Malik Fiyaz
Pakistan has failed to realise even one-fifth of the China-Pakistan Economic Corridor (CPEC) potential and the country’s biggest failure is its inability to increase exports, which is required to finance debt and investment-related obligations.In the event of K Trade which was arranged to look back at first 10 years of CPEC.It was cleared that under the BRI banner, over 3,000 projects worth $1.2 trillion have been signed by China with various countries. Out of this amount, $800 billion worth of projects have been put into action and Pakistan got only $25 billion in investment.So far, $25 billion has been invested under CPEC in over 20 projects and 68% of the investment was in the power sector, according to the K Trade brief. China had committed $62 billion in investment that could not materialise because of Pakistan’s own follies.China gave Pakistan a solution that the country needed to increase its exports by an additional $20 billion to $25 billion from 2015 to 2020 to survive “but Pakistan failed”, revealed by caretaker minister Fawad Hassan Fawad.Fawad said “Our biggest failure was that we could not increase exports by putting together Special Economic Zones” under CPEC, said the minister. Pakistan and China had agreed to set up five SEZs but none is still functional.The Chinese were very active and eager to see SEZ operations but “so far Pakistan has not been able to come up with a single SEZ,” said Nasir Ali Shah Bokhari.Pakistan did not have the capacity to implement $62 billion of CPEC projects and yet pakistani politicians kept talking about these numbers for political benefits. Putting a number to CPEC in public was a political move, which no country does in the world.Pakistan was advised by China that there was no need to talk about these billions of dollars investment figures but Pakistan kept talking about these numbers. Pakistani politicians not scandalised CPEC for political point scoring, Chinese investors would have invested two to three times more in Pakistan.Pakistani politicians keep talking about visions but visions do not come without first learning.During his visit to Pakistan, Chinese President Xi Jinping asked Pakistan not to do four things “but we did every one of four that he advised us not to do for making progress and development.Pakistan can benefit from Gwadar being the connecting port, as it is estimated that CPEC would generate $70 billion in transit revenue per annum, said Nadia Ishtiaq, Managing Director of Corporate Finance at KTrade.A comparative study carried out by KTrade, an investment advisory firm, showed that in 2014, Chinese investment in Indonesia was less than $2 billion, which in 2020 increased to over $7 billion per annum. Compared to this, the Chinese investment in Pakistan was over $600 million in 2014 that in 2022 dropped to below $500 million per annum despite CPEC, according to KTrade.Chinese investment in Indonesia also went to diverse sectors while in Pakistan it largely remained concentrated in the energy sector.Since 2013, there were four different prime ministers and the regime change every time led to the change in government’s policies, leading to the loss of investors’ confidence. The labour quality also immensely dropped in Pakistan and over 800,000 skilled Pakistanis have already left the country in search for better opportunities.The development of Gwadar was very crucial for China and even the Chinese president mentioned it during his address at the second BRI Forum.Before starting phase-II, Pakistan must realise that the conventional approach may not work this time. If thenew government wants to set up new bodies for doing some work, it should abolish the old ones – in a veiled reference to the Special Investment Facilitation Council.As a matter of fact, Islamabad, which is burdened with unprecedented debt pressure and is on the verge of a financial default. Moreover, Beijing is not happy with the strict conditions of the International Monetary Fund (IMF) for the resumption of the USD 6 billion bailout package program, which may exacerbate Pakistan’s economic troubles and draw scrutiny to Chinese loans. According to IMF data, China holds approximately USD 30 billion of Pakistan’s total external foreign debt of USD 126 billion. Despite making several attempts to complete delayed projects and initiate new ones, CPEC’s future looks bleak due to Pakistan’s struggling economy and China’s apparent reluctance to provide new financial assistance.
