One of the factors of losing competitive edge in exports against other developing countries of the region is lack of introduction of latest technologies and innovations in the manufacturing sector for which the industrial policies pursued over the past 46 years are responsible. The cluster development arrangement suggests that infrastructure is necessary but innovation in Pakistan’s industrial sector would come through Special Economic Zones (SEZs). The process of their establishment is yet to be fast-tracked and the technological base of the existing industrial sector has to be modernized with the introduction of new technologies.
The economic zones under the framework of CPEC will be located within the regional or local clusters. Other countries like Germany and Saudi Arabia have also expressed interest in being part of the economic landscape that is to be provided by the industrial zones within CPEC. However, reaping the fruits of SEZs depend on providing investment opportunities to Pakistani entrepreneurs, the contours of which are yet to be drawn. Speaking at a press conference after the 55th review meeting of CPEC last July, the former technocrat caretaker minister for finance and planning Dr. Shamshad Akhtar had expressed displeasure over the delay in streamlining the SEZs project and underlined the need for making it a priority. She had emphasised that SEZs are critical for Pakistan’s second phase of industrialisation.
Unlike its predecessor, the present government has sagaciously avoided overselling of CPEC for political propaganda. However, it has to devise a scientific and thorough plan to involve Pakistani business in these economic zones and direct some indigenous technical innovation towards local cluster development. The industrialists of “Golden Industrial Triangle” comprising business leaders from the industries of Gugrat, Gugranwala and Sialkot, had repeatedly urged the former Prime Minister Nawaz Sharif and Planning Minister Ahsan Iqbal for a meeting to allay their apprehensions and assure them prospects of joint ventures with Chinese entrepreneurs in the SEZs but their request was not accepted.
The incumbent government should incentivize small manufacturing industries and involve them in small engineering and software development for digital or real services. Pakistan can specialize in small scale chip manufacturing and become partner of Chinese mobile phone development industry, while developing a base for high technology manufacturing industries. The example of Asian Tigers particularly South Korea and Malaysia is worth emulation. This is similar to Pakistan and China defense cooperation which helped Pakistan to manufacture JF-17 Thunder aircraft. The aeronautical niche through cooperation between Chinese and Pakistani defense clusters enabled Pakistan to become an exporter of aeronautical equipments. The same model of technological cooperation can be replicated in civilian goods industries. In the meantime steps towards improving industrial competitiveness are missing although the policies of the successive governments did not envisage this vital component of manufacturing sector.
A detailed feasibility of industrial business activity needs to be undertaken to understand and promote local business niche along with local skill sets of population. This may also mean planning and changing urban development thinking that caters to the needs of its dwellers concentrating on social sector development by building health and educational facilities for unskilled and semi skilled population. The resources for social sector development in surrounding areas of SEZs can come from donors or public private partnership or may be generated fro private sector investment as a matter of their corporate social responsibility.
The area of human resource development associated with CPEC has been mismanaged. Barring a sporadic initiative of previous Punjab government with Tianjin University of China in Lahore rest of the three provincial governments could not develop a strategy for skill development to prepare a pool of manpower to handle and operate the technologies that will be used in SEZs. Former PTI Chief Minister of KP Pervaiz Khattak destroyed that available infrastructure of skill development by closing the institutions of vocational training. His baby the Technical Education and Vocational Training Authority (TEVTA) is dysfunctional whereas the province would need suitably trained work force for the SEZ at Rashakai. Higher education institutions, particularly the ones for studies in engineering sciences and technology have inefficiencies in skill development and research activities which must be overcome before the SEZs are established.