CPEC, an initiative worth more than 60 billion USD, at its start was heralded as a game-changer for the industry, economy, and people of Pakistan. Politicians, policymakers, and soothsayers predicted that CPEC will revolutionise the economy of the country with industry booming, job opportunities exploding and an unparalleled inflow of FDI.

However, many years down the road, the first phase of CPEC, which is generally related to infrastructure development such as the building of roads, and bridges, and setting up thermal power plants, has been completed. However, the effect of the first phase of CPEC on the local economy in terms of job opportunities, maximum utilisation of local industry output, and increase in the skill level of the local workforce is not visible. For instance, in any huge infrastructure project, steel is a necessary ingredient, but our Pakistan Steel Mills (PSM), Karachi is not only closed but on the gavel for some time. Further, a very important project of the CPEC initiative is the extension and dualisation of the railway line, which has still to move beyond discussions. Thus, so far, the promises and claims associated with the CPEC are still to materialise.

Now, some time back, the government announced the start of the second phase of CPEC which generally relates to the establishment of Special Economic Zones (SEZs) and their industrialisation, along the CPEC route. Now again, as before, politicians, policymakers, and economists have started predicting the second phase to be a game-changer for the economy of Pakistan. They are soliciting immediate establishment of SEZs but the question as to how these SEZs will be financed, especially in the backdrop of Pakistan going to every money lending institution for loans, is not being answered. Further, there is no risk failure analysis—if the SEZ(s) fail, is the country in a position to absorb the failures and repay bad loans along with the accrued interests?

Next, how will the SEZs be populated? It is being hyped that by some magic wand, foreign investors, especially Chinese investors, will flock to the SEZs, which will, in turn, generate jobs and kick-start the economy. Further, federal and provincial governments are struggling to provide utilities: gas, electricity, and water, at competitive rates, to existing domestic and industrial consumers. Hence, it is not clear how the federal and provincial governments will supply cheap utilities to the SEZs.

Also, the government is bending backward to secure loans from foreign institutions such as the IMF. But even the IMF is suspicious that its money might not be used to service interest on loans secured from China for CPEC, and the government is not divulging the monetary details and agreement of CPEC with IMF and other money lending institutions. Pakistan has invited Turkey to join the CPEC project. The PM’s trip to Turkey to convince investors to become part of the CPEC is an indicator that probably Pakistan does not have the resources to complete the second phase and perhaps Chinese investors are not that keen to invest, as trumpeted earlier.