Global Rice News

Pakistan’s struggle to compete globally in terms of trade share can be attributed to its reliance on primary export resources and limited market diversification. However, there is hope for revitalizing Pakistan’s industrial sector and boosting exports through the China-Pakistan Economic Corridor (CPEC).

Rafiullah Kakar, a member of the development projects committee at the Ministry of Planning, Development and Special Initiatives, believes that CPEC can serve as a significant catalyst for industrial rejuvenation. The project offers incentives through special economic zones and infrastructure investments. China has emerged as the principal investor in Pakistan, injecting $25.4 billion into the economy over the past decade. Kakar highlights the progress in energy projects and transportation infrastructure, both of which have contributed to economic activity and trade efficiency.

One of the key initiatives under CPEC is the development of nine special economic zones. These zones, combined with tax exemptions and logistical support, hold promise for attracting investment and fostering industrial growth. Pakistan’s commitment to sustainable development is evident in its streamlined regulatory frameworks.

However, Pakistan’s export growth has been stagnant, with its global trade share decreasing from 0.15% to 0.12% between 2005 and 2022. Muhammad Ashfaq, a joint secretary at the Ministry of Commerce, points out that limited diversification in export products and target markets is a critical issue. The dominance of primary resources like cotton fabrics, rice, and animal skins in Pakistan’s export sector has persisted for decades. Additionally, Pakistan heavily relies on the Middle East as its main export destination, with the USA, Europe, and China being its top trading partners.

In contrast to its regional counterparts, Pakistan has been unable to transition its export base from primary raw materials to high-value-added products. While the share of the manufacturing sector in Pakistan’s exports has only increased by 16% over the past two decades, regional competitors have experienced an average growth rate of 43%.

Despite these challenges, CPEC has the potential to boost Pakistan’s economy through improved market accessibility, regional connectivity, and increased trade volumes. The project aims to strengthen trade links with key regions like the Middle East, Central Asia, and Africa, setting the stage for industrial development. However, to fully harness CPEC’s transformative potential, structural reforms are needed to address systemic constraints and unleash Pakistan’s industrial prowess. Export diversification, enhanced market access, and an enabling business environment are crucial for long-term sustainability.

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