The more than US$60 billion loan from the People’s Republic of China in the China-Pakistan Economic Corridor (CPEC), is set to change the face of Pakistan’s economy. The CPEC initiative is beneficiary for the economy of both the countries. The China will get the quick access to the Arabian Sea and Middle East markets and in return Pakistan will get support from the upcoming superpower China at all international forums.
The CPEC initiative is good if it will be executed in true letter and spirit. There are many advantages of this initiative, but on the other hand, there will be many challenges that Pakistan will face. This fear comes from the way the projects are being controlled, i.e. all materials, equipment, and manpower are being brought from China, with little or no participation by the Pakistani people. We will discuss both the advantages and disadvantages in this article.
The China will give Pakistan loan of more than US$60 billion under CPEC. In fact Pakistan is not getting even a single dollar of it. The contract of all the projects under CPEC initiative are awarded to the Chinese Engineering, Procurement & Construction (EPC) companies. The majority of the projects are using the Chinese technology means the Original Equipment Manufacturers (OEM) are from China. The loan that is processed by Chinese banks is transferred to the Chinese OEM companies through the Chinese EPC contractors. The summary of CPEC is that China is selling their own products to the Pakistan on installment basis on high interest rates.
Another issue is the lack of transparency and accountability in awarding the projects under CPEC initiatives. The agreement, in its present form, is finalized in confidentiality and the lack of information has badly obstructed a proper cost benefit analysis of the projects. There is possibility that the agreement might be heavily twisted in favor of China. The government should give the right of information to the people of Pakistan.
The Chinese approach of not hiring the local people will not help Pakistan create job opportunities for millions of its youth. The Chinese EPC contractors are bringing their own employees from China. The participation of the local community in employment is too less. It would be better if Chinese brings only technical experts from China and the rest of the employment is from Pakistani nationals, like European or American EPC contractors. But the Chinese companies are bringing all kind of employees from China, even unskilled employees like cleaning staff and helpers are brought from China. This looks clear failure of the Pakistani government while negotiating the contracts. There should be at least 80 percent employment for the Pakistani workforce. This may be bearable if it stops only during the construction of the projects. The Pakistani government has awarded the Operation & Maintenance (O&M) contracts of these projects to the Chinese companies. The Chinese companies are bringing their own manpower for the O&M of these projects or hiring the Pakistani national on a very low salary. This is a big dilemma that projects are being installed in Pakistan and country’s talented young workforce will not get much job opportunities.
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The China is the biggest economy of the world and has the capacity to make cheap products. The question arises that if cheap products from China started to arrive in Pakistani market, how our local market will compete with them? This is a very serious issue for the local Pakistani industry and employees associated with these industries. Will Pakistani only do trading by purchasing goods from China and selling in Pakistani market? This issue needs to be addressed and policies should be formulated to protect local industry.
Now we will discuss the way forward that what the government should do to make the CPEC initiative more fruitful for Pakistan. The government should take measures immediately to fully utilize the Pakistani workforce in the CPEC initiative.
The government should restrict the Chinese companies to hire 80-90 percent Pakistani nationals. This need to be addressed immediately, otherwise the way projects of CPEC are going; Pakistani youth will not get any benefit from it. The present strategy of Chinese companies is very disappointing for Pakistani workforce. If the government puts the restriction to hire more Pakistani, the companies will face shortage of manpower and result in more pay for Pakistani employees. All the money of CPEC US$60 billion investment is going back to China. Only in this way we can hold something for Pakistani people.
The universities and colleges should develop the 1-2 years training programs for Pakistani youth to make them skilled. The skilled youth can work more effectively on the projects and earn more money for their families.
The public and private institutes should start short courses of Chinese language. By learning the Chinese language, Pakistani nationals can work more effectively with the Chinese.
We are strongly against the opinion of some people that China is taking control of Pakistan under the CPEC initiative. The strategic location of Pakistan has given us opportunity to be a part of such a big project. Now it is responsibility of the Pakistani government to take full benefit of this opportunity provided by nature. The government should make the contract awarding method more clear and transparent. The agreements should be beneficial for the people of Pakistan. The most important point is that Pakistani youth should get at least 80- 90 percent employment in CPEC initiative. This will help in enhancing the skills of youth. Secondly, the Chinese companies should be offered special tax initiatives to install high tech industries in Pakistan, i.e. turbine manufacturing, generator manufacturing, car manufacturing and other heavy machinery manufacturing facilities. This will help in technology transfer to the country and also a great learning opportunity for the talented youth of the country. We pray that CPEC initiative will bring prosperity in Pakistan and the relationship and mutual cooperation between the two countries will extend further.
[box type=”note” align=”” class=”” width=””]Muhammad Farhan is an engineer by profession and has been working in the power sector since 2007. twitter: @farhan6309902[/box]