CPEC Phase II: Potential of Rashakai Special Economic Zone in Creating Business Opportunities

China Pakistan Economic Corridor (CPEC), a flagship project of Belt and Road Initiative (BRI) launched by Chinese President Xi Jinping in his visit to Pakistan in 2015. In beginning, it was $46 billion project but now its worth has been increased to $62 billion. The project provided Pakistan a breathing space in 2015 as it was inflicted with multiple challenges like terrorism, internal destabilization, energy crisis and infrastructure lacking. The issues were stumbling block in its triumph, so, Pakistan took Chinese help to resolve all those through CPEC in different phases. In the initial phase, capacity building of Pakistan was pivotal aspiration of China under CPEC through infrastructure and energy projects. After thriving completion of the first phase, CPEC has now entered into its second phase where industrialization, agriculture, science, improving livelihood of people and technology transfer to Pakistan are the key goals.

In this phase, China takes along collection of imaginative new windows of opportunities in every province of Pakistan especially in Khyber Pakhtunkhwa (KPK) which remained behindhand in the past due to number of reasons. As the main focus of the CPEC phase two is socio-economic development, trade promotion, employment and economic growth, so, the cause can only be fully served through special economic zones (SEZs). Pakistan has established SEZs to follow successful experience of China as these brought sharp increases in its GDP which helps eradicating poverty. According to International Labor Organization (ILO), tremendous increase in SEZs is observed in world since last few years. According to ILO, in 1986, there were 176 SEZs  in  47  countries  which  rose  to  3500  in  130  countries  in  2006.  According  to  World Investment Report of 2019, there were 5400 SEZs in 147 countries.

Pakistan adopted the same model, therefore, in 2016; Pakistan and China in sixth Joint Cooperation Committee (JCC) decided to establish SEZs in Pakistan. Initially over hundred SEZs were planned which later reduced to 46 but now Pakistani authorities especially Ministry of Planning Division and Board of Investment proposed the construction of nine SEZs including Rashakai Special Economic Zone (RSEZ) in different parts of Pakistan.

RSEZ in KPK is top precedence and is a flagship project of Khyber-Pakhtunkhwa Economic Zones Development & Management Company (KPEZDMC) which will implement it with collaboration of the China Road and Bridge Corporation (CRBC). The zone is spread over almost 1,000 acres and located near M-1 Nowshera. It will have international standards infrastructure and will be developed in three phases with almost $128 million. The ground breaking of the zone is planned in near future.

On 8 December, 2020, CPEC authority chairman Lt. Gen (r) Asim Saleem Bajwa said that earth breaking ceremony of RSEZ would be held soon under CPEC. He claimed that after completion, RSEZ will transform transportation services of the province along with business and trade.

Chief Minister KPK Mahmood Khan in his address to a forum said that ground breaking in RSEZ is temporarily deferred due to COVID-19 and matters will be addressed soon. After being operational, it will become hub of economic activity for the province. According to him, RSEZ will produce 200,000 jobs in engineering industries and food processing along with boosting business activities in the province.

Prime Minister of Pakistan Imran Khan said in his speech that KPK was underdeveloped and it had to look towards Karachi and the Middle East for jobs due to lack of opportunities but RSEZ is bringing a lot of industrialization in the province which will solve the issue. The RSEZ will become a life line of the province and people will be able to find employment without having to leave their homes in pursuit of livelihood.

Atif R.Bokhari, Chairman of Board of Investment said, in the second phase of CPEC, role of government  has  changed  and  our  main  goal  is  to  provide  conducive  and  comfortable environment to business community, private sector and industrialists of the province to invest. It remained a dream in the past due to repercussions of Soviet War and Global War on Terror in Afghanistan. In context of improved security situation after different operations by security agencies in Pakistan, investment of business community and entrepreneurship will diminish poverty and will raise the livelihood of the locals. China practiced the same model to eradicate poverty and world admires their efforts.

Courtesy to law and order situation of the province, investors from Pakistan and China are rushing  to  buy  commercial  plots  in  RSEZ.  According  to  available  data,  more  than  1,700 applications have been submitted for commercial plots in RSEZ. According to Chief Minister KPK,  two  Chinese  companies  already  have  completed  required  their  agreements  with government of Pakistan and one has been allotted 40 acres plot for steel production. In the zone, investor will bring high tech industry which will help Pakistan to increase exports, decrease imports and create jobs opportunities for locals. In the second phase, Pakistan is providing tax exemptions  to  investors  on  technology  transfer  in  the  country,  skill  development,  relocate Chinese industry in the province and increase the labor productivity. Materialization of the plan will improve literacy rate and  research  and development  in the province which will create substantial job and business opportunities for the people of KPK. This is first the zone and being developed on public-private partnership, therefore, if this experiment works then it can open door for many more in the country.

Socio-economic development is the top priority of CPEC phase two, for this; both countries have established a Joint Working Group. Under the group, both countries have agreed to work on 27 projects in Pakistan for which China gave grant of $ 1 billion.

As RSEZ is strategically located in proximity of Afghanistan and Central Asia, therefore, it has potential to become export base to Afghanistan and to the world through Gwadar Port. It can prove to  be  hub  of  regional  connectivity  if  properly  managed  and  with  improved  security situation  in Pakistan  as well  as  in  Afghanistan.  The  zone will  provide  trade,  business  and employment opportunities to the people of the province in particular and whole country in general. It will also provide multiple benefits to Pakistan like, increase in people to people contact and foreign direct investment in the coming years. The zone will attract foreign investors which will increase economic activities in Pakistan and this will spread its soft image to the world.

Naveed Anjum
Naveed Anjum
Naveed Anjum is PhD Scholar of International Relations at International Islamic University Islamabad, Pakistan.