Pakistan has already missed two big development opportunities; CPEC brings with it a third. It is a moment of opportunity we cannot afford to miss, writes Ahsan Iqbal, Federal Minister, Planning, Development and Reform.
TIMES are changing, the world is transforming, and Asia remains at the epicentre of this 21st century transformation. The centre of economic power is shifting from the West towards the East partly because of the global economic recession of 2008-09, and partly because of the implementation of futuristic visions by China in the form of Belt and Road Initiative (BRI). The China-Pakistan Economic Corridor (CPEC) serves as the flagship project of BRI and this vision.
CPEC, which is one of the seven economic corridors of BRI, provides Pakistan and the surrounding countries enormous opportunities as it gives an integrating platform for over three billion people in Central, West and South Asia, as well as in the Middle East and Africa.
The surge in trade, investment and financial flows would bring not just peace and prosperity to these regions through enhancement in the competitiveness of the economies of the countries, but also better living standards seeking to reduce regional disparities and social inequality and improve life expectancy as well as quality of life in the country and in the adjoining region.
Through CPEC, Pakistan is harnessing its geo-strategic location into geoeconomic advantage. Through CPEC the region will be integrated into an economic hub, promising a great future for its populace.
The CPEC project epitomises the growing mutuality of interest and the vision of a shared politico-economic future on the part of Pakistan and China. It creates a new framework of interaction on the basis of economic connectivity and regional cooperation which will have far-reaching positive implications for the two countries as well as the adjoining regions.
Safe to say, the CPEC is an integral part of BRI which seeks to turn Silk Route into an economic reality. Therefore, it won’t be an exaggeration to call CPEC a game-changer for Pakistan, Asia and the wider region. The completion of early harvest projects has set the stage for a prosperous industrious Pakistan cooperation.
There is no doubt that the future of Asia is a shared one, and CPEC serves as the primary platform through which we can work towards building our sustainable and prosperous future which depend upon the contribution and trust of international partners and countries that can seek to benefit from it.
Since 1978, when the reform and opening-up drive was introduced by China, the country chose an investment-driven mode of development, and it was proven as a correct choice based on the need for fast growth. Economic reform in China is of paramount importance, with market-oriented reform and the reform of state-owned enterprises (SOEs) at its core.
Following China’s footsteps, Pakistan is also working on a new growth engine driven by creativity and innovation in order to build a dynamic model of development.
CPEC envisages broadened connectivity, enhanced infrastructure, sustainable development, and people-to-people exchanges. Besides the cultural and social aspects, CPEC seeks to address the infrastructure gaps in Pakistan by focussing on the development of transport and energy infrastructure, to innovating telecommunication and financial networks, in an environment that attracts foreign investment from private as well as public enterprises.
CPEC is helping us mobilise resources needed to fill up infrastructure as well as other gaps in sectors such as telecommunication, education, agriculture, maritime etc. By selecting the right projects, on the right scale, with right financial arrangements, in an optimum policy environment, BRI countries can safeguard ourselves from financial and economic risks that come with the futuristic and tremendous projects like CPEC.
Thanks to the CPEC, we have attracted increasing foreign direct investment (FDI) into Pakistan in the infrastructure, power and construction sector. Moreover, Gwadar, due to its strategic and geographical significance, has the potential to surpass neighbouring ports in terms of trading activity. The trade has already commenced and we are on our way to attain transformation of Pakistan into a global economic hub.
Strengthening economic growth and improving people’s livelihood is a crucial pillar of CPEC. Through CPEC we are moving closer in reducing urban-rural gap with policies of targeted poverty reduction and human resource (HR) development.
We want to forge a comprehensive economic cooperation by leveraging our respective comparative advantage and strengthening all-round cooperation based on bringing their economic cooperation to an unprecedented height. We want to implement mutually beneficial development and improve the level of connectivity to achieve the goal of promoting mutual development, mutual prosperity and mutually beneficial cooperation.
CPEC in the last five years has been developed and implemented as per the cooperation priorities. The initiative has given us new dimensions to improve and promote inter-governmental cooperation, build a multi-level communication mechanism, expand shared interests, enhance mutual political trust, and reach new cooperation consensus. The concerted efforts by all team members have helped build a robust policy support for the implementation of practical cooperation and large-scale projects.
The Pakistan of 2018 is a confident country showing tremendous potential to achieve the economic targets of Vision 2025. Through Government’s pragmatic policies we are more open for business, trade and investment. Today, investors across the world from the Americas, Europe and the UK eye Pakistan as a lucrative investment destination.
China’s experience in development and success of Special Economic Zones (SEZs) and their robust industrial development serves a good example for us. Given this, industry cooperation between China and Pakistan compounded with the guidance of Chinese experts will provide excellent opportunity for Pakistan to strengthen industrial capability and national domestic economy.
Through pragmatic policies Pakistan today is more open for business and investment. Global investors eye Pakistan as an investment destination.
To achieve the vision of economic, structural transformation and sustainable poverty alleviation it is being endeavoured to work on the Industrial Cooperation under CPEC by developing SEZs by attracting local and foreign investors.
Despite the positive news and outlook of CPEC, there are still naysayers who continue to undermine the Government’s unflinching efforts for making CPEC a successful reality. One of the most recent attempts is this new norm by many critics to term the CPEC as a debt-trap, a carefully chosen term coined by those looking to sabotage the initiative. The fact of the matter is that out of the total package, an estimated amount of 34 billion in the form of investment by Chinese companies is in the energy projects in Pakistan, which has nothing to do with Pakistan’s external debt liability.
Therefore, in these times, it is our duty to remain vigilant and make sure that our knowledge is backed by substantial evidence and research. Only then we will be able to move towards a more prosperous Pakistan, Asia, and a better World while safeguarding sovereignty, mutual benefits and national vision.
At the CPEC Summit, of which the Ministry of Planning and Development was a co-host in a publicprivate partnership, I spoke about the economic reality that is undeniably emerging. It is an age of knowledge revolution, innovation and disruption. The speed of change has become the speed of electron. Dinosaurs of today become history tomorrow. Therefore, for any economy, for any country, it is important to understand the new emerging global realities.
Asia is becoming the new engine of growth in the world economy. It is estimated by 2050, Asia will contribute 52pc to the world GDP. Within Asia, South Asia, China and Central Asia where three billion people live, these are the new engines of growth. Pakistan has a great opportunity that it is located at the intersection of these three engines of growth. If we can create economic corridors in this region, Pakistan can become the hub of trade, commerce, manufacturing and global supply chains through this part of the world. It is in that spirit that when we developed Vision 2025, we made regional connectivity one of its seven pillars because for 70 years we wasted our time playing in the orbit of geopolitics.
In July 2013, we accompanied [the then] Prime Minister Nawaz Sharif and signed a memorandum of understanding with China in Beijing to start our CPEC journey. It was only an expression and intent of working together to carve out a new future, but within a couple of years, that piece of paper became a portfolio of $46 billion on which both sides had agreement and we have been able to energise $29 billion of investment from that portfolio till today and the remaining is in the pipeline.
This is now the biggest flagship project of BRI of the Chinese leadership. It is also a great progressive vision put forward by President Xi. At a time when world economy had slowed down, at a time when developed economies were not showing demand or growth, he put forward a very transformational and progressive BRI vision.
When you have no growth, it means there is no demand. So, in order to produce growth, you need more demand and if existing markets are not producing demand, you need to create new markets and how do you create new markets? You create new markets through connectivity. This is the basic essence of BRI; this huge network of corridors. Connectivity is going to bring new demand and growth in the world economy.
BRI and CPEC are not a conspiracy, are not bilateral programmes. These programmes have regional and global impact and they offer opportunities for all players in the region and every player in the global economy.
Pakistan, with 207 million population, one of the biggest markets in the world, about 80 million middleclass strategically located on CPEC route, has an opportunity to become the key player in BRI and bring prosperity for its people and for the region by developing a modern infrastructure through this initiative.
God has given us the third opportunity. In the past, we have dropped two development catches. The first catch we dropped was in 1960s when everyone said that Pakistan was the next emerging economy. The 1965 war derailed us from that journey. In 1991, when the government of Nawaz Sharif introduced new economic reforms, we had the second opportunity but Pakistan was thrown into perpetual political instability to undermine democratic process in this country. This is now the third moment for us, the third opportunity that has come to us through our most reliable and trusted friend, China, which has shown that a friend in need is a friend indeed.
CPEC essentially comprises four pillars; Gwadar Port, energy, infrastructure and economic zones, but it is now extended up to 2030 through a long-term plan which encompasses all socioeconomic dimensions of development. From technology to social development, it is now not just a framework of projects, it is a framework for complete socioeconomic development and it is a partnership for shared prosperity. If we continue on this path, Pakistan will become one of the top 20 economies by 2030 as Price Waterhouse Coopers has already projected Pakistan to be in that league.
CPEC has brought valuable foreign investment. When I started my first meeting with the Chinese, I was myself surprised to see that China figured 13th in FDI. In 70 years, we never saw China as an economic partner. While China was showing a miracle, no one had the foresight here to develop an economic partnership with China. In 1980, per capita income of Pakistan was $300. In 1980, per capita income of China was $200. Today, China’s per capita income is $8,000 and ours is $1,600. We are very happy that China has made a miraculous economic progress but if we also had an economic foresight, we could have partnered with China to also benefit from this economic revolution.
Development cannot happen in vacuum. The success of China is based on a combination of four factors; peace, stability, development and reform. Unless these four pillars become a platform for any nation to move forward its development ambition, that development ambition cannot turn into reality. If we will not ensure political stability, if we will not ensure peace and solidarity in our country, best of the best plans and best of the best intentions will fail. If you look at the average of last five years and compare this with the average of previous five years, you will see that Pakistan is today on a trajectory of growth. From 2008 to 2013, our average GDP growth rate was 3pc.
From 2013 to 2018, the average growth rate is 5pc. It is 5.8pc this year, which is the highest in the last 13 years. CPEC has brought opportunities for every region of Pakistan. We have to understand that there are lobbies which are not happy with CPEC and they keep spinning disinformation. CPEC is not a debt trap. CPEC has 75pc of investment in IPP mode. All energy investment is private investment; not a single dollar of loan to Pakistan. There is no debt trap in CPEC. It is a partnership for the prosperity of Pakistan. It is a helping hand from our most brotherly trusted country that has shown that it has stood with Pakistan in another time of need.
Some say, China will become East India Company. They have not read history. In 3000 years of history, China has never occupied a single inch of foreign territory compared to every other global power that has done imperialism in history. So, China seeks partnership. China seeks to bring fruits of development and share fruits of development with all other countries.
Lastly, there is nothing to fear for Pakistani businesses. This is again a propaganda. Actually, the nine SEZs will bring tremendous opportunities for Pakistani businessmen to partner with Chinese companies, to attract Chinese investment in Pakistan. There are 85 million jobs ready for relocation to other countries because of the rise in wages in China. These 85 million jobs, if we fail to attract a share, will go to Vietnam, Cambodia, Myanmar, Ethiopia and other places. It is for us to go out and attract and partner Chinese enterprises to bring their investment and technology in Pakistan so that we can create jobs for our young population.
I hope both sides will take advantage of the CPEC Summit and work newer projects because the future of CPEC is not in government-to-government cooperation; it is in business-to-business cooperation.
I am grateful to the Chinese businessmen who travelled from China to participate in the event and for meaningful meetings with Pakistani businessmen. They will together translate this great project as the biggest testimony of friendship in the 21st century and the print on history of CPEC will always be there like the Great Wall of China.
Let us reject the naysayers who sit in the evening on television talk shows and tell us how everything is bad. Pakistan is not sinking. Pakistan is rising. Pakistan is now moving forward and CPEC is the driver of this rising Pakistan. Let us all commit that by working harder, working better and working smarter, we will put this country in the top 25 economies of the world by 2025. Long live China-Pakistan friendship!
The writer is Federal Minister, Planning, Development and Reform.
This article is part of the CPEC 2018 summit supplement. To read more from the supplement, visit the archive.