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CPEC to make Pakistan pivot of regional prosperity: expert

by December 15, 2016 General

Pakistan protests WB at the map showing AJK, G-B part of India


The World Bank’s presentation during 32nd annual general meeting of PIDE on Tuesday displayed Azad Jammu & Kashmir as well as Gilgit Baltistan (GB) as part of India in map. 

When a journalist raised this point during the PIDE conference, the WB official said that there was no official map from the World Bank.

Later on, the Chief Economist Planning Commission Nadeem Javed made disclaimer and said that Pakistan would launch formal protest with World Bank’s office here in Islamabad for making this map as part of presentation for this conference. 

The IMF’s Resident Chief in Pakistan Tokhir Mizroev said that Pakistan would have to increase its exports by 15 percent every year till 2020-21 in order to pay back CPEC related obligations. He said that Pakistan remained unable to boost regional trade as empirical evidence showed that Carec countries were trading more with US and EU but their trade with themselves was negligible. The main challenge for Pakistan will be increasing its exports under CPEC initiative, he added.

Earlier, Vincent Palmade, Lead Economist, PFSG, African Region, the World Bank, made a presentation on the World Bank’s book titled, “South Asia’s Turn: Policies to Boost Competitiveness and Create the Next Export Powerhouse”. Presenting the salient features of the book, Palmade said that it discusses what the South Asian region needs to gain from competitiveness. He said that South Asia has the potential to change and Pakistan can play a pivotal role in boosting growth as it has a large market and have immense potential. However, he 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 favourable. 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. These are improvement in business environment, connecting global value chain, leveraging agglomeration economies, and strengthening firm capabilities. Palmade said that the services sector is expected to grow and boost productivity. He said that the World Bank is also trying to help Pakistan to boost trade and regional integration.

According to press statement issued by PIDE stating that the presentation by Vincent Palmade of the World Bank showed an erroneous map of Pakistan. It must be reiterated that the map, however, was not part of the report that was submitted to the organisers by the World Bank. The map was strongly repudiated by the Conference organisers, Pakistan Institute of Development Economics, Pakistan Society of Development Economists, and the Ministry of Planning, Development, and Reform.

Earlier, while delivering the Allama Iqbal lectureon “Role of Productivity, Quality, and Innovations in Making CPEC Work for Pakistan”, Mark Goh of the National University of Singapore, said that to make CPEC successful, every province must have an industrial park for manufacturing and exporting products. He reiterated the fact that politics must be left behind to focus on the wellbeing of everyone. 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.

Prof. Goh stressed the need to keep five factors in consideration while selecting the corridors. These factors are current traffic volume of people and cargo; prospects of economic and traffic growth; capacity to increase connectivity between countries and people; potential to mitigate delays and other hindrances; and economic and financial sustainability. The speaker stressed the need to create new processes that are time and cost effective and for that Pakistan need to create business houses that can deal directly with the already established Chinese business houses as this would reduce both cost and time. Thus, there is a need to develop business-to-business trade instead of business-to-consumer trade. 

Another aim of CPEC is to transport oil and gas from the Persian Gulf to Xinjiang. The emphasis is on infrastructure to 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 percent in the total time consumed. Prof Goh emphasised that by 2020 CPEC will reduce the trade cost to Central Asia by 11.5 percent and to Indonesia by 25.3 percent. A one-day loss in transportation decreases the value of exports by one percent. Similarly, trade-improving transparency can result in 7.5 percent increase in trade.