Raja Waqas Shabbir |
Economic and financial stability is connected with political stability- was the much talked about statement of Army Chief Qamar Zaman Bajwa last year. Ironically, the IMF concluded in its last negotiations with Pakistani authorities, that Pakistan has overcome its demons and despite the continuous political orchestra and dramatic events (which marred the country), the economy has managed to demonstrate a better performance than expected.
Domestic and external investors are always wary of Pakistan’s precarious political landscape. Although, improved law and order have helped bridge the trust deficit amongst the investor community regarding Pakistan’s diminishing security threats. The positive IMF talks, improving energy sector- with 50% contribution from CPEC related projects – a drastically consolidated stock exchange and positive media reporting in reputed foreign publications regarding the country’s economic indicators, Pakistan is seen as an economic force to reckon with, if it manages to realise its potential.
Since, all the political leverage of Sharif’s is based on an accomplishments of CPEC-projects. Resultantly, it requires rigorous scrutiny to determine its true benefits to the economy, beyond transit and road structure networks.
However, recent reports by the State Bank of Pakistan (SBP) reflect the growing concerns for the country as debt continues to witness an upward trajectory. Furthermore, the failure to boost exports, inability to improve competitiveness, stagnant and at times declining agricultural sector, and energy crises have exposed the government’s reform claims.
No doubt, the government has increased road infrastructure, added approximately 10,000 megawatts into the National Grid, and improved the security situation in the country. But, the menace of governance, and corruption still remain bigger challenges. Efforts are seen in some departments, but concrete results have yet to be realised.
Without institutional reforms, a debt-ridden country with no plan to boost agriculture and the industrial sector looks vulnerable. The service sector has improved but is still very dependent on the telecommunication sector. Remittances are reliable but growing at slower rates. Unfortunately, despite the few positive macroeconomic indicators, Pakistan’s growing twin deficits and ballooning debt will be hard to deal with.
Moreover, how much technology transfer will take place? What measures are in place to ensure and safeguard Pakistan from potentially East-India like situation? The CPEC – Long Term Plan is a mystery which has failed to unfold thus far despite the release of 26-page document and governments unsatisfactory explanations.
Some experts believe, that these should be seen as short-term worries — as Pakistan is investing for the future at expense of current sufferings. However, dividends of this investment-amid huge imports remains a mystery. But, it is not the only mystery. The Long-Term Plan remains an even bigger mystery which fails to unfold despite the release of a 26-page document by the government on CPEC in mid-December. With all eyes on CPEC as the engine that will turn the fortune of this country, it needs more transparency and scrutiny. Questions being asked by the media need to be answered.
If CPEC is a Game Changer why Hide the Details
The government is continuously using rhetoric to defend the plan. But, the question remains, if CPEC is genuinely favorable and a real game changer, what makes them hide it from general public and analysts? It should be open to debate and discussion to draw out the real benefits to the beleaguered Pakistani economy. Under the cover of globalization, integration with the Chinese economy, with China taking a more dominant position and a financialized economy will have little benefit for ordinary people.
So far, 50% of the total improvement in the energy sector is a result of CPEC funded development. China investing in roads infrastructure is understandable since it is a necessary part for their transit trade.
Long Term Plan- of CPEC is indeed questionable given the information shared by Khurrum Hussain in Dawn Leaks II. Khurrum Hussain writing for Dawn argued that “more transparency is required in the CPEC enterprise, because people need to understand that it is far bigger than roads, power plants and transit trade”.
The PML-N government has always been famous for big money, glittering and fancy projects. Most of these projects are mainly aimed to woe the voters. ‘Jo dikhta hai wo bikta hai’ is what works in Pakistan. If you speak to a common people in Lahore about progress, they will happily point out at the underpasses, bridges, metros and orange train as a symbol of development. Most of the public is unaware of the insights into real details of the project.
As Khurrum argues, “any agreement that is going to be ‘game changing’ will necessarily need to be scrutinised, debated and discussed, and in the course of this exercise, there will necessarily be divergent points of view that will need to engage with each other”.
Khurrum who read the detailed draft of CPEC plan said, “in reality, CPEC is about allowing Chinese enterprises to assume dominant positions in all dynamic sectors of Pakistan’s economy, as well as a ‘strategic’ direction that is often hinted at but never fleshed out in the JCC meetings and the LTP. All else is distraction”.
But, it’s interest in building economic zones is primarily focusing on settling its own enterprises in the zones and appears to benefit primarily Chinese interests and not Pakistani companies.
So far, 50% of the total improvement in the energy sector is a result of CPEC funded development. China investing in roads infrastructure is understandable since it is a necessary part for their transit trade. But, it’s interest in building economic zones is primarily focusing on settling its own enterprises in the zones and appears to benefit primarily Chinese interests and not Pakistani companies.
This is the reason why some analysts are increasingly showing apprehensions about the nature of the deal. Multi-national corporations are symbols of modern day imperialism. If China intends to bring its own companies to do end to end business in Pakistan, how will this benefit Pakistani firms? Moreover, how much technology transfer will take place? What measures are in place to ensure and safeguard Pakistan from potentially East-India like situation?
Since, all the political leverage of Sharif’s is based on an accomplishments of CPEC-projects. Resultantly, it requires rigorous scrutiny to determine its true benefits to the economy, beyond transit and road structure networks. The CPEC – Long Term Plan is a mystery which has failed to unfold thus far despite the release of 26-page document and governments unsatisfactory explanations.
Waqas Shabbir is a Derby Business School graduate in Finance, currently working as a freelance writer. The views expressed are those of the author and do not necessarily reflect GVS editorial policy.