The cadence and mantra of economic development for a modern state is now globally recognized.
Restricting the role of government to formulating a policy and regulatory framework and inducing and regulating the private sector: period.
Nonetheless, the Pak-China relationship has focused primarily on government and related policy issues. Surprisingly, the most critical element of the relationship when it comes to trade, economy, investment and trade cooperation has been “put on hold” a bit.
The “tidal wave” of the bilateral link between the two countries, the multibillion-dollar China-Pakistan Economic Corridor (CPEC) megaproject, has so far also focused on infrastructure construction.
Phase II of CPEC is promised to be more inclusive with a direct impact on Pakistan’s economic and societal priorities through industrialization, job creation and improved exports.
It might be a big media slogan, but true results-based development would be most difficult, especially when we assess the skills of the Pakistani public sector.
It is worrying that there are now less than 10 joint ventures between Pakistani and Chinese companies.
The first round of free trade agreements (FTAs) between Pakistan and China resulted in the shutdown of most Pakistani industries. It was not until 2020 that the FTA was renegotiated to address the unbalanced nature of bilateral trade with China.
However, many little empowerment chores are not online. Just two years ago we only had four direct flights between China and Pakistan, a weekly freight shipping company, all letters of credit (LC) were in US dollars, business visas for Pakistani businessmen were a nightmare and the list can go on.
The opportunity to meaningfully engage China is immense and present. We must use sentiment and warmth in bilateral relations, triggering Pakistan’s economic growth on China-centric trade ties.
However, today’s China is more business-oriented, driven by commercial and economic jargon and commercial dynamics. Therefore, we also have to talk about boutique – opportunities, risks and returns, and joint ventures and partnerships.
China will be the world’s largest consumer market. As it climbs the ladder of prosperity, it will consume billions of dollars in goods and services.
The Chinese industrial base will move away from low-value goods to services, high technology and luxury. This is a great opportunity for Pakistani businesses to develop an understanding of China’s domestic trends, now and in the future.
The FTA can help increase exportable products from Pakistan to China. Pakistan is expected to identify 250 new exportable items over the next two years, develop a five-year plan and actively move towards value addition and product diversification.
It is expected to develop another 100 items made in Pakistan with Chinese collaboration by relocating industries and re-exporting to other international markets.
He must regularly engage all chambers and commercial organizations in Pakistan and China. Apart from these, all factors related to trade such as shipping, freight, air freight, tariffs, labeling, translations, certifications, quarantine laws, etc. must be completely flattened.
Access to capital
The most fundamental ingredient in stimulating economic activity is access to abundant and profitable business capital.
The State Bank through Pakistani banks may offer a special initiative for industrialization – a 10-year loan (a cap of 500 million rupees per party to enable SMEs) at a fixed interest rate of 4% per year to finance industrial machinery.
Low cost risk coverage rates of 2% per annum can be provided by Sinosure to Chinese companies for supplier credit loans (up to 10 years). Inexpensive currency hedging rates of 2% per annum can also be provided between the Pakistani rupee and the Chinese renminbi.
The two sides are expected to activate Pak-China Investment Company to promote joint ventures in the private sector.
The scientific advances of China in the field of agriculture are remarkable and on the contrary we remain in the Stone Age.
Pakistan-China agricultural cooperation is essential to Pakistan’s national interests and can be very important in bilateral economic relations. Engagement in this sector should be focused on high yields, lower consumption, food security, local suitability, technology adoption, and research and development.
Ultimately, the cultural and human bond is the lasting bond between two nations. In this aspect again, we have put too much emphasis on government and must encourage a wider milieu.
Private sector joint ventures should be promoted. A special mandate is expected to be given to Pak-China Investment Company to invest up to 10% stake in joint ventures and offer business advisory services to identify 100 projects suitable for such ventures. A goal of 50 joint ventures of $ 500 million per year can be set.
For roadshows and delegation visits, Pakistan should prepare a business directory featuring its top 500 companies wishing to establish joint ventures with Chinese companies.
Business and investment delegations led and hosted by the private sector can be formed and roadshows organized on a regular basis. For training and educational exchange, scholarships at top Chinese universities and vice versa and science and technology training courses should be provided by the private sector.
In the event of dispute settlement, Pakistan should establish an alternative arbitration forum for all commercial and commercial disputes and establish an amicable settlement mechanism for personal and civil matters.
For information exchange, Pakistan should set up NGOs such as “Understanding China” to promote exchanges between think tanks, business forums and national leaders and the media and information exchange.
In conclusion, the Pak-China relationship is vital for Pakistan’s economic and industrial development and requires 360-degree national orientation. This requires synchronization with the government of Pakistan, however, it is too critical of an issue to be left to bureaucratic standards and government verbiage.
The private sector must be reinvigorated to take the lead in this transformation – “putting the horse before the cart”.
Besides our strategic and defense ties, we must build the Pak-China relationship to become a mutually balanced multi-billion dollar trade and investment partnership, cooperation in advanced technology and R&D, and a relationship of trust and confidence. respect between peoples.
Only then will we climb the imposing Himalayas, which is just a mountain range.
THE WRITER IS THE CHAIRMAN AND CEO OF THE DWP GROUP