Since the signing of the CPEC agreement—a project worth more than 60 billion USD between Pakistan and China—it has been heralded as a game-changer for Pakistan’s economy. Tomes after tomes have been written about the supposed benefits of CPEC to Pakistan, and all subsequent governments have claimed that CPEC will industrialise the country and create hundreds of thousands of jobs across Pakistan.
Presently, we are in the second phase of CPEC. First-phase projects were basically in infrastructure such as power stations and transportation and predominantly aimed to improve overall infrastructure quality, making it more convenient for people’s lives and creating employment opportunities. The second phase of CPEC is claimed to focus more on industrial cooperation, agriculture, medical services, education, and poverty alleviation. Further, special economic zones (SEZs) have been planned in the second phase, and a few are in the process of being established along the CPEC route. The governments, both at the provincial and federal levels, are endeavouring to develop and facilitate the establishment of SEZs.
The majority of investment in CPEC from China is in the form of loans, which need to be paid back along with interest. And any loan is good enough if it can create jobs and profits in a sustained manner. There have been claims but no hard statistics to back the claims by the successive governments of job creation due to CPEC. For instance, the first phase of CPEC, consisting of infrastructure development, has been officially declared completed. However, statistics have not been released as to how many jobs—both temporary and permanent—were generated during this phase. And most importantly, how this phase benefitted our economy is unclear; where our cement factories went into overdrive to provide cement for infrastructure projects, for instance. And whether Pakistan Steel Mills was working overtime to provide steel to infrastructure projects. Similarly, another indicator of a performing economy and industrialisation is the ever-increasing demand for engineering personnel. On the contrary, we are seeing joblessness among engineering professionals continuously on the rise by the day.
Now, we are in the second phase of CPEC—industrialisation which will supposedly industrialise our economy and again create hundreds of thousands of jobs and will help reduce imports and increase exports. However, other than mere claims and prophecies, no mechanisms have been offered as to how SEZs will be populated to generate jobs and kickstart the economy. On the contrary, since the inception of CPEC, we have been asking for loans, bail-out packages from IMF and brotherly countries, and requesting roll-overs of loans to China.
The mere establishment of SEZs does not per se bring industrial uplift and employment, as has been previously tried and experimented with by Pakistan. Further, the SEZs are being modelled upon the SEZs of China. However, China started with a few SEZs at specially chosen locations and based on the lessons learned, tweaked the laws and incentives for local and foreign investment for existing and new SEZs. Moreover, the success of an SEZ depends upon the type of industries being set up and the level of value-addition being brought about by these industries, and the tax exemptions and rebates should be proportionate to the value-addition achieved and local employment generated. However, other than vague claims, it is not clear what types of industries will be set up and what value they will bring to our economy.
Now, at a great financial cost, SEZs are being established, and any setback in the setting up and operationalising of SEZs will increase the debt liabilities of Pakistan. Sri Lanka is one example where loans-funded projects did not perform as envisaged. Similarly in Africa and in the Balkans, projects and initiatives are not performing as intended, which is leaving these countries’ economies in shambles.
Presently, we are in the second phase of CPEC. First-phase projects were basically in infrastructure such as power stations and transportation and predominantly aimed to improve overall infrastructure quality, making it more convenient for people’s lives and creating employment opportunities. The second phase of CPEC is claimed to focus more on industrial cooperation, agriculture, medical services, education, and poverty alleviation. Further, special economic zones (SEZs) have been planned in the second phase, and a few are in the process of being established along the CPEC route. The governments, both at the provincial and federal levels, are endeavouring to develop and facilitate the establishment of SEZs.
The majority of investment in CPEC from China is in the form of loans, which need to be paid back along with interest. And any loan is good enough if it can create jobs and profits in a sustained manner. There have been claims but no hard statistics to back the claims by the successive governments of job creation due to CPEC. For instance, the first phase of CPEC, consisting of infrastructure development, has been officially declared completed. However, statistics have not been released as to how many jobs—both temporary and permanent—were generated during this phase. And most importantly, how this phase benefitted our economy is unclear; where our cement factories went into overdrive to provide cement for infrastructure projects, for instance. And whether Pakistan Steel Mills was working overtime to provide steel to infrastructure projects. Similarly, another indicator of a performing economy and industrialisation is the ever-increasing demand for engineering personnel. On the contrary, we are seeing joblessness among engineering professionals continuously on the rise by the day.
Now, we are in the second phase of CPEC—industrialisation which will supposedly industrialise our economy and again create hundreds of thousands of jobs and will help reduce imports and increase exports. However, other than mere claims and prophecies, no mechanisms have been offered as to how SEZs will be populated to generate jobs and kickstart the economy. On the contrary, since the inception of CPEC, we have been asking for loans, bail-out packages from IMF and brotherly countries, and requesting roll-overs of loans to China.
The mere establishment of SEZs does not per se bring industrial uplift and employment, as has been previously tried and experimented with by Pakistan. Further, the SEZs are being modelled upon the SEZs of China. However, China started with a few SEZs at specially chosen locations and based on the lessons learned, tweaked the laws and incentives for local and foreign investment for existing and new SEZs. Moreover, the success of an SEZ depends upon the type of industries being set up and the level of value-addition being brought about by these industries, and the tax exemptions and rebates should be proportionate to the value-addition achieved and local employment generated. However, other than vague claims, it is not clear what types of industries will be set up and what value they will bring to our economy.
Now, at a great financial cost, SEZs are being established, and any setback in the setting up and operationalising of SEZs will increase the debt liabilities of Pakistan. Sri Lanka is one example where loans-funded projects did not perform as envisaged. Similarly in Africa and in the Balkans, projects and initiatives are not performing as intended, which is leaving these countries’ economies in shambles.
