CPEC connectivity paves the way for Special Economic Zones in KP

Hazara Motorway under CPEC boosting trade and economic activities. [Photo/Tahir Ali]
PESHAWAR, Jan. 20 (Gwadar Pro) –  With the significant infrastructural improvement due to investments made under China Pakistan Economic Corridor (CPEC), the government of Khyber Pakhtunkhwa (KP) has shifted its focus to the development of Special Economic Zones (SEZs) and Industrial Zones to create clusters of industrial excellence and to start the growth of industries.
Recently the KP’s cabinet passed the revised “Industrial Policy 2020”, which supports human resource development, innovation and creates a supply chain to capitalize on many potential opportunities available in the province (including newly merged tribal districts). The policy also aims to make the environment competitive for investment and rejuvenate the industrial sector.
Under the policy, the KP Government plans to establish at least 10 EZ/SEZs across the province in ten years. They include Hattar SEZ Extension (1000 acres), Daraband (D.I Khan) SEZ (1500 acres), Mohmand EZ (350 acres), Nowshera Extension EZ (77 acres), Swat EZ, Buner EZ, Shahkas (Khyber Pass Economic Corridor route), Chitral EZ, Ghazi and Jalozai.
According to the policy, at least two SEZs under Public-Private Partnership (PPP) like Rashakai SEZ are going to be established in the next five years while Hattar, Mohmand and Rashakai SEZs are being promoted under CPEC. It also states that efforts are on the way towards the development of Mohmand Industrial Estate as a sector-specific SEZ (Marble City).
The policy is based on three pillars of “revival & rehabilitation, growth and competitiveness”. The priority areas include the revival of sick units, rehabilitation of infrastructure and allied facilities in existing industrial estates, the establishment of sector-specific EZs, SEZs, encouragement of small and medium-sized enterprises/cottage industry, and development of technically skilled human capital as per the requirement of the industry in the province. Under the policy, the government plans to promote the construction industry besides automobile, pharmaceutical, electronics, home appliances, apparel, transshipment, IT based industries as well as food & beverages and labor-intensive industries.
The document reads that currently there are 1,286 industrial units in the province. They include 900 operational units, 300 closed and 64 under-construction units. The total number of workers is 10,301 (6,401 males and 3,897 females). Among the top five industries are Pharmaceuticals (97), Plastic industries (79), Marble & Granite (67), Steel Industries (59) and Food Processing and Beverages (52).
According to the document, at least 26,539 students are enrolled in 58 technical institutes of the province. To equip the human resource with modern and updated technical skills, under the policy, government will integrate technical institutes with industries, which will attract investment in vocational training and provide technical education as per the need of the industry. The government will also set up a model vocational college in collaboration with Chinese vocational colleges for skills development under CPEC socio-economic growth.
The policy states that the industrial cooperation under CPEC provides KP a great opportunity to start the industrialization process. The Rashakai prioritized SEZ is the only SEZ in CPEC portfolio that is being done in Build Operate and Transfer (BOT) mode with Chinese state-owned enterprises that will bring JVs. As certain Chinese manufacturers are looking elsewhere to relocate, through the industrial policy, KP can leverage its natural endowments and low-cost human resource to attract them. Due to its overcapacity issue, the sunset industries in China could be relocated to KP. Moreover, industries in KP can benefit from Free Trade Agreement (FTA-II) with China implemented in 2020.

The Central Asia Regional Economic Cooperation (CAREC) program was started to promote regional cohesiveness, trade and integration between the Central Asian countries, leading to accelerated economic growth and poverty reduction. It consists of 11 countries including Pakistan and has mobilized USD34.5 billion to lay the groundwork for economic corridor development. Central Asian markets have immense potential and if products and goods produced in Pakistan are marketed properly and strategically, exports can be increased significantly when directed to those markets. The KPEC is also one of the parts of CAREC routes connecting Pakistan to Central Asia via KP. Therefore, in the regional context, the Industrial Policy 2020 objectives are mapped with the key themes of the CAREC strategic framework 2020 and 2030.

Source: China Economic Net