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Analysis Of CPEC Second Phase

The first phase of CPEC project is about to complete by 2020. Most of the development and building works aimed under the first phase of the project has almost been completed and now both China and Pakistan want to move towards the second phase of the multibillion dollars project.

CPEC Phases And Timeline

Under the second phase Special Economic Zones (SEZs) will be built over trade routes at Dhabeji, Faislabad, Rashakai, Hattar, Keti Bander and Sheikhupura while industrial estates will be developed in Vehari, Chunia and Rahim Yar Khan. There are many speculations going on about the second phase and its impacts on our economy and industry. To better understand the consequences of CPEC second phase for Pakistan we have to analyze phase two from all different perspective.

With the installation of these SEZs benefits that according to some prominent economists Pakistan is likely gain are

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Increase Economic Activity: It is an obvious fact that with the creation of Special Economic Zones at different regions over trade and transit routes economic activities will groom at these sites. Such economic activities will have enormous positive effects on the economy of the country.

Opportunities For Business: With the creation of SEZs business opportunities for locals will also increases. There are many business opportunities in Pakistan and let us hope that Special Economic Zones may prove a trigger point for all of them.

Intermediate Goods: It is also believed that Special Economic Zones (SEZs) will prove a major market for the availability of intermediate goods for the local industry. Every year Pakistan imports million dollars intermediate goods that the country then assembled and produced final goods. Now with availability of these goods within the country, Pakistan’s import cost will decrease to a greater extent.

Innovation in Local Industry: The establishment of SEZs will not only help in the creation of new business opportunities but it will also lead to the development of many new innovations in local industry.    

Revival Of Industry: Industrial sector in Pakistan is facing a swift decline for the past few decades. It is believed that the creation of SEZs will not only help in the revival of industrial sector in Pakistan but it will also help in diverting government’s attention towards it.

Some expected negative effects of Special Economic Zones on Pakistan’s economy and industry are

Use Of Fertile Land: Many people in Pakistan are objecting the creation of Special Economic Zones at the pointed sites for the exploitation of fertile land at these area. They believed that Pakistan has basically an agricultural economy and the use of fertile land at these sites for the establishment of SEZs means a greater agricultural loss to the country.

Domestic Industry: Another very serious point of concern is the uncertain future of Pakistan’s local industry. Generally it is believed that at SEZs mainly Chinese industry will be installed. In such case what will be the position of Pakistan’s domestic industry in these zones?

Local Raw Material: Similarly if Pakistan will start receiving readymade intermediate goods then how the country will utilize her own raw materials? In case of import of readymade intermediate goods from China how the country will manage to utilize her own crude materials?

Domestic Labor Force: The uncertain future and role of Pakistani labor force in Special Economic Zones is also a matter of serious concern both for the public and labors. Generally it was believed that the establishment of SEZs will help in the creation of many jobs but now there are speculations of the use of mostly Chinese labor force at these sites. In such case what will be the future of our labor market?

Future Of Agriculture Sector: And last but not the least, what will be the future of Pakistan’s agricultural sector? It is believed that the creation of SEZs and the increase of industrial activity in the country will probably shift away government’s attention from agricultural sector. In such case the already troubled agricultural sector of Pakistan may face more troubles. We should not forget that agricultural products constitute 21% of Pakistan’s GDP and 45% population of the country is either directly or indirectly linked with this sector.

CPEC and the creation of Special Economic Zones are no doubt promising steps towards industrial and economic development of the country but the government should not overlook other side of the coin.  

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