CSS & PMS Pakistan Affairs | Special Economic Zones (SEZs) Planned under CPEC
The following question of CSS Pakistan Affairs is solved by Aqsa Noor under the supervision of Howfiv’s Pakistan Affairs and Current Affairs Coaches: Miss Iqra Ali and Sir Ammar Hashmir. She learnt how to attempt 20 marks question and essay writing from Sir Syed Kazim Ali, Pakistan’s best CSS and PMS English essay and precis teacher with the highest success rate of his students. This solved question is attempted on the pattern taught by Sir to his students, scoring the highest marks in compulsory and optional subjects for years.
Outline
1-Introduction
2-Understanding and significance of SEZs
3-Types of Special Economic Zones (SEZs) planned under CPEC
- Industrial zones SEZs
- Free Economic SEZs
- Agro Special Economic Zones
- Tourism Expansion Special Economic Zones
4-Prospects of Special Economic Zones
- Infrastructural development and Regional Connectivity
- Economic upliftment
- Sustainability and agricultural modernization
- Promotion of Tourism Industry
5-Critical Analysis
6-Conclusion
Answer to the Question
Introduction
Special Economic Zones (SEZs) serve as a cornerstone of a stable economic system since they not only ensure free trade, foster infrastructural development, attract foreign direct investment, and accelerate regional connectivity but also alleviate the country’s global standing in the geopolitical landscape of the world. Historically, SEZ have been persistent example of a historic economic boon and a game changer for developing countries for centuries. Similarly, SEZs planned under CPEC held significant importance for Pakistan’s socio-economic and political growth. Moreover, there are several types of SEZs planned under CPEC, such as Allama Iqbal Industrial City, Rashakai SEZ, Dhabeji SEZ, Bostan SEZ, and ICT Model Industrial City. Additionally, Dhabeji has certain locational advantages including easy access to Port Qasim enabling raw material import and finished goods export without incurring major inland transportation costs and saving time. A direct access road (8km) connecting Port Qasim to Dhabeji Zone is being developed. These zones bring forth many prospects alongside, which can potentially change the fate of a nation, such as industrial growth, development in transport infrastructure, creation of employment opportunities, and agricultural modernization. Therefore, Pakistan must employ its utmost efforts to get these zones fully operational to achieve its desired national goals.
Understanding and significance of SEZs
The term SEZs refers to the Special Economic Zones designed under the China-Pakistan Economic Corridor CPEC- a flagship project of BRI. CPEC is divided into three phases, short-term (2015-2020), medium-term (2020-2025), and long-term (2025-2030). Special economic zones are specifically formulated under the medium term of CPEC. SEZs are the specific area within a country, where trade and business laws differ from the rest of the country, aim to foster trade by reducing customs charges, giving tax exemptions, promoting foreign direct investment, and attracting Chinese locals. Moreover, the importance of SEZs for the country’s progress can’t be undermined due to its historic success in Shenzhen, Zhuhai, and Shantou China. Therefore, the Chinese and Pakistani Governments have approved the nine SEZs across Pakistan, aiming to ensure promising results for Pakistan and nearby countries.
- Industrial zones
China-Pakistan Economic Corridor has entered into its second phase and it focuses on industrial cooperation by establishing special economic zones to attract domestic and foreign investment, fostering industrialization and enhancing regional connectivity, surpassing the traditional economic patterns. For instance Rashakai SEZ in Khyber Pakhtunkhuwa. The place is already famous for its cloth market. Therefore, Installation of industries in Rashakai will bridge the gap between Pakistan and CAR countries by providing tax incentives and one-window facilities. Moreover, Allama Iqbal industrial city (AIIC) in Faisalabad also aims to ensure textile, engineering, and food processing sectors. Additionally, a solar power plant of 700 megawatt has also been installed to provide renewable energy to AIIC, stated in, Memorandum of understanding (MoU) signed between the Faisalabad Industrial Estate Development & Management Company (FIEDMC), Power China Jiangxi Electric Power Construction Co. Ltd (JEPCC), and Henan Zhonghui Electric Power Engineering & Consulting Co. Ltd (HZEPEC). It, indeed, has an innate potential to be one of the cleanest and greenest SEZ of Pakistan. Thus, Pakistan must harness the full potential of the industrial zones to get its maximum benefits. It is stated that
“Special Economic Zones under CPEC will be the game-changer in industrial development and employment generation for Pakistan.”
Former Prime Minister of Pakistan Imran Khan
- Free Economic Zones/Trade Zones
Moving forward to another type, which is mainly based on facilitating trade by reducing barriers, enhancing logistics, and improving supply chain efficiency. For instance, Dhabeji Special Economic Zone, an under-development project, is located near Port Qasim Karachi, Sindh. Its unprecedented strategic importance makes it one of the important routes for CPEC as it amplifies the regional connectivity with the Middle East, Africa, Central Asia, and China. Also, it brings forth employment opportunities for the local people. It not only lessens the logistics cost and time but also enhances trade across the continents. Moreover, the following sectors are feasible to be established at Bostan Special Economic Zone, such as Fruit Processing, Agriculture machinery, Pharmaceutical, Motor Bikes Assembly, Chromite, Ceramic industries, Electric Appliance, and Halal Food Industry. It aims to boost the industrial growth in Baluchistan by providing tax holidays, duty exemption, and custom-free charges, CPEC Authorities. It can potentially redefine the landscape of Baluchistan on a wider scale. Hence, Pakistan must pay heed to the proper operation of these zones to ensure economic stability in the region especially Baluchistan.
- Agro-Special Economic Zones
Stepping towards agricultural special economic zones. Their primary objective is to enhance agricultural development, modernizing it through technology transfer, improved infrastructure, and innovative farming techniques. For instance, the Islamabad Capital Territory Model Industrial Zone and Bostan SEZ focus on inculcating agro-tech solutions by introducing smart farming and AI in the agriculture sector. It intends to shift the traditional agricultural patterns to the non-conventional setup to meet the demands of the digital era. It will boost exports by improving food security, proper storage and efficient processing of food. Moreover, it saves the farmers from Post-harvest loss by proper treatment of products, such as cold storage, proper packaging, and efficient transportation of food. Thus, Pakistan being an agrarian country needs to reform its traditional agricultural system, by considering its prospects. Following this, the FDIs through CPEC have a significant impact on the overall socio-economic and agricultural growth of the country.
- Tourism Expansion Special Economic Zones
Moreover, tourism is essential economic driver particularly in a countries like Pakistan, which are geographically diverse. Hence, phase II of CPEC aims to promote tourist industry of Pakistan by developing tourism infrastructure to leverage Pakistan’s rich culture and natural heritage. For instance Moqpondass, a proposed SEZ, in Gilgit-Baltistan. It is an important chokepoint connecting Gilgit Skardu and Islamabad which mainly focuses on, mineral, fruit and mineral processing. It would attract local tourists and foreigners by facilitating them through infrastructure, roads, railways, hotels, and logistics lounges. Moreover, Mirpur Industrial Zone AJK SEZ also envisions to enhance the breathtaking landscape of Kashmir by improving the infrastructure and creating hospitable environment for locals and outsiders.
Prospects of Special Economic Zones Planned Under CPEC
- Infrastructural development and Regional Connectivity
Special Economic Zones are considered instrumental to a country’s growth, for the strategic location of the SEZs plays a crucial role in the process. For instance, Industrial zones at Rashakai, Dabji, and Bostan will experience industrial advancement and potentially uplift the backward areas. They are expected to create employment opportunities for the underdeveloped areas of Pakistan and western China. Moreover, Special Economic Zones would boost the production of local goods, as they offer cost-effective labour, land, and tax exemptions. It would also reduce the over-reliance on imported goods. Additionally, manufacturing products under Special Economic Zones help Pakistan, overcoming its trade deficit. In addition to this, SEZs are accompanied by renewable power plants, which aim to create an environment-friendly industrial ecosystem.
“SEZs are the engines of our future economic growth. They will uplift backward areas and create thousands of jobs for our youth.”
Prime Minister of Pakistan Shahbaz Sharif
- Economic upliftment
Special Economic Zones are specially designed to enhance the economic status of countries, such as Bostan Balochistan, AIIC, Rashakai, Khyber Pakhtunkhwa, and Dabji, Sindh to promote regional collectivity between China and Pakistan and also in intra-cities. Free Trade Zones would facilitate the cross-border e-commerce, ensuring the economic stability in both countries. Moreover, the Gwadar port SEZ, a maritime node, connects Western China and landlocked countries to Arabian Sea, providing easy access to the Strait of Hormuz. Hence, it will boost Pakistan’s role in regional connectivity. Moreover, tax exemptions and zero custom duties would reduce the chances of red tapism and bureaucratic hurdles. Therefore, this would alleviate poverty and boost the overall socio economic growth of the country.
“Development is the key to solving all problems. SEZs are platforms of openness and reform that bring prosperity.”
Chinese President Xi Jin ping
- Sustainability and agricultural modernization
Agriculture contributes a significant portion of Pakistan’s GDP, typically around 23-24%, according to the Pakistan Bureau of Statistics. Therefore the construction of Agro SEZs is a wise decision that would, undoubtedly, accelerate the economic might of Pakistan. Moreover, the manufacturing of insecticides, Pesticides, and Fertilizer, such as the NPK Fertilizer Plant, Proposed, is expected to produce 800,000 tons of annual output. Meat Processing Plant Sukkur is expected to yield 200,000 tons a year. Milk Demonstration Plants Punjab, Proposed, 200,000 tons a year. In addition to this, the modernization of agri techniques would boost the productivity of foods, for instance, the use of remote sensing technology, advanced equipment, and smart irrigation systems. It would also enhance the fisheries zone and promote cross-border agricultural trade hubs with Xinjiang China.
- Promotion of Tourism Industry
The expansion and integration of tourism industry into SEZ offers promising prospects for economic advancement, cultural diversification, and employment opportunities. For example, the first man-made “Chand Tara Island” of Pakistan in Gwadar with an investment of $10billion would be mega project of CPEC. The island will exhibit art amusement park, art & culture museum, concert hall, mega theatre, hotels, resorts, shopping malls, and water front walk facilities. After the completion of Chand Tara Island, Gwadar would potentially be the next trading hub of South Asia. Similarly, Moqpandas Pass, a junction between the Karakoram, Himalayas, and Hindukush, is intended to foster trade and facilitate the natives to promote local goods across Pakistan and South Asia. Moreover, Mirpur SEZ would significantly attract the diaspora due to its UK based Kashmiri community. Thus, unlocking the potential behind mega projects of CPEC would help Pakistan, achieving new heights of economic success.
Critical Analysis
Special Economic Zones are pivotal to the socio-economic-political and agricultural development of Pakistan. As they involve several sectors, bearing numerous prospects, and contributing to the financial prosperity of the country. To fully realize the true potential of Special Economic Zones, Pakistan must counter the challenges that impede the economic progress of the country. For instance, political instability and poor governance have disrupted the chains of progress. Government topplings have subsequently created trust and a trade deficit among foreign investors, impacting the momentum of smooth working. Moreover, cross-border terrorism and infiltration from neighboring countries have significantly halted the development of CPEC projects, intending to destabilize the project. Hence, Pakistan must take remedial measures to protect CPEC to unlock its benefits and thrive economically.
Conclusion
Special Economic Zones are geographically chosen chokepoints, which strength the regional integration, connecting Kashgar, China, and Gilgit-Pakistan to Gwadar Port and Arabian Sea through one road. However, with the easy access and connectivity across Pakistan and western China, CPEC projects still lag behind in achieving its true objectives due to political reasons and cross border terrorism. Nevertheless, these obstacles can be overcome with proper government interventions, resource allocation and countering terrorism. Moreover, SEZs are working in diverse domains that would enhance economic competitiveness by using skilled men force, FDIs, technological advancement and cultural exchange. Thus, Government, along with its nation, must make efforts to take these projects to the new heights of success.
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