The Joint Coordination Committee (JCC) on CPEC will ink an industrial cooperation framework agreement on Dec 20 in Beijing to ‘pave the way’ for the development of Special Economic Zones (SEZs) in Pakistan.
Under the framework the Chinese investors will be encouraged to relocate in SEZs such industries whose products could be exported, especially to their home market, or which could substitute Pakistani imports from China.
The agreement is also expected to encourage joint ventures in the manufacturing sector which is lagging behind much faster growth in other segments of the Pakistani economy.
Keeping with the continuing trend, the companies registered in November with the Securities and Exchange Commission of Pakistan (SECP) show that the two top categories are trading (165 firms) and services (120).
Of the total November registrations, 35 food and beverage companies were incorporated although it wasn’t immediately clear whether they intended to manufacture in Pakistan as such had not been specified by the SECP.
Modern autonomous outfits on the model of newly created organisations are needed to make SEZs a ‘one-stop shop’ and spur investment. The system has to take care of the investors
The final draft of the industrial cooperation pact has been shared with the chief ministers of all provinces, the prime minister of Azad Jammu and Kashmir (AJK) and the chief executive of Gilgit Baltistan (GB). They will be part of the delegation to the 8th JCC meeting led by the federal planning minister.
Nine SEZs were originally planned to be set-up in three years and presumably, with the exception of an IT zone in Islamabad, all are to be built by the provinces. The cabinet sub-committee on CPEC has now decided that the sub-federations, AJK and GB governments will market their own industrial zones and projects. The provinces are also required to share their pilot projects with the Chinese partners in the coming JCC meeting in Beijing.
While Pakistan is “welcoming investments from multiple countries for special economic zones,” Board of Investment (BOI) Chairman Haroon Sharif says the pace of work on these zones need to be expedited.
The major problem is providing an uninterrupted supply of utilities, particularly power but also gas and water. There is not enough power in the country for the large-scale investment envisaged for these zones. Mr Sharif has proposed that captive power plants be considered for meeting electricity demand.
According to the BOI, of the three SEZs currently being built under CPEC only the one in Faisalabad is nearing completion; while the SEZ in KP’s Rashakai is in the final stage of approval. The KP government has signed an agreement with the China Road and Bridge Corporation for developing the Rashakai industrial zone in two years. The Dhabji SEZ in Sindh, is “moving, albeit slowly”.
The World Bank’s (WB)’ Doing Business Reforms Advisory Scoping Mission’ in Pakistan has advised the Sindh government to focus on industrial estates with the necessary infrastructure.
In a meeting with the provincial Planning and Development Board Chairman Muhammad Waseem, WB officials said industrial zones were required to ‘provide an enabling environment for investment’.
Leading a delegation of Overseas Investors Chamber of Commerce of Commerce and Industry (OICCI) members, the OICCI President Irfan Wahab Khan, in a meeting with Prime Minister Imran Khan, pointed out that “investors can take market risks but have difficulty in managing risk created by the system.”
“The biggest hurdle for us is surely the weak capacity of the state to deal with private sector investors and find ways to deliver on their needs,” says Haroon Sharif. When foreign investors show interest, the state needs to put technical expertise on the table, he adds.
According to available data, the skewed distribution of the federal workforce betrays the shortage of capable expertise in Pakistan’s highest policymaking apparatus. Only five per cent of the total workforce in the Federal secretariat and attached departments comprise of highly educated professionals while the subordinate or support staff accounts for 95pc.
The situation is stated be better in autonomous institutions where 17pc of the personnel are from the educated officer or professional class. Provincial governments and their old autonomous institutions are no different. Thus, says an expert in public administration reforms, “decision-making is of very poor quality and results in general public dissatisfaction with government functionaries.”
However, there is a huge difference in the professionalism, efficiency and performance of the old institutions and modern IT outfits set-up in the pubic sector in recent years.
Modern autonomous outfits on the model of newly created organisations are the needed to make SEZs a ‘one-stop shop’ and spur investment. The system has to take care of the investors.
Published in Dawn, The Business and Finance Weekly, December 17th, 2018
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