piece is research. While several research organisations have been formed, the depth and kind of research needed to fuel the CPEC-based industrial web to flourish in Pakistan has not happened. Some significant efforts have been made by regular universities, such as the Lahore School of Economics, which has mapped the clusters and sectors that can leverage CPEC in Punjab. This is a hint towards what works: building new organisations is challenging and takes time. Pakistan’s best bet is to empower and fund Pakistan’s best universities to spearhead CPEC research.
Yet another missing piece is the human resource supply road map. Once projects start coming online, they will acquire the human resource needed. If relevant and sufficient expertise is available locally that will obviously be the first choice, for convenience and minimising cost. But if it isn’t, then Chinese companies will import labour from China. At the moment, national organisations such as the Pakistan Technical & Vocational Education & Training Reform are acting, but not with the intensity needed. The actions and programes of all human resource supply organisations need to be directed by a national CPEC HR requirement plan. Pakistan owes this to its youth.
Published in The Express Tribune, August 15th, 2018.