Positive Impacts of CPEC on Pakistan’s Economy

China-Pakistan economic corridor (CPEC) is a project of regional connectivity which lies under One Belt One Road (OROR) initiative, led by Beijing. The 20^th century has seen immense conflicts over oil, which is now superseded by maritime politics. At this point of time, CPEC has become a treasured corridor, which has started its initial operations between Pakistan and China. The CPEC will not only develop the western China, which has only 6% of its total population, but it will also provide infrastructure development and huge input to the energy sector in Pakistan, which is the priority need these days.

The main four components of CPEC are Gwadar port, Energy sector development, Communication infrastructure and Industrial development. Pakistan is lacking in all the three sectors (energy, communication and infrastructure), which are the most looked-for components to build up the economy, in order to make some notable place in the global economic race. Initially, the CPEC was amounting 46 billion USD among which the US $33.178 billion is allocated to the Energy sector, the most fruitful share. US $11.83 billion has been assigned to Communication infrastructure and the US $ 792 Million is for the development of Gwadar port and city. And now it has expanded up to 52 billion USD.

Pakistan at this point of time is facing around 6000 MW of shortage; this is the main reason behind the shutting down of the industries. At this crucial time, Pakistan urgently needs development in power sector, CPEC is the “Golden Bird” at this point of time which will give Pakistan with more than 10350 MW under CPEC-Energy Priority Projects and 6345 MW with CPEC-Energy actively promoted projects. This will not only lead to the revival of the domestic industry but in late 20’s of this century Pakistan will be selling her surplus energy.

One of the main modules of CPEC is building of Special Economic Zones (SEZs). There will be 26 SEZs throughout the country. Each SEZ will target specific goods and services depending on the accessibility of workforce and raw material locally. This specialization will lead to ‘economy of scale’ and this efficient production will increase our exports because of the low-cost production. Strengthened local industry discourages imports, currently PKR 470,038 million and PKR 180,899 million exports in contrast. These SEZs will play the ‘game changer’ role in thinning the trade deficit.

Foreign Direct Investment (FDI) is the most obligatory economic indicator for Pakistan in order to boost up the economy. In FY 2015-16, Pakistan received USD 1016.3 million compared to 963.8 million, which showed 167% increase. It is probable that CPEC will trigger the FDI up to USD 150 billion and with CPEC Pakistan is strengthening the prerequisites to entice FDI i.e. regional connectivity, law and order and macroeconomic indicators stability. The USD 11.83 billion is to be spent on the communication infrastructure to enhance regional connectivity and the Pakistan has seen a positive signal in maintaining law and order situation as the Terrorism index showed the decrease to 8.61 from 9.07 in contrast. The said factors will play the role of catalyst to fascinate FDI.

Unemployment is one of the problematic indicators these days, but the good sign is that CPEC will inject up to 2,320,000 jobs into the job market by 2018. Due to which the brain drain will come to its end and the knowledge will be employed within the border.

Meanwhile, Baluchistan, considered as one of the most under-developed provinces, will develop and would become the economic hub of Asia with the functioning of Gwadar port. The port will become a facilitator for the development of Makran Coast and unlock the potential for tourism. A gigantic amount of investment and development reforms are knocking at the door step of Baluchistan and these steps are the most attractive tools to inject FDI into this region. The most important prerequisite to latch FDI is the development of Free Zone at Gwadar. This free zone includes 2,280 acres of Gwadar port free zone while Industrial zone occupy 3,000 acres, which is about to inspire the FDI by a substantial amount and will lead to developing the under-developed province with some extra pace. Furthermore, the tourism is one of the most important factors in taking off one’s economy and Baluchistan is blessed with the majestic landscapes and breathtaking sceneries which are going to be exposed soon to the foreigners; and the construction of Gwadar International Airport is going to make an end to the cut-off and communication gap between Baluchistan with rest of the world. Under the CPEC umbrella, the fishing industry got some share because the coastal population mostly depends upon fishery and the up gradation and development of fishing industry will open up paths for the locals to enhance their private business.

The CPEC is not only a win-win situation for both Pakistan and China but also it is in the benefit for Central Asia and the Middle East. The megaproject will alleviate the growth rate by 2.2%. We are almost done with the energy shortfall and we are about to meet the prerequisites of FDI. And the most important development is the takeoff of Baluchistan’s groundwork.  The SEZs will take off our Industry, so looking with a bird eye; we can conclude that when the wheel will start moving on CPEC, growth and prosperity will follow.