CPEC a Game Changer

The following article has been published in Daily Nation, dated 29th June 2015

(E-Paper (Print Edition)http://nation.com.pk/E-Paper/lahore/2015-06-29/page-9)

(Onlinehttp://nation.com.pk/business/29-Jun-2015/cpec-a-game-changer)

HNPI declares CPEC a Game Changer

Prof Dp

By: Omer Zaheer Meer

China Pakistan Economic Corridor (CPEC) is one of the most discussed topics in Pakistan of late. Several aspects of the proposed “super project” have been examined. It is rightly placed as a game changer for not just Pakistan or the region but one with the potential to change the global economic, military and strategic landscape. Before moving ahead on the topic let’s recall that CPEC is a series of projects worth $ 45.6 billion, aimed to connect Gwadar port in Pakistan strategically located on Arabian Sea just outside the Strait of Hormuz, with Northwestern China (Xinjiang) via Khunjrab (last town on the Pakistani side) along-with several development and uplift projects for transportation, energy and technical infrastructure in Pakistan. An extensive development and uplift of road and rail links is envisaged with energy pipelines decorating the “new silk road”.

In simple terms the plan is to provide the world with a new silk road for global trade, places so strategically that it makes it the most cost-effective and quickest route. The port fees, access charges and transportation revenues alone would be worth billions of $ for Pakistan. If proper policies are implemented, the industrial and business developments particularly along the routes can turn Pakistan into a global economic powerhouse.

It was against this backdrop that this writer was honored to be invited by the Mr. Absar Abdul Ali, director of the prestigious Hameed Nizami Press Institute (HNPI) as a keynote speaker to participate on a seminar on the subject. Mian Iftikhar, the head of the Engineers study forum worked extensively with his team to invite a bouquet of experts from various fields. The result was a brilliant seminar which thoroughly covered almost all the aspects relating to CPEC. Though all the speakers were learned and did justice to their subject, Engineer Iftikhar ul Haq and Mrs. Naheed Ghazanfar from UET covered areas largely neglected re CPEC. The latter explained the technical details of the construction and potential of tens of thousands of jobs resulting from the construction projects alone. Her experience of having already worked with Chinese on critical projects came in handy there. In addition to the above the following points were also discussed at the said event.

A common perception has developed amongst the masses of late that CPEC is all about the road network being built to link Gwadar with China. This is not true as one can see from the list of the projects envisioned under CPEC and shared on these pages before by this writer. While undoubtedly the road and rail links are of fundamental and strategic importance with long-term revenue generation potential and the ones which can be the catalyst for a geo-political shift in the region, they are not this project is all about. Infact most of the projects are related to technical and energy infrastructure projects. To put it in perspective, more than 70% of the proposed $ 45.6 billion investment is expected to be spent on these projects.

In addition to the benefits to Pakistan, the strategic benefits and significance of CPEC to China were also extensively discussed which includes the following:

Firstly China is heavily dependent upon the oil from Gulf. CPEC will reduce the transportation distance from 16,000 km to just 5,000 km for its oil imports of which 8-% is transported via ships while 60% comes directly from gulf, resulting in substantial economic savings, more business all around the year and neutralizing the threat of blockade by political rivals.

Secondly CPEC will also give China unparalleled access to the untapped and raw energy rich markets of Central Asia and Afghanistan, These regions are collectively seen as the next big thing in energy and natural resources terms. China envisions utilizing this for securing its energy needs for the next century as well as placing itself as the world leader re energy security by having similar influence and control on the future energy sources as the one currently held by America over the gulf.

Thirdly CPEC will also allow economic benefits to flow to lesser developed and troubled regions of western China including Muslim-majority Xinjiang. Also the enhanced security ties with Pakistan and economic developments, China hopes to eliminate the unrest in Xinjiang.

Last but not the least CPEC will provide China an additional key port, an opening to the world from its western side and the capability to blockade the oil supplies to any future adversaries by having a key naval port at Gwadar. The current attempts to encircle and contain China would therefore become redundant.

Moreover while it must be appreciated that the controversy over the three land routes planned to link Gwadar to Xinjiang is old and settled now with the Government promising to complete the western route passing largely through the underdeveloped Balochistan and KPK first, it is also a lesson for the decision makers. There are outside efforts led by India to disrupt the CPEC, evident by the now well publicized news of a RAW division established with starting allocation of $ 3 billion for the sole purpose of disrupting CPEC. Chahbahar port of Iran and Dubai port of UAE are at risk to become redundant with huge economic costs to them once CPEC is fully operational.

This unfortunately aligns Iranian and Emirati interests with Indian. Moreover quite obviously, the strategic great game with aims of containing China translates into USA having its interests in seeing through it that CPEC does not become successful. With the vested interests of all these regional and global players at stake, it is advised that all local stakeholders be taken into confidence and CPEC branded as a national project instead of belonging to any one party. We must remember that no outside efforts to disrupt can be successful without genuine internal dissatisfaction.

The author is Director of the think-tank “Millat Thinkers’ Forum”. He is a leading economist, CFA Charterholder, experienced fellow Chartered Certified Accountant and anti-money laundering expert with international exposure who can be reached on Twitter and www.myMFB.com @OmerZaheerMeer or omerzaheermeer@hotmail.co.uk

Education: The neglected step child?

The following article has been published in Daily Nation, dated 15th June 2015

(E-Paper (Print Edition)http://nation.com.pk/E-Paper/lahore/2015-06-15/page-9)

(Onlinehttp://nation.com.pk/business/15-Jun-2015/education-the-neglected-step-child)

Education: The neglected step child?

By: Omer Zaheer Meer

For almost four decades after independence, Pakistan was economically ahead of its’ arch-rival and estranged neighbor India despite the huge market and mass of the latter. 1990’s brought about the reversal with India leaping ahead and now reaching a situation where it has placed itself much ahead of Pakistan economically. While we often refer to the economic exploits of India and commonly cover reasons such as the IT boom and missed opportunities by Pakistan, have we ever thought that perhaps the real reason was education?

Yes, education that has been neglected by every succeeding Pakistani government. On the other hand, the Indian policy makers realized the importance of quality education and ensured appropriate steps were taken to develop their huge human resources, on the basis of which their current economic apparatus is booming. Their continuous investment in education bore fruits and placed India as a leader in IT outsourcing from where it really took off. Rather than becoming stagnant, Indians continued to invest in education with substantial results in bio-technologies, medical and education industries besides others.

On the other hand, while Pakistanis continue to outshine Indians and most of the world on an individual level, the overall state of affairs of its education sector, particularly public sector education, remains dismal. While we often criticize the rising unemployment levels, the lack of quality human resource availability remains a concern for local businesses. Most business owners complain that even the available human resource is not up to the international standards they’re competing against. Add to this the high illiteracy and we are faced with a dire situation demanding immediate corrective measures.

Infact, if you look at all major economies, with the exception of most Gulf countries relying on oil, they’re based on educated and trained human resources. Gone are the days when hard labor alone could turnaround national economies. Without continuously developed and upgraded education, no nation can hope to compete on the modern global stage. What’s more inspiring is that being a Muslim seeking education is mandatory even at the cost of hardships.

Furthermore as the right to education is a fundamental right of every human being recognized by the United Nations, perhaps the member countries should sought to deliver this key right to their citizens. The good thing is that the decision making circles in Pakistan have started saying the right things about education, of late. The problem is the lack of implementation.

All major political parties in Pakistan acknowledge the above facts and affirm their commitment to improving the human resources development in the country via education to ensure less disillusioned youth are attracted to extremism fuelling law and order problems for the nation. Similarly owning to political competition when Mian Shahbaz Sharif led Punjab government proposed substantially increasing the education budget, a feat it did not actually achieve, the PPP’s federal government proposed a budgetary allocation of 7% which was again something of a political statement which was not implemented.

However, it were the high hopes from the electoral promises of Mian Nawaz Sharif led PMLN in the 2013 general elections campaign with promises of 4% allocation of the GDP (not the budget) to the education sector that made segments of intelligentsia excited. Unfortunately it was again not to be. While the 14% increase for education in the 2015-16 budget proposed through the finance bill is a positive step in the right direction, the promised height of 4% of GDP still remains a dream.

Infact the manifestos of all major national parties including PTI and PPP committed to increasing the budgetary allocations for education. The upcoming Sindh and KPK budgets would reveal how much of those promises would be kept. Moreover, post 18th amendment the education sector has largely been within the ambit of provincial governments. This is not to make light the significance of a proper federal allocation to education sector setting a precedent and direction for the provinces to pursue.

What’s tragic is that although it is an established fact that investment in education lays the long-term foundation for economic prosperity and reduction in acute poverty, none of the parties in power have been able to meet their promised increases for the education to date. Unfortunately, election promises have become wish lists. Revenue constraints are almost always cited as a major constraint despite under-utilized budgetary allocations in several sectors including developmental. While one can respect the genuine constraints, perhaps better management of available resources can free up additional revenues for the neglected education sector. Similarly the ever increasing allocations to political gimmick based schemes can serve the nation well if utilized in educational sector.

Rightly or wrongly, some argue that given the improved quality of life, political awareness and a demanding populace resulting from a higher outlay on education, the traditional political class particularly from the rural belts across all political parties, ensure that the declared goals to invest in education by their respective parties are not met. Their common interests in this case ensure an unwritten alliance across the board. It is upto the policy makers and top leadership of these parties to take corrective measures to dispel this notion.

One thing is for sure, if we want to develop Pakistan into a sustainable and independent modern economy, there is no other option but to invest heavily in education and human resource development. This in due time will rid Pakistan of the both extremes it is currently facing as a properly educated nation would realize and implement the way of balance being the best course, as told to us by the greatest leader of all times, Prophet Muhammad PBUH.

The author is Director of the think-tank “Millat Thinkers’ Forum”. He is a leading economist, CFA Charterholder, experienced fellow Chartered Certified Accountant and anti-money laundering expert with international exposure who can be reached on Twitter and www.myMFB.com @OmerZaheerMeer or omerzaheermeer@hotmail.co.uk

Yemen Conflict: Potential Economic Catalyst for Pak

The following article has been published in Daily Nation, dated 06th April 2015

(E-Paper (Print Edition)http://nation.com.pk/E-Paper/lahore/2015-04-06/page-9 )

(Onlinehttp://nation.com.pk/business/06-Apr-2015/yemen-conflict-potential-economic-catalyst-for-pak )

Yemen Conflict: Potential Economic Catalyst for Pak

Prof Dp

By: Omer Zaheer Meer

Strategic decisions by modern states are based on either some principles, agreements, vested national interests or a combination of the above mentioned. A confusion and lack of clarity often results in ruining of opportunities which could otherwise turnaround the situation of a nation. By now, you’d have most likely heard about the conflict in Yemen, a regional dominance affair portrayed as a Shia-Sunni sectarian conflict by the script writers of the new world order for their own vested interests. While a lot has been written on the Yemen conflict in the past few days, a focus on economic prospects of the potential decisions has been somewhat lacking. We’ll address it in this write-up.

Pakistan currently has a vital economic dependency on Kingdom of Saudi Arabia (KSA) led Gulf coalition. The aid provide during sanctions and the $ 1.5 billion “gift” to Pakistan during current Government just last year maybe one-offs but the continuous provision of oil on “deferred payment” and employment opportunities for millions of Pakistanis in KSA and the Gulf region are of a permanent nature helping sustain Pakistan’s economy. Similarly, Pakistan share important economic ties with United Arab Emirate (UAE) whose companies often invest in Pakistan, albeit of extremely favorable terms in semi-Government or Government owned enterprises. Furthermore Pakistan has recently executed an agreement to import LNG from Qatar to meet its energy needs. The Gulf region is amongst major export destinations of Pakistani products. Annual bilateral trade is in billions of $. In economic terms there is an unfavorable trade imbalance in the trade ties mainly due to the import of oil by Pakistan. Furthermore, there is a convergence on security interests between Pakistan and most of the Gulf countries baring the issues with UAE regarding conflict of interests re Gawadar port as outlined below.

On the other hand, while there are just a few thousands Pakistani employed in Iran (fifteen to twenty thousands), the strategic position of it being a neighbor of Pakistan has serious implications for nation defence and thereby resultant impact on defence spending and national budget. While the past has glorious examples of Pak-Iran collaboration particularly during the 1965 war with India, it is an unfortunate fact that due to the non-convergence of economic and regional security interests, Iran has lately been in partnership with Pakistan’s arch rival India. The process exacerbated due to the divergence of interests in Afghanistan and peaked with the launch of the Gawadar project which directly threatened Iran’s vital “Chahbahar” port just like it threatened the prospects of UAE ports more importantly Dubai. The result has been direct economic costs for Pakistan due to delays in making port operational due to law and order situation supported by foreign interests as well as increased defence spending further straining the national resources.

Keeping in view of the above, perhaps it is high time that the strategic decision makers in Pakistan list the vital national interests that can be secured from both KSA led Gulf region as well as Iran as well as to what extent it can offer its co-operation in return depending on existing agreements. It is vital that we think realistically respecting the support and co-operation we’ve received from our allies over the years but sans undue emotions. USA has done the services expected of Pakistan for years at extremely lucrative terms; it would therefore not be unfair or unethical for Pakistan to pursue the betterment of its inhabitants while supporting its allies.

Below are some proposals in regarding what Pakistan can offer considering its own issues and limitations:

  • Pakistan should focus on its ability play the role of an effective mediator to address the concerns of both Iran and KSA just like it did to bring China and USA closer back in the 1970’s.
  • Deploy air support and commanders to lead Gulf forces within their borders (particularly KSA) to ensure effective defence.
  • Deploying its own forces within KSA to protect its borders from outside attacks.
  • As a last resort conduct targeted air-strikes against local militia on formal request from the Yemen Government and KSA led Gulf coalition on the principle of supporting democratically elected government.

What Pakistan can achieve economically in return may include the following:

  • Assurances from both Iran and UAE to stop stirring up trouble in Balochistan resulting in a quicker start of Gawadar project as well as lower spending on counter-terrorism there.
  • Membership of important bodies including GCC with economic implications.
  • Removal of tariffs on Pakistani imports in their countries, with preferential treatment.
  • Attractive deals to secure reliable LNG, LPG, oil, e.t.c. at cheap rates to ensure Pakistan’s growing energy needs are met effectively. Depending on some key factors Pakistan can secure even free supplies for a long period.
  • Offering special nationality packages to Pakistanis working in the countries involved, which can positively influence the foreign exchange reserves of the country.
  • Writing-off of Pakistan’s debts due towards GCC countries.
  • Paying off Pakistan’s other external debts.

This is yet another historic opportunity for Pakistan and it should not be squandered like many in the past. The demands listed above are all very realistic and possible considering the vital role expected of and the possible costs for Pakistan. They’re also much less then what had been taken by the USA for similar services in the past. So if Pakistan is to play the most important role for one of the richest regions in the world, it may as well get due recognition and rewards. After all the law of the nature is such that even brothers working in brothers’ businesses must get rewarded for their work. And what’s better if the rewards are sufficient for one brother while less then what the other was paying to outsiders.

The author is Director of the think-tank “Millat Thinkers’ Forum”. He is a leading economist, chartered financial analyst, qualified fellow accountant and anti-money laundering expert with international exposure who can be reached on Twitter and www.myMFB.com @OmerZaheerMeer or omerzaheermeer@hotmail.co.uk