New Economic Corridor Good for Local Business
KARACHI: The New China-Pakistan Economic Corridor (CPEC) could be a “game-changer” for Pakistan and indeed for South Asia said Nawaz Sharif, in the first address of the CPEC Summit and Expo. The much anticipated two-day event which took place at the Pakistan-China Friendship Center in Islamabad was attended by key politicians, business leaders, and delegates from both countries.
The inaugural session welcomed the Chinese Ambassador to Pakistan, Mr Sun Weidong and Pakistan’s Federal Minister for Planning, Development and Reforms Mr Ahsan Iqbal, along with 110 key delegates from China.
The $46 billion project has lofty ambitions: elimination of poverty, unemployment, and underdevelopment. It aims to complete this mission by rapidly expanding and upgrading Pakistan’s infrastructure and by broadening economic cooperation with the People’s Republic of China; CPEC is an extension of China’s equally ambitious One Belt, One Road Initiative that aims to connect 64 countries in three continents.
Analysts expect the creation of a surplus of 700,000 jobs between 2015 and 2030; with up to 2.5 percentage points added to the country’s annual economic growth. Cumulatively, the different projects have a combined value that equals the total foreign direct investment in Pakistan since the year 1970; equating to billions of additional revenue for both countries.
Included In the pipeline, is a 1,100-kilometer motorway connecting Karachi to Lahore. “One of the major deterrents for international investors is poor national transport connectivity, they see Pakistan’s cities as too isolated,” said SaadArshed, managing director of Lamudi Pakistan—the online property platform.“The new six-lane highway will open up massive trade potential between the largest and the second largest cities in the country,” Arshed went on to say.
However, there are many who oppose the partnership. Business people have come out to oppose CPEC, citing that rarely before has a Free Trade Agreement (FTA) resulted in a positive outcome for the Pakistan economy. Many fear they will be ill-equipped to compete with cheaper Chinese products and consider it a blow to local commerce.
Naturally, there will be apprehension but other countries have seen extremely positive outcomes from FTAs. A key example is the U.S and Chile. In just the first few years of the U.S-Chile FTA, according to the Central Bank of Chile, Chilean exports to the U.S grew significantly. CPEC is likely to be mutually beneficial for both countries. China has a gargantuan need for cement, and machinery and many other items. The rapid growth of China’s middle class—urban-household income is expected to double by 2022—presents opportunities on both sides.
Those who anticipate a potential market, stand to benefit from a sizeable return on investment whether they are Pakistani property investors or Lahore carpet weavers as fortune favours the brave.