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Road to transformation


1/7/2019
With new trends and norms being adopted across the globe, it has been witnessed that China’s trends and experience have tremendous lessons on offer to its neighbours and beyond.
 
For its part, Pakistan – as the flag bearer of China’s Belt and Road Initiative (BRI) – is undergoing reforms to develop its economy and is encouraging efforts to rejuvenate its industrial base and small-and-medium enterprises (SMEs). In this regard, CPEC’s industrialisation phase provides enormous opportunities to Pakistan through the creation of special economic zones (SEZs) and the subsequent development of businesses in various sectors.
 
During the 8th JCC meeting held in Beijing last year, the two sides focused on industrial development; enhancing agriculture cooperation; poverty alleviation; and social-sector development to improve the lives and livelihoods of Pakistanis. During the event, China and Pakistan signed an MoU on industrial cooperation. This particular agreement promotes cooperation in key industries, such as textile, petro-chemical, automobile, and iron and steel.
 
Importantly, both sides agreed on the early development of four SEZs that are in the advanced stage of planning in Phase-I. The SEZs include the Rashakai SEZ in Khyber Pakhtunkhwa, the Dhabeji SEZ in Thatta, the Allama Iqbal Industrial City (M3) in Faisalabad, and the Islamabad IT SEZ. The government is also focusing on the requirement of utilities and infrastructure to jumpstart zones. Once this is successfully achieved, the remaining SEZs can follow suit with minimal chances of error, and a high success ratio. In its road to prosperity and industrial growth, China started from one SEZ, ie Shenzhen SEZ in the late 1970s.
 
The implementation of this important sector will support the exploration and development of natural resources; improve business-to-business (B2B) linkages; and enhance the investment environment and trade cooperation. This cooperation is likely to increase economic growth and shape new industry clusters, thereby taking the fruits of CPEC to the relatively underdeveloped regions of Pakistan.
 
The special economic zones will help generate employment, which is, by and large, the only sustainable method to reduce poverty. This development needs to be aggressively pursued to shape a new international logistics network and promote regional economic integration through stable trade growth.
 
In accordance with the vision of cooperation, development and win-win progress under CPEC, both countries ought to make use of the existing bilateral cooperation mechanism to form synergies and complement each other’s endowments to achieve early results in the industrial cooperation phase. Although Pakistan lacks the requisite expertise to develop SEZs, China’s experience and success with special economic zones and their robust industrial development presents a model for us.
 
In light of this, industry cooperation between China and Pakistan, compounded with the guidance of Chinese experts, will provide an excellent opportunity for Pakistan to strengthen industrial capability and national domestic economy. Trained and highly skilful human resources are required to meet this demand. Experts in both countries are also exploring new avenues of vocational and technical education, aimed at building support to CPEC-led industrialisation by providing trained human resource.
 
In this regard, public-private partnership will accelerate the growth process and support the government in this pursuit. Incentive packages for new and existing industries that are relocating into SEZs, either from abroad or within, need to be made more inclusive. We may follow the examples of Vietnam, Laos and Cambodia.
 
Apart from tax-based incentives, a fragmented regulatory framework also needs to be fixed to create a conducive environment to attract investment. We may consider providing incentives in various sectors that are fundamental to our future industrial growth, including the oil and gas sectors. We also need to strengthen our triple helix model by synergising the three pillars: academia, the government and industry.
 
Only robust industry development can attract large-scale foreign direct investment, ensure holistic development, create employment for our burgeoning youth population, and help achieve an economic turnaround.
 
For Pakistan, this is the right time to take action and we cannot afford to fail. All we need to do is leverage our geographical advantage and increase regional integration to connect with regional supply chains. Pakistan’s business community also needs to steer the helm of this business-led phase of cooperation and must gear up to capitalise on the liberal trade policies, road shows and industrial incentives offered by the government. We also need to stay abreast with innovations, technological developments and the evolving expectations of investors.
 
Source: The News