It is better to teach a man to fish than give him fish!

Hassnain Javed

JANUARY 28, 2020

 

 

If you watch the news, chances are you have come across statement by government officials on how our economy is on the right track? How the current account deficit has turned into a surplus and that our exports have surpassed our imports but the economy is a complicated subject for a common person like myself.

In order to better understand it, we need to get deep into details. According to reports, our balance of payments status changed from a current account deficit to surplus. It seems like good news and we are hearing appreciation for the government, but you claim it is not what is seems and that the Prime Minister doesn’t know what he’s “bragging” about. It is harsh critique.

But, this critique is based on facts the on-going reality checks. It is important to understand the success philosophy which is duly mixture of preparation and luck. Selected (again harsh) in literal sense our very respected elected Prime Minister came on mere luck who lacks the clue to handle the boiling pot which has been overcooked by previous chefs and now own verge to spill out. Moreover, to gain success it is essential to know how to manage failure.

The point is, the high unemployment rates, poverty and the difficulties faced by mass audience and not taking harsh stand would be none less than a crime. Statistics tell us exports have not increased. Then where are we getting the money form? Without exports there’s no point to incoming money neither have the remittances from migrants working outside doubled. Borrowing money from the US and parking it in Pakistan to earn interest-based profit and then send it back to the US does not serves Pakistan. Pakistan only can benefit if foreign investment establishes industries and assets such as power stations, dam, ports, canals and best utilize the China Pakistan Economic Corridor.

You don’t win wars singing patriotic songs. You need tanks, warships, armored cars, fighter planes etc. And they all run on petrol. Petrol is bought with dollars, dollars are earned via exports, exports are only possible with industrial development

As I have explained in my previous article “Hot Money route to no Money”. It is of significance to clear our mind from where this money is coming from ? The current account surplus is in actual not surplus these dollars are borrowed, it is debt. The government is taking loans and private entities are investing those dollars outside the country. If it isn’t a joke, then what is? But the prevalent economic team is of opinion that in order for our economy to stabilize they sought help. What other choice did they have?

But keeping in view our economic history it seems it is repeating itself. Until 2003 for every $100 of goods exported, Pakistan imported goods/services worth $125. This mean we had a trade deficit of 25%. There were some remittances, capital income and some debt rest we generally borrow enough to offset the deficit then. Now for every export of $100, our imports worth $230. This explains deficit of 25% has risen to 130%. This deficit can now neither be offset by remittances nor can any other capital influence do wonders. The only available option is to seek debt. There is a supermarket near my house where a separate section is allocated for cat and dog food. You can also find shampoo for your pets and we import all of this stuff.

One-third of Pakistani children are malnourished but we are importing dog and cat food from dollars we borrow from lenders. I demand the government ban all unnecessary imports. Levying duties or increasing them will not work just simply ban them. We should not import food at the cost of loaded debt for future generations. We do not need apples form New Zealand or chocolates from Switzerland. Some 5% of the population can afford such luxuries the rest hardly get by with three modest meals a day.

By having 17% GST, our industries cannot survive. It should be brought down to 5% so industries can be developed and perform. This will catalyze employment and exports to generate a genuine surplus. However, both suggestions will cause revenue to drop, but we can cover for both of the aspects. Firstly by cutting down on non-development spending. I am neither suggesting of setting austerity measures or selling cows in the name of austerity. We have 42 divisions in the government in Islamabad alone such as the division for National Harmony, National Regulation, National Heritage etc. Somebody please tell me what’s the use? The Post Office used to be a part of the Communication Ministry but now it’s a separate ministry. Previously it had one Director General and one Additional DG. Now we have one DG and nine ADGs for the Post Office. I don’t remember the last time I posted a letter and I’m sure you have not either. When I talk about cutting non-development spending, it includes defense as well. We need to open this debate now. There are two heads for the defense budget, which includes combat expenditure and non-combat expenditure.

Combat expenditure is not something I believe I am expert to form opinion. But other than that, we see a big chunk of the defense budget that has nothing to do with wars. On the way to Peshawar from Lahore via GT Road you will find a cantonment every 40km. They were built in the British Raj when they were engaged in wars against the Afghans. There were three wars with imminent threats of attacks and the enemy was Russia in Tsarist times. Now we have fostered friendly ties up to Moscow. We need to shut down those cantonments. Why have we kept them? The same way we have a Coast Guard. For some historical reason, the Coast Guard was under the Army. The Navy claimed that the seas were its territory and the Coast Guard must be handed over to it. Therefore, instead of handing it over to the Navy they created another force called the Maritime Security Agency. Now there are two forces doing the same work. So, there’s a lot of room to cut noncombat defense budgets. Why am I stressing this? If I have more spending but my income doesn’t reconcile with it. If there’s no hope for the income to increase. I must cut my spending. It’s as simple as this we don’t talk about cutting expenditure and whenever we have to cut the budget,we slash development. So, we can’t build power houses, roads, schools or dispensaries.

But non-development budget, both civil and military never see a decrease. They, in fact, only increase. Slashing defense and non-development expenditure are necessary to avoid a deficit. Deficit can crash the economy. It has, in fact, collapsed and we are now figuratively on the ventilator. The day we stop taking loans, we’ll go bankrupt, we won’t survive. You don’t win wars singing patriotic songs. You need tanks, warships, armored cars, fighter planes etc. And they all run on petrol. Petrol is bought with dollars, dollars are earned via exports, exports are only possible with industrial development. If we shut down industries there will be no exports and thus no dollars. This would result in our inability to buy petrol which means our tanks and warships will remain in silos and we won’t be able to fight our wars. In order to fight wars, we need a strong economy.

No matter what the government policies are how they affect people is important. Pakistan genetic DNA ordering is weak otherwise Pakistan as a nation can unite as one.

I will end my discussion by again taking inspiration from our neighborhood China “it is better to teach a man to fish than give him fish”. Therefore, we try our best to promote the local industries and build strong export base to combat the future challenges.

Hot Money route to No Money!

Hassnain Javed

JANUARY 21, 2020

 

 

Paul Krugman, Nobel Memorial Prize in Economic Sciences and Distinguished Professor of Economics at City University of New York, wrote: “….foundation for crisis was laid by a rush of foreign investors into a country, followed by a sudden rush out.”

Professor Krugman further add: “Since 1980, however, the roster has been impressive: Mexico, Brazil, Argentina and Chile in 1982. Sweden and Finland in 1991. Mexico again in 1995. Thailand, Malaysia, Indonesia and Korea in 1998. Argentina again in 2002. And, of course, the more recent run of disasters: Iceland, Ireland, Greece, Portugal, Spain, Italy, Cyprus.”

Keeping above in view throughout the years, consistently low investment rates are a promising sign for Pakistan, and it has become difficult to deal with the growing and developing economies, which are increasing at a much steady pace, rendering it a daunting challenge for the country. Structural flaws, legal and constitutional restrictions, enhanced tax compliance, policy instability and unexpectedness are major challenges to securing substantial conventional capital inflows into the country.

In order to have access to debt trapping, Pakistan has also been locked in a perpetual cycle of low-investment-low-saving generally results in private sector dragging out, which has constrained the country’s growth prospects. Regarding the regional economies, the investment rate in Pakistan is weakening both in absolute terms and as a percentage of GDP, which has adversely affected economic productive sectors like human capital, infrastructure, electricity, industrial sector, transport, agriculture, etc.

Resurrecting the economy is essential to government but securing foreign investors to invest in the country is equally valuable. The government’s economic team recently visited the US and Europe, and went out of their way to persuade and attract and retain investors to invest in government bills and bonds as lending rates are reportedly very high in Pakistan. Therefore, interest rates in Europe and the US are not so high, foreign investors will earn better returns by lending money to Pakistan due to high interest rates, while Pakistan can receive foreign currency, that will further help build its foreign reserves.

This is technically called Carry Trade and is also known as Hot Money. Hot Money means is an investment strategy concerning low interest rate borrowing and investing in an asset that delivers a higher rate of return. Pakistan has already been naturally drawn by international investors to some USD 400 million as Hot Money. SBP authorities believe that in the months ahead Pakistan will be able to raise up to USD 2 billion as hot money, while the Ministry of Finance will also finalize the recapitalization of Euro Bonds with a very attractive return rate.

Pakistan initiated foreign currency accounts (FCAs) in the early 1970s by providing the necessary and saving mechanisms to employees working overseas to draw capital flows to fund rising deficits. This scheme proved costly as accounts covered against the exchange risk, banks were granted a’ cushion’ advance cover on their foreign exchange liabilities towards the forefront by State Bank of Pakistan (SBP).

Hot Money means is an investment strategy concerning low interest rate borrowing and investing in an asset that delivers a higher rate of return. Pakistan has already been naturally drawn by international investors to some USD 400 million as Hot Money

In early 1990s, Pakistan opened up its economy, embraced liberal and market-oriented policies, and boosted private sector by introducing incentive packages eying capital flows. FCAs evolved into tax havens for international investors to park capital as a result of some legal measures to entertain tax evaders, which raised the country’s external debt and additional expense to the economy.

The trade liberalization regime’s adherents believe that financial capital markets and flexible exchange rates chase away free inflows of capital from one country to another to manipulate short-term gains that make the economies more susceptible. Due to the sheer trend of globalization, various global hedge funds began approaching Pakistani stock market and started pouring hot money for their narrow-term gains.

In order to complement the critical necessity of opening capital accounts during the first half of the 2000 era / decade, the liberalization process persisted and culminated in more openness and control, allowing foreign exchange companies promote structured inward remittance networks rather than hawala and hundi ones. With both the liberalizing procedures of foreign banks, industry-determined exchange rates, and financial reforms, in 2007 country garnered $8 billion in private foreign investment.

These foreign capital inflows exacerbated stock market and real estate speculations, which made them resilient contribution to degenerating competition in the country. If the prominence of Pakistan’s economy to the global economy is not as large as that of emerging economies, but in the past, it persisted highly susceptible and consistently felt the ‘ heat ‘ from economic shocks originating from international oil prices that chucked Pakistan into regular payment balance shocks. Successive governments have not followed any serious legislation on foreign investment policies to entice capital flows in human capital, superior technology, infrastructure, industry or business ecosystem.

Homeland has in the earlier days raised loans from foreign commercial banks or international cooperation agencies to build foreign exchange reserves at floating rates with short-term investment boundaries. All these previous activities of capitalizing hot money create major debt sustainability challenges, and destabilize the country’s external account.

In order to conclude, the current designated economic team needs to understand rather than living in fool’s paradise and assuring everything will get in align the short term benefits should be weigh against the tsunami of losses and economic disaster. As expressed in “Why nations fail” experiences should be taken as precedent. Pakistan economyhad experienced the severe backlashes of hot money due to its volatile nature. Such evidences are also found in the case of Mexico (peso crisis, 1994), Thailand (Baht crises, 1997), Russia (1998), Argentina (2001) which led to massive disruptions, fluctuations in foreign exchange market and at domestic front as well. In brief, IMF is also of belief the short-term debt is route to channelize higher financial crises. I will end my discussion with an urge to country Prime Minister and his economic team to religiously adhere to Chinese philosophy “it is better to teach a man to fish than give him fish”.

Qatar-Education City

Hassnain Javed

5/21/2018

After a five years long gap I got the opportunity to spend some time in Qatar. At my surprise most of the things have been changed and there are positive developments and prospects all around. It is clearly visible that Qatar has started investing a large portion of its hydrocarbon revenues in human capital. The state has began targeting its education sector for reform over a decade ago, recognizing that its development would be key to diversifying the economy and meeting the objectives mapped out in the long-term strategy, known as the Qatar National Vision 2030.

A couple of years back, H.H. Emir Tamim container Hamad Al Thani endorsed a record spending plan of $62 billion expanding the designation of assets for education by 7.3% as contrasted with the previous year. As indicated by The Word Bank, this is one of the most elevated allotments in the MENA locale. Qatar’s open consumptions on education contribute to 3.3% of its GDP and this increment will be incompletely dispensed for extension of Qatar Foundation and Qatar University offices. Assets will likewise go towards building 85 new schools and to cover the costs of 29 which are right now under development. The principle objective of the Government of Qatar (GOQ) is to put resources into balanced and drew in residents arranged to help the country sooner rather than later.

The private division is likewise assuming an inexorably vital part in giving education services, especially at the essential and auxiliary levels, with private schools catering the most part to the ostracize populace and an expanding number of Qatari nationals.

By law, the Government of Qatar gives free education at the primary and secondary level. The Higher Education Institute (HEI) working under the Supreme Education Council, grants skilled youthful Qatari students full grants for undergrads and graduate projects in colleges around the globe. It is upon the discretion of the students who may choose from a rundown of 346 American colleges.

An aggregate of 1,420 Qataris considered in the United States amid the 2016-2017 school year. This is an extensive number for a populace just the measure of 2.1 million where expats constitute well more than 80%.

The choices are not just restricted to colleges abroad. Qatar Foundation (QF) is a noteworthy vehicle for education with its lead venture, a 2,500 section of land grounds known as “Education City,” that is home to the accompanying six American Universities which includes Weill-Cornell Medical College (medicine);Carnegie Mellon University (computer science, business);Georgetown School of Foreign Service (political science and international affairs);Virginia Commonwealth University (design); Texas A&M University (engineering) and Northwestern University (journalism).

Moreover, QF has implemented the Academic Bridge Program (ABP) in Education City which prepares Qatari high school graduates for universities in Qatar or abroad. Students receive training for the IELTS, TOEFL, SAT and ACT. In addition, QF launched its own scholarship program supported by local companies. The program focuses on long-term employment needs by sponsoring trainees to study in Qatar and overseas, in countries like the United States, UK, France, Germany and Australia.

As per most recent accessible report from Qatar Statistics Authority, there were almost twice the same number of female students selected in colleges in Qatar as compared to males, and about 66% of all graduates were ladies. While expat and Qatari females are still more inclined to select in and graduate with college degrees here, their male partners still outflank them with regards to achievement in business. With regards to facilitating their instruction, female Qatari understudies were significantly more prone to stay in Qatar than to accept up abroad open doors, reflecting national traditions and customs.

A total of 370 university students were awarded international scholarships in 2011-12 – with 80% of these (295) going to male students and just 20% (75) taken up by female students. Management and economics was the most popular field of study for those international scholarship students, with 183 of them choosing it for further study. This was followed by arts and science (82 students) and engineering for 67 students.

Qatar is working to develop an appropriate environment for its nationals, to acquire necessary skills applicable to key sectors of the economy. In this regard, the GOQ launched a “Qatarization strategy” designed to increase the number of Qatari nationals in all joint venture industries and government departments to assume important positions formerly occupied by expatriates. Despite the many educational options, the sector is striving to keep up with increasing market demand. The arrival of foreign professionals with their families, in an effort to meet the deadlines of projects set by the National Vision 2030 and the World Cup 2022, add significant pressure to the education system. The population has more than doubled since 2004 and more institutions are needed to cope with growing demand. The Government is conscious of the situation and the Supreme Education Council is making a concerted effort to promote the establishment of top international institutions.

 

In order to conclude, education is considered to be the backbone of any nation to develop. Qatar has rightly focused and implemented the strategies for its improvement as it will help create alliance for its population at large with enterprises and global world. I am hopeful that someday Pakistan understands the real worth of spending in education sector especially creating more avenues for women education development. As a good educated woman can help in shaping better children and a prosperous society.

Belarus- A New Trade Craze

Hassnain Javed

5/14/2018

Global economic philanthropy is a unique case. Whenever, Chinese community undertakes a foreign investment project, it has a multiplier effect on the economy at large and boosts the domestic revenue at a broader horizon. There are three channels through which local revenue accelerates. Firstly, revenues increase by the higher profit turnover of the domestic government’s own enterprises. Secondly, international trade and projects aids private companies to get registered in the local periphery which translates in increased production and simultaneously government tax revenue collection. Thirdly, foreign projects at some extent contribute in job creation if not permanently, then at least temporary, which overall improves the societal well-being. Besides the stated benefits for the Chinese national government, the local entrepreneurs involved are main drives to turn these projects into reality and serve as instruments for individual promotion.

Now, taking up the case of China-Belarus new trade projects it is obvious that any country that takes the initiative to invest and trade has potential benefits attached as it is believed to be no free lunches. First of all, investment in Belarus; Chinese are pursuing their own interests which are certainly interests vested by government officials. In a situation where, economic irrationality is presented by the rationality of the individual decision makers, career perspectives for government officials in China are most suited for those providing large budget surpluses. Therefore, Chinese investment in Belarus is not purely confined by maximization of Chinese economy in general. It can even be opposite to this objective as system is designed in a way that maximizes the local GDP and fiscal revenues which justifies economic rationality.

Chinese economy is more prone towards short-term results as the local officials have to report about the current updates to the central government rather than the long-term materialization. Thus, quantifiable results supersede the overall progress. The primary emphasis is placed on statistical numbers and indicators that help in generating a competitive environment among the local governments. There is famous Chinese saying that “numbers produce officials and officials produce numbers”. It clearly defines the ideological mechanism of the vicious circle that Belarusians aim to renounce with the Belavezha Accords.

Along with the potential gains and direct benefits from foreign investment there come wider opportunities for bribes and kickbacks. It is believed any type of investment that promotes and contributes within the governmental and part hierarchy translates in creation of personal wealth through corruption mechanisms.

Now, it is important to understand the phenomena behind the investment redirection by China. Why China is interested in investing in Central and East European countries. There is a major problem that China is facing that is at home there is problem of overinvesting in its own country. This is considered to be unavoidable problem because the performance of local officials is measured by the locality’s GDP growth. There is list of examples from China where airports, railroads and highways are only built for the sake of construction process and to increase localities GDP in a short run. For instance, the construction of Fuyang city airport project investment amounted to 320 million yuan. But, after being operational for a year it has to be closed down due to low air traffic. This example explains that Chinese are more interested in construction process rather than practical use of the final facilities. Once the project is completed Chinese are facing maintenance problems. Therefore, Chinese local governments save their money constructing outside China using the export credits. Thus, cost of maintenance for final facility is transferred to another country. Likewise, local governments gain some advantages from increasing production and providing jobs for people in localities. It will translate in short-term payoffs.

Based on the above analysis it provides evidence that what happens in China and the reason behind Chinese support with their export credit to different countries. In crux China is supersaturated with the investment projects within the country therefore benefits from continuing realization of the same projects abroad. Thus, Chinese projects in Belarus are with similar project intentions in corresponding industries. China has wide range of unnecessary construction of highways but Belarus in turn is far from the problem of having unnecessary expressways. Therefore, improvement of the infrastructural improvement is necessity and one of the top priorities. More than half of the 15,800 kilometers of Belarusian national highways, which stretch to about 9,000 kilometers, need at least a surface treatment therefore China redirected more than 322 US million dollars to Belarus. Moreover, Chinese and Belarusian parties also signed a 102 million US dollars loan for Intelligent Transport System in Minsk, which involves improvement projects on M-2 highway that leads to Minsk-National Airport and M-9 highway, which is a ring road around the capital.

In order to conclude, there are important lessons to be learnt from Chinese strategies and the way to promote their domestic industry even through export-credit. Every developing economy needs to realize their export potentials and best exploitation of their resources. Without giving boost to domestic industry in short-term it is impossible to meet with long term objectives. This analysis provides a wide picture that Belarusian trade investment by foreigners is unlikely to reap fruitful benefits to its economy as the possibility for them to benefit to the same extent as the Chinese officials is limited by the nature of Chinese loans used to fund the projects. China is smart in establishing trade links as it provides Belarusians with loans, conditioned upon the purchase of goods and services from the businesses and local state-owned enterprises in China.

Social Credit System

Hassnain Javed

5/7/2018

Another brand new phenomenon that is being introduced by yet again Chinese is “social credit system”. Chinese authorities claim that they have banned more than 7 million people who were considered to be “untrustworthy” from boarding flights and approximately 3 million others were deemed so from riding on high-speed rail trains. This provides evidence that Chinese authorities are getting more pro-active and use advanced technologies to have a complete crack-down on crime. To combat with this approach various pilot projects have already been launched nationwide in China.

The National Development Reform Commission reports on untrustworthy records offer evidence that China could engineer society if it combines technology with its credit system. The capital city of China, Beijing is striving to generate and officially operationalize a Social Credit System (SCS) by 2020. Now, what pertains in SCS is a national system designed in such a way to value, acknowledge, identify and engineer better individual behavior by generation of the scores for 1.4 billion citizens. This system will award the trustworthy and likewise punish the disobedient.

The “social credit system,” was first announced in 2014 which aims to strengthen the idea that “keeping trust is glorious and breaking trust is disgraceful,” according to a government document. The program is due to be fully operational by 2020, but is being piloted for millions of people already. The scheme is believed to be obligatory. Currently, the system is piecemeal and not fully executed some are run by city councils, others are scored by private tech platforms which hold personal data.

It is more similar to private credit scores, a person’s social score can also move up and down depending on their behavior. The exact methodology is still a secret and yet not be found by others but examples of breaches include bad driving, smoking in non-smoking zones, buying too many video games and posting fake news online.

Some of the operational execution of this scheme is observed in China as it has already started punishing people by restricting their travel. Approximately, 9 million people with low scores have been blocked from buying tickets for domestic flights, Channel News Asia reported in March, citing official statistics. Moreover, they can also compress down on luxury options because the recent statistics report that somewhat three million people are barred from getting business-class train tickets.

Actually, the main ideology behind this system is that it will punish bad passengers specifically. Some of the common observed potential misdeeds include trying to ride with no ticket, loitering in front of boarding gates, or smoking in no-smoking areas. According to Foreign Policy, credit systems monitor whether people pay bills on time, much like financial credit trackers but also ascribe a moral dimension. Other proposed punishable offences include spending too long playing video games, wasting money on playful purchases and posting on social media. In addition, spreading fake news, specifically about terrorist attacks or airport security, will also be deemed as one of the punishable offences.

For instance Beijing newspaper reported that 17 people who refused to carry out military service last year were barred from enrolling in higher education, applying for high school, or continuing their studies. Besides this, citizens with very low social credit would also be banned from enrolling their children at high-paying private schools. It’s not clear whether this particular policy has been put into action yet officially.

Moreover, “Trust-breaking” folks would also be disqualified from doing management jobs in state-owned firms and big banks. Some crimes, like fraud and embezzlement, would also have a big effect on social credit system. Likewise, individuals who refused military service were also banned from some holidays and hotels with implication that vacation plans are fair game too.

On the flip side the regime rewards people here as well as punishes them. It is reported by Chinese national that good scores aids in speeding up travel applications to places like Europe. An anonymous woman in Beijing also told the BBC in 2015 that she was able to book a hotel without having to pay cash deposit because she had a good score.

Furthermore, another feature on SCS is Naming and shaming method available. In year 2016 it encourages companies to consult the blacklist before hiring people or giving them contracts. However, people will be notified by the courts before they are added to the list, and are allowed to appeal against the decision within ten days of receiving the notification. Although it’s not clear when the list will start to be implemented but it’s adverse along with fruitful implications are being observed.

Beside the weirdness of the system the Human Rights Watch referred it as “chilling,” while Botsman called it “a futuristic vision of Big Brother out of control” and some citizens say it’s making them better people already. In order to conclude, Pakistan is also suffering from ever increasing crime rates, cybercrimes, unfair punishments and unlawful acts. To keep a check and to bring sense of responsibility among the citizens of Pakistan we have to launch such system from which society at large benefit. Pakistan has to aware its citizens that the government control is intact and if there is breaking of rules they will cause them punishments and if they religiously follow the rules it will shape Pakistan as harmonious and peaceful society.

Belt and Road Cross Border Cooperation

Hassnain Javed

4/30/2018

United Nations Industrial Development Organisation (UNIDO) has given 17 sustainability development goals (SDGs) whereas focusing primarily on goal 9 that industry, innovation and infrastructure which helps in promoting trade, standards, quality and investment. This idea further leads to inclusive and sustainable industrial development which encapsulates shared prosperity, economic competitiveness and safeguarding the environment. Shared prosperity promotes the idea of inclusive growth with equal opportunities for all people, via partnerships with all relevant stakeholders. In contrast, economic competitiveness supports the industrial growth, increased trade and technological progress, via modern industrial policies. Now, to remain sustainable which is important for future survival safeguarding the environment is of utmost need. Environmentally sustainable growth via cleaner industrial technologies and production methods is new way to address the issue.

By having industry, innovation and infrastructure there will be trade and development. Now, trade promotes economic growth, alleviates poverty and help countries reach their development goals. In addition, trade facilitation including implementation of the World Trade Organisation (WTO) trade facilitation agreement as well as tackling other policy and infrastructure barriers to goods and services trade are critical to growth and poverty reduction. But, if there is proper interconnection being developed by industrial clusters then innovation trade patterns could be channelised and emerging and developing economies like Pakistan can greatly benefit from it.

Now, to have industry innovation and infrastructure there is need of investment as well. Investment needs to be scaled up significantly in the coming years to contribute to the 2030 agenda. Moreover, SDGs explicitly call for quality and responsible investment to optimise contribution to economic development. Although several challenges persist in attracting inclusive and sustainable investment thus private investment act as a complement to public investment which is yet again a powerful development enabler for developing economies.

UNIDO has applied unique approach to address the goal which pertains to quality infrastructure to conform the investment and technology promotion offices to compete with innovation through e-commerce connection and support the idea of cross-border cooperation. Quality infrastructure refers to standards and quality for market access it requires consumer’s awareness and capacity building, enterprises upgrading and value chain development, quality infrastructure services through quality through quality promotion, conformity assessment, accreditation, mutual recognition and calibration verification tools. Moreover, quality infrastructure is also required at end of institutions for standardisation and accreditation. Likewise, regulatory framework and quality policy is essential at end of governance. If this is executed it will help in building stronger confidence for cross border trade and cooperation

Trade facilitation is also needed for improved cross-border trade what is needed are better quality products, which have been tested, inspected and certified before cross bordering to build the strong quality trade confidence. The key to success is creation of demand-driven quality infrastructure for sustainability. Demand refers to quality culture and supply is quality infrastructure there amalgamation equates the sustainability and generation of cross border trade.

Besides this, there can be different types of investment to support the goal it includes traditional investment, quality investment and impact investment. Traditional investment generates financial return which incorporates both direct and indirect investment. Quality investment as explained earlier requires strategically direct investments towards target areas with high growth potential and creating virtuous linkages with the local industry. The impact investment generates social and environmental impact alongside a financial return, can also be philanthropic in nature not aiming at financial return is very common tool by developed world to be applied in developing economies. It all leads to blend of social and financial value.

Impact investment addresses the most pressing challenges for both basic services and important sectors. It accounts for 1% of FDI flows (USD 1.53 trillion) which is growing around 20% yearly. It further helps in finding new types of investors like banks, pension funds, financial advisors, government and development finance institution and individual investors that turn to impact investment which are financially sound and can be helpful in contributing and attaining to SDGs. There are ten investment and technology promotion offices worldwide promoting two-way investment for achieving the SDGs.

The 4th industrial revolution commonly referred to as Industry 4.0 is changing the trade and investments patterns worldwide. In 18th century there was mechanisation which produced steam and water power later in 19th century there was mass production and electrification conveyor. In 20th century there was automation and today there is game changer by cyber physical systems and creation of idea internet of things. This transition explained how economies of scope translated into economies of scale and transformation towards individual production. It further strengthens that E-commerce as a driver for trade. E-commerce is playing an increasingly important role in promoting trade growth, industry transformation and job creation, as well as enabling developing countries and SMEs to better participate in and benefit from global value chains. E-commerce also brings overall strategic opportunities for the economic and social development for BRICs countries and evolving need for related policy discussions which aim at reducing trade costs in cross border e-commerce. Therefore, e-commerce unleashes opportunities for SMEs to participate in international trade and facilities SMEs to access information for cross-border investment.

UNIDO has taken several steps for sustainable development it includes Belt and Road Initiative (BRI), Inclusive and Sustainable Industrial Development and Sustainable Development Goals. BRI supports the regional development initiative that promotes win-win cooperation, common development, prosperity, peace and cooperation, openness, inclusiveness and mutual understanding. In 2016, the UN General Assembly showed its support for BRI by recognising its importance as a vehicle for regional cooperation, in particular its role in facilitating regional connectivity, trade and transit. In addition, UNIDO’s inclusive and sustainable industrial development mandate promotes shared prosperity, economic competitiveness and environment sustainability. Moreover, SDGs developing quality, reliable, sustainable and resilient infrastructure to support economic development and human well-being it all leads to driving economic transformation.

Programme for Country Partnership (PCP), is a new initiative which optimise investment, boosting trade and enhancing market access with main objectives to accelerate the momentum of industrialisation, create more development impact and assert the relevance of UNIDO as an influential agent of change for industrialisation. This program is led by the host government at the highest political level. The PCP leverages large-scale public and private investment for industrial development, infrastructure and innovation by targeting prioritised sectors and areas aligned with the national industrialisation strategy. The PCP creates synergy with partner interventions like UN agencies development partners, financial institutions and the business sector. PCP impact and partnerships includes UNIDO technical cooperation stand-alone and expanding bi-lateral trade by maximising impact through mobilising investment.

In order to conclude, Pakistan should focus on UNIDO’s role within the PCP. As PCP facilitates the conveying of partners and the overall coordination which designs and develops a holistic program aimed at up-scaling development results and building synergies with partner interventions in the country which provides normative, policy and advisory services to the government on industry-related issues aim at delivering integration and multi-disciplinary technical assistance. Therefore, supports the government in mobilising large-scale industrial investments from public and private partners.

UNIDO Day 2018

Hassnain Javed

4/23/2018

On April 20th, 2018 UNIDO Day 2018: Belt and Road Cross-Border Cooperation Forum was held in Shanghai, China. I was privileged to be invited by President Yan Xiaohong (Jiangsu University, China) and Dr Cui Yong (Deputy Secretary General, One Belt One Road College, Jiangsu University, China) in this event to represent the case of China- Pakistan future collaboration. Upon an exclusive discussion with H.E.LI Yong, Director-General (DG) UNIDO I was reassured that Pakistan shares a long history of collaborative projects with UNIDO but most of the projects didn’t reap the fruitful outcomes which is the major reason for resistance in future collaboration. Moreover, the DG also narrates that two years back when he tried to figure out why Pakistan is lagging behind in comparison to other UNIDO partner countries the answer received by our Ex-Prime Minister was quite disturbing because as usual our government put the entire burden of guilt to previous establishments. The DG was of the opinion that Pakistan can itself become self-sufficient if it focuses on three aspects. Firstly, it needs to own things and stop blaming what others had done in past. Secondly, energy is important driver for economic development therefore it is significant for Pakistan to pay special attention in this area. Thirdly, Pakistan needs to channelise export of best fruits and vegetables produced in Pakistan which he believes are a stepping stone for Pakistan to become self-sufficient and getting out of poverty trap.

After the exclusive discussion there was formal opening of UNIDO 2018. UNIDO has been committed to achieve inclusive globalisation and environmental sustainability in industry development, realise the potential of industrial contribution, reach the prosperity of mankind through cooperation, and build a community for common destiny for mankind. In China, UNIDO will host UNIDO day annually during China (Shanghai), International Technology Fair. It will primarily focus on themes of trade technology and global sustainable development; the activities include high-level international forums, dialogues and visits, with the objective of catalysing global industry innovation, the economic transformation and industrial upgrading.

This year, the UNIDO Day has taken the opportunity of “Belt & Road” initiative and hold three thematic events: Belt and Road Cross-Border Cooperation Forum, “Bridge for Cities” Roadshow and the UNIDO Special Exhibition Stand. The events were aimed to explore the cross-border cooperation and investment opportunities with focus on the Smart City, Industry 4.0, and Circular Economy for the common prosperity of mankind. Moreover, it also emphasised on regional economic and trade exchange to promote “Belt and Road” cross-border cooperation through global technology complementation to achieve industry upgrading and environmental sustainable development. The main agenda highlighted is setting and harmonising fiscal, monetary and industrial policies and in supporting sound economic growth in emerging and developing economies.

It was mentioned that recently, UNIDO have signed a joint Declaration on a Programme for Country Partnership (PCP) for 2018-2023 with Cambodia. This makes Cambodia the first country in Asia to pilot the PCP initiative. This initiative will target three key areas which includes the development of sustainable tourism, the development of competitive agro-industry and creative industry value chains and industrial diversification in specific through the development of Special Economic Zones (SEZs). Now, in reality Pakistan is also in dire need of such initiatives as discussed above it covers all those areas which requires special attention. Undoubtedly, if a proper channel is adopted by our government and its concerned Ministries and already executed projects like China Pakistan Economic Corridor (CPEC) Pakistan can become a dreamland. Moreover, the PCP will be supported by number of interventions on cross-cutting issues which includes interventions in the following areas: industrial policy and business environment; skills development; quality infrastructure, innovation and technology transfer; energy access and efficiency; resource efficiency and cleaner production and environmental management.

If, Cambodia can be fortunate enough to become part of this initiative then why not Pakistan. Pakistan needs to target it then it could serve as a new platform for synchronizing development efforts and in specific for optimal resource mobilisation and effective Pakistan’s Industrial Development policy.

Likewise, DG UNIDO also mentioned about joining forces with Thailand to develop the Eastern Economic Corridor by lending assistance in upgrading and improving industries in the area. They have the agenda to promote sustainable industry in countries undergoing an economic transition. The goal of the strategy is to evolve the Thai economy from reliance on assembly line manufacturing for multinationals to one driven by home-grown innovation, creativity, research and development, high technologies and green technologies.

Now, once again it is a great idea to be replicated in Pakistan. We need to showcase our case at right platform and in proper way. I am of opinion great emphasis should be placed toward Pakistan financial sector reforms which prompt major financial institutions to establish corporate governance to deal with toxic assets, strengthen risk management and importance to fiscal and financial measures in favor of agricultural development and SMEs as it acts as the cornerstones for creating economic opportunities, reducing poverty and promoting gender equality.

Overall conclusion, of the UNIDO Day 2018 is to have partnerships that are essential for bringing industry 4.0 technologies to cities to transform them into smart cities. There are countless opportunities available to make cities smarter through industry 4.0 technologies, but the ultimate goal should always be to improve the quality of life for people. There is the potential for developing countries to leapfrog to higher levels of development through the use of technology. Lastly, smart cities will be pivotal in achieving the 2030 agenda which focus on inclusive sustainable industrial development through the nexus of industry, infrastructure and innovation in cities.

 

Ant Forest and Low-carbon lifestyles

Hassnain Javed

3/19/2018

There is unique science of sustainability and its interlinked organs. It cannot be some sort of moral sacrifice or either the political dilemma or a philanthropical cause. Indeed it has to be a design challenge which currently our nation is undergoing. In the prevalent situation I believe we need to address this challenge by benchmarking the successful sustainable projects being executed and have positive socioeconomic impacts.

Thus, I conducted a case analysis inspired by the Chinese government’s efforts to reduce greenhouse gas emissions; Hanghou-based financial technology player Ant Financial Services Group introduced an innovative program called ‘Ant Forest’ on Alipay in August 2016.

Combining elements of the Internet, finance, and low-carbon lifestyles in a video game format, Ant Forest encourages users to take part in low-carbon activities like walking, paying for bills online, and taking public transport, to create virtual ‘green energy’. By accumulating this green energy, users can grow virtual trees. These online trees then get planted in real life in the desert through the support of Ant Financial and its partners.

This serves the dual purpose of promoting greener habits while protecting the environment. Bai Xue, senior researcher with Ant Financial, says the scheme is very popular with online users. “Currently, 230 million people are actively participating in Ant Forest on their mobile phones. Technology, which can be used to mobilize the public, makes public welfare activities easier. If everyone is involved, we can easily popularize a low- carbon lifestyle.”

How exactly does Ant Forest turn virtual trees into real ones? Ant Financial cooperates with environmental NGOs like the Society of Entrepreneurs and Ecology (SEE), and the China Green Foundation. We’ll (continue to) use technology to do more.’ This environmentally-friendly scheme has also inspired many mobile payment users, 60% of whom are under 20 years of age, to be healthier and conscious of their carbon footprint. A user reports, “I used to weigh 140 kilograms. Because I’ve been walking every day, I now weigh 100 kilograms. I’ve planted four trees with all the energy I gathered in my online Ant Forest account. Every time felt like giving up, the idea of planting a tree pushed me forward.”

Within China, Ant Forest has been responsible for planting a total of 10.25 million trees, which has directly reduced carbon dioxide emissions by 1.22 million tons. Ant Financial’s environmentally-friendly scheme is also in line with Chinese agricultural and forestry officials, who plan on promoting tree-planting and forest cover in the five-year- period starting from 2016. According to a UN report, China is also on track to increase forest coverage up to 23% of total land area within the next three years.

Having a glance at idea of Ant Forest, let’s get into more detail how this was germinated. In actual the above discussed sustainable project is a byproduct of the business, operations which contribute to society with an inclusive approach to financial services, giving anyone, anywhere, equal opportunities for financial investment i.e. Ant Financial.

In a survey conducted while designing a case analysis for Ant Financial I ask most people in China to name a location they associate with ‘finance’ and they may say ‘London’, ‘New York’, ‘Singapore’, ‘Hong Kong’, or ‘Shanghai’. All of these are modern cities with highly developed financial services industries. Historically in China, financial services have been readily available to wealthy urban residents, while poorer rural residents have difficulty in accessing these services. There is less motivation for banks and other financial institutions to offer services in rural areas.

The lack of a credit recording and scoring system means there is no way of calculating a how likely a person is to repay debts. ‘Pledging,’ a method of using existing assets to provide security on a loan, is also not an option in these areas. Both of these factors mean that financial institutions would need to take on a much higher risk if they provided loans to rural residents. Upon closer inspection Pakistan is also having the similar conditions in our rural areas.

Chinese addressed the above problem in highly technical, sustainable and feasible model. Alibaba Group launched its first financial product, payment app ‘Alipay,’ in 2004. Ten years later in 2014, Aipay’s parent company was rebranded as Ant Financial signaling a new era Of Alibaba financial services.

The name Ant’ was chosen to represent the combined strength of many working together. One of the most important aspects of Ant Financial’s platform is its open, shared credit system.

Ant Financial has developed this system through big data analysis, including monitoring of user behavior on Alipay and other Ant Financial products. Users are given access to different types of financial services Via Alipay depending on how good their credit score is.

Unlike traditional credit-scoring systems which else have a limited amount of data from a limited number of financial institutions. Ant Financial’s system makes it possible to score all users. Regardless Of where they are located and how many traditional financial services they have used in the past.

From 2014 to 2017, Ant Financial had provided loans, insurance and payment services to 160 million crop farmers and nearly 1.8 million livestock farmers. In addition to farmers, it also provided services to individual business owners and SMEs in rural areas. This impressed World Bank President Kim Yong, who commented: “It’s now easier for Chinese farmers to buy insurance than it is for me to do so in the United States.”

In addition to developing a financial services system that is more inclusive Ant Financial is actively supporting rural development in other ways. It provides loans as part of the ‘Graduate Hometown Development’ scheme, where university graduates interested in contributing to the development of their hometown can apply for a loan to help them do so. Only eight months after launching its e-banking service. Ant Financial had provided 400 million loans to 14 thousand university graduates under the scheme. Of these loans have been distributed to graduates in national and provincial poverty-stricken areas.

Besides this, Ant Financial has plans in the making to radically simplify financial services in other ways. For example, the company aims to reduce administrative banking costs for loans from 2,000 RMB to just 2 RMB by making the process fully automatic. Applicants spend three minutes filling in and submitting their loan application online, and Ant Financial’s system uses big data and Internet resources to process and transfer the loan into the applicant’s account within a single second.

In order to conclude, given the massive success of Ant Forest, Ant Financial is keen on rolling out a similar carbon-tracking scheme in other countries as well. I really suggest Pakistan to put forth such initiatives under the China Pakistan Economic Corridor. Moreover, all the above points streamline the similar initial conditions of Pakistan and China rural areas before the advent of such feasible idea thus its replication could also reap fruits for our economy.

The writer is a Master Trainer/Advisor at the Pakistan Industrial Technical Assistance Centre Lahore, under the Federal Ministry of Industries and Production, Islamabad.

Within China, Ant Forest has been responsible for planting a total of 10.25 million trees, which has directly reduced carbon dioxide emissions by 1.22 million tons.

Wakhan Corridor and CPEC

Hassnain Javed

2/26/2018

The narrow strip of territory in northeastern Afghanistan that extends to China and separates Tajikistan from Pakistan this strip is about 350km (220 mi) long and 13-65 km (8.1-40.4 mi) wide. Yes this strip is known as Wakhan corridor which enjoys extreme strategic position. Between China, Afghanistan, Tajikistan and Pakistan, inside the Pamir Knot, lies the Wakhan corridor. This strip of land sandwiched between the four countries was created as a buffer between the territories of British India and Tsarist Russia in the 19th century, which was then formally demarcated between the Kingdom of Afghanistan and the Chinese People’s Republic in November 1963. The Wakhan corridor has historically been an important transit path of the ancient Silk Road route.

Given the geography of the Pamir Mountains, building infrastructure in the Wakhan could be difficult and costly. However, there are many instances of projects that have been successfully completed in the similar and even more geographically complex terrains of the region. The Karakorum Mountains, into which the Karakorum Highway was built (using 1960s and 1970s technology, taking 20 years to complete), and the Pamir Mountains where the Wakhan corridor lies are in the same area with similar topography.

A nutshell comparison of these areas indicates that the feasibility of infrastructure in Wakhan is increasingly viable given the road and tunnel-building technologies available in China today. The cost of the 400 km Wakhan project would be trivial compared to the $794-million upgrade of the Karakorum Highway or the $4.2 billion for the 1,600 km China-Tibet railway that opened in 2006. If such mega projects could be built on the roof of the world way back in the late 1970s and early 2000s, there is no reason to perceive geographic complexity as a barrier to building connectivity via Wakhan.

What is currently missing is an initiative to open borders and collaborate. While geographical complexity has not been a barrier to the development of the infrastructure in Wakhan, security concerns and regional political play seem to be the major roadblocks on the way to the development of Wakhan.

Yet until today, there has not been a single project undertaken with trilateral cooperation. So how can the three neighbors initiate and increase their trilateral cooperation? The first goal should be to boost trilateral people-to-people exchanges.

The three governments need to address the physical and political obstacles hindering trilateral people-to-people and business-to-business relations. Between China and Afghanistan, there are physical barriers, especially the absence of direct infrastructure links (currently Sino-Afghan bilateral trade passes through a third country, like Iran or Pakistan). Some might argue that the tough physical terrain in Wakhan, Badakhshan, the part of Afghanistan bordering China, is a big hindrance for directly connecting the two countries. But if building the Karakorum Highway in Pakistan is possible, why not undertake such a project in the Wakhan Corridor in Afghanistan? Paving the way for direct road links between Afghanistan and China would enormously boost the bilateral trade.

Meanwhile, between Pakistan and Afghanistan there are political barriers, which then cause rising physical barriers through the closure of borders. These barriers have badly influenced bilateral trade and transit. For instance, according to Afghan statistics, the total volume of Afghanistan-Pakistan trade decreased from $1.573 billion in 2015-2016 to $1.482 billion in 2016-2017. Similarly, Afghan imports from Pakistan dropped from $1.346 billion to $1.199 billion during the same period. Overall, since 2010, Afghanistan-Pakistan bilateral trade had decreased from a peak of $2.5 billion.

All the three sides should freely encourage each other to point out their red lines. If these red lines or concerns are not logical, they should be discussed. Some red lines are not negotiable but others stem from miscommunication or misunderstanding rather than reality. It is here that China can play a very important role by persuading its two neighbors to effectively engage. China has every reason to do so, because the security situation of Afghanistan is also a headache for Beijing’s Belt and Road Initiative and its heavy investments in CPEC. With China interested in mediating between Afghanistan and Pakistan, it has the potential to outperform previous attempts by Turkey, the United Kingdom, and the United States.

Besides this, there are three main advantages of building infrastructure through Wakhan corridor. First, the inhabitants of the Pamir Knot — encompassing Gorno-Badakhshan Autonomous Region of Tajikistan, Wakhan District in Badakhshan province of Afghanistan, Kashgar in Xinjiang Autonomous Region of China, and Chitral in Khyber Pakhtunkhwa of Pakistan — share a common history, culture, religion and geography.

People in this enclave have been isolated from wider civilisations for centuries. Moreover, the border areas among these four countries are widely underdeveloped and economically insecure. Their primary sources of livelihood have been livestock husbandry and, to some extent, agriculture. According to a 2008 report, the literacy rate in Wakhan district hardly reaches 5 per cent.

The foremost advantage of building infrastructure in this region would be to bring change in the life and livelihood of the local population. Their access to markets and cities would help them sell their products, get access to education and find alternative sources of income. Regional investment in infrastructure and trade would provide locals with reliable sources of employment, rejuvenating these people’s historical ties to the ancient Silk Road.

Second, connecting the bordering countries and facilitating economic integration through better infrastructure would lead to more stability and security in the region. Better customs controls and the deployment of border guards, as well as control of the illegal cross-border trafficking, would encourage legal exchange and cooperation.

Indirectly, the integration of the border areas would strengthen local development and lead to an increase in the economic well-being of the local population, which would lead to more secure and stabilised border regions.

Finally, linking the Wakhan corridor to the Karakorum Highway would provide the shortest route for China to reach its mega projects in Afghanistan, and for the Afghans to access the vast Chinese market. The north-south expansion of the corridor would help landlocked Tajikistan to get access to Pakistan’s ports, allowing the Pakistanis to reach the resource-rich Central Asian republics by traversing Afghanistan through the shortest possible route.

If built, the Wakhan corridor would be the least costly trade route between China, Afghanistan, Tajikistan and Pakistan compared to the current alternatives. This should compel the four countries to transform this land buffer into a bridge between them.

Currently, CPEC benefits Pakistan and China, but it can be easily extended to include Afghanistan and Tajikistan. If the Wakhan route is connected to the CPEC, it would undoubtedly boost trade and transform the economic outlook for the entire region.

In my view, political bottlenecks and security fears should not hold back economic progress and regional prosperity. It would be in the best interest of the region as a whole to develop more projects like CPEC and Chabahar, with regional integration and economic cooperation in mind. These megaprojects, linked together in good faith, could reinforce and facilitate trade and transit in the region with the lowest possible costs and numerous benefits.

Special economic zones under CPEC

Hassnain Javed

2/19/2018

Industrial revolution had initiated in the 18th century but the world had to wait till 1959 to witness the establishment of first modern SEZ in Shannon, Ireland. As of 2006, International Labour Organization’s (ILO) database reported 3,500 zones in 130 countries and today one can find more than 4300 SEZs around the globe and the number is increasing rapidly. The reason behind this growth is the substantial development that comes with the establishment and successful operation of a SEZ. There is no specific definition of a SEZ; some call it a place where foreign companies enjoy tax benefits, other know it as an area near port for export purpose while remaining consider it as a vehicle to attract FDI; all these descriptions are correct. Countries use SEZs as a tool for industrialization. A number of examples exist in the world from Asia to Latin America that illustrate how SEZs play a vital role in economic growth; however not all the SEZs get miracles like Shenzhen in China. Out of all the countries developing SEZs, China has been the most successful. China has gained immense progress through SEZ ventures. According to an estimate, SEZs, all over the world, have created approximately 66 million jobs out of which 30 million are exclusively located in China.

Special Economic Zones or SEZs are considered significant specifically for the industrial development of a country. Industrial development provides the firm standing on which any country can hope to reap long term economic benefits. At the same time it is important that the SEZs are based on the export oriented business/trade development. SEZs are the specific regions identified and demarcated with the sole aim of bolstering economic activity. The aim is achieved through offering various incentives to the foreign investors such as tax and duty exemptions. This idea is now being practiced all across the globe in various countries and is contributing greatly to their respective economic growth.

Pakistan today, under CPEC, has entered the Industrialization phase. Even though in the past, Pakistan was mindful of establishing these zones and tried to establish the SEZs but the attempts were not particularly successful back then. Nonetheless Pakistan does already have some successful industrial clusters and estates in Sialkot: surgical goods Cluster; Gujarat: ceramic/pottery industrial cluster; Faisalabad: readymade garments manufacturing cluster; Khyber PakhtunKhwa (KPK): marble Cluster; Hattar Industrial Estate (KPK): food and beverage, textile, crockery, chemical industry; and Gujranwala: tannery/leather industrial cluster. However this time along with the renewed conviction, Pakistan can rely on the vast personal and successful experience of China in the establishment of SEZs under the ambit of CPEC. China’s own SEZs which number almost around 1800, speaks volume of its sound success in this domain. Since 1980’s it has garnered enough skill, practice and knowledge of the requirements for setting up of these economic zones. Pakistan can also and must utilize this experience of China in ensuring the success of its prospective economic zones.

So far nine SEZs have been identified to be established soon. One each in Punjab, Khyber Pakhtunkhwa, Baluchistan and Islamabad, two in Sindh and one each in FATA, Azad Kashmir and Gilgit-Baltistan. Governing structure for these zones is provided n the SEZ Act 2012 and the Board of Investment (BoI) has established “CPEC-SEZ” Cell for facilitating stakeholders on the matters relating to CPEC and Special Economic Zones. Not only can Pakistan learn greatly from China but should also focus on cultivating domestic capacity in the areas of vocational education, agriculture, water management, automobile technology, electrical appliances, and disaster management etc.

Pakistan is eventually set to embrace around 37 SEZs under CPEC. Four SEZ sites were identified in Punjab. Punjab-China Economic Zone and Quaid-i-Azam Apparel Park SEZ are in Sheikhupura while M-3 Industrial City and Value Addition City are in Faisalabad. In Balochistan, nine places were identified for SEZs: Bostan Industrial Zone, Dasht Industrial Zone, Turbat Industrial Zone, Industrial Zone at the Junction of Qilla Saifullah, Zhoband Loralai, Gwadar Industrial Estate, Lasbela Industrial Estate, Dera Murad Jamali Industrial and Trading Estate and Winder Industrial and Trading Estate. In Sindh, four sites were identified for SEZs. These are China Special Economic Zone at Dhabeji in Thatta, China Industrial Zone near Karachi, Textile City and Marble City. Two of these projects were considered in Thatta: China Special Economic Zone, Dhabeji (priority) and Keti Bandar. The Khyber Pakhtunkhwa government requested the establishment of SEZs in 17 places under the CPEC. These include economic zone at Karak, Nowshera, Bannu, Jalozai, Rashakai, Risalpur, Chitral, Buner, Swat, Batagram, Jahangir, Mansehra and Gadoon Amazai. Others include Hattar Phase VII Industrial Zone, Ghazi Economic Zone and Gomal Economic Zone in Dera Ismail Khan. Moqpondass SEZ will be established in Gilgit-Baltistan. In Azad Jammu and Kashmir, Bhimber Industrial Zone will be the priority project while Muzaffarabad SEZ will be the alternative. In Fata, the only SEZ will be Mohmand Marble City. ICT Model Industrial Zone will be established in Islamabad while an industrial park will be developed on Pakistan Steel Mills’ land in Port Qasim near Karachi.

It’s a fact that at the moment Pakistan doesn’t have a manpower proficient enough to operate Chinese technological tools and machineries. Also there is not yet much information available about the nature of labour that will be employed in this project. It is expected that China can provide rigorous training to the local Pakistani workforce and make them skilled enough to use the advanced technology. Not only will it generate domestic employment opportunities but will directly contribute to the sustainable development of Pakistan, which of course is one of the eventual goals of the CPEC. Both China and Pakistan need to work towards bringing more transparency and clarity in this regard. The final framework should be based on equivalent and balanced opportunities for all the stakeholders.

Last but not the least, for these SEZs to deliver successfully it is important to have a secure foreign investment. For that purpose not only certain economic incentives are to be offered but the provision of basic utilities such as gas, water, electricity are to be ensured too. In this regard the federal governments have already agreed to supply these amenities to the economic zones. Additionally the workable environment should be made available where the security concerns should be at the minimum. The success of economic zones also depends on the socio-economic conditions of adjacent areas. In case of Pakistan, the local employment opportunities and capacity building should be the main focus that should be achieved with the mutual consultation and understanding between both China and Pakistan.

Moreover, Industrial cooperation under CPEC will help us to attract those labour intensive industries and jobs that will definitely change the destiny of Pakistan. This looks difficult but is not something impossible to achieve. In 1979 before economic reforms in China, China’s GDP per capita was lower than Pakistan. However, presently China stood at US $ 8069 while Pakistan is still stuck between US $ 1400 to 1500. As mentioned earlier China’s support in the CPEC is the key to Pakistan’s success. China has all the experience that Pakistan needs at the moment. The need of the hour is to keep all the differences aside and leave no stone unturned to make CPEC as an exemplary economic between China and Pakistan for the rest to follow.