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CPEC’s dividend: Dreams and realities


October 25, 2018

Since its start both the government and society have attached great expectations of prosperity with the China Pakistan Economic Corridor (CPEC). It is claimed to be a game changer opportunity.

The Chinese government has so far given unhindered support to this project and despite political uncertainties here, have attempted to keep this venture on track. The government have been claiming CPEC to be an unprecedented opportunity of bringing large scale economic and social change across the masses in Pakistan. Different political entities are claiming political mileage of securing this economic opportunity for the nation.

Although in the beginning, the four key areas of cooperation include the Gwadar port, energy, transportation infrastructure and industrial cooperation, it is also included in future plans to expand the cooperation in the fields of financial services, science and technology, tourism, education, agriculture and poverty elimination etc.

Other projects include setting up of special industrial zones across the country to increase manufacturing and processing activities, road and rail networks and cooperation between private investors from both sides. In a recent visit the Chinese foreign minister has shown interest in enhancing cooperation in the field of agriculture and the government is also trumpeting to enhance export of agro-based products to China. Doubtlessly there is big potential and opportunity in export of agri-food products.

Although at small scale, in some sectors, investment from Chinese private sectors has already started pouring in and they are seen setting up their businesses in different cities in Pakistan. But such interest is only one sided and has little potential to benefit the Pakistani business communities and the society at large.

It is so because the pattern of business activities of Chinese investors is not being regulated in a way that should integrate Pakistani segment for a win-win situation. There is no fault attributed to Chinese side. The fault lies on our side because the Pakistani business houses have number of infirmities, incapacities and lack of foresight and vision.

The government or trade development authority has done little to support the business community on Pakistani side to enhance their capacity, build their will and wisdom to grab opportunities to reap the benefits of Chinese presence in our business and economic sectors.

This way, a large chunk of benefits expected from Chinese cooperation is bound to go to the Chinese side and little will be left for the Pakistani society.

Being an agricultural country, we have great potential to benefit from this opportunity by exporting value added, processed agricultural and fisheries products to China. China is importing agri-food products coming from plant and animal origin from around 65 countries. Unfortunately, there is little export of processed agricultural products from Pakistan.

It is so because no effort has been made by Pakistani entrepreneur and famers, trade development authority or the government to explore this area and dig out reasons of this failure. Like any vigilant state, the Chinese government has promulgated stringent quality control mechanism on entry of agri-food products into China.

The Chinese have set up a specialized agency generally known as General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) now placed under the Chinese Customs administration. All manufacturing and processing facilities interested to export to China must be inspected and certified for quality control by quality inspectors from this organization. Each agricultural product must be registered with Ministry of Agriculture of China before export. Since, the Pakistani entrepreneurs and manufacturer of agri-products do not meet quality standards and also are not aware of these restrictions, and trade development authority and the government are doing little to support them, the dream of increasing cooperation in area of agricultural would not come true despite a big demand in China. The Chinese restrictions are for quality control and it is nothing more than what is being practiced around the world by organized nations. It is unwillingness of Pakistani entrepreneur and business communities to invest in quality improvement and complacence of trade development authority in proactively guiding them, that we are losing big opportunities that are knocking at the doors.

Again, despite stringent restrictions, some Chinese companies working in Pakistan, are grabbing this opportunity for their benefits alone, by manipulating exports to China through the means only known to them. It is yet not too late that the government realizes its obligation to reap the benefits of CPEC in a realistic manner and participate in enhancing the capacity of agro-manufacturing and processing sectors for quality certification by Chinese quarantine authorities. This is only possible if cooperation for quality certification of Pakistani manufacturers is sought from Chinese government through one window operation and Pakistani side is motivated and persuaded to meet prescribed quality standards to boost exports.

The situation for capacity building of human resource is no different. We have a number of vocational training institutes that can meet future demand of Chinese manufacturers. However, the quality of vocational training, simulators, equipment and curricula are all obsolete to train able and capable work force able to handle hi-tech manufacturing that is being planned for specialized industrial zones to be set up under CPEC. It is strange that development of human resource to meet future requirement has not been made an integral part of CPEC’s projects. There is wide gap of quality of work force between what may be future Chinese demand and what is being produced. There are no efforts to analyze the gap and provide resources for filling up this gap. In recent years Chinese vocational institutes have opened their doors to induct students from different countries to equip them with latest technical knowledge and skills on most upgraded simulators. The education and training are mostly free or subsidized in these institutions. It is good opportunity for Pakistani youth to be trained in these hi-tech institutes to meet future requirement of manufacturing and processing in specialized industrial zones. Unfortunately, efforts towards achieving these goals is very limited. As a result, our society would not be able to reap the benefits of Chinese presence and consequently there may be Chinese workers grabbing opportunities meant for Pakistani youth and the dream of prosperity and happiness would never materialize.

This milieu of complacence and regressive phenomenon may be stopped if government is able to make proactive policies to improve capacity and quality of Pakistani Agri-based manufacturers with help of Chinese quality control agencies under a CPEC project. This should follow integrating Pakistani business community with Chinese private sector investors for a mutually beneficial association involving manufacturing, processing and other value adding activities. Same approach may be adopted for training work force in Chinese vocational institutes.

An integral part of government policy must be revamping of laws by providing a speedy, effective but reliable mechanism of dispute resolution that must be in consonance with international standards as practiced around the world. Setting up of some mechanism on the pattern of Chinese International Economic and Commercial Dispute Resolution Commission, may be a step, in right direction. It is historically traceable that Chinese investors more willingly invests in countries where such dispute resolution forums are effectively in place and judicial mechanism is prompt and speedy. Some the examples include Singapore, Hong Kong, South Korea, Japan, Russia and Dubai.

The writer is a corporate compliance attorney and also author of a book ‘Social Dynamics of White-Collar Crimes' [email protected]