The cor­ri­dor to pros­per­ity

The Pak Banker - - 4EDITORIAL - Huzaifa Akhtar

OF­FI­CIALLY an­nounced in 2014, the China Pak­istan Eco­nomic Cor­ri­dor (CPEC) was the ray of hope Pak­istan's econ­omy was des­per­ate for. The ex­ten­sive plan en­tails a na­tional agenda for eco­nomic bet­ter­ment, be­gin­ning from mea­sures to be taken to in­crease en­ergy pro­duc­tion in the power-de­fi­cient coun­try, stress­ing the im­por­tance of spe­cial eco­nomic zones, un­der­tak­ing largescale road and rail in­fra­struc­ture over­hauls and de­vel­op­ment projects in Gwadar Port. Ex­perts seemed scep­tic, the fea­si­bil­ity of the pro­posed largescale projects was ques­tioned and the lack of se­cu­rity and trans­parency of cor­rupt in­sti­tu­tions was brought into light.

The aid-de­pen­dent state of Pak­istan, cursed with in­ca­pable in­sti­tu­tions im­ped­ing eco­nomic progress, has wel­comed Chi­nese sup­port with open arms. As ever, the govern­ment did not find it per­ti­nent to dis­close all in­for­ma­tion to the very pub­lic that voted them into of­fice. Out of the to­tal $45 bil­lion bud­get for CPEC, in­de­pen­dent com­pa­nies will in­vest around $35 bil­lion in en­ergy pro­duc­tion and we will be able to buy elec­tric­ity from them at com­pet­i­tive rates. The re­main­ing amount agreed by China to be loaned to Pak­istan is in the form of con­ces­sion­ary loans, of­fered at low in­ter­est rates.

Though de­tails of projects have been far from trans­par­ent, the am­bi­tion that drives CPEC projects be­gan to show in 2015. The govern­ment dived into what ap­pears to be a rapid mod­erni­sa­tion of the coun­try's in­fra­struc­ture. While projects like the Or­ange Line Metro in La­hore raised en­vi­ron­men­tal con­cerns and faced crit­i­cism, the govern­ment did not do so much as bat an eye­lash and con­tin­ued con­struc­tion, un­de­terred. The only bank­able thing the regime has to go on is the even­tual aid such projects will be to­wards mar­ket ac­tiv­ity, by pro­vid­ing rapid tran­sit for in­di­vid­u­als in the metropoli­tan cen­tres of the coun­try. The in­vest­ment in this pro­ject is im­mense, but is it the most ef­fi­cient, cost-ef­fec­tive, and least dam­ag­ing to third par­ties? Al­though the ques­tion of an al­ter­na­tive un­der­ground route has been brought up and brushed aside by pol­i­cy­mak­ers re­peat­edly, suf­fi­cient ev­i­dence has not been pro­vided for over­look­ing the op­tion. If Lon­don in 1890 and Cairo in 1987 in­tro­duced their mod­ern un­der­ground rail­way lines that now pro­vide rapid tran­sit to up to 4 mil­lion com­muters daily, surely we can dig a lit­tle deeper, quite lit­er­ally, and pro­vide a sim­i­lar ser­vice that ben­e­fits com­muters with­out the dec­i­ma­tion of our cul­tural her­itage.

With al­most 50% of the to­tal pop­u­la­tion of Pak­istan aged be­tween 15 and 55, the com­mence­ment of CPEC is ex­pected to gen­er­ate jobs all over the coun­try and help in­di­vid­u­als of em­ploy­able ages oth­er­wise un­able to find jobs. The in­ter­est­ing thing about CPEC is seen in the way it is sup­posed to be spread all over Pak­istan, and not only Pun­jab, as would be ex­pected of any "na­tional" plan in­tro­duced by the cur­rent govern­ment. The con­struc­tion of coal power plants in cen­tral and south­ern Pun­jab, Sindh and Balochis­tan will steadily raise de­mand for skilled and un­skilled labour in ru­ral and ur­ban lo­cal­i­ties in th­ese ar­eas. A lit­tle over 60% of Pak­istan's pop­u­la­tion re­sides in ru­ral ar­eas and are en­gaged in un­skilled work, which may be able to find more op­por­tu­ni­ties at th­ese coal plants and mines. The provinces of Pun­jab and Sindh will gain the most in terms of em­ploy­ment gen­er­a­tion in the en­ergy sec­tor, as most power plants will be con­structed there in the next 15 years. Though it can be said that th­ese provinces are favoured in in­fras­truc­tural de­vel­op­ment projects quite fre­quently, there is the in­evitable ben­e­fit to the masses in terms of job cre­ation and over­all pros­per­ity. The elec­tric­ity gen­er­a­tion plants will be lo­cated far from the eco­nomic cen­tres of th­ese provinces, ar­eas that are usu­ally ne­glected when it comes to eco­nomic de­vel­op­ment. Though there will be a dis­pro­por­tion­ate gain from th­ese in­vest­ments, it must be noted that oth­er­wise ne­glected ar­eas are be­ing in­vested in. No one would have ex­pected spe­cial teams to be hired, bil­lions of dol­lars in­vested into lo­cat­ing and ex­tract­ing coal re­serves if China had not pro­posed its in­ter­est in the mat­ter. Im­prov­ing Pak­istan's in­land links may be es­sen­tial to the suc­cess of CPEC, but its ben­e­fits to the coun­try it­self could be im­mense. The im­me­di­ate re­con­struc­tion of tracks in Pun­jab and in­creased speed for trains is un­der­way. The even­tual plan of the rail­way over­haul will link the north­ern ar­eas from Khun­jerab Pass at the Pak-China bor­der to all provinces east, west and south. In ad­di­tion to this, a com­plex net­work of road links in all provinces is pro­posed, the east­ern part of which will be­gin con­struc­tion soon. Be­ing able to safely ac­cess most ar­eas of the coun­try by road can en­able peo­ple to travel more and dis­trib­u­tors to ac­cess more mar­kets. Bet­ter road and rail trans­port sys­tems are es­sen­tial to the smooth work­ing of any econ­omy, and Pak­istan since its con­cep­tion, has rarely had a pro­ject with its fo­cus on link­ing ev­ery cor­ner of the coun­try to each other.

An­other ini­tia­tive pro­posed un­der CPEC is of the cre­ation of spe­cial eco­nomic zones along the CPEC from Khun­jerab to Gwadar. Th­ese zones will pro­vide in­dus­tries with easy ac­cess to trans­port, labour and pro­vide tax con­ces­sions ac­cord­ing to their na­ture of op­er­a­tion and level of ac­tiv­ity. This is ex­pected to boost in­vest­ment not only from do­mes­tic en­trepreneurs but also from for­eign sources.

The abil­ity of China and Pak­istan to main­tain peace in an area sus­cep­ti­ble to ex­ter­nal pres­sures while sep­a­ratist groups work on both sides to cre­ate chaos, should be the great­est hur­dle for CPEC, one that may or may not be over­come en­tirely. Even if Pak­istan does not at­tain a utopian se­cure state, CPEC is likely to bring about the in­fras­truc­tural de­vel­op­ment the econ­omy needs.

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