Charting the Path to Success for CPEC SEZs: Infrastructure and Beyond

The initial phase of the China-Pakistan Economic Corridor (CPEC) primarily focused on the development of essential infrastructure, including roads and power plants. However, CPEC is now entering its second phase, which centers on the establishment of Special Economic Zones (SEZs) along the corridor. This phase, often referred to as the industrialization stage of CPEC, encompasses four major SEZs: Rashakai SEZ in Khyber Pakhtunkhwa, Allama Iqbal Industrial City in Punjab, Bostan SEZ in Balochistan, and Dhabeji SEZ in Sindh.

Rashakai SEZ, having been inaugurated earlier, is already showing signs of economic growth and promises prosperity for the region. Meanwhile, the remaining SEZs are in various stages of land acquisition and infrastructure development. Notably, Dhabeji is still classified as an industrial zone and remains entangled in legal disputes related to its transformation into an SEZ.

Recent efforts by the government have included hosting roadshows primarily targeting Chinese investors, urging them to invest in these SEZs. These investors have been provided with insights into investment opportunities within Pakistan, including potential joint ventures in traditional industrial sectors such as textiles. However, the success of these SEZs hinges on several critical factors, which we will explore.

First and foremost, Pakistan grapples with a utilities crisis, marked by frequent increases in electricity prices and depleting gas reserves. The country has not made significant strides in discovering new oil and gas resources in decades, leading to acute gas shortages, especially during winters. Industries, even influential ones like the All Pakistan Textile Mills Association (APTMA), face hurdles in securing uninterrupted gas supplies. This situation raises concerns about the government's ability to provide competitive utility prices to new industries establishing themselves in the SEZs.

Secondly, assuming adequate infrastructure is in place, the availability of a well-trained workforce within these SEZs becomes paramount. The government envisions the establishment of new industries and the facilitation of technology transfers. However, absorbing technology transfers necessitates a workforce with advanced analytical and critical skills. Unfortunately, many of our technical and vocational training institutes teach outdated curricula on obsolete machinery. Engineering universities fail to produce graduates capable of assimilating new knowledge that accompanies technology transfers. Understanding, operationalizing, troubleshooting, and customizing technology to local needs require this new knowledge, making it essential to align vocational and engineering universities with the demands of future SEZ industries.

Thirdly, each SEZ will host a mix of heavy, medium, and light industries, each requiring distinct resources like raw materials and skilled labor. Therefore, catering to these diverse industries will necessitate a variety of skills within each SEZ. The crucial question arises: Can SEZ management and industries attract and retain the necessary skill sets to run these zones efficiently and productively?

Lastly, government involvement at any level tends to introduce bureaucratic processes. While federal and provincial governments have established independent SEZ management companies, long-term sustainability hinges on placing these companies under the leadership of industrial representatives, the true stakeholders in SEZ success.

In conclusion, despite several years passing since the inception of CPEC projects, both federal and provincial governments are still grappling with the practical implementation of SEZs while courting potential investors. This groundwork should have been laid during the initial phase when infrastructure was being developed. Therefore, a more integrated approach is now essential, encompassing the development and population of SEZs. In addition to investor outreach, the government must focus on nurturing the skill base within these zones, addressing the utilities crisis, and aligning academic and vocational training with the specific requirements of SEZ industries.