The economic survey and budget documents are presenting a dismal picture of economy. The economy has contracted. Major production sectors, except agriculture is showing negative growth. Government could not achieve any major target of major indicators of economy. It was expected in the backdrop of COVID-19. As we know, the world economy is contracting, and people are losing jobs. The inflation has just started to rise, and people are with few resources to combat. So, we cannot blame the government of Pakistan for the bleak state of economy at this point of time.
However, the choices by government to combat this situation would be major area of interest to watch. Although, the situation is complicated but certainly Pakistan have options to combat itlike CPEC. It is not rhetoric but a reality. But to exploit the CPEC for economic revival would require a comprehensive policy and action plan.
First of all, Pakistan needs to come out of ifs and buts. We should stop listening to international experts and focus on our needs and ways to doing business. The mantra to keep happy or satisfy all, will not work. Every country has its own interest which they try to put forward through different organizations by providing them funding at one name or other. They also use propaganda mechanism to distract us. Pakistan should not give head to them and keeping working on indigenous solutions and take actions which are needed for the development of country. Besides, we also need to share our narrative and facts very clearly and loudly, which will help our people to understand the propaganda. It will pave way for smooth implementation of CPEC.
Second, Pakistan needs to focus on our strengths and stop buying fake dreams. We need to understand that our strength is agriculture at this point of time. CPEC provides us an excellent opportunity to capitalize on it. Recently, Pakistan and China have signed an MoU to strengthen our cooperation. China has also agreed to provide US$ 100 million for agriculture sector under social development program during this year. It would be a good chance for Pakistan to use this fund for development of agriculture and fight the challenge of locust.
Moreover, under the MoU Pakistan can promote joint ventures especially in supply chain of agriculture. The biggest challenge in supply chain of agriculture isthe shortage of cold storage and quality of transport with cold storage facility. The investment in supply chain will help Pakistan in different ways. First, it will increase the shelf life of perishable commodities. Second, it will also help to maintain quality ofperishable and non-perishable commodities for long time period. Third, consumers will get quality products. These all activities will also help farmers to save their resources and earn more.
The second area for short-term would-be establishment of quality control and certification facilities. It is biggest hurdle to enhance our agriculture trade along with supply chain. The availability of these services will give a boost to agricultural export in short run.In long run Pakistan will benefit by attracting investment in sector for mechanization and climate compatible agricultural practices. Climate change has emerged as the biggest challenge for agriculture. Pakistan is already suffering and during the current year we have witnessed the un-expected rain at time of harvest of Rabi crops. The cooperation under CPEC can help us to combat these challenges.
Third, area would be construction projects under the CPEC including ML-1, road infrastructure, dams and most importantly SEZs and service facilities. It is good to note that Pakistan has allocated a good amount of resources for different construction projects in the budget. Although it is not according to demand, but it is good start. The allocation of budget for ML-1 is a sign that government will start this project soon. However, there is less focus on physical infrastructure of SEZs and within SEZs like residential, services and industrial buildings. By focusing on these areas, government can attract good investment from China through different Chinese government institutions and companies.
Government should look for investors from China, which can invest in SEZ residential infrastructure. It would be easier to convince China, as China has already committed US$ 100 million for housing projects in Pakistan under social development program
Hence, government should immediately start negotiation with China to secure investment for industrial, services and residential infrastructure. Residential infrastructure is already priority of government of Pakistan. Hence, government should look for investors from China, which can invest in SEZ residential infrastructure. It would be easier to convince China, as China has already committed US$ 100 million for housing projects in Pakistan under social development program. Industrial infrastructure would be helpful to accelerate the process of industrialization in addition to construction activities. These all activities would help Pakistan for creation of jobs in short run and better functioning of SEZs in long run. The creation of jobs will be instrumental to give boost to domestic business through consumption. It will also contribute in the national revenue through taxes and domestic consumption of governmental services like electricity etc. Fourth, under CPEC government can talk with China for the inclusion of some SMEs or products in the supply chain of China. For example, we can negotiate to include some parts of machinery or food items. It will help Pakistan to secure export market through established products. In present scenario, inclusion in China’s supply chain is only hope, to recover the export loss in short run because China is only exception with positive GDP in this COVID-19 crisis.
However, to exploit the benefits of CPEC, Pakistan needs wisdom and have to move away from the street smartness approach. Unfortunately, we are not great fan of the concept of wisdom, but we love street smartness. We are paying price for this street smartness and ignoring the wisdom. Again, we are trying to do the same by ignoring sustainable benefits and focusing on gimmicks. Our strategy seems to be opposite of the saying “one bird in hand is better than two in bushes”. We keep eye on two but ignore what we have. For example, presently, we talk a lot about digitalization but ignore the facts. There is no second opinion about the importance of digitalization, but the problem is do we have resources for it. Do we have all instruments of digitalization or we are just focusing on internet or some services related to digitalization? There are many more questions to be answer. The wise strategy would be to look at available opportunities and plan digitalization according to development status in a step wise manner.
Lastly, the wisdom tells us that CPEC is our strength and best opportunity available, at this point of time. We need to focus on it and accelerate the implementation of CPEC. For that purpose, we need to consolidate our efforts and institutional mechanisms. Right now, there are a good number of champions of CPEC, which sometime delay the implementation of some decisions. The best candidate for consolidation would be CPEC Authority. It is already doing good job as we have witnessed improvement in management of CPEC but strengthening of authority will give it more space to play.
The writer is Director, Asia Study Center, SDPI