Skip to main content

CPEC: transport or economic corridor?

By Hasaan Khawar

The writer is a public policy expert and an honorary Fellow of Consortium for Development Policy Research. He tweets @hasaankhawar

Three CPEC routes are expected to form an impressive transport corridor connecting China to the Arabian Sea. If the Chinese start using these routes to trade with Middle East and North African countries, CPEC will turn into a cross-border trade and transit corridor. With enough traffic, we might also get some toll income. But the real returns are to be expected for Pakistan, only if CPEC truly becomes a vibrant economic corridor. how can we make it happen? Merely by creating a few special economic zones? And what is an economic corridor anyway?

Trade corridors have been in existence for centuries, with famous Silk, Spice and Incense routes connecting the Orient with the Occident. Trade corridors depict movement of goods and services in specific geographical patterns. Transport corridors, a most recent phenomenon, generally refer to a linear area, connecting two or more economic centres and often employing a combination of surface transport networks such as road and rail.

Economic corridors however are a wider concept. They represent not just connectivity and trade but also widespread economic activity in a geographic area, in the shape of industrial and economic clusters, connected markets, and a network of economic centres. Connectivity is a prerequisite for establishing economic corridors but not sufficient.

History shows that transport corridors do transform into economic corridors through gradual development, urban agglomeration and increased trade and economic activities, leading to formation of new settlements and economic clusters. This however takes time. The present Grand Trunk (GT) Road is an example of a trade and transport route turned into a vibrant economic corridor, with numerous urban centres and economic clusters along the route. This route however has been in existence for more than two millennia, upgraded by Sher Shah Suri in the 16th century.

If we could wait for centuries, CPEC might transform into a vibrant economic corridor on its own. But if we want it sooner, we need to catalyse this process through a well thought-out strategy.

Firstly, it is important to realise that economic corridor is not a linear concept, meaning thereby that CPEC, besides connecting China to Gwadar, needs to spread horizontally connecting to a network of secondary cities and smaller markets. Research shows that productivity impact of connectivity is higher for rural areas, which previously had poor connectivity. This requires aligning of public investments with CPEC through an integrated spatial planning strategy and plugging existing missing links, especially in less-developed regions.

Secondly, a real economic corridor of this scale cannot take off by public investments only. Therefore, the next step is to mobilise private investment, which would require regulatory and business environment reforms. Public investment should only be used to provide infrastructure or to address market failures in selected cases.

The third area is to ensure equitable growth. With new corridors coming up, there is a risk that much of the investment would flow to already flourishing urban and economic centres. The role of the government is therefore to ensure fair distribution of dividends of these new investments and remove any disparities.

These steps however require well-coordinated actions by multiple federal and provincial government departments. We therefore need to carefully think through our governance structure for corridor development. Other countries have established fully-empowered private sector-driven statutory bodies that coordinate actions across a range of departments and are accountable for clear performance indicators such as quantum of investment mobilised and number of new jobs created, rather than showing summits, conferences and roadshows as their achievement.

Investment for CPEC road infrastructure stands around $11 billion. At 2% interest and 20-year repayment period, it translates into $672 million debt-servicing payment every year. The toll payments alone will not be sufficient to pay back this amount. Economic corridor development is therefore the only way to go.

Published in The Express Tribune, June 5th, 2018

https://tribune.com.pk/story/1727674/6-cpec-transport-economic-corridor/

Comments

Popular posts from this blog

Balochistan to establish first medical university

https://www.dawn.com/news/1366135

The Newspaper's Staff CorrespondentOctober 25, 2017QUETTA: The provincial cabinet on Tuesday approved the draft for establishing a medical university in Balochistan.Health minister Mir Rehmat Saleh Baloch made the announcement while speaking at a press conference after a cabinet meeting.“The cabinet has approved the draft of the medical university which would be presented in the current session of the Balochistan Assembly,” he said, adding with the assembly’s approval the Bolan Medical College would be converted into a medical university.Published in Dawn, October 25th, 2017

CPEC Jobs in Pakistan, salary details

JOBS...نوکریاں چائنہ کمپنی میںPlease help the deserving persons...Salary:Salary package in China–Pakistan Economic Corridor (CPEC) in these 300,000 jobs shall be on daily wages. The details of the daily wages are as follows;Welder: Rs. 1,700 dailyHeavy Duty Driver: Rs. 1,700 dailyMason: Rs. 1,500 dailyHelper: Rs. 850 dailyElectrician: Rs. 1,700 dailySurveyor: Rs. 2,500 dailySecurity Guard: Rs. 1,600 dailyBulldozer operator: Rs. 2,200 dailyConcrete mixer machine operator: Rs. 2,000 dailyRoller operator: Rs. 2,000 dailySteel fixer: Rs. 2,200 dailyIron Shuttering fixer: Rs. 1,800 dailyAccount clerk: Rs. 2,200 dailyCarpenter: Rs. 1,700 dailyLight duty driver: Rs. 1,700 dailyLabour: Rs. 900 dailyPara Engine mechanic: Rs. 1,700 dailyPipe fitter: Rs. 1,700 dailyStorekeeper: Rs. 1,700 dailyOffice boy: Rs. 1,200 dailyExcavator operator: Rs. 2,200 dailyShovel operator: Rs. 2,200 dailyComputer operator: Rs. 2,200 dailySecurity Supervisor: Rs. 2,200 dailyCook for Chinese food: Rs. 2,000 dailyCook…

Germany’s Siemens sets up Belt and Road office in Beijing

https://gbtimes.com/germanys-siemens-sets-up-belt-and-road-office-in-beijing
Germany’s Siemens sets up Belt and Road office in Beijingby Janne Suokas Mar 23, 2018 15:20 TRADEINVESTMENTBELT AND ROAD INITIATIVEGerman industrial and engineering group Siemens will set up a Belt and Road office in Beijing. surberFlickrCC BY 2.0
German industrial and engineering group Siemens will set up an office in Beijing to boost international cooperation under China’s Belt and Road initiative, the company said on Friday.The move will help strengthen Siemens’ cooperation with Chinese and international companies and expand business opportunities brought about by the Belt and Road initiative, according to the company’s statement.The Belt and Road initiative is China’s ambitious project to boost trade and infrastructure investment in more than 65 countries along the ancient Silk Road trade routes from Asia to Europe and Africa.Siemens said it had already partnered with hundreds of Chinese companies in overse…