The improved infrastructure will increase trade and cause an economic boom but, in the absence of enlightened legislation and structural changes in the economy, most of this will benefit a very narrow and connected business class.
Infrastructure spending alone cannot be relied on to move an economy of 200 million into the middle to high income territory in an inclusive manner. That requires masterminding a consistent increase in manpower productivity and orchestrating the transition from an agriculture-led, low value addition, economy to an industrialised one with higher value addition achieved though enlightened interventions.
For this systemic societal issues which restrict productivity must be addressed. These issues consist of education, skills development and healthcare; enabling policies that improve the ecosystem and encourage private sector investment; increasing the size of the formal economy; empowering women empowerment, etc.
For national development in key elements the development plan could include:
Public private partnerships: Improving infrastructure in Punjab and Sindh makes economic sense if you want to leverage what already exists. However you can’t write off the lesser developed areas and the government needs to propose a plan on how these will catch up.
Private sector participation will guarantee sustainability but our private sector doesn’t have the investment capacity or risk appetite to do it alone. The government needs to play its part to make the investment environment for industries more attractive than the real estate and stock market.
This includes providing research and development credits and technical assistance for existing SMEs that want to upgrade.
Inclusive agenda: The best way to ensure security and sustainability of CPEC projects is by vesting economic interests in local communities. Some of the gains from the industrial zones and transportation hubs need to flow into local communities perpetuating inclusivity.
There are now many successful internationally applied partnership models that involve community participation for infrastructure development which have reduced labour and other costs.
Brain drain: Pakistan has suffered from brain drain with its best educated minds being forced to go abroad due to the paucity of opportunities in the country. It would do well to offer incentives to harvest the crop of many senior, internationally experienced, expatriates who would be willing to relocate to Pakistan for the right opportunity.
Taiwan is one of many examples of a country that successfully created a whole new industrial sector that propelled its economic growth and for which it primarily depended on its returning expatriates for technical and managerial know how.
Energy: To reduce the import bill hydro and solar projects must be preferred, particularly hydroelectric projects that help build water reservoirs to address increasing water scarcity issues. In ten years’ time, Pakistan is projected to face severe water scarcity which has yet to be effectively addressed.
An increasing quota on CPEC transportation should be set for hybrid and electric vehicles so that the project can be used to reduce dependence on oil which will otherwise drag on our foreign exchange reserves and hence, the economy.
The present opportunity to bundle CPEC projects with a coordinated national development plan that provides solutions to Vision 2025, should not be missed.
By: ZULFIQAR QAZILBASH
Courtesy: Dawn News