CPEC Phase-II and SIFC: Charting the future course for Pakistan’s economic prosperity

Vice Foreign Minister Sun Weidong of China is in Islamabad to attend the 4th meeting of the CPEC-Joint Working Group on International Cooperation and Coordination marks a significant milestone in the China-Pakistan Economic Corridor (CPEC) initiative. Co-chaired by Pakistan’s Foreign Secretary Muhammad Syrus Sajjad Qazi, this meeting is set to evaluate significant strides in key development areas: rural revitalization, industrialization, green development, and science and technology. As both phases of the project – CPEC 1 and the ongoing CPEC 2 – enter critical stages of development, the meeting’s agenda is crucial in evaluating progress, strategizing future actions, and reinforcing the corridor’s role in regional connectivity and economic growth.

It will take stock of the existing status of CPEC-1 & 2 given the dynamic global economic and geopolitical landscape, reviewing progress, adapt strategies to ensure sustainable and mutually beneficial development for both China and Pakistan and adjust and fine-tune the future course of action.

The meeting will set a future course of action for industrialization by fast-tracking establishing Special Economic Zones (SEZs), designed to spur manufacturing growth and attract foreign investments. With infrastructure development at its core, these SEZs are expected to drive job creation, boost exports, and diversify Pakistan’s economic base in the coming decade. Parallelly, green development will be fast-tracked with investments in renewable energy projects, eco-friendly urban planning, and sustainable transportation. These projects, spanning multiple years, are crucial for reducing environmental impacts and achieving long-term energy sustainability.

The meeting will also channelize the collaborative efforts in cutting-edge fields such as IT, biotechnology, and advanced manufacturing. Establishing research centers and technology parks, these initiatives are poised to catapult both nations into a future of technological innovation and a skilled workforce.

Central to the discussions will be the integration of the Special Investment Facilitation Council (SIFC) in CPEC-2 aimed at fast-tracking international cooperation and attracting global investment to broaden the scope and impact of CPEC by offering potential financial solutions and attracting further investment into these projects.

The meeting is likely to focus on garnering significant interest from a range of regional and international players for CPEC-1 & 2. Nations such as Iran, Afghanistan, and Middle Eastern powerhouses including the UAE, Saudi Arabia, and Qatar, along with European countries, are eyeing the corridor for its vast potential in reshaping regional trade and connectivity.

Iran and Afghanistan are poised to benefit from enhanced trade links and access, with Iran’s potential integration into CPEC serving as a gateway to Central Asia. Whereas, Middle Eastern countries view CPEC as a lucrative investment opportunity, aiming to link their own economic ventures with Pakistan’s strategic location, thus deepening economic ties and expanding their influence in Asia. Joining CPEC offers them a platform for significant economic growth through investment in infrastructure and industrial projects. The corridor promises enhanced connectivity, opening up new market accesses, particularly for landlocked regions.

European countries, while cautious due to geopolitical sensitivities, recognize the corridor’s potential as a new trade route, providing a more direct access to Asian markets. This could usher in a new era of economic cooperation, transcending traditional geopolitical boundaries and if managed effectively, CPEC could become a cornerstone of a new economic order in Eurasia, fostering unprecedented levels of cooperation, development, and regional integration.

The meeting is likely to value the promising opportunity Pakistan offers to transform its vast tracts of virgin, cultivable land into a hub of agricultural productivity, appealing especially to water-scarce but energy-rich Middle Eastern countries seeking to lessen their dependence on food imports.

Encompassing approximately 40% of its total land area, or about 79 million acres, Pakistan’s regions like Balochistan, Sindh, NWFP, and Southern Punjab, with their fertile alluvial soils and ample water resources, are ideal for conversion into large-scale, mechanized farming.

By establishing Special Economic Zones (SEZs) and encouraging public-private partnerships, Pakistan can offer attractive incentives for investment, such as tax breaks and infrastructure support. This not only paves the way for a more secure food supply for investing countries but also promises significant benefits for Pakistan, including technology transfer, job creation, and enhanced agricultural output.

The initiative, encompassing agricultural research and development with a focus on arid agriculture and water-efficient technologies, has the potential to foster innovations that could benefit both regions and beyond. This strategic development in agriculture under CPEC-2 could serve as a paradigm of South-South cooperation, bolstering Pakistan’s ties with the Middle East and setting the stage for mutual economic growth and regional stability. The prospective meeting is set to delve into the untapped $50 trillion worth of Pakistan’s mineral wealth, particularly in regions like Balochistan, NWFP, Gilgit Baltistan, and Southern Punjab. These areas are rich in a wide array of resources, including copper, iron ore, chromite, rock salt, gypsum, limestone, marble, coal, gold, and rare earth metals, alongside an abundance of precious and semi-precious stones. The focus is not just on bolstering the economy but also on diversifying Pakistan’s resource base, leveraging these vast reserves of both metallic and non-metallic minerals.

Efforts will include public-private partnerships, comprehensive geological surveys, and international technical collaborations. This approach aims to bring substantial foreign investment and advanced mining technologies to Pakistan. The exploitation of these mineral reserves is expected to significantly boost Pakistan’s GDP, spur new industrial sectors, and lead towards energy self-sufficiency, setting the country on a path towards a diversified and robust economic landscape.

Hopefully, the meeting will also focus on exploitation of Pakistan’s extensive coastline along the Arabian Sea, a gateway to untapped economic opportunities, poised for transformation through CPEC-2 and SIFC. This coastline, strategically situated on major shipping routes, holds immense potential for boosting maritime trade and shipping industries, both cargo and passenger. Additionally, the region’s natural beauty offers significant prospects for tourism development, from luxury resorts to eco-tourism. The fertile marine life along the coast presents opportunities for a sustainable fishing industry, capable of bolstering food security and export revenues. However, tapping into this wealth requires considerable investment in infrastructure, sustainable practices, and an integrated approach to coastal development.

CPEC-2 and SIFC are ideally positioned to catalyze this transformation. They can drive infrastructure development by building advanced harbor facilities, upgrading existing ports, and establishing new maritime routes. SIFC’s role in attracting both local and international investment is crucial, particularly in initiating public-private partnerships for diverse projects, ranging from tourism to marine conservation.

The socio-economic impact of fully developing Pakistan’s coastal areas could be profound. It promises not only enhanced economic growth through trade, tourism, and fisheries but also a significant upliftment of local communities. The creation of a myriad of job opportunities across sectors will lead to improved living standards and community development. Furthermore, a vibrant coastal economy will bolster Pakistan’s international standing as a key maritime player and a desirable tourist destination. This strategic development, if executed with foresight and sustainability, has the potential to reshape the socio-economic fabric of Pakistan, bringing prosperity and growth while preserving the natural allure of its coastline.

The 4th meeting of the CPEC Joint Working Group, occurring at a pivotal moment just before Pakistan’s 2024 general elections, holds substantial significance. The decisions to accelerate the progress of both CPEC-1 and CPEC-2 are crucial, as these projects are increasingly seen as the backbone for Pakistan’s future economic prosperity. With a strong focus on enhancing the country’s financial and economic status through infrastructural, industrial, and technological development, these initiatives are expected to lay a robust foundation for the incoming government.

This groundwork promises to offer an advantageous starting point for the new administration, which will have the opportunity to propel these initiatives forward.

Leveraged by the collective wisdom and intellectual contributions of representatives from across Pakistan, the new government will be well-positioned to elevate these projects to new heights, thereby catalyzing a significant qualitative and quantitative uplift in the lives of the Pakistani people.