Pakistan’s Economic Revival

Pakistan’s history of nation building is, however, a long list of missed opportunities due to lack of recognition of merit and rule of law. Every regime has left a worse legacy than its predecessor.

Syed Hasan Javed

When everyone was giving up on Pakistan Economy, including Pakistani investors themselves in 2015, China came along with its US$ 46 billion China Pakistan Economic Corridor (CPEC) investment in the three Five Year Phases (2015-2030) projects.

Given our Westernized Colonial template of education and mindset issues there were no shortage of Sceptics and Detractors, questioning the veracity, capacity, security and the ground reality for these Projects to be implemented.

CPEC initiative harnessed the hundreds of ‘shovel ready projects’ in Energy, Motorways, Infrastructure, Port, Industrial zone, given the ‘trust’ between the two countries, which went through the various stages of full implementation.

Almost US$ 26 billion Projects in Infrastructure, motorways and power projects have completed by June 2023, producing additional 8,000 MW of electricity, 200,000 direct employment opportunities in the first phase.

The Chinese initiative historically speaking resembles the ‘American Marshall Plan’ after the World War II for the Western Europe, but only ten times larger. China’s medium to long term objectives include outsourcing its excess industrial capacity, developing new growth points, relocation of industrial zones, diversifying transit and transportation routes and supplies and to develop the Western regions for closer integration with the Euro Asian markets. 

The CPEC investment has already begun having ‘Multiplier effect’ and ‘spin offs’ for the economy of Pakistan. The Second Phase (2020-2025) with a dozen areas of collaboration in sectors such as agriculture, mining, AI and digital infrastructure, industries relocation, operationalization of special economic zones, higher education, environment, maritime, etc. are likely to achieve high quality development with transformative impact on the economy, long held hostage to the repeated IMF Programs with its faulty doctrines, conditionality, and myopic book keeping directives, since 1989.

The CPEC projects of Gwadar’s expansion plans, like the energy and infrastructure projects are all in full swing. The availability of multiple routes for transit corridors and the Plans to build oil and gas pipelines, underground railway from Kashgar to Gwadar are likely to prove a real ‘game changer’ for the entire region ensuring peace, prosperity, security and stability for half of world’s populations.

Pakistan’s history of nation building is however a long list of ‘missed opportunities’ due to lack of recognition of merit and rule of law. Every regime has left a worse legacy than its predecessor.

It is no use indulging in blame game, complaints and ungratefulness. Our airports and markets do not have tourists. Pakistan can and should reverse its sustained downslide.

It is among the best blessed and geographically well placed nations. With the CPEC entering the second or the middle phase of its implementation, it poses very different set of challenges and requires mobilizing different kinds of professional capacities.

CPEC is means to an end i.e. economic take off of Pakistan. If it does not, without timely wide ranging comprehensive policy reforms, it could develop into debt trap. Time is of essence to avoid subsequent Anarchy and chaos.

The IMF policies followed by successive regime never encouraged them to undertake serious structural reforms, all the public commitments, being nothing but ‘eyewash’.

The resultant consequences have been Low rate of domestic savings, tax collection, FDI and low fixed capital investment, low factor productivity, poor innovation, backward vocational & technical skills.

There is absence of ‘soft infrastructure’, which increases the ‘cost of doing business’. The core deficiencies hindering the implementation of CPEC need to be addressed by acknowledging mistakes and correcting them.

The system of governance in Pakistan needs ‘comprehensive policy reforms’. Deng Xiaoping, China’s great leader and the father of reforms and open door policy that has transformed China since 1978, had asked his people to either ‘reform or perish’.

This formed the ‘bedrock’ of the change in China from its old centralized subsistence inward looking economy to a modern market driven society. A u-turn was an existential question for the Chinese as it is for Pakistanis today. 

For the first time in many decades, Pakistan is ready for a ‘paradigm shift’ in development planning. The existing institutions however lack the professional capacities and the political will to make it happen.

There appears to be no sense of urgency to reform the way things have been done. We fail to acknowledge that it is our current ways of thinking and doing, which have brought us to this sorry and tragic state of affairs.

A mega u-turn is needed as precious time has been lost to make the comprehensive policy reforms happen, given the leadership deficit, extreme level of political polarization, economic meltdown, lack of hard decisions, new incentives and policies.

Pakistan sits at the ‘cusp’ of historic transition in its nation building, with both strong ‘headwinds and tailwinds’. Pakistan has been made a hostage of the IFIs. Pakistan’s national building dilemmas have been accentuated by the IFIs prescribed ‘development model of dependence, docility, denial and delusion’.

There is need now to disengage with the existing IFI paradigm and to conceptualize, enact and implement the new policy reforms initiatives, in order to release the full potential of the economy. The time to adopt a new ‘development paradigm’ that meets our future needs, addresses current failures and learns from the past mistakes.