National and International Issues

2019: The Year of Reforms and CPEC

Pakistan cannot continue doing the same thing with the same mindset, sustaining its downslide. For the first time in many decades, Pakistan is ready for a paradigm change in the template of development planning. The existing institutions, however, lack the professional capacities, if not the political will, to make wealth creation happen. Precious time has already been lost. Business as usual, is no more an option!


Pakistan sits at the cusp of historic transition in its nation building, with both strong ‘headwinds and tailwinds’. Over the past seven decades, Pakistan’s mother system has been sick due to major self-inflicted policy missteps and partly due to sophisticated hybrid war imposed by the external powers. Pakistan has been made a hostage of the IFIs. The country’s nation building dilemmas have been accentuated by the IFIs prescribed development path of dependence, docility, denial and delusion. Einstein’s Theory of Insanity says ‘One cannot get different results by doing the same thing over and over again’. The time to adopt a new development paradigm that meets our future needs, addresses current failures and draws lessons from the past mistakes is now or never. 
The rise of Pakistan’s trusted strategic partner China as the economic superpower, the respect Pakistan enjoys in the Islamic world and the quality of its military and strategic resources make it a category in itself. The demographic dividend of having almost 64 percent of population below 29 years of age enables Pakistan to groom at least a million high quality professionals and triple the number of vocational trained manpower annually from 2020 onwards to sustain the growth trajectory being ignited by CPEC. China is willing to help. For example, how to prepare our future generation for the job opportunities in the emerging multinational conglomerates of China (a record 120 Chinese companies have made it to the July 2018 Fortune Global 500 List).
Making Use of CPEC to Achieve the Pakistan Dream
Building a ‘knowledge corridor’ could be worth many times more than multi-track motorways. It will respond to demands of society and usher sustainable prosperity. When we only build motorways, we deny higher education opportunities to thousands of promising and talented youth. There is what the economists prefer to call an ‘opportunity cost’ for every CPEC or non-CPEC project. Pakistan appears to be losing out on the future. 50 percent scholarships offered by the Chinese universities are unutilized due to lack of awareness and institutional lethargy in our education system. A futuristic vision and a plan of action is needed to benefit from China’s rise. With CPEC entering the second or the middle phase of its implementation, it poses a very different set of challenges and requires mobilizing different kinds of professional capacities. Again, China is willing to help as 5000 Chinese small and medium enterprises (SMEs) are ready to relocate their factories to Pakistan to manufacture products for the Chinese market as well as abroad, utilizing Pakistan’s abundant raw material, cheap labour resources and location advantages. It is a win-win proposition for both nations.
The biggest challenge, however, is the ‘disconnect’ between Pakistani SMEs and their Chinese counterparts in the absence of mutual awareness of culture, systemic and business ethics. The second challenge is the size of the companies. Some of the Chinese SMEs are indeed equal to Pakistan’s Large Scale Enterprises (LSEs). Although Pakistan led the developing world during the decade of the 1960s and 1970s, the rules and procedures have also not kept pace with modernity. The third challenge is the slow decision making, low quality of governance with endemic corruption in all departments and all levels. In the absence of hard decisions for comprehensive policy reforms, the opportunities being opened up by CPEC are not likely to be harnessed just by repeating the mantra of ‘game changer’ or a culture of ribbon-cutting. 
Pakistan needs to attract Chinese private sector investors with additional incentives package. Nowhere in the world, a level playing field has ever succeeded to attract foreign investment. Pakistan cannot continue to be a hostage to its monopolies who neither want to compete nor want to see a competitor. Pakistan has been an exceedingly profitable market for both domestic and foreign investors. But the domestic investors instead of re-investing their surplus capital stashed them abroad, buying properties or shares. The net result has been a loss in competitiveness and share in the global market for Pakistani exports. Pakistan’s protected market has thus become a ‘bucket with a hundred holes’. Pakistan has emerged as the biggest loser in the globalization era, particularly after 1970s. Our industrial class partly was incapacitated by the destructive and reckless ‘policy of nationalization’ and partly due to its own inability to grow out of seth culture. The Chinese investment in SMEs by way of joint ventures will bring in 90 percent of the investment envisaged under CPEC’s medium and long-term programs. 
Proposed Package of Policy Reforms
Pakistan should not cherry pick from China’s development experience. Any progress without comprehensive policy reforms is unsustainable. Pakistan has all the right tools to emerge as a prosperous power. The major comprehensive policy initiatives could include electoral reforms with limitations for legislators to three-time membership of federal parliament or provincial assemblies to enable induction of new blood in politics; reduction in civil service by way of restructuring of ministries, departments and autonomous bodies to lessen mounting non-development expenditure; end of job quota system with 10 percent reserved for special category of backward areas; judicial reforms with the introduction of mediation courts to handle 90 percent of civil cases in order to reduce burden on higher courts and to make justice cheap, accessible and speedy; restructuring of autonomous bodies such as WAPDA, PIA, Pakistan Steel Mills in order to end subsidies; documentation of economy for domestic resource mobilization; expansion of taxation base by standardization and simplification of tax rules; ease of doing business by way of simplification of rules and procedures to attract investment; modernization of agriculture to enhance quality and quantity of output; rural industrialization by way of start-ups to generate employment; development of rural credit market by increasing the banking penetration in far flung areas; land reforms to curb absentee landlordism; irrigation canals dredging (Bhal Safai) to increase water availability; construction of water reservoirs and dredging of lakes to enhance water storage; policies to engage overseas Pakistanis in nation building and industrial development by curbing landgrabbing (qabza) mafia; and, police sector reforms to improve law and order and improve public service delivery.
The other major areas for new policy initiatives include: industrial policy reforms to restore the trust of the private sector; launching nine Special Economic Zones (SEZs), science and industrial parks, township village enterprises (TVEs); energy sector reforms for cheaper generation, conservation, and distribution; development of renewable energy sector; exploitation of mining and minerals sector; tourism policy initiatives; development of blue economy and maritime sector by amending the defunct Maritime Ordinance; standardization of education system by abolishing the class based three tier system of O&A levels, Matriculation and deeni (religious) madaris; administrative structure reforms with addition of new provinces in place of divisions; development of commercial business districts (CBDs) and empowerment of local government and municipal bodies; financial and banking sector reforms; Green Pakistan policy initiative to counter climate change and environment degradation; revival of cultural values through promotion of soft power by using media and education institutions; social sector reforms to promote voluntarism, community participation; housing sector reforms to discourage real estate development in agricultural areas; health sector reforms to encourage private sector investment in hospitals, diagnostic centres, and pharmaceutical industries; science and technology sector reforms to facilitate the transfer of technology/prototypes from abroad for local SMEs and start-ups; and, policies to promote civil-military collaboration in defence production and research.  
All solutions emerge with a mindset change. This is what the famous British economist John Maynard Keynes had in mind when he had observed that the ‘problem was not of generating new ideas, but remaining with the old mindset.’ Pakistan cannot continue doing the same thing with the same mindset, sustaining its downslide. For the first time in many decades, Pakistan is ready for a paradigm change in the template of development planning. The existing institutions, however, lack the professional capacities, if not the political will, to make wealth creation happen. Precious time has already been lost. Business as usual, is no more an option! Pakistan can no more sustain the old political gimmickries. There only remains the narrow span of 365 days of 2019 to make the comprehensive policy reforms happen for paying off the rising debt and providing jobs to a rising young population.
Pakistan stands in 2018 where China stood in 1978, when it began its comprehensive policy of reforms and open door to the outside world. In the absence of reforms and innovation, Pakistan’s history of nation building is a long list of missed opportunities. We should never let CPEC become yet another missed opportunity. Despite having the world’s best scenic spots, historical sites, cultural heritage of hospitality, our airports and markets do not have tourists and foreigners. Pakistani narrative is missing in the global discourse. It remains the best kept secret in the world, except for the wrong reasons. Pakistan can and should reverse its sustained downslide. It is among the best blessed and geographically well placed nations for future. Its rich natural, mineral and human resource, diverse climate, demography, social capital, cultural values, civil and military institutions, provide formidable inbuilt strengths.


The writer has served as Pakistan’s Ambassador in Germany, Singapore and Mauritius. He worked in China for two diplomatic assignments for nearly a decade. He is the author of several books on China. Currently, he is the Director at Chinese Studies Centre, National University of Science and Technology (NUST), Islamabad. E-mail: [email protected]

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