ISLAMABAD - Advisor to the Prime Minister Sartaj Aziz has said that CPEC infrastructure loans are on soft-term basis with the rate of 2 percent and the payback time is twenty to twenty-five years.

Contrasting the CPEC investment with loans from the World Bank, Sartaj Aziz said that it takes many years to get a loan of one or two billion dollars from the World Bank. Sartaj Aziz expressed these views while addressing the 32nd Annual General Meeting and Conference of the Pakistan Society of Development Economists (PSDE) that began on Tuesday here. The theme of the PSDE’s this year’s Conference is “China-Pakistan Economic Corridor and Regional Integration”.

The Conference was inaugurated by Sartaj Aziz, Advisor to the Prime Minister on Foreign Affairs. The three-day long Conference is being organised by the Pakistan Institute of Development Economics (PIDE), with the support of Ministry of Planning, Development and Reforms. Other sponsors of the AGM/Conference include UNDP, FES, the World Bank, PPAF, OXFAM, IGC, ILO, IUCN, AKRSP, IFPRI, ADB, and ECO-SF.

In his keynote address, Sartaj Aziz said “Out of the total CPEC investment, 33 billion dollars is in the energy related projects and most of this outlay is in the form of investment.” Highlighting the importance of the Gwadar Port, which is a part of the CPEC, Aziz said that developing Gwadar is not only important for Pakistan but also for the development and uplift of Balochistan. Aziz said that CPEC is a flagship project of the Chinese vision of “One-Belt-One-Road”. He said that the evolution of this project started many years ago when they realized that many parts of China, including Xinjiang, were far from ports.

Advisor to the Prime Minister said that in the last twenty-five years, it was the South East Asia that contributed to the world growth. In the next twenty-five years, however, it is the West of China, Central Asia, and Pakistan that have the potential to lead the world development.

Sartaj Aziz said that each province has been asked to build one industrial park each and this is where more work and deliberations are needed as the development of industrial parks is very important to access larger markets and reap full benefits of CPEC. He said that diversification is very important to increase our exports as at present as our exports are sluggish.

Vincent Palmade, Lead Economist, PFSG, African Region, the World Bank, made a presentation on the World Bank’s book titled, “South Asia’s Turn: Policies to Boost Competitiveness and Create the Next Export Powerhouse”. Presenting the salient features of the book, Palmade said that it discusses what the South Asian region needs to gain competitiveness. He said that the productivity of Pakistani firms is quite low, especially of the SMEs. The skill intensity of Pakistani exports is low and although the ICT and tourism sectors are doing well, much more needs to be done. Similarly, productivity of the Chinese firms is quite high as compared to that of the Pakistani firms.

At the same time, he stressed, there is a great potential in Pakistan and the conditions are favorable. For example, Pakistan has excellence in the production of Basmati rice but market regulations are restrictive. Similarly, Pakistan’s sporting goods, surgical instruments, and leather apparel industries have the potential but the business environment is not conducive. He said that there are four policy levers that should be taken into account. These are improvement in business environment, connecting global value chain, leveraging agglomeration economies, and strengthening firm capabilities.

Palmade said that the services sector is expected to grow and boost productivity. He said that the World Bank is also trying to help Pakistan to boost trade and regional integration.

Earlier, while delivering the Allama Iqbal lecture on “Role of Productivity, Quality, and Innovations in Making CPEC Work for Pakistan”, Mark Goh of the National University of Singapore said that to make CPEC successful, every province must have an industrial park for manufacturing and exporting products. He reiterated the fact that politics must be left behind to focus on the wellbeing of everyone.

Prof Goh stressed the need to keep five factors in consideration while selecting the corridors. These factors are current traffic volume of people and cargo; prospects of economic and traffic growth; capacity to increase connectivity between countries and people; potential to mitigate delays and other hindrances; and economic and financial sustainability.

He said that another aim of CPEC is to transport oil and gas from the Persian Gulf to Xinjiang. The emphasis is on infrastructure to reduce the cost incurred by transportation. CPEC would ensure that there is no congestion from Shanghai to Gwadar and the vehicles move at a minimum speed of 60 kilometer-per-hour. This would mean completing the distance in 41 hours, which is a reduction by 82 percent in the total time consumed. Prof Goh emphasized that by 2020 CPEC will reduce the trade cost to Central Asia by 11.5 percent and to Indonesia by 25.3 percent. A one-day loss in transportation decreases the value of exports by one percent.

Earlier, in his presidential address, Dr Asad Zaman, President PSDE and Vice Chancellor PIDE, said that the next hegemon of the world would be Asia, lead by China. In transitional times, he said, the power is up for grabs. The transition also creates opportunities to redefine the world and it is the scholars who carry the day by redefining the world.