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Pakistan set for economic jumpstart under second phase of CPEC

Source: Xinhua| 2019-12-03 18:57:31|

By Raheela Nazir

ISLAMABAD, Dec. 3 (Xinhua) -- Since the inception of the China-Pakistan Economic Corridor (CPEC), Pakistan has been witnessing an unprecedented upward trajectory in the socio-economic domain, with a major uplift in the energy sector and transportation infrastructure over the past six years.

Back in 2013, Pakistan was under acute energy crisis when the local industry was relocating to the neighboring countries, and some parts of the country were witnessing electricity load shedding of even 18 to 20 hours in a day. With the implementation of CPEC energy projects, Pakistan is now almost a load shedding free country.

Similarly in 2013, the transport network was in dilapidated condition, causing an annual loss of about 3.5 percent of Gross Domestic Product, according to local media. Under the first phase of CPEC, the transportation infrastructure has improved considerably through integrated road networks and upgradation of railways.

China is investing billions of dollars in Pakistan through CPEC which is now entering its second phase, focusing on industrialization, agriculture and socio-economic development. Local economists believe that the second phase of CPEC will act as a stimulus for Pakistan's economic growth.

Yasir Masood, director of media and publications at the CPEC Center of Excellence, an Islamabad-based think tank under Pakistan's Ministry of Planning, Development and Reform, told Xinhua that the second phase has all the contours and the right strategies which will enable Pakistan's economy to take off by industrialization, technology transfer, innovation, agriculture modernization, trade and market access, blue economy, regional connectivity and third party or multiparty participation in different sectors.

"The development and operations of the special economic zones (SEZs) will be one of the major focuses under the second phase of CPEC. To better populate and then run the SEZs, right investment strategies in addition to right industrial mix in the zones will be ensured," he said.

Keeping in view the enormous economic benefits of the SEZs, Pakistani Prime Minister Imran Khan has recently directed authorities concerned to fast-track the completion of the infrastructural work on the SEZs so as to facilitate foreign direct investments and establishment of industries.

Pakistan's Minister of Planning, Development and Reform Asad Umar said on Friday that the government is expected to perform the groundbreaking of the first special economic zone under CPEC by the end of December, adding that another two SEZs will be open within the current fiscal year.

However, Masood stressed that "the success of the SEZs would depend on a number of factors including geographical advantage, the business environment within the SEZs, the right industrial mix within the SEZs, presence of foreign firms and brands, linkages of the SEZs with the domestic economy (backward linkages) and SEZs enterprises integration in the global value chains."

"Implementation in the right direction of the devoted plans can change the destiny of the Pakistani generation considering the utilization and importance of the second phase of CPEC to its full potential."

Shakeel Ahmed Ramay, a political economist and executive director of Zalmi Foundation, a non-profit organization supporting and facilitating the implementation of sustainable development agenda across Pakistan, told Xinhua after the first phase of CPEC, the confidence of international investors has greatly improved which has set the stage for the second phase.

He said investors need basic infrastructure like energy and transport to run their business ventures which Pakistan has been able to overcome with the completion of the first phase of CPEC, adding that "now every other day, a number of delegations and chief executives of international companies are visiting Pakistan for business opportunities, which is going to revive the economic activities in Pakistan."

"Most importantly, special economic zones are being built under the second phase of CPEC that had great potential for attracting investments from across the globe particularly from China," Ramay said, adding that if Chinese companies come to Pakistan with technology transfer for joint ventures and investment, it will create new opportunities for entrepreneurs of both countries and give impetus to Pakistan's exports.

He said an estimated 75,000 jobs have been created during the first phase of CPEC, and over 1 million employments will be generated during the second phase, which will ultimately help Pakistan in poverty alleviation.

Pakistani experts are of the view that the private sector and business community of Pakistan would be the leading players during the second phase of CPEC while the government's role would be mostly of a facilitator, contrary to the first phase which required the leading role of the government.

In this regard, a business council has recently been established by the government of Pakistan and through the investment-friendly policies which are in the offing, the business community would be able to establish the joint working groups with the business community of other countries including China which will create an inclusive win-win ambiance for the entrepreneurs.

In order to improve Pakistan's overall trade performance, China has offered Pakistan export concession on 313 new items under the second phase of the free trade agreement (FTA) between Pakistan and China signed during Prime Minister Imran Khan's visit to China in April this year.

The agreement came into effect on Sunday under which Pakistani manufacturers and trader will be able to export 313 new products on zero duty to the Chinese market.

Sheikh Amir Waheed, the chief executive officer of the AW Group of Industries and former president of Islamabad Chamber of Commerce and Industry, said the inclusion of a list of 313 items in the FTA, which include commodities from agriculture, textile goods, leather and other wide range of goods is a positive step taken in the right direction considering Pakistan's current financial hurdles to pay off external debt. It is a testimony to the fact that China wants to make Pakistan's economy sustainable, independent and long standing.

"This is a humongous opportunity for the Pakistani traders to tap the huge market of China which is now brewing with new openings for the entire world," Waheed told Xinhua, adding that Pakistan can now enhance its exports to China and thus mitigating the existing huge trade deficit between both countries.

Local traders, however, must study the Chinese market demands first and prioritize their exports accordingly. They should offer the best products which are competitive, demand driven with quality assurance while meeting the deadlines of deliveries that will give many benefits to exporters and traders of Pakistan, said the industrialist.


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