CPEC: Boon for adept and bane for inept

By Mansoor Ahmad

LAHORE: China-Pakistan Economic Corridor (CPEC) is acclaimed by all as a great economic opportunity; however, there are some pessimists, who are pointing out fault lines in the concept because the opening of this landmark trade and investment avenue would expose their inefficiencies.

Local engineers, for instance complain they have been sidelined, in many infrastructure projects, in the favour of Chinese engineers. Apparel sector entrepreneurs apprehend that Chinese would establish large-scale garment making facilities and would poach their skilled labor force. Some industrialists even go as far as saying the China has established industrial zones spread over 400 kilometers at the border city of Urumqi, where they would manufacture textiles at labour wages slightly higher than Pakistan and export them through Gwadar.

As far as Pakistani engineers are concerned, their participation would definitely have boosted their capabilities. However, one must keep in mind that these projects were awarded to the contractors after transparent bidding process. Now it is up to the contractor to hire needed human resource and complete the project within time and budget. The government of Pakistan cannot force the contractor to engage Pakistani engineers. If the government exerts this pressure the contractor may ask for increasing the contract amount.

The foreign contractors from other countries also engage the management and engineering experts from their own country and use the middle and lower level workers from the local population. The capacities of middle and lower cadre working in these projects would increase. They will also come in handy when similar projects are undertaken in future. Another noteworthy point is the contractor would never bring engineers from China if it adds to the cost. This also raises question about the productivity and efficiency of our engineers because no commercial organization would bring staff from abroad, if there is no difference in competence and salaries. It must be kept in view that all the CPEC projects are being completed ahead of schedule and without any cost overruns; therefore the government has no reason to complain.  The apparel sector in Pakistan is fragmented and small, employing an average 2,000 workers per enterprise. These entrepreneurs do not have the capacities to fulfill huge orders from multinational brands. They do get an order of maximum million pieces when tens of thousands of them are needed. Bangladeshi garment units are very large employing 10,000 to 40,000 workers and could alone execute the entire demand of any multinational.

The companies in China are even bigger. If they relocate their units in Pakistan they definitely would come in a big way to keep their global export markets intact. They are exporting in different categories than Pakistan.

The Chinese would not be poaching in foreign markets served by Pakistan. They would have to engage skilled workers. For this they would have to train fresh workforce through their highly skilled workers.

They may engage skilled workers already engaged with local industries. This would be beneficial for the Pakistani workers and would enhance their wages and perks. Pakistani entrepreneurs would have to match higher salaries and enhance their efficiency to move forward.

Coming back to Urumqi, it is true that the Chinese region bordering Pakistan is poorer than the rest of China. In fact the wages in the region are an average $200 per month against $650 in the developed China.

But people forget it is not a densely populated area. It does not have enough manpower to operate industries spread over 400 kilometers. Workers from the developed parts of China, where wages are higher, would not migrate to a lower wage area. If they do, they will demand wages, which would be too high to operate those units viably. The Chinese would definitely be establishing high-tech industries in this region for future exports to the regions connected through Gwadar.

Thus, Pakistan’s interests would not be compromised.  Pakistani businessmen should understand the CPEC is an opportunity that benefits both Pakistan and China. It is more advantageous to China because of the size of its economy. It also needs to be grasped the CPEC offers Pakistan the road connectivity with our neighbors. Earlier China was our unconnected neighbour.

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