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How CPEC Phase-II Will Galvanize Industrialization And Unemployment In Pakistan?

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China Pakistan Economic Corridor – A brief overview 

  1. The China-Pakistan Economic Corridor (CPEC) is perceived as a game-changer for the South-Asian region and beyond.
  2. China Pakistan Economic Corridor (CPEC), a flagship project of the Belt and Road Initiative (BRI) launched by Chinese President Xi Jinping in his visit to Pakistan in 2015. In beginning, it was a $46 billion project.
  3. CPEC is a great opportunity for Pakistan. CPEC connects us to China which is one of the biggest markets in the world.
  4. CPEC includes the various projects of energy, infrastructure, connectivity, as well as social sector development.
  5. The projects – including roads and railways from Gwadar in Pakistan to Xinjiang in China – will cut short Beijing’s trade routes with the world through sea approximately by 12,000 miles. The corridor will shorten oil, gas, and other trade routes by thousands of kilometers by cutting overland from western China rather than going around South and Southeast Asia by ship.
  6. It is building strong roots to take economic growth to next level not only within Pakistan but across the region.
  7. As of now the estimated investment size of CPEC has reached beyond $60 billion.
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Also See: Decentralization of Power in Pakistan: Is There A Need For New Provinces?

Different Phases of CPEC 

  1. The CPEC projects in Pakistan are divided into three phases.
  2. Pakistan has already set up projects like power production plants under phase-I by 2020.
  3. The country aspires to develop medium-term projects under phase-II by 2025 and long-term projects under Phase-III by 2030.

CPEC Phase-II

CPEC has now entered into its second phase. The key goals of the second phase of CPEC are industrialization, agriculture, science, improving the livelihood of people, and technology transfer to Pakistan.

By 2025, the CPEC aims for: industrial system approximately complete, major economic functions brought into play, the people’s livelihood along the CPEC significantly improved, more-balanced regional economic development. In short, the second phase calls for all the goals of Vision 2025 achieved.

CPEC Phase-II and galvanized industrialization in Pakistan

  1. CPEC is a multi-layered project. Under CPEC’s second phase, the industrial base of the country would be expanded which would help in increasing the country’s exports.
  2. As far as industrial development is concerned, productivity would be increased and exports would see a big jump with a reduction in imports under CPECs second phase.
  3. Phase-II would redress the issue of the trade imbalance between Pakistan and China.
  4. As per a recent statement by Chief of Army Staff General Qamar Bajwa Chinese companies were showing keen interest to invest in all three Special Economic Zones (SEZs). He said that the process for relocation of the Chinese industry in Pakistan was in progress.
  5. Investment in the agriculture sector of both countries by establishing special economic zones will boost cooperation in the Chinese and Pakistani agriculture sectors.
  6. Mango is Pakistan’s leading export and it is expected that the exported product will be sold in supermarkets across China.
  7. Joint venture in agriculture is the first step to reduce the price which can be achieved through the introduction of technology and working with farmers and exporters to set a reasonable price for imported fruits and vegetables.
  8. Many products can be transported by road to China through the establishment of a cold chain system that’s an initiative of CPEC. Up till now, the short shelf-life products, like mango fisheries and other agricultural products, were exported by air with increased prices. They would now be transported at a reasonable cost.
  9. Pakistan produces a huge amount of cotton which can be exported to China as Beijing has a vast number of textile industries. Balochistan is the only province producing Onyx in the world and the Chinese have a specific inclination towards the stone.
  10. The gem was another area where Chinese joint ventures could help building Pakistani industries especially exports of gold and copper to China. Pakistan has abundant gems in northern areas but it lacks advanced technology to polish gems. However, the Chinese could help the country to make beautiful jewelry products.
  11. Moreover, Pakistan would be able to exchange skilled labor with China and other countries of the region once the connectivity rail, road projects are completed.
  12. Operations of the China-Pakistan Free Trade Agreement would decrease prices as import duty would not apply to products.
  13. The industrialization that is the main pillar of the second phase will provide required sources of economic growth and help generate employment.
  14. Furthermore, In Pakistan, cottage or household industries hold an important position in the rural set-up. Most villages are self-sufficient in the basic necessities of life. They have their own carpenters, cobblers, potters, craftsmen, and cotton weavers. Many families depend on cottage industries for income. There is a great demand for hand-woven [carpet]s, embroidered work, brassware, rugs, and traditional bangles. These are also considered important export items and are in good demand in international markets. CPEC upon completion would give away to further the market outreach for cottage industry.
  15. CPEC’s Special Economic Zones (SEZs) will play a pivotal role. SEZs would provide basic infrastructure and impetus for industrialization. A special economic zone is an area in which the business and trade laws are different from the rest of the country. These zones are located within a country’s national borders, and their aims include increased trade balance, employment, increased investment, job creation, and effective administration.

Prime Minister of Pakistan Imran Khan has rightly pointed out in one of his speeches that KPK was underdeveloped and it had to look towards Karachi and the Middle East for jobs due to lack of opportunities but RSEZ is bringing a lot of industrialization in the province which will solve the issues.

How exactly CPEC Phase-II would reduce unemployment in Pakistan

Employment is considered the main factor for the trickle-down of economic benefit. Therefore, the success or failure of industrialization will determine the fate and perceived benefits of CPEC.

  1. Pakistani officials anticipated that CPEC will enable the environment to create 2.3 million jobs between 2015 and 2030 and add 2-2.5% points to the country’s annual economic (GDP) growth.
  2. Connectivity with CARs would help Pakistan to access fuel rich regions of the world that is likely to reduce the fuel crises alongside reducing the cost of fossil fuels in Pakistan.
  3. China-Pakistan Economic Corridor (CPEC) is a strategic economic project aiming at increasing regional connectivity for the economic development of Pakistan and China.
  4. As many as 700,000 new job opportunities for local people are estimated to be created by 2030 under the China Pakistan Economic Corridor (CPEC), according to the report of The Express Tribune.
  5. CPEC is not only expected to be beneficial for Pakistan and China but is also expected to have positive spillover effects to other neighboring countries by enhancing the geographical connectivity of Pakistan with landlocked Central Asian states.
  6. Investment in infrastructure undeniably increases and creates jobs in the service sector.
  7. About nine projects under CPEC have already been completed, producing 5,320MW electricity with an investment of $7.9 billion. The energy-generating projects have provided jobs to 5,000 Pakistani citizens according to a report by Business Standard.
  8. CPEC Authority Chairman uttered that eight more energy projects are being constructed to generate 4,470MW electricity with an investment of another $9.55 billion and would provide employment to over 15,000 Pakistanis.
  9. As the main focus of the CPEC phase two is socio-economic development, trade promotion, employment, and economic growth, so, the cause can only be fully served through special economic zones (SEZs).
  10. RSEZ in KPK is top precedence and is a flagship project of Khyber-Pakhtunkhwa Economic Zones Development & Management Company (KPEZDMC) which will implement it with the collaboration of the China Road and Bridge Corporation (CRBC). The zone is spread over almost 1,000 acres and located near M-1 Nowshera. It will have international standards infrastructure and will be developed in three phases with almost $128 million.
  11. RSEZ will transform the transportation services of the province along with business and trade.  After the start of its operations, it will become a hub of economic activity for the province. According to stats shared on the eve of its groundbreaking ceremony, RSEZ will produce 200,000 jobs in engineering industries and food processing along with boosting business activities in the province.
  12. It will also provide multiple benefits to Pakistan like an increase in people-to-people contact and foreign direct investment in the coming years. The special economic zone is likely to attract foreign investors which will increase economic activities in Pakistan and this will spread its soft image to the world.
  13. Chinese companies shared advanced techniques and successful experience to  help Pakistan modernise its human resources. They also sponsored thousands of Pakistani students to study in China and sent hundreds of Pakistani engineers and professionals to China for training on scholarships.

Conclusion

Conclusively, CPEC Phase-II will not only galvanize the industrialization in Pakistan by its multi-layered projects concerning improved business and connectivity but it is likely to increase the employment opportunities for the people in various sectors of the economy.

About Noshin Bashir

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