CPEC: The Second Phase

Author Name: Asad-Ullah-Khan      03 Mar 2021     Domestic Economy

Over the past few years, people of Pakistan are very enthusiastic to materialize the $60 Billion investment that is believed to be a game changer for both Pakistan and the region. It is worth mentioning here that already $25bn investment have been completed in the early harvest projects last year in 2020 and now both the countries have started second phase of the CPEC. It must be understood that the second phase will be more crucial as it is not only dependent upon the rapid industrialization of Pakistan but also how and what will Pakistan offer to the region once the idea is materialized. During the second phase Pakistan will have to focus on its internal dynamics in order to achieve the maximum benefit.

The development in the second phase of CPEC will be based upon rapid industrialization. In this context, the smart development of special economic zones without any political prioritization will play key role in the success of this particular phase. The basic infrastructure for the process of Industrialization will be provided by these special economic zones. SEZs in any state across the globe are used to attract foreign direct investment, employment opportunities, setting up the pace for transformation of economy and implementation of strategic reforms. Unlike all the progressing nations Pakistan is trying to achieve these calculated objectives via SEZs under CPEC. Currently, according to official CPEC website, there are total 09 proposed SEZs across Pakistan out of which 03 are being developed rapidly. Allama Iqbal Industrial City Faisalabad, Dhabeji SEZ, and Rashakai SEZ are currently under development.

Efficient planning can guarantee half success. However, effective implementation can guarantee full success. Therefore to achieve full success Pakistan will have to devise such implementation strategy that will address the issues of internal implementation, monitoring an evaluation.

In the second phase of CPEC, due to industrialization, thousands of jobs opportunities will be created. According to the statistics released first phase of CPEC has created 75,000 jobs for local people and only 17.5% Chinese labour was used. However in the second phase, during the process of Industrialization only skilled labour will be able meet the demands of the public-private partnership. For this purpose government has already launched an initiative to reform The Technical Education and Vocational Training Authority (TEVTA) but this step alone will not be able to reap the real benefits coming from second phase of CPEC. A comprehensive plan to technically train the people in public and private domain must be drafted and implemented without any further delay. The plan may revolve around the promotion of small and medium enterprises SMEs. Also being a Muslim country, Pakistan can tap into the halal food market. According to estimate halal food market will grow to 3 trillion by 2027, but unfortunately Pakistan’s contribution in this sector is very low. With good market strategies Pakistan can easily capture up to $5 billion in this particular sector.

It is pertinent to note here that the success of the second phase of the CPEC is also directly linked with how this phase is designed to offer benefits in the region and even beyond the region. For instance, linking CPEC with Afghanistan may change strategic matrix in the region. Without peace and stability in Afghanistan, South Asia can never prosper economically. In this context, when the US is thinking to pull out its forces from Afghanistan, Afghans need to tap economic options in the region because they will observe the cut of $8 billion aid from west very soon.

It must be noted that just before the start of second phase of CPEC Pakistan has announced the increase in the re-opening up on the trade points on Pak-Afghan border. Currently there are 18 trade points between Pakistan and Afghanistan and the most important one is the Torkham border. After 2014 most of the crossing points were closed however, Pakistan’s special envoy to Afghanistan, Ambassador Muhammad Sadiq categorically stated that more trading points will be open soon. With such steps, government is trying to expand the second phase of CPEC to its neighbourly countries. To boost the trade from Gawadar port the Gawadar –Chaman highway will prove to be Catalyst in enhancing trade activities in the region.

Another reason of extending CPEC in the region, especially in the second phase, is the Pakistan’s aim to reach out to the market of Central Asian States. Also the issue of access to the warm waters by Central Asian States can also be resolved. As mentioned earlier, this can only be made possible once there is peace in Afghanistan. Pakistan’s deep interest in Afghan peace process and its effort in making it a success story are not only beneficial for Pakistan only but also regional states that will enjoy the prosperity in the form of improved economic connectivity in the region.

The industrialization phase of CPEC will face many challenges coming ahead. The foremost challenge will be the implementation phase. Unlike first phase Pakistan will have to overcome its internal issues to successful implement the second phase uniformly. Similarly, extending the CPEC in the region will also be dependent on the Afghan conflict equation. Peace in Afghanistan will facilitate economic integration of the region.


Asad Ullah khan is a Senior Research Fellow at the Centre for Aerospace & Security Studies (CASS). The article was first published in Pakistan Observer. He can be reached at cass.thinkers@gmail.com





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