Home Digital Magazine April 2018 Issue Concerns and predictions on CPEC reliance for Pakistan – Dr. Aadil Nakhoda

Concerns and predictions on CPEC reliance for Pakistan – Dr. Aadil Nakhoda

The economic expert explains whether the reliance on CPEC was good for the Pakistani economy and what Pakistan needs to do to ensure that it profits from CPEC.

CPEC

If CPEC is an over-reliance then what is the other substitute for Pakistan. I don’t see an alternative, I don’t see any other country coming up and saying they will invest in Pakistan’s infrastructure. Since we don’t have an alternative, therefore, it’s not an overreliance. However, if you talk about the policies, then it’s different, CPEC will not give you the right policies.

For policymaking, you need to have the right economists, right people, to be involved in that to devise right policies, unfortunately, we don’t have that. Pakistan is developing its infrastructure – power plants are being installed, roads are being built. China is providing means to Pakistan to develop its ports and roads.

Pakistan is developing its infrastructure – power plants are being installed, roads are being built. China is providing means to Pakistan to develop its ports and roads.

If CPEC increases Pakistan’s exports, then there is a chance to tackle the internal issues facing Pakistan. Exports have to shoot up, in fact, they should be doubled. To control Pakistan’s trade deficit, exports will have to touch $50 billion. However, effective policymaking is needed to reap the fruits of CPEC. Even, if CPEC develops industries for Pakistan, they will remain ineffective, unless, policies are not devised.

Read more: CPEC in the eyes of an economic guru

Pakistan is a consumption-based economy, hence we need to improve our export side. If this can be achieved using internal policy, we can tackle these issues. It remains unclear, how the labour will be supplied for CPEC projects. If they will set up industries, machinery will be imported and this will require training and development.

For example, in Kazakhstan tomatoes production was very low, despite having the weather and land to cultivate it, the Chinese moved their redundant tomato plants to Kazakhstan which saw a jump in tomato production there.

If they replicate this in Pakistan and move textiles for example to Pakistan, due to high cost in China, and make use of Pakistan’s internal resources, then it could be beneficial. If they are investing capital and labour is used from Pakistan, it could have positive impact. It is difficult to say how will China make use of Pakistan’s local resources. Chinese competition may make it hard for the Pakistani industry.

Exports have to shoot up, in fact, they should be doubled. To control Pakistan’s trade deficit, exports will have to touch $50 billion.

For that industrial policy will be crucial to maintain the quality of Pakistani industry. Pakistan lacks avenues to boost exports. If exports improve, and industries develop, demand for remittances goes down.

Pakistan needs to have a strong industrial policy. Pakistan must shift its focus from large scale to small scale industry. With CPEC, industrial areas will have to be diversified. Transportation system will have to improve.

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CPEC gives such opportunities. Opportunities abound, what we need is good economic decision making and policy making. Internal policies are crucial for CPEC to be a game changer. CPEC is a game changer in a sense that it will build the power plants, roads and major infrastructure.

But, if energy is becoming more expensive, we will become uncompetitive. There are lots of other factors; our agriculture policy has been worse lately, if we have a robust industry, agriculture demand will boost up. We have to improve productivity, we suffered alloy in the last two years.

Industry policy can have a profound impact on agriculture policy. The biggest challenge which any country faces is devising a good industrial strategy, Internal strength and capacity building is crucial, which needs good advisors and is the key to success for CEPC.

Dr. Aadil Nakhoda is an assistant professor at IBA (Karachi). He holds a PhD in International Trade from the University of California, Santa Cruz. He specializes in Topics on International trade and development economics. Apart from his publications in journals, he writers newspaper articles regularly. 

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