CPEC to reduce the cost incurred by transportation: International experts
China Pakistan Economic Corridor (CPEC) is a flagship project of the Chinese vision of “One-Belt-One-Road and Pakistan has announced to benefit from it as per own priorities. Out of the total CPEC investment, dollar 33 billion is in the energy related projects.
In the next twenty-five years, West of China, Central Asia, and Pakistan have the potential to lead the world development whereas in the previous twenty-five years South East Asia contributed to the world growth. Now China and Russia are developing Eurasia together but not just for the sake of trade but also to build institutions to aid in development of the entire region,
In a keynote address at 32nd Annual General Meeting and Conference of the Pakistan Society of Development Economists (PSDE), Pakistani Advisor on Foreign Affairs Sartaj Aziz said that CPEC was a grand concept that would not only connect China but it would also connect the surrounding countries and evolution of this project started many years ago when they realized that many parts of China, including Xinjiang, were far from ports.
Aziz, while highlighting the success of the present Government, said, we have achieved 4.5% GDP growth this year, which can increase further by overcoming energy shortages. In this regard, energy related projects in CPEC can prove to be very beneficial.
Each province has been asked to build one industrial park each and this is where more work and deliberations are needed as the development of industrial parks is very important to access larger markets and reap full benefits of CPEC. Sartaj Aziz also said that labor market dynamics are very important because once the industries are set up, we cannot expect the Chinese labor force to work in those industries
The theme of the PSDE’s this year’s Conference is “China-Pakistan Economic Corridor and Regional Integration”. Pakistan Institute of Development Economics (PIDE), with the support of Ministry of Planning, Development and Reform and other sponsors namely UNDP, FES, the World Bank, PPAF, OXFAM, IGC, ILO, IUCN, AKRSP, IFPRI, ADB, and ECO-SF organized the conference.
These topics include regional integration; how to manage industrial parks because our experience with the industrial parks has not been very successful unfortunately; and the domestic reforms that need to be undertaken to make CPEC a success.
In his address President PSDE and Vice Chancellor PIDE Dr. Asad Zaman said that the next hegemony of the world would be Asia, lead by China in transitional times the power was up for grabs. The transition also creates opportunities to redefine the world and it is the scholars who carry the day by redefining the world. When the leadership changes hands, it is the leader who sets the terms and the followers do not have much choice but to look at the world the way the leaders wants them to see it.
The VC PIDE said that there also existed an ancient Silk Road which was being revived through CPEC. In the end, he expressed hope that the new civilization that is emerging would be the opposite of barbarism which is currently the order of the day and that it would promote harmony and peace.
Lead Economist PFSG, African Region, the World Bank Vincent Palmade, said that the productivity of Pakistani firms is quite low, especially of the SMEs. The skill intensity of Pakistani exports is low and although the ICT and tourism sectors are doing well, much more needs to be done. Similarly, productivity of the Chinese firms is quite high as compared to that of the Pakistani firms.
At the same time, he stressed, there is a great potential in Pakistan and the conditions are favorable. For example, Pakistan has excellence in the production of Basmati rice but market regulations are restrictive. Similarly, Pakistan’s sporting goods, surgical instruments, and leather apparel industries have the potential but the business environment is not conducive. He said that there are four policy levers that should be taken into account.
While delivering the Allama Iqbal lecture on “Role of Productivity, Quality, and Innovations in Making CPEC Work for Pakistan”, Mark Goh of the National University of Singapore, said that the emphasis on infrastructure would reduce the cost incurred by transportation. CPEC would ensure that there is no congestion from Shanghai to Gwadar and the vehicles move at a minimum speed of 60 kilometer-per-hour.
This would mean completing the distance in 41 hours, which is a reduction by 82 % in the total time consumed. Prof Goh emphasized that by 2020 CPEC will reduce the trade cost to Central Asia by 11.5 % and to Indonesia by 25.3%. A one-day loss in transportation decreases the value of exports by one percent. Similarly, trade-improving transparency can result in 7.5 % increase in trade.
Discussing the role of connectivity, Prof Goh said that connectivity is of two kinds, which are hard connectivity and soft connectivity. Hard connectivity is infrastructure development, including roads, ports and ICT structures, whereas soft connectivity is knowledge sharing and institution building. He highlighted that CPEC aims to improve infrastructure as 46 billion dollars have been dedicated to build 2,442 kilometer long road to link Kashgar to Gwadar.