Press Release – Day 3

Pakistan looks at Chabahar as a project complementing CPEC – Professor Ahsan Iqbal

The 32nd AGM and Conference of the PSDE, organized by PIDE, concluded today with the prestigious Quaid-i-Azam Lecture, delivered by Professor Athar Hussain, Director Asia Research Center, London School of Economics, UK. The theme of his lecture was “Regional and Domestic Political Economy”. The session was chaired by Professor Ahsan Iqbal, Minister for Planning, Development, and Reforms. Professor Hussain’s paper was discussed by Mr. Haroon Sharif, Advisor, Regional Economic Cooperation, South Asia, Professor Tariq Amin Khan, Ryerson University, Toronto, Canada, and Dr. Ashfaque Hasan Khan, Dean, NUST, Islamabad.

Professor Ahsan Iqbal, in his concluding remarks, said that he was delighted and honored to be the chief guest at the concluding session of the PSDE/PIDE Conference. On the occasion, he said that the policies should be research-based and should not be formed on the basis of gut feelings. He said that the solutions to the problems should be based on empirical evidence and not on mere judgments. For this to happen, however, the ideas must be discussed in an open environment and the discourse must be free and frank, he added. Highlighting the importance of CPEC for Pakistan, the Minister said that the project is not only a game-changer but it could also be a fate-changer if implemented correctly. Furthermore, he highlighted the importance of the PSDE/PIDE Conferences and said that key messages from the last year’s Conference were discussed, and benefited from, in the Planning Commission.

Professor Iqbal said that 10 years ago, the world was looking at us because of the security situation but now every government and think-tanks are looking for opportunities they can have through CPEC with everyone expressing the desire to join CPEC. Giving the examples of giants like Blackberry and Nokia who lost their places as global leaders, he said that we must adapt to the changing conditions around the world or else we would be left behind. Prof Iqbal said that CPEC is not just about transportation infrastructure and energy projects. It is a framework that is much broader, holistic, and looks at all the socioeconomic factors of development. Infrastructure and energy are important as they are the current bottlenecks for development. In the last sixty-six years, 16 to 17 thousand megawatts of energy was added to the system but the coming 3 years would see a record addition of 11,000 megawatt increase in power production. It is the biggest ever investment in the energy sector in Pakistan. He added that it was the SME sector that paid the price of energy shortages as the large sector had alternatives. Through CPEC we are also removing transport and infrastructural bottlenecks.

The Minister said dded that under CPEC, China does not look at Pakistan as a market but a country with shared destiny. By sharing their development experience, the Chinese are helping Pakistan to expedite its development process. Commenting on the development of the Chabahar by Iran and India, the Minister said that Pakistan is not looking at it as a competition but a development that complements CPEC. We are the poorest integrated region in the world, he added. He said that CPEC is not just a project of Pakistan but something linking the whole region.

The Quaid-i-Azam lecture focused on what is the most striking feature of the geographical distribution of economic activities or entities. Professor Hussain stated that most of us are either unaware of how uneven many of the geographical distributions are or regard the fact as of no particular significance, needing no explanation. Based on the New Economic Geography (NEG) framework, Professor Hussain said that uneven distributions arise from a variety of causes, some of which are obvious while others are complex and made up of a number of separate but interacting factors. He argued that with some exceptions economic activities are mobile in principal and can be relocated at a number of alternative locations. The exceptions are those that are tied to some natural resource in which case they are determined by the availability of that particular resource. Professor Hussain believed that the main determinant of selecting a location is the trade-off between the economies of scale, transport cost, and market size. He concluded his talk by giving implications of NEG for regional policy. He said that NEG points to strong trends towards concentration and agglomeration — a trend that seems contrary to reducing regional inequalities. The focus of regional policy, therefore, should be increasing the attraction of backward regions through investment in local infrastructure and improving local human capital.

The first panel discussion of the day was on “Socio-Economic Impact of CPEC”, which was chaired by Dr. Arshad Zaman, former Chief Economist. Dr. Nadeem Javed, Chief Economist, Government of Pakistan, said that CPEC is primarily an energy-driven connectivity project the aim of which is to reduce energy constraints and improve fuel mix. Post-July 2017 the gap between demand and supply of energy will end and by July 2018 generation of power is expected to be in surplus due to CPEC. The Chief Economist said that according to projections, CPEC would reduce the number of unemployed labor force by 2.32 million in 2017-18. Expressing his views on the topic, Professor Tariq Amin Khan, Ryerson University, Canada, said that problems in existing social relations require alteration in structure of rural society. If the goal is to create less oppressive social relations then the Government needs to intervene. He said that it took many decades for the situation to change in Central Punjab but we cannot wait that long to bring social change in Southern Punjab. The situation demands land distribution, learning lessons from history, and imposition of agriculture tax and using the revenues for rural development. The last panelist of the session, Mr. Qazi Issa, Executive Director, PPAF, said that to uplift the neglected community, the need is to create dedicated community connectivity fund. For human development we require to build social capital and empower the communities, he further commented.

Continuing the discussion, Dr. Safdar A. Sohail, Executive Director, CPEC Center of Excellence, PIDE-Planning Commission, said that the socioeconomic impact of CPEC is the most widely and wildly discussed issue in recent days on all the platforms. He said that the CPEC in its current manifestation would go up till 2030 but it would continue after that as a part of the long term plan. Mr. Nasir Afghan, Director MBA Program IBA, who was the final speaker of the session, said that spatial framework of China involves national to city and district level planning and we also need to look into it. He said that existing industrial parks in Pakistan are not performing well. He said that all national sector plans are needed to be aligned to CPEC.

The second panel discussion was on the theme of “Challenges in the Agriculture Sector and Role of CPEC”. The session was chaired by Mr. Muhammad Abid Javed, Secretary Ministry of National Food Security and Research, Government of Pakistan. Commenting on the theme, Mr. Shujaat Ali, Additional Secretary Finance, Government of Pakistan, said that the interest in agriculture in policy and research has declined rapidly. The second speaker on the occasion was Professor Steve Davies of IFPRI. He said that fertilizers yield has gotten worse for cotton and wheat since 1980s and the fertilizer industry is highly subsidized. He said that the best agriculture policy would be to remove subsidies and increase R&D expenditures. It will increase government revenues and increase production. He further said that Bhasha Dam initiative is a positive step and the combination of Bhasha Dam and water course line will positively affect water supply in future. Expressing his views on the topic, Dr. Paul Dorosh said that only large farmers, who sell wheat to the Government, benefit from current wheat policy. He said that the Government faces financial loss of Rs. 4.5 billion every year due to subsidy and wheat procurement. Dr. Dorosh said that per-unit subsidy could be reduced by raising the release price and reducing subsidy to flour mills. The amount saved could be used for irrigation and other purposes. At the end of the session, the book titled “Agriculture and Rural Economy in Pakistan: Issues, Outlooks, and Policy Priorities”, edited by David J. Spielman, Sohail J. Malik, Paul Dorosh, and Nuzhat Ahmad, was launched. The book is published for IFPRI, Washington, D.C., USA.

Earlier, some interesting papers were presented in technical sessions. In a paper on CPEC and Regional Integration, the author said that the analysis of Trans-Asian Pipeline Network shows the importance of CPEC. Afghanistan can be an effective connecting point but it does not have infrastructure and there is also a problem of security. Analyzing the use of renewable energy in China and its possible spillover effects for Pakistan, another paper showed that in China there has been a shift from hydro energy to wind and solar energy. Since FDI has spillover effects, investment in CPEC related projects in Pakistan will help it to adopt renewable energy. Therefore, policies should facilitate the transfer of tacit knowhow of renewable energy generation. Using transitional analysis, a paper showed that regional integration will increase 13 percent per year due to CPEC and related projects. As per statistics given in another paper on infrastructure development and regional integration, nearly 20 percent of GDP will be invested through FDI by China. The CPEC will also improve the integral physical infrastructure for the development of the whole region, the paper argued.

The three-day long Conference was attended by a large number of social scientists, researchers, faculty members from universities across Pakistan, students, policymakers and Government functionaries. The Conference was organized by the Pakistan Institute of Development Economics (PIDE), with the support of Ministry of Planning, Development and Reform. Other sponsors of the AGM/Conference include UNDP, FES, the World Bank, PPAF, OXFAM, IGC, ILO, IUCN, AKRSP, IFPRI, ADB, and ECO-SF.