ISLAMABAD: The federal government has decided to go ahead with the China Pakistan Economic Corridor (CPEC) amid the watchful eyes of international entities. The federal cabinet has approved the commencement of the second, and most important, phase of the CPEC project for industrial development of Pakistan.
Sources claim that the federal cabinet has granted its approval for signing the draft Memorandum of Cooperation (MoC) ostensibly to promote industrial cooperation with China, within the framework of the CPEC.
Sources further disclosed that the federal minister for the Board of investment (BoI) (including Chinese & other FDI), as well as the Special Initiatives, have reviewed and authorized the submission of a summary before the federal cabinet, thereby seeking the cabinet’s necessary approval.
What exactly is CPEC?
CPEC is the most prominent project of China’s Belt and Road Initiative, consisting of various economic and infrastructure projects throughout Pakistan. It is a $62 billion project, which includes a 3,000-kilometer network of railways, oil and gas pipelines connecting both countries, as well as new renewable energy projects.
What do the agreed upon conditions of this phase of the CPEC project include?
It was informed that Under the aforementioned MOC, government officials and CPEC-related workforce will go to China. Moreover, Pakistani officials will be trained according to China’s successful industrial model.
According to reports, the industrial cooperation agreement between the two neighboring countries will be effective till 2025, with the possibility of further expansion. They elaborated that under the agreement, there will be capacity building and skill development of Pakistan’s CPEC workforce. The Ministry of External Affairs and Ministry of Law jointly endorsed the draft agreement, sources claimed.
To clarify, BoI is the lead agency of the Joint Working Group (JWG) on industrial cooperation under CPEC from the Pakistani side. On the other hand, the Chinese counterpart of the BoI is the National Development & Reform Commission (NDRC), China.
A framework agreement was also signed between both parties in 2022, which besides other matters of significance, also aims to foster skill development and capacity building of the local workforce. This shows the potential skilling and economic advancement that Pakistan anticipates would result from the current endeavor.
Here is what happened in the pursuance of the consensus reached in the Framework Agreement and the 10th JCC meeting of CPEC, held on 23rd September 2021, the NDRC– China has proposed that an MoC between BoI and the All-China Federation of Trade Unions (ACFTU) is likely to be signed, in order to strengthen workers’ exchange under CPEC Industrial Cooperation.
Sources further hinted that the proposed MoC envisages to conduct exchange programmes of Government officers and workforce associated with CPEC projects, through capacity building and skill development, Chinese language courses, and any other mutually agreed mechanism to promote people to people ties.
According to sources, BoI and ACFTU have reached consensus on the text of the draft MoC, which has been duly vetted by the Law Division, as well as been concurred by the Ministry of Foreign Affairs.
Based on the draft copy, available with Profit, of the MoC between the ACFTU of China and the BoI of Pakistan, there will be an agreement between the two entities to promote industrial cooperation, within the framework of the China-Pakistan Economic Corridor Industrial Cooperation (CPEC IC).
In the foreseeable future (2023-2025), and keeping in mind the COVID-19 pandemic, both sides will, on the basis of mutual consent, hold online workers symposiums at regular intervals, as well as, carry out relevant exchanges and cooperation. The online symposium will be designated for the workforces of both countries that are actively engaged in and contributing to the construction of CPEC. This will provide a platform to augment people to people exchanges through experience sharing and suggestions for the future development of CPEC.
Moreover, online seminars based on the Chinese’s successful experience in development for Special Economic Zones (SEZs) shall also be organized for the concerned stakeholders in Pakistan. Following the same timeline, in the next three years, both sides shall initiate an exchange programme by arranging activities in their respective countries to foster practical people to people and cultural exchanges on ground.
To provide first hand experience of the successful industrial models in China, the Chinese stakeholders shall facilitate the field visits of the concerned teams from Pakistan, including the Chinese SEZs, sources told Profit. Likewise, in order to mitigate the language barrier between the two countries’ workforces associated with CPEC, while promoting brotherly relations and cultural ties, both sides shall arrange exchange programmes by holding language learning courses in their respective countries.
Furthermore, it was revealed that according to work needs, both sides will set up a consultation mechanism. This MOC may be amended or modified at any time through mutual written consent of both sides. The amendment or modification shall enter into force in the like manner as provided in the Article VII of this MOC.
The available copy of the MOC also states that any differences arising out of interpretation or implementation of said MOC shall be settled amicably, through mutual consultations between the ACFTU and the BoI. This MOC is expected to enter into force on the date of signatures and shall remain valid unless terminated. Moreover, the activities undertaken during the validity of this MOC shall continue to be governed by its provisions till their completion, unless both sides agree otherwise.
The pressure to discontinue the CPEC project comes from Pakistan’s debt issue. In 2013, when CPEC initially commenced, Pakistan was indebted to China for $4.1 billion. However, by March 2020, this debt had risen by 185% from $4.1 billion to $11.8 billion to China, with a total debt of $72.7 billion to all loaners (China and others) combined. According to IMF data, the amount was higher when loan from commercial Chinese banks was factored in, with over $6.74 billion in 2019.
This became the source of concern for US government officials and analysts, whereby Pakistan’s rapidly growing debt problem to China made CPEC look like a bad idea. However, it can be argued that the debt issue is not due to Chinese malfeasance, but because of Pakistan’s own handicapped political economy.
Moreover, the commencement of CPEC set in motion a shift in regional alliances, with prominent opposition from India. India’s main reason for resistance was the CPEC route, which passes through Pakistan’s Kashmir and Gilgit-Baltistan regions that are considered to be areas disputed between Pakistan and India. Other points of contention towards the project are owed to the potential bolstering of China’s position as the regional hegemon, challenging the highly contested superpower status between India and China. Moreover, in case of CPEC’s success, Pakistan would gain some stability and economic strength. As Pakistan’s historical rival, India would obviously oppose any project that makes this possibility a reality.
In conclusion, despite resistance from international entities, Pakistan and China have decided to continue the, now decade-old, CPEC project. This decision is tricky, considering Pakistan’s destitute economic situation and the desperation with which it needs an IMF bailout. Will we get an IMF loan after continuously going after the lender’s (and others concerned) wishes?
We need to have an enabling environment in place before we are able to implement Chinese model of industrialization. From tax authorities to bureaucracy to establishment, everyone wants their piece of the cake before they allow any progress in their sphere of influence to take place.
It’s really a risk and perhaps this is a challenge but also an opportunity.
It,s a good effort as usual on the paper. Capacity building of beaurocracy will not help, the r not creative minded and have no experience of commercial activities. Therefore, they remain incompetent to stimulate what is needed and how to integrate to materials the industrialization in Pakistan. I worked with them, I know how incompetent and have no motivation of nation building attitude. Often r from low and middle class of society with blocked head. more obedient to please the senior officer, who is also one of them with no epitite to own the responsibilities.
For such u need a visualised leadership, which is not there in Pakistan unfortunately and neither a team who can deliver it.
commendable Sir .
About Beurocrates in Pakistan.
Those who have worked with them , know exactly their mindset .
A resourceful Pak , placed in such a Supreme location, a Gateway of Asia , opening to the world of opportunities of central Asia and China , leading all the way to Europe. What a scope !! but falling into the hands of incompetents .
the biggest reason for akistan,s decay is corrupt 1% elite
Mr Abdul ,you are so true .You have presented a true picture of our Beurocracy. They have no capacity . They only know how to mint perks & privileges for them . They can never think beyond that .