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What Policy matters Pakistan should take to ensure maximum benefit from the CPEC projects??
Introduction
The ChinaPakistan Economic Corridor is a corridor that is an
assortment of energy, infrastructure & logistics, mass transit &
Gwadar Development projects currently under construction
worth around $50 billion. Out of $50 billion around 70% i.e.:
$35 billion is allocated for energy projects which are planned
to be completed by 2020 -2023, while $15 billion for
infrastructure, logistics, Gwadar and related projects
CPEC aims to facilitate trade along an overland route that
connects Kashgar and Gwadar, through the construction of a
network of highways, railways, and pipelines. This corridor will
rapidly expand and upgrade the infrastructure in Pakistan, and
will also deepen and broaden the economic links between
Pakistan and the People's Republic of China. CPEC is the part
of Chinas ambitious dream of One Belt One Road, its
importance is evident from the inclusion as part of China's 13th five-year development plan.
CPEC will not only benefit Pakistan and China but will also positively impact India, Iran,
Afghanistan and Central Asia. With increasing trade activity rail, road and air transportation
system, people to people contact and enhanced co-operation CPEC will result in a well-connected
and integrated region of shared destiny, harmony and development
CPEC Projects
Energy
Infrastructure
Mass Transit
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Gwadar Development
Highway Networks of CPEC
Railway Network of CPEC
Fiber Optics projects of CPEC
Proposed Policies
CPEC CORE BJECTIVES
CPEC is the series of megaprojects to lift up the economy of Pakistan. For the purpose of this I
will discuss the strategies and policies our government and industrial needs to embrace to get
maximum advantage form this project. The scope of this report is limited to suggesting the
policies that could maximize the economic benefit to Pakistan. At a broader level the benefits
that Pakistan economy can enjoy are as follows:
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Strategic decision for power sector growth and development
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will not only curtail the outflow of foreign exchange but will enable the cost saving as Pakistani
labor is much cheap as compare to China. Government should
i. Devise a policy to transfer the jobs to Pakistani manpower over a staggered period
through on job training, apprenticeship, internships, attachments and study assignments
supervised by Chinese trainers
ii. Coordinated and deliberated effort on part of government to establish vocational training
centers and skill development institutes .A broad study of the job markets and jobs that
would result from CPEC projects and operational activities.
iii. Develop and prepare a pool of workers and professional who are ready to take jobs from
Chinese
iv. Switch form low-skilled labor to high skilled labor, policy makers should lay down the
policy to induct a minimum level of local labor for all projects and joint ventures.
v. Create a model to improve working condition to increase productivity of the labor.
vi. Ensure that all special economic zones should exclusively include dedicated training
center and facilities
Industrial Policy
Governmental policy makers need to categorize industries in the context of CPEC and devise a
plan for their growth accordingly. Government need to develop a coherent, well-functional
industrial policy that can stimulate real growth.
The decision we will make today will have ramifications in the long-term. It is evident form the
history of most developed industrial nations that well-organized policies and growth plans plays
a vital role in their economic growth. One can simply infer that idiosyncratic industrial policies
coupled with free trade agreements and low risk appetite of our industrialist has contributed
towards low industrial growth in Pakistan.
Business community has several concerns over CPEC projects and how it will impacts their
businesses they need to realize that only by setting up joint ventures and partnerships they can
harness the interest of Chinese businessmen and achieve mutual benefits
- Industrialist need to take bold decisions and put up joint ventures with Chinese
- they need to change their psyche of running the business in families and in isolation, they
need to open up and share the dynamics of their business and work with Chinese
businessmen and to set up partnerships and joint ventures
This mutual co-operation will result in sharing of capital, knowledge, skill, technology and
experience and would not only result in the growth of individual businesses but will servers
towards collective prosperity and growth of Pakistans economy
Now that we have discussed the importance of a coherent industrial policy the question arises
who it should be structured. The obvious initial step is setting the fundamentals right.
Government should
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- Ensure uninterruptable supply of electricity and gas to the industries
- streamlining tax policies and easing up the regulations
- making coordinated efforts to increase the volume of exports by diversifying product mix,
probing new markets, revising free trade agreements and reducing transaction cost
- Put a serious effort to monetize the CPEC opportunity and move up the technology ladder.
- Create firm incentives for establishing state of the art industries and commissioning of
advanced machineries and force industries to achieve competitiveness by reducing cost
and increasing efficiency.
- One concern government need to address is Chinese versus local ownership of the
resources, government can alleviate this concerns by implementing the policy of long-
term lease for CPEC projects as opposed to sale.
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- Government need to make sure to translate the economic activity that CPEC would
create into increase in exports to achieve long-term sustainability and growth.
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Conclusion
The CPEC initiative could, potentially, transform Pakistan and its industry in particular. That
said, now is the time to sit down and formulate a coherent industrial policy or we may find
ourselves trapped in producing the same, low-value-added goods in the future
To get the most out of CPEC, we must perform a detailed planning and set measurable objectives.
To achieve the planed goals we must have the best of the teams with the right blend of people
to effectively manage the resources and stakeholders.
Such planning must drill down to each SEZ and specific teams must be assigned to set, manage
and achieve milestones set for each SEZ.
References
http://cpec.gov.pk/
Pakistan Power Sector Reform Plan (Key of SUSTAINABLE, AFFORDABLE and reliable power sector)