CPEC 2nd Phase – CPECBULLETIN https://cpecbulletin.com Your Ultimate Guide To CPEC Mon, 31 Jan 2022 06:44:12 +0000 en-US hourly 1 https://wordpress.org/?v=4.9.20 CPEC: Reshaping Pakistan’s Railway https://cpecbulletin.com/2020/06/22/cpec-reshaping-pakistans-railway/ https://cpecbulletin.com/2020/06/22/cpec-reshaping-pakistans-railway/#respond Mon, 22 Jun 2020 13:28:33 +0000 https://cpecbulletin.com/?p=7175 Pakistan railway is inefficient with several problems that affect both passengers and the freight sector. There are copious reasons for such a dilapidated railway network and makes one wonders as to what and how could be the possible reasons for such a run-down railway system, especially when other countries with similar economic standing has progressed …

The post CPEC: Reshaping Pakistan’s Railway appeared first on CPECBULLETIN.

]]>

Pakistan railway is inefficient with several problems that affect both passengers and the freight sector. There are copious reasons for such a dilapidated railway network and makes one wonders as to what and how could be the possible reasons for such a run-down railway system, especially when other countries with similar economic standing has progressed by leaps and bounds in this sector.

Few explicit reasons are causing everlasting damage to railway sector, for instance, lack of sincere efforts in delivering services is missing by the authorities which in turn causes delays, repeated accidents occur, loss of goods and lead times are also observed. Poor rail linkages, outdated trains and manual signaling system coupled with the poor infrastructure consistently overburden government expenditure. Put together, these are some of the reasons that perpetually work to halt any improvement in the rail network of Pakistan. Having said this, the Chinese government and its entrepreneurs have extended their support to upgrade and turn around Pakistan’s railway system under the rubric of China-Pakistan Economic Corridor (CPEC) since its inception in 2013.

According to Ernesto Sanchez et. al, 2013, due to these inefficiencies, the use of rail freight has dropped over the years from 7.2 million tons to less than 4.6 million tons. These disorganization have cost the economy about Rs.150 billion per annum when compared with regional and global countries a significant difference is seen. According to Reuters, 2017, China’s rail freight volume in February 2017 was 281.21 million tons, which is substantially higher than Pakistan’s decreasing volume. EU-27 was estimated around 389 billion tons in 2010 with the biggest country being Denmark (Eurostat, 2012).

Moreover, our rail freight takes about a couple of days on the main line (Karachi-Lahore) and up to 16 days (Karachi-Quetta) to deliver upcountry which is three times slower than China and US (Ovais, 2014). When compared to countries such as China, UK, and the US that are well known for having a well-established and successful rail freight network Pakistan certainly falls behind. Cheap and quick shipment of goods is crucial to ensure competitiveness and provide a regional and national edge over competitors.

Under CPEC there has been a huge investment into optimizing the rail network in Pakistan in order to make it efficient and competitive. Approximately $62bn is being invested into CPEC, out of which approximately $8.6bn is being allocated to the up-gradation of the ML-1 rail line. However, for a successful implementation and development of this project, consideration has to be made to creating an effective system that can support the capacity and speed of the trains at each junction keeping in mind the costs and time required.

The investment will be used to upgrade existing lines, modernizing and upgrading rail junctions and stations such as Havelian Dry Port and extending the rail network. It will support high speed/capacity trains, increasing the speed from 60 Km/h to more than 130 km/h under the CPEC initiative. This will allow the rail network to ship goods twice as fast which would reduce costs and lead time. It will also provide a cheap and quick way of transporting goods over long distances giving both private and public sectors a competitive edge.

According to the Reuters report 2017, China currently imports $6-7 billion of perishable food from Europe each year, mainly pork, dairy, fruit, and seafood. Under the Belt and Road Initiative, the rail network between China and Europe will reduce transportation time from 40-50 days to 13 days or two weeks it could bring a whole new potential to Europe-china Trade. Similarly, agriculture commodities are an important part of Pakistan’s trade and export, however, less than one per cent is shipped using the rail network. According to Road Freight Transport and Emerging Competitive Dynamics, 2016, due to current inefficiencies, about 30 per cent to 40 per cent of agricultural production is wasted due to inefficient supply chain infrastructure. It stands to reason if investment from CPEC improves and optimizes rail transport then, industries and sectors that depend on fast and cheap transportation in order to make a profit will benefit the most, especially perishable goods.

Rail is cheaper to use longer distances while the road is cheaper over shorter distances. The average trip distance for trucks in Pakistan is 947 km per trip. Using rail is far more competitive than the road for freight over longer distances (over 500 km); as such investment is crucially needed to fill this gap. Economies of scale can be achieved by using one rail with 30 carriages to transport goods from Gwadar to Kashgar (1700 Km), rather the equivalent amount of trucks which will have a higher cost, need more maintenance and will take far longer to reach the destination.

With the CPEC investment, the aim is to bring our out-of-date rail network into the modern age and become competitive with regional countries. There are obvious advantages that have been highlighted above. Having a proper rail system will help the economic corridor between China and Pakistan be utilized to its optimal potential. This will facilitate more growth, trade and investment in the long run not only between China and Pakistan but will have positive implications on the regional and global connectivity.

 

Industrial revolution had initiated in the 18th century but the world had to wait till 1959 to witness the establishment of first modern Special Economic Zones (SEZ) in Shannon, Ireland. As of 2006, International Labor Organization’s (ILO) database reported 3,500 zones in 130 countries and today one can find more than 4300 SEZs around the globe and the number is increasing rapidly. The reason behind this growth is the substantial development that comes with the establishment and successful operation of a SEZ. There is no specific definition of a SEZ; some call it a place where foreign companies enjoy tax benefits, other know it as an area near port for export purpose while remaining consider it as a vehicle to attract Foreign Direct Investment (FDI); all these descriptions are correct. Countries use SEZs as a tool for industrialization. A number of examples exist in the world from Asia to Latin America that illustrate how SEZs play a vital role in economic growth; however not all the SEZs get miracles like Shenzhen in China. Out of all the countries developing SEZs, China has been the most successful. China has gained immense progress through SEZ ventures. According to an estimate, SEZs, all over the world, have created approximately 66 million jobs out of which 30 million are exclusively located in China.

Special Economic Zones or SEZs are considered significant specifically for the industrial development of a country. Industrial development provides the firm standing on which any country can hope to reap long term economic benefits. At the same time, it is important that the SEZs are based on the export oriented business/trade development. SEZs are the specific regions identified and demarcated with the sole aim of bolstering economic activity. The aim is achieved through offering various incentives to the foreign investors such as tax and duty exemptions. This idea is now being practiced all across the globe in various countries and is contributing greatly to their respective economic growth.

Pakistan today, under CPEC, has entered the Industrialization phase. Even though in the past, Pakistan was mindful of establishing these zones and tried to establish the SEZs but the attempts were not particularly successful back then. Nonetheless Pakistan does already have some successful industrial clusters and estates in Sialkot: surgical goods Cluster; Gujarat: ceramic/pottery industrial cluster; Faisalabad: readymade garments manufacturing cluster; Khyber Pakhtunkhwa (KPK): marble Cluster; Hattar Industrial Estate (KPK): food and beverage, textile, crockery, chemical industry; and Gujranwala: tannery/leather industrial cluster. However, this time along with the renewed conviction, Pakistan can rely on the vast personal and successful experience of China in the establishment of SEZs under the ambit of CPEC. China’s own SEZs which number almost around 1800, speaks volume of its sound success in this domain. Since 1980’s it has garnered enough skill, practice and knowledge of the requirements for setting up of these economic zones. Pakistan can also and must utilize this experience of China in ensuring the success of its prospective economic zones.

So far nine SEZs have been identified to be established soon. One each in Punjab, Khyber Pakhtunkhwa, Baluchistan and Islamabad, two in Sindh and one each in FATA, Azad Kashmir and Gilgit-Baltistan. Governing structure for these zones is provided n the SEZ Act 2012 and the Board of Investment (BoI) has established “CPEC-SEZ” Cell for facilitating stakeholders on the matters relating to CPEC and Special Economic Zones. Not only can Pakistan learn greatly from China but should also focus on cultivating domestic capacity in the areas of vocational education, agriculture, water management, automobile technology, electrical appliances, and disaster management etc.

Pakistan is eventually set to embrace around 37 SEZs under CPEC. Four SEZ sites were identified in Punjab. Punjab-China Economic Zone and Quaid-i-Azam Apparel Park SEZ are in Sheikhupura while M-3 Industrial City and Value Addition City are in Faisalabad. In Balochistan, nine places were identified for SEZs: Bostan Industrial Zone, Dasht Industrial Zone, Turbat Industrial Zone, Industrial Zone at the Junction of Qilla Saifullah, Zhoband Loralai, Gwadar Industrial Estate, Lasbela Industrial Estate, Dera Murad Jamali Industrial and Trading Estate and Winder Industrial and Trading Estate. In Sindh, four sites were identified for SEZs. These are China Special Economic Zone at Dhabeji in Thatta, China Industrial Zone near Karachi, Textile City and Marble City. Two of these projects were considered in Thatta: China Special Economic Zone, Dhabeji (priority) and Keti Bandar. The Khyber Pakhtunkhwa government requested the establishment of SEZs in 17 places under the CPEC. These include economic zone at Karak, Nowshera, Bannu, Jalozai, Rashakai, Risalpur, Chitral, Buner, Swat, Batagram, Jahangir, Mansehra and Gadoon Amazai. Others include Hattar Phase VII Industrial Zone, Ghazi Economic Zone and Gomal Economic Zone in Dera Ismail Khan. Moqpondass33 SEZ will be established in Gilgit-Baltistan. In Azad Jammu and Kashmir, Bhimber Industrial Zone will be the priority project while Muzaffarabad SEZ will be the alternative. In Fata, the only SEZ will be Mohmand Marble City. ICT Model Industrial Zone will be established in Islamabad while an industrial park will be developed on Pakistan Steel Mills’ land in Port Qasim near Karachi.

It’s a fact that at the moment Pakistan doesn’t have a manpower proficient enough to operate Chinese technological tools and machineries. Also there is not yet much information available about the nature of labor that will be employed in this project. It is expected that China can provide rigorous training to the local Pakistani workforce and make them skilled enough to use the advanced technology. Not only will it generate domestic employment opportunities but will directly contribute to the sustainable development of Pakistan, which of course is one of the eventual goals of the CPEC. Both China and Pakistan need to work towards bringing more transparency and clarity in this regard. The final framework should be based on equivalent and balanced opportunities for all the stakeholders.

Last but not the least, for these SEZs to deliver successfully it is important to have a secure foreign investment. For that purpose, not only certain economic incentives are to be offered but the provision of basic utilities such as gas, water, electricity are to be ensured too. In this regard the federal governments have already agreed to supply these amenities to the economic zones. Additionally, the workable environment should be made available where the security concerns should be at the minimum. The success of economic zones also depends on the socio-economic conditions of adjacent areas. In case of Pakistan, the local employment opportunities and capacity building should be the main focus that should be achieved with the mutual consultation and understanding between both China and Pakistan.

Moreover, Industrial cooperation under CPEC will help us to attract those labor intensive industries and jobs that will definitely change the destiny of Pakistan. This looks difficult but is not something impossible to achieve. In 1979 before economic reforms in China, China’s GDP per capita was lower than Pakistan. However, presently China stood at US $ 8069 while Pakistan is still stuck between US $ 1400 to 1500. As mentioned earlier China’s support in the CPEC is the key to Pakistan’s success. China has all the experience that Pakistan needs at the moment. The need of the hour is to keep all the differences aside and leave no stone unturned to make CPEC as an exemplary economic between China and Pakistan for the rest to follow.

 

The second phase of the China-Pakistan Economic Corridor (CPEC) is prime to start that added more sectors recently like agriculture and tourism. The vague accusations of succumb slow process of Multi-Billion dollar project Belt and Road initiative (BRI) have been denied by chairman CPEC authority, Asim Saleem Bajwa.

Under Belt and Road initiative (BRI) global strategic plan adopted by China in 2013, China committed to invest $62 Billion to forge Pakistan through Infrastructure and Development. China contended this Belt and Road initiative in Pakistan via two phases. The first phase generally focused on Infrastructure and energy sectors that was launched back in 2015. The second phase that is at its cusp to start will primarily focus on Development and Private sectors and it will add more like agriculture, science and technology, and tourism, Asim Bajwa tweeted.

Asim Saleem Bajwa had rejected the dismays and labeled the accusations as the moniker “Flotsam and Jetsam”. He tweeted, “Rumors about CPEC slowing down are totally baseless, misdirected propaganda articles keep appearing”. He denied the aspersions and bolstered by telling the that coronavirus has not slowed down the process of the second phase of CPEC.

Federal Minister for Planning, Development, Reform, and special initiatives Asad Umar also added into the context of the second phase of CPEC and supported the statement by Asim Bajwa and gives a conspicuous assertion of several additions of sectors in the second phase of CPEC.

India has had always denied the CPEC project as it develops the Azad Kashmir (Pakistan-occupied for India) so their narrative strongly condemns the CPEC initiative. CPEC is regarded as a flagship of Multi-Billion Dollar project of Belt and Road initiative (BRI) which aims at connecting Chinese province of Xinjiang with Gwadar in Pakistan to loom the Global influence of China and economic prosperity for both Pakistan and China by expanding and proliferating Infrastructure and Development through stark and sheer prowess.

 

 

Acting Ambassador of China Zhao Lijian gave message on FM-98 that Social sector will get special attention in the second phase of China-Pakistan Economic Corridor (CPEC).

The second phase begins with the start of new year, 2019, he said while talking here in FM-98’s program “Hum Qadam”. The initial phase of the CPEC has focused on infrastructure and energy projects in Pakistan which witnessed significant growth.

During the next 5 years, small projects will be the focus of attention under the CPEC, which include renovation of schools, innovation in hospital system, poverty reduction, model villages and supply of clean water for the public.

In addition to this, small scale power generation projects will be built in remote areas, Zhao liJian said adding in the education sector more than 22,000 Pakistani students are studying in China, while more Pakistani students will be sent their for higher education.

He said that more Pakistanis would be trained in China and Pakistan to overcome the problem of manpower for Chinese companies working on various projects in Pakistan. The Acting Ambassador said, the construction of Karakoram Highway from Hawelian to Thakot and Motorway M-5 from Multan to Sukkur will be completed soon.

Furthermore, he said that 7 key projects of energy have been completed in Pakistan including solar, wind and coal-generated projects, due to which significant reduction in energy problems has been seen, while work on more projects is going on speedily.

Referring to the negative reports about CPEC in local and western media, the Ambassador said, CPEC is being built with national consensus. He said that despite controversy in political matters between the political parties, complete consensus about CPEC and Pak-China relations is there inarguably.

He contended, public awareness is needed in response to negative reports published in this regard. Zhao LiJian further said that the people should be aware of the basic objectives of negative propagators, because their negative reports generally give the impression that the CPEC is a burden on Pakistan’s economy on account of interest rates. he categorically stated that all such reports are baseless without having any ground reality.

 

News Source: The News International