ZEESHAN MANGRIO

MUHAMMAD YASEEN SHAIKH

MUSKAN SAMI
SYED HASSAN HUSSAIN
MUHAMMAD TANZEEL SHAIKH
YASIR ALI
ZULFIQAR ALI

PAKISTAN - A
SUBMITTED TO

MA’AM SADIA MAHFOOZ KHAN

INTERNATIONAL RELATIONS

GROWING
NATION
CHINA|PAKISTAN|SMEs
 TABLE OF CONTENTS
OBJECTIVE 01
INTRODUCTION 2

OPPORTUNITIES 3

THREATS 4

OBJECTIVE 02
INTRODUCTION 6

SIGNIFICANCE OF THE STUDY 7

GROWTH OF SMES IN PAKSITAN 7

WOMEN ENTREPRENEURSHIP DEVELOPMENT 9

YOUTH ENTREPRENEURSHIP DEVELOPMENT 10

E-ENABLEMENT 11

TECHNICAL AND VOCATIONAL SKILLS DEVELOPMENT 11

ISSUES IN SME DEVELOPMENT 12

POLICIES FOR SMES IN PAKISTAN 13

OBJECTIVE 03
CPEC CHALLENGES FOR PAKSTAN 16
ENERGY PROJECTS UNDER CPEC 27

REFERENCES 35

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OBJECTIVE 01

INTRODUCTION
Since when the British had left the subcontinent and after the formation of Pakistan its neighbor
China had built up a friendly tie between both the countries. Throughout different historical
periods and despite changes with the times, Chinese and Pakistani governments and people have
been working hard to enrich the Friendship and have set a model for friendly bilateral ties
between different cultures, social systems, and ideologies. They both have worked together, and
China has always helped his neighbor Pakistan by means of financial terms, by supplying weapons
and armors. Chinese and Pakistani governments and Pakistan who were facing a 3.55% loss in
annual GDP due to the bad infrastructure, so people have deeply realized the importance of
developing the China-Pakistan Economic Corridor, starting From Kashagar in Xinjiang, China, and
reaching Karachi and Gwadar, southern coastal cities. In Pakistan via the Khunjerab Pass and
several other nodal areas, for cementing China Pakistan-Economic relations, promoting friendly
cooperation and establishing the shared, Destiny of the two countries. CPEC is an economic and
development project for the benefit of the people of the region. The two sides take CPEC as the
core while prioritizing in Gwadar, Energy, Transport Infrastructure, and Industrial Cooperation,
which has opened a new chapter for the CPEC construction. In line with the Consensus reached
between Premier Li Keqiang and then Pakistan Prime Minister Nawaz Sharif, relevant ministries
and departments of both countries have Set up a cooperation mechanism to coordinate the
development of CPEC and jointly formulated the Long-Term Plan for China-Pakistan Economic
Corridor in 2013.This plan is a national plan approved by both Chinese and Pakistani
governments. It will effectively match relevant national plans and local plans of China as well as
Pakistan’s Vision 2025.This plan is effective until 2030, the short-term projects included will be
Considered up to 2020; medium-term projects up to 2025; and long-term projects up to 2030.
The investment between both the countries is reasonably determine by the investment and
Financing modes based on the nature of projects and the status of cash flow. The major
investment is broad up by Government funds. The governments of the two countries bear the
primary responsibility for investment and Financing of public welfare projects. The Pakistani
federal government and provincial governments along the CPEC tries to assume some investment
and financing responsibilities by various means, such as earmarked budget funds at all levels for
the CPEC building and allowing provincial governments to issue financial bonds in domestic and
foreign capital markets. Both governments actively take various forms to provide credit
enhancement support for major financing projects, effectively reduce the financing costs and
protect the rights and interests of creditors. Both countries are encouraging Chinese enterprises,
private sectors, and private sector funds of other economic entities to make various forms of
direct investment, welcome Pakistan's private capital in participating in the projects along the
Loans from international financial institutions. Both countries welcome the World Bank, the Asian
Development Bank, the Asia Infrastructure Investment Bank (AIIB), and other international

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financial institutions to provide long-term concessional loans to support the investment and
financing for the projects along the CPEC.

OPPORTUNITIES
Other than the building of Gawadar port and the infrastructure facilities such as rail, and road
links the CPEC has proved to be a vital opportunity for both the countries, the opportunities are
massive. The Pakistani government has discussed the project with the Taliban led Afghanistan in
order to join in the multi-billion-dollar project CPEC. The Pakistani government thinks that this
will improve the ties between both the countries and will enhance the relationship with the
Taliban’s. This important project — China Pakistan Economic Corridor — provides good
opportunities, good potential for providing infrastructure and energy connectivity between
Afghanistan and Pakistan and will also connecting South Asia to the Central Asian region. When
on August 15, Taliban’s too k over Afghanistan, it has face financial crisis because United States
have rejected to provide funds to the Afghanis. And its billions of dollar account of central bank
account have been frozen. So, this action by the Pakistani government providing a helping hand
will improve the ties between both the countries and will provide trade routes to South Asian
and Central Asian regions.
If we talk more, it is a golden opportunity for Pakistan to promote cooperation on infrastructure,
transportation, industrial collaboration, and Gwadar and energy security through CPEC. It is
closely associated with the implementation of the Belt and Road Initiative. The Belt and Road run
through the continents of Asia, Africa, and Europe, connected East Asia to Europe, and huge
economic potential. Gwadar is the lifeline for China and CPEC. After the financial crisis of 2007
the world economy had face huge losses, but it is now recovering majorly, the investment by
China and Pakistan will boost the world economy and will bear fruits in the face of huge exports
and profits for other countries. The macro economy of Pakistan will be much improved from the
CPEC. The macro economy has turned for better in Pakistan in recent years. The economic growth
has been picking up boosting the market demand for transportation and energy; the inflation
level has been low, driving up the expected actual returns of major projects for the CPEC building;
the international balance of payments has been moving towards equilibrium, foreign exchange
reserves have been growing and the expectation of the exchange rate has been stable, reducing
the investment and financing risks for major CPEC projects. CPEC might further strengthen
business activity and economic cooperation in neighboring states. When the project will be
completed, it will serve as a primary gateway for trade between China and the Middle East and
Africa. CPEC has important effect on the neighboring state’s trade and energy. It will create
economic security for Pakistan more as compared to the energy and other issues. The major
problem faced by people of Pakistan is the high unemployment in the region because of the
smaller number of industries working inside the country so The CPEC will create job opportunities
for the people of both Pakistan and China. The CPEC has open gateways for the local investors to

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invest around the port and earn good money in return. And now recently Pakistani government
has also urged the local investors of Karachi to invest around the port means to set up their export
units in Gawadar. This will increase the total number of exports for Pakistan. While meeting with
the business community at the Karachi Chamber of Commerce and Industry (KCCI), the Senate
chairman said Gwadar is fast becoming a trading hub center as development work on the CPEC
had picked up pace. He asked Karachi businessmen to invest in Gwadar and the China-Pakistan
Economic Corridor projects. As many Chinese businessman have already invested much and are
earning good money it will be a golden opportunity for businessman of Karachi he added. The
CPEC will open gates for tourism in Pakistan. And the Pakistani Government is working on the
projects such as hotels and recreation activities are being set up around the project in order to
promote tourism.

THREATS
At the point when a Pakistani administrator as of late cautioned in Parliament that "another East
India Company is in the offing" as China-Pakistan Economic Corridor, he unquestionably caused
a commotion. This view came from Senator Tahir Mashhadi, administrator of the Senate Standing
Committee on Planning and Development, who explicitly voiced worries about the extravagant
advances Pakistan should take care of to China for CPEC. Mashhadi additionally had a problem
with China's requests in regard to control duties on projects as per Chinese interests. Since the
authority talk in Pakistan has introduced CPEC in exceptionally ruddy terms (frequently
considering it a "distinct advantage"), the "East India Company" similarity justifies an appropriate
examination. To analyze China's job, inside the setting of the CPEC project, with that of the British
East India Company would be an overstatement, however not an absolutely discreditable
contention. There can't be accurate equals between both cases. Above all else, the technique
utilized by the East India Company (EIC) was completely unique. The EIC went to the subcontinent
basically determined to do exchange however usurped power through the fierce utilization of
power, which the famous British antiquarian William Dalrymple portrayed as "presumably the
grisliest scene in the whole history of British imperialism." By differentiation, China and Pakistan
partake in a model kinship dependent on common trust and regard.
Northern Pakistan is honored with three out of seven world's biggest icy masses. It is home to
5218 icy masses approx. (spread over a space of around 15,040 km2) and ice holds on 2738 km3.
These icy masses are the significant wellsprings of water for the streams and balance out both
local and worldwide climatic changes. Sadly, these glacial masses are softening quickly because
of different anthropogenic exercises and an Earth-wide temperature boost at the pace of 0.66
m/year. As per the Intergovernmental Panel on Climate Change (IPCC), a big part of the all-out
worldwide mountain glacial mass could vanish continuously 2100. Moreover, with the
development of the China-Pakistan Economic Corridor (CPEC) project, around 7000 trucks each
day will go through this space, prompting the outflow of up to 36.5 million tons of CO2. Such

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emanation will seriously lessen the mass of the glacial masses and will probably bring about
outrageous flooding. One of the radical results will be water starvation, which is anticipated to
be just about as right on time as 2025, while a definitive result of the water starvation will be as
adversely influenced and downregulated agribusiness—low food yield against the quickly
developing populace, hydroelectricity age, and water-based working enterprises. Changes in the
example, mass, and size of the glacial masses and crumbled regular habitat won't just influence
the neighborhood biodiversity through the intensely dealt CPEC interstates yet will likewise
unequivocally influence the marine biodiversity in the waterfront spaces of the Arabian ocean
and Gwadar Port Pakistan.

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OBJECTIVE 02

SME OF PAKISTAN
INTRODUCTION
In most countries, SMEs constitute more than 90% of all enterprises and significantly contribute towards
economic growth. Nations all over the world give huge importance to this sector for the purpose of
stimulating economic growth; according to Rohra and Panhwar (2009) most of the high-income nations
acknowledge the importance of SME sector in supporting their economies. Due to their immense
importance to the economy, countries all over the world have been enhancing their support to SMEs
through developing and implementing an integrated SME Development Framework, which clearly lays
down roles and responsibilities of institutions to support SME development in a holistic manner

Accounting for 40% of GDP and 40% of exports and employing 80% of workers in non-agricultural sectors,
Pakistan’s small and medium-sized enterprises (SME) sector plays a pivotal role in the country’s economic
growth, employment creation and poverty reduction. However, SME finance in Pakistan, which is
indispensable for SME development, represents only 9% of outstanding loans to the private sector in
amount as of the end of 2016 with only 6% of SMEs receiving loans from banks.

Pakistan’s economy mainly focuses on SMEs. Government previous policies have given a defining and
clear perspective for the broad activity within the macroeconomic framework; efforts are primarily for
the large enterprises, neglecting SME which are at the core part of our economy. Our SMEs features an
assortment of shortcomings which have compelled their capacity to adjust to the financial liberalization
measures presented and to require full advantage of rapidly growing markets of the world. But SME
significance and commitment within the financial movement recommends that there's a noteworthy
potential to improve their development through fitting directions and advancement.

Whereas SME are being said in a few of our socio-economic strategies and approach records, measures
are not sufficiently specified and prioritized for us to be able to talk of any coherent SME approach. The
SME Segment Advancement Program seeks to make strides this circumstance by welcoming all concerned
partners to draft Pakistan's future SME approach. ME advancement is an imperative issue for numerous
government departments and central workplaces. In any case, there's an existing need of coordination
and customary data trade instrument among institutions which compels their collective capacity to
provide in the SME advancement process. The obligation for encouraging SME arrangement advancement
lies with SMEDA, connected to the Service of Industry and Generation. One of the major reasons for the
need of coordination is that SMEDA has not been given with a component to start, facilitate, screen, and
evaluate activities of SME advancement exterior of its claim scope of activities.

Government is looking to create a suitable environment for SME in Pakistan and to decrease unnecessary
challenges which are causing difficulties in their development. This also is affecting the relationship
between and SME and Government as well as mostly taxation and labor.

SIGNIFICANCE OF THE STUDY

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There is always a gap between the desired target of SME progress and actual progress in Pakistan. With
the renewed policies of the Government of Pakistan to increase the progress of SME Sector it has become
mandatory to start new developments with a right policy and institutional focus. This will make SMEs of
Pakistan more competitive in international markets and fulfill the desired aim of employment creation,
new enterprise progress, increase export promotion and contribution to revenue and value of economy.

The SME development infrastructure will make a progress in creation of innovative and developed SMEs
besides developing environment for Small Medium Enterprises. Collectively, the Government of Pakistan
can achieve its SME targeted goals in more systematic manner. The developed countries know the value
of SMEs in supporting their economic conditions. Due to their immense importance to the economy,
countries all over the world have been increasing their support to SMEs through creating and applying an
integrated SME Development Framework, which clearly focusing on responsibilities and roles of
institutions to assist SME development in a comprehensive manner

GROWTH OF SMEs IN PAKISTAN

SME sector development, growth and competitiveness underpin need for a comprehensive framework to
pave way for a complete Entrepreneurial Ecosystem in Pakistan. The SMEs Development Strategy Paper
outlines strategic pillars to approach the daunting challenge of SME development in Pakistan in a
structured manner. This paper identifies key priorities for reforms in SMEs sector conducive for the growth
of SMEs. These key priority pillars are summarized below:

LEGISLATIVE ENVIRONMENT
Despite the improvement of legislation and general operational environment for business activity in
Pakistan, the SME sector still faces difficulties in a number of areas, which negatively influence their
competitiveness. Currently, there is no Regulatory Impact Assessment system in the country. For creation
of conducive and SME-oriented regulatory environment, at first stage the existing legislation requires
assessment in terms of regulatory burden imposed on SMEs and estimation of the compliance costs of
such regulations. There is need for development of new policies and regulatory frameworks that directly
promote SME sector growth and competitiveness. However, importantly the SMEs sector may be engaged
to secure inputs on new legislation.

INSTITUTIONAL FRAMEWORK
SME support institutions play a crucial role in SMEs growth and development. Despite the existence of
SME support institutions in Pakistan, there is still a need for greater involvement in SMEs promotion. In
this regard, close cooperation and consultation with the private sector will greatly contribute to
establishing result-oriented support programmes. Strong SME support institutions will support the
enhancement of SME sector competitiveness in every aspect. In order to strengthen SME support
institutions, a comprehensive institutional review may be conducted and the needs for further
institutional strengthening should be identified and prioritized. Small and Medium Enterprises
Development Authority (SMEDA) is the only public sector premier SME development organization in
Pakistan. SMEDA need to be strengthened enabling

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it to better address SMEs needs, as currently due to limited human & financial resources it is constrained
to do so. Outreach of SMEDA needs to be expanded to district level with appropriate resources so that
SMEs at all levels can be supported.

SECTORS DEVELOPMENT APPROACH

In 2005, Pakistan signed an agreement with USAID, Pakistan Initiative for Strategic Development (PISDAC)
to develop strategy for a few priority sectors in Pakistan. SMEDA being the official counterpart on behalf
of Government of Pakistan facilitated the process and the strategy level process was primarily led through
private sector engagement in the form of Strategy working Group (SWOG). The sector development
process resulted in creation of five sector development companies: Pakistan Stone Development
Company (PASDEC), Furniture Development Company, Pakistan Gems and Jewelry Development
Company (PGJDC), Pakistan Dairy Development Company (PDDC), Pakistan Hunting & Sporting Arms
Development Company. However, this process was not adopted on continuous basis despite of the many
achievements in shape of sector development companies. This strategy development process should be
adopted on continued basis. Through private sector consultation, priority sectors along with detailed
diagnostic studies may be undertaken. The priority sector may include Minerals, Tourism, Logistics, ICT,
Gems & Jewelry, Horticulture, Construction, Fisheries, Dairy & Livestock, Textile, Leather, Engineering,
Energy

ACCESS TO FINANCE
The importance of providing SMEs with access to finance has been a recurring and unanimous concern of
the Government and SME development platforms. Traditional sources of formal financing; commercial
loans and leasing products have reached a ceiling in tapping the SME sector’s financing potential. SMEs
mostly rely on informal sources of lending along with internally generated trade credit for financing of
their operations and fixed expenditures. The main problem for SMEs in developing countries is not their
small size but their isolation. And this results in lack of access to market, financial, information and
institutional support. Best practices in facilitating financing to small and medium enterprises include
government support for establishment of guaranteed schemes against commercial financing and
introduction of equity support programs.

a. Credit Guarantee Scheme

Credit Guarantee Scheme for SMEs sector may be prioritized and synchronized with priority sectors
through initial government seed money. This initiative will ensure, increase the number of SMEs accessing
loans from financial institutions, create an environment for banks, based on the realization of potential
and fair competition, to develop institutional capacities for SME financing, increase commercial activity,
employment generation, productivity, and economic growth.

b. Equity Participation Fund

Equity participation fund identify, facilitate, and finance high growth potential small and medium
enterprises through easy availability of equity financing. Equity participation funds, as international best
practices, function through government funding of seed capital followed by investments mobilized
through the private sector. It is proposed that fund may be developed through seed money from the

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Government and attracting private investment as leverage 40:60 ratio. The fund may target the following
categories of SMEs”

 Green – field projects: SMEs with sound and sustainable business idea looking for investment
options may be funded for long term fixed asset financing support
 Early stage – high growth: SMEs with approximately 2 years of successful operations, looking
for working capital or fixed asset financing.
 Mature / Established Businesses: SMEs looking for long term, fixed asset financing for
business innovation, business expansion, progression from small to medium / medium to
large, etc.

WOMEN ENTREPRENEURSHIP DEVELOPMENT

Women businesses are crucial to the economic success of a country as they can generate substantial
economic impact given the availability of right regulatory support. To address gender empowerment, each
provincial setup consists of women development department working to reduce gender equality gap. The
current focus of these departments is limited to administrative / institutional reforms, political reforms,
reforms in public sector recruitment process and reforms of key processes of policy formulation and
budget preparation. However, these women development plans do not shed any special emphasis on
economic empowerment through enterprise development. Special attention needs to be given for
creating sensitization with respect to economic and financial policy review and rationalizing regulatory
procedures/ requirements and introducing incentives for encouraging gender integration in economic
cycle. Thus, from economic standpoint, women entrepreneurs, whether new entrants or experienced, not
only face social and mobility restrictions but also have to overcome discriminatory challenges culminated
in the present setup. Thus, for long term sustainable economic development and empowerment of
existing and potential women entrepreneurs, some of the significant steps may include.

a. Start Your Business Program (SYBP):

Start Your Own Business is a very significant initiative and may be designed to cater to business
development needs of young graduates inexperienced and informal women businesses. The key thematic
components may include business development services, grants, equity support funds and subsidized
lending schemes through which the beneficiaries be facilitated to ensure proper business setups and their
inclusion in formal economic cycle. Special incentives may be announced for value added export products.

b. The Women @ Business Program (W@BP)

Women entrepreneurs (WE), whether new entrants or experienced, have to counter various challenges
for business start-up, survival, daily management, or expansion on continual basis. Although there are a
number of players claiming to have a substantial range of support available for women businesses, it is
difficult for women entrepreneurs to access required information and identify best available options.
Women @ Business Program is recommended to counter the above highlighted issues by ensuring WEs
inclusion in the financial system, provision of technical advisory services, product diversification for
targeting export and access to markets required for their business expansion and sustainability. This may
include business development services, grants, equity support funds and subsidized lending schemes
through which the beneficiaries will be facilitated to ensure proper business expansion and their inclusion
in formal financial system.

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 c. Business Help Line
Business Helpline may provide women business owners with a highly visible point of contact to access
information and referral services to improve their business sustainability. This may be done through team
of facilitators connecting WEs via e-mail or call to relevant experts, consultants having extensive
experience in different business sectors, areas, for provision of tailored advice to the needs of women
businesses. Webinars and other documents covering a diversity of knowledge including business start-up
information, banking, finance, accounting, marketing, advertising, taxation, information technology,
licensing, and certification etc. may be made available. Additionally, it can serve as information depository
for all activities and programs, being offered by all stakeholders (Government agencies, trade bodies,
technical institutes, donors, financial institutions, women businesses, etc.). This initiative can also provide
support in linking WEs with organizations providing advice and support to women businesses.

YOUTH ENTREPRENEURSHIP DEVELOPMENT

Total number of students enrolled in technical and vocational courses in Pakistan both in the public and
private sector reaches over 0.3 million (National Vocational and Technical Training Commission). The
number of unskilled workers is estimated to be even higher than the formally trained population. Thus,
the ever-increasing labor inflow is exerting enormous pressure on the Pakistani job market. Some of these
young trained have the ability and potential to manage small businesses and given some financial
assistance, can change the job market profile. The skilled youth can be supported in number of ways to
start their own small-scale enterprises such as:

a. Industry Academia Linkages

Coordinated linkage between industry and academia is the critical bridge in solving business related
production, technology, and management problems. This initiative may include identification of priority
sectors for carrying out industry academia linkages projects for any research that can be commercialized
and has a significant economic impact, or for such business improvement projects that can be replicated
across a number of firms and industries. Capacity of the Offices of Research, Innovation and
Commercialization (ORICs) can be developed and provide financial support for research
commercialization and business improvement projects

b. Business Angels and Mentors Network

Business Angles & Mentors Network can play a vital role in supporting innovative business startups by
fresh university graduates. As for realizing high growth businesses, it is essential that expertise and
experience of industry and academia experts, entrepreneurs, R & D, and business support institutions are
linked with university startups and other individuals having a high growth entrepreneurial business idea.
This can address the gaps that exist between the ideas to launch, commercialization stage primarily
through the proposed ‘Business Angels and Mentors Network’. This may provide business mentoring,
sector specific expertise, and facilitate linkages with markets and entrepreneurial finance.

c. Business and Technology Incubation Service

Strengthening of existing business incubation Services BIS and technology incubation services (TIS) and
potential for new such initiatives is essential for high growth entrepreneurial startups. For strengthening

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of existing BISs & TISs, universities may be induced to partner with relevant platforms i.e., SMEDA, with
regard to access to their on-going entrepreneurship support programs such as business plan competitions
and Business Incubation Centers (BICs)/ Technology Incubation Centers (TICs). The findings may be
focused on availability of better services for sustainability of the existing startups at commercial scale.
New business and technology incubation services can also be assessed and developed at the universities
and academic institutions where innovative and sustainable startups can be initiated with limited support.

E- ENABLEMENT
Developments in the fields of Information Communications Technology (ICT) are indeed revolutionary in
nature; Information and knowledge are expanding in quantity and accessibility. In fields such as
agriculture, industry, health, education, transport, telecommunication, environment, human resources
management and business development, the consequences can be revolutionary. ICT contributes directly
to spread fruits of sustainable development and reduce traditional geographical barriers, providing an
opportunity for all to access local and global markets in a more equitable manner. For E-enablement of
SMEs web-based platforms may be developed that that provides online business opportunities and value-
added services to SMEs by building partnerships. This platform may act as a hub of business information
interchange through functional B2B trade Portal, Business information Portal and a variety of value-added
products and services.

TECHNICAL & VOCATIONAL SKILLS DEVELOPMENT

Development of competitive human capital is very important for growth and competitiveness of SMEs.
This further requires development of Technical Education & Vocational Training (TVET) system ensuring
formation of high qualified and competitive workforce meeting labor market needs. Despite the ongoing
reform in TVET sector, there is still job mismatch on the labor market - mismatch between the skills
available and those required by the industry. Scarcity of high-qualified labor is a barrier especially to SMEs
growth and development while SMEs’ resources devoted to human capital development are limited.
Therefore, a target-oriented approach is very important to facilitate employment of highly qualified
people in SMEs. Identification of labor market needs for SMEs is essential for the elaboration of relevant
programs for skills development.

a. Implementation of the National TVET Policy

The Government of Pakistan has approved the first-ever national policy for the technical and vocational
education and training (TVET) in 2018 by the federal cabinet. The national TVET policy speaks about the
opportunities and the environment where youth can contribute to the economy of the country. The policy
involves mechanism to formulate national standards for the development of qualifications, its
implementation and training delivery based on Competency Based-Training (CBT) system. However, there
is need for implementation of this policy in true sense uniformly at the federal and provincial level. Some
of the key aspects that need greater attention during implementation are:

 Continued accelerated reform of the public sector for the implementation of the policy
initiatives.
 Promote cooperation between public and private sector and involvement of private’s sector
in implementation.

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  Strengthening quality assurance and monitoring mechanisms at federal and provincial
LEVEL.
 Accreditation of TVET institutes.
 Strengthening of National Skills Information System for better employment opportunities.

b. Public Governance and Management in TVET sector

Effective public governance and management continue to be key issues in the technical education and
vocational training sector in Pakistan. Outdated and weak curriculum, lack of market-oriented training,
practical exposure and absence of proper monitoring & evaluation mechanism is mainly due to weak
governance and management of the public sector TVET sector. There is dire need for development of
updated, market oriented and demand driven curriculum, introduction of new training disciplines and a
robust monitoring & evaluation system. This can be achieved through improved governance and
management structure based on international best practices.

ISSUES IN SME DEVELOPMENT

SHORT- AND MEDIUM-TERM ISSUES: This section reflects issues where we feel we may
achieve strong impacts in the short and medium-term, i.e., until 2011. They should therefore become
major topics of our deliberation and shape the formulation of our SME policy.

a) Business Development: It is agreed that much more can be achieved only by appropriate
policy tools and regulations than with support programs. Likewise, SME development is
hampered more by inappropriate regulations than compensated by means of appropriate
support programs. Most of the developed nations therefore have mechanisms in place to
revert the biases against small firms. All such mechanisms are missing in present policy or
legal environment in Pakistan. The absence of a specialized, uniform legal framework for the
development of SME hampers SME operations.
b) Relationship Between Government And Smes: The relationship between Government and
SME seems to be fundamentally flawed. In many cases this extends also to other large
organizations and their interaction with smaller clients as SME. The present divide is, among
others, reflected in a language gap. Part of the concern for local businesspeople is the
inadequate business facilitation process in the local language which includes laws,
regulations, and business support material available in the English language only.
c) Taxation Issues: Firms in Pakistan's SME sector, encounter an increasingly complex legal,
tax and administrative environment, both in starting up and developing their business.
According to research, 67% of enterprises termed tax regulations as most problematic.
56%10 of businesses report a crunch of taxes, while 28% of businesses felt that taxes in the
country are too high.

LONG TERM ISSUES: There are issues which are beyond the scope of our current interventions.
They are partially rooted in the multiple cultural structures of our society, frequently exacerbated by our
geo-political situation.

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 a) Literacy: The evidence reveals that SME find it extremely difficult to grow because of
their inability to delegate to soundly trained staff. The day, the small businessman feels
comfortable to delegate, SME start progressing.
b) Law And Order: Law and order situation in Pakistan has always been regarded as
worrisome. One survey report that one in five respondents report that the business was
the target of at least one crime during 2002. Another assessment suggests that businesses
in NWFP spend 4.5%, Sindh and Punjab 1-2% of their revenue on security. One in four
SME consider law and order to be a severe problem.
c) Intellectual Property Rights: Intellectual Property Rights (IPR) is a vital issue that
needs to be looked into. It has been observed that many developing countries, with the
help of a change in their IP systems and laws, are able to attract Foreign Direct Investment
(FDI) in the Research and Development (R&D) especially in the industrial and scientific
field. Therefore, promotion and protection of intellectual property spurs economic
growth, creates new jobs and industries, enhancing the quality and enjoyment of life.

POLICIES FOR SMEs IN PAKISTAN

S. no: Thematic Area Tasks Responsibility
1 Legislative  Assessment of existing  Ministry of Industries
Environment regulations in terms of & Production.
regulatory burden imposed on  Ministry of planning &
SMEs and estimation of the development.
compliance costs of such
regulations.
 Formulation of new investment
friendly policies in consultation
with private sector.
2 Institutional  Comprehensive institutional  Ministry of Industries
Strengthening review for further institutional & Production.
strengthening should be
conducted for identification &
prioritization of SME support
institutions.
 Strengthening of SMEDA in
terms of technical and financial
resources & expanding SMEDA
access at district level.
3 Sector  Sector development process  Ministry of Industries
Development should be adopted on & Production.
Strategy continued basis.  Ministry of planning
 Through private sector & development.
consultation, priority sectors  SMEDA
along with detailed diagnostic
studies should be undertaken.
The priority sector may include
Minerals, Tourism, Logistics,
ICT, Gems & Jewelry,

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 Horticulture, Construction,
Fisheries, Dairy & Livestock,
Textile, Leather, Engineering,
Energy.
4 Access to Finance  Credit Guarantee Scheme for  State Bank
SMEs sector must be prioritized  Commercial Banks
and synchronized with priority  SMEDA
sectors through initial  Chambers/Associations
government seed money.
 Equity participation fund
should be initiated to identify,
facilitate, and finance high
growth potential small and
medium enterprises.
 Government should reduce
mark-up on the existing SME
financing and government may
take the burden of excess mark
up out of this facility. Introduce
low mark-up financial products
for SMEs.
5 Women  Initiate Start Your Own  Ministry of Industries
Economic Business Program to cater to & Production
Empowerment business development needs of  National Commission
young graduates and on Status of Women
informal/inexperienced women  Provincial WDPs1
businesses.  SMEDA
 Women @ Business Program
should be initiated to ensure
proper business expansion and
their inclusion in formal
financial system.
 Business Help Line should be
launched for WEs that serves
as information depository for
all activities and programs,
being offered by all
stakeholders.
6 Youth  Development of industry and  HEC
Entrepreneurs academia linkages for  Ministry of Youth
hip Development internship and apprenticeship Affairs
programs.  SMEDA
 Business Angels and Mentors
Network programs should be
developed to provide business
mentoring, sector specific
expertise, and facilitate

14 | P a g e
 linkages with markets and
entrepreneurial finance.
 New business/technology
incubation services should
develop at the academic
institutions where innovative
and sustainable startups can be
initiated with limited support.
7 E-Enablement of  Web based platforms may be  Ministry of Science and
SMEs developed that that provides Technology.
online business opportunities  Ministry of Planning &
and value-added services to Development
SMEs by building partnerships.  Provincial IT Board
 Information interchange
programs should be developed
that act as a hub of business
information interchange
through functional B2B trade
Portal, Business information
Portal and a variety of value-
added products and services.
8 TVET Sector  Implementation of the National  Provincial TEVTs
Development TVET Policy  Ministry of Overseas
 Updated, market oriented and Pakistanis and Human
demand driven curriculum, Resource Development
introduction of new training  SMEDA
disciplines and a robust
monitoring & evaluation
system should be developed
for public sector TVET.
 Public Governance and
Management in TVET sector
should be aligned based on
international best practices.
 Private Sector Engagement in
TVET
 Establishment of Life Long
Entrepreneurial Learning.
9 Ease of Doing  Development of conducive  Ministry of Planning &
Business regulatory framework for SMEs Development.
with focus on lower taxes,  FBR
incentives for women
entrepreneurs, one window
facilities at federal and
provincial level for facilitation
of investors and etc.

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OBJECTIVE 03

CHALLENGES THAT PAKISTAN IS/WILL FACE DUE TO

CHINA-PAKISTAN ECONOMIC CORRIDOR
China and Pakistan are both such countries that have best political relations with each other. The
China-Pakistan Economic Corridor (CPEC) is a blessing for both the countries that can bring
economic boost in relations as well as financially. Pakistan had an advantage of strategic pattern
and importance of Indian Ocean, Gawadar Port has an important role in this project and planning
the development of this corridor. China investment has taken a lot of national as well as
international attention. This corridor can be a game changer in bringing prosperity and improve
in quality of life in the region particularly to Pakistan. But as it has a lot of advantages for many
countries of this region, there are some challenges that Pakistan is /will face in the future because
of this CPEC project from financial, economic, social, cultural and poverty point of view. Some of
those issues are addressed here and some are just opinions that it may happen.

A. DOMESTIC RESTRICTIONS
On the domestic front, Pakistan's internal security situation and lack of political consensus are
the two key difficulties that could stymie the CPEC project's realization. These hurdles, if not
addressed properly, have the potential to stymie national progress and Pakistan's economic
integration in the region, as envisioned by the CPEC.

 Internal Security:
Radicalism perpetrated by religious extremists, tribal Taliban fighters, and the CPK are the main
causes of security issues in Pakistan today. Inter-denominational and ethnic political violence in
Karachi and Quetta's metropolitan districts. Balochistan is experiencing a nationalist uprising
sponsored and supported by outside destructive powers. Law and violence have obscured the
regulated environment. Tanny's instability in Balochistan, where important development
projects such as the port of Gwadar are in the works, might stymie CPEC's realization. Radicalism
perpetrated by religious extremists, tribal Taliban fighters, and the CPK are the main causes of
security issues in Pakistan today. Inter-denominational and ethnic political violence in Karachi
and Quetta's metropolitan districts. Balochistan is experiencing a nationalist uprising sponsored
and supported by outside destructive powers. Law and violence have obscured the regulated
environment. Tanny's instability in Balochistan, where important development projects such as
the port of Gwadar are in the works, might stymie CPEC's realization.

 Relational Dynamics
Political stumbling blocks in Pakistan might hinder the CPEC project's implementation even more.
Despite the fact that Pakistan's major political parties agree on the benefits of the China-Pakistan

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Economic Corridor (CPEC), there is a political battle brewing among numerous groupings,
primarily over the choice of partners. The course of the CPEC project and its financial distribution.
The answer is straightforward. The importance for constructing these roads is debatable;
underdeveloped provinces are at the top of the list. For example, the provinces of Khyber
Pakhtunkhwa and Balochistan accuse the central government of rewriting the constitution.
Under the pretense of security, the original strategy would only benefit more developed
countries. The proposed route adjustment was rejected by the government, however the
project's budget allocation of $4,444 shows that the east route is preferred above the west route.
The implementation of CPEC may be hampered by a lack of political consensus. Given Pakistan's
political economy's long history, a lack of vision and political discussion resulted in the formation
of significant development projects. Another problem that has aroused concerns among political
parties and other stakeholders is the lack of openness and secrecy in allocated transactions. They
have demanded the government to publicize all CPEC-related agreements.

B. DIFFICULTIES IN GOVERNANCE
The decision and demarcation of geographical regions for CPEC roads, trains, fiber optic
connections, and primarily commercial regions is one of the most essential governance
demanding issues. For example, the latter sparked heated controversy among neighborhood,
local, and neighborhood stakeholders. The above stakeholders were unable to reach an
agreement on a wide range of SEZs during the initial consultation. In addition, kingdom
administrations, local and kingdom political parties, and various stakeholders have expressed
specific interest in the SEZ's proximity. For example, Gilgit-Baltistan thought that it would be a
super herbal area for a commercial sector, but it is no longer economically viable. Furthermore,
access to capital may be viewed as a major impediment to the corridor's overall expansion. The
question is whether the federal and state governments are interested in enacting tax legislation
and administrative regulations, and, more importantly, spending a portion of their revenue in
CPEC projects. Increase. The concept of retributive justice in relation to the allocation of CPEC
revenues to local, municipal, and state governments is also problematic.
Another facet of CPEC administration is trade and tax disputes between Pakistani enterprises or
between China and Pakistani companies. At the local, regional, state, and federal levels, there is
no conflict resolution system to help affected parties. Furthermore, China and Pakistan continue
to struggle to establish an agreement on a trading framework to improve trade under the CPEC.
China's plan to totally replace the former with money was recently rejected by Pakistan.

C. ISSUE OF SECURITY
Pakistan is undeniably vulnerable to both domestic and international security
concerns. Since 9/11, Pakistan has been a hotbed of modern terrorism. During the
Musharraf era (1999-2007), when Pakistan decided to support the US-led war on
terror against the legislative and administrative actions, yet suicide Taliban and al-
Qaeda, the latter retaliated by targeting Pakistani security officers, civilians, and

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 critical agencies. I began to do so. As a result, over 30,000 Pakistanis, both civilians
and law enforcement officers, have been killed in several terrorist assaults since
2003. However, the total number of causal linkages has decreased since 2014 as a
result of specific terrorist tactics continue to exist. Terrorist organizations such as the
Pakistan Taliban (TTP) could attack Pakistani security agencies and minorities if
given the chance. These are significant security issues that the Pakistani government
will face for the sake of the CPEC, which both China and Pakistan consider to be a vital
aspect of their current bilateral relations. The preceding part intends to provide
statistics and create awareness about the numerous governance and security
challenges that may impact CPEC in some way. The latter part of the paper reviews
the importance of CPEC for the BRI.

D. REGIONAL POLITICS:
CPEC faces opposition and critism on different levels from regional as well as international
geopolitical realties. Many security specialists have highlighted concerns that the CPEC project's
implementation could be hampered by regional circumstances. The current regional climate in
Afghanistan is one of these obstacles, as are competing interests of immediate neighbors such
as India and Iran. Many countries of Asia see it as a threat as well as other continents critics to
too. The unstable environment in Afghanistan, India's skepticism of the effort, as well as US and
Iranian worries, might all have a detrimental impact on the mega-project. This thesis section
identifies and describes these obstacles and competing interests in this regional setting.

 United States of America:

The competition between United States and China has grown to such level, that Pakistan is in
crosshair of this rivalry as well as CPEC. The United States showed ambivalence about China-
Pakistan Economic Corridor and later critism. They argued that Chinese rates are far higher than
what it should be, and lower rates can be offered by other countries, but skepticism is raised as
none of those countries step forward to step in place of China and invest such an amount. But
that was not the real reason for their ambivalence. Their real reason was the threat to their
superpower status and that China can become more powerful on the success of CPEC AND BRI.
Pakistan was replaced by India as its primary ally in South Asia. In 2018, $2 billion of military aid
was suspended by White House, while it supports India with economic and military partnership.
United States continued their tries to dismantle CPEC as well as China and Pakistan friendship.
Baluchistan is targeted by US as it is the heart of CPEC. In 2016, Jammat-ul-Harrar was declared
to be in America’s terror list. Both countries were afraid as historically it was seen that the terror
attack on Pakistan increased whenever America will target Afghanistan-Pakistan border.

 India:

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India starts having trouble with any development or strategy that benefits Pakistan that’s why
they saw CPEC as a threat to their ambition to dominate Asia. Gilgit Baltistan is where it passes
through. KKH (the corridor's northern segment) has previously passed through Gilgit Baltistan,
but India is a CPEC route that defines India as Pakistan's occupied Kashmir, which is part of India's
disputed conflict zone of Jammu and Kashmir. Concerns have been expressed. As if it were a part
of that territory. India is concerned that, in order to obtain CPEC projects, Pakistan may upgrade
Gilgit-constitutional Baltistan's standing and constitutionally recognize the territory as Pakistan's
fifth state. This is because it may have an impact on the international response to the Kashmir
conflict. Pakistan's government believes India is carrying out anti-state actions in Pakistan,
particularly to sabotage the CPEC project. Disgusted and dissatisfied, India has increased its
financial and military support to anti-state elements, including Baloch rebels and other terrorist
groups, in order to escalate unrest in Baluchistan and Karachi in order to derail the CPEC project.
The Indian agent, who was recently condemned to death for spying, has admitted to his country's
role in destabilizing Baluchistan, Karachi, and KPK.
The recent confession of a former Tehreek-e-Taliban Pakistan (TTP) and its splinter group
Jamaat-ul-Ahrar spokesman only adds to the argument. The recent confession of a former
Tehreek-e-Taliban Pakistan (TTP) and its offshoot faction Jamaat-ul-Ahrar spokesman backs up
these assertions. Ehsan Ullah Ehsan, who surrendered to security forces on April 16, 2017,
disclosed the Indian espionage agency RAW's participation in funding and assisting terrorist
groups in order to undermine the CPEC project and Pakistan in general. RAW's involvement in
terrorist strikes in Karachi and Balochistan has been mentioned by Pakistan's government several
times. Pakistan's Army Chief has publicly accused RAW for the project's destabilization. In order
to gain competition against CPEC, India also invested in an Iranian port, Chahabahr Port so it can
compete with Gawadar Port and CPEC will face difficulties. As a result, it looks that India will
continue to be a spoiler in the existing regional context unless it is proactively engaged and
integrated into the regional economic structure.

 Afghanistan:
Stable Afghanistan is critical to the CPEC's development, although the security situation in
Afghanistan has worsened since most of NATO's International Security Assistance Unit left in
2016. 234 The Taliban's reluctance has also hampered the political peace process. Mura
Mansour, the group's head, was murdered in a US military drone attack. He joined a Shikoku
coordinating group in May 2016, which included China, Pakistan, the United States, and
Afghanistan 235. As a result, the environment of both Pakistan and China's western area. As a
result, under the Shikoku Coordinating Group, Pakistan and Afghanistan must work together to
find a practical solution to the situation. Improved border security between Pakistan and
Afghanistan is also critical for the CPEC to succeed. This is because the porous and unmanaged
border continues to pose a security concern to the adjacent provinces of KPK and Balochistan.

19 | P a g e
TTP, Al Qaeda, Islamic State (ISIS), Uighur Extremists, and Turkistan Islamic Movement are all
active in Afghanistan's Kunar Province and Nuristan, which border Pakistan (ETIM). Radical
Xinjiang Uighur Autonomous Region Chinese Uighurs, working in tandem with the TTP, pose a
major threat to China's interests in Pakistan's East Turkestan region. China has recently been
seeking to improve regional cooperation. In Beijing in October 2014, the 4th Heart Asia-Istanbul
Process Ministerial Meeting was held with the goal of encouraging peace and collaboration
between Afghanistan and its neighbors in order to promote peace and stability in Afghanistan.
Hosted. In addition, China has helped ease tensions and resolve the division between Pakistan
and Afghanistan in order to enjoy the benefits of CPEC.

 Iran:
Iran's first reaction to the CPEC project indicated that it viewed Gwadar's development as a deep-
sea port of concern, as well as a competitor to the Chabahar port at the mouth of the Strait of
Hormuz. In May 2016, India, Iran, and Afghanistan inked an agreement to build a trilateral
framework to develop Chabahar into a strategic port in response to the developments presented
by Gwadar. The initiative is an alternative route that bypasses Pakistan for all three-country
regional trade and access to sealed Central Asia, with India investing roughly $ 500 million.

 Balochistan
Balochistan has made significant progress. India's active propagation and support of
Balochistan-based terror groups, such as the Baloch Liberation Army (BLA), in order to
destabilize Pakistan and the CPEC is still going on, with the CIA and India's Research and
Analysis Wing (RAW) working together on the Balochistan project. According to experts like
Brigadier Aslam Ghuman, a retired ISI official, Pakistan's spy agency, the Inter-Services
Intelligence (ISI), is aware of such intrigues and has foiled many of their terror plots. The RAW-
backed Baloch Liberation Front (BLF) head, Nazar Baloch, publicly announced in 2016 that he
would welcome any support from India and pledged more attacks on the CPEC. RAW has
orchestrated a number of murders of Chinese engineers in Balochistan through proxies.
These attacks on Chinese CPEC workers are part of a planned plan to break China's ties with
Pakistan. The Chinese consulate in Karachi, for example, was assaulted by BLA in November
2018. Following an investigation, Amir Shaikh, the Additional Inspector General of Police, told
the press and the public that the attack was planned in Afghanistan by BLA mastermind Aslam
and carried out with RAW's assistance. Narendra Modi, India's anti-Pakistan and jingoistic
prime leader, has publicly stated that Baloch people praised him for raising the subject of
Pakistan's humanitarian crimes — His statement was interpreted in Islamabad as
incontrovertible evidence of Indian intervention in the province. At the same time, America's
support for India has sparked similar concerns about human rights breaches in Balochistan.

20 | P a g e
 America was quick to criticize Pakistan, but ostensibly ignored India's and its own agencies'
assistance for Balochi militants who have harmed and killed hundreds of people in the
country. According to Usman Shahid, a scholar, Islamabad feels that America's Balochistan
objective is "much broader than just human rights breaches" because of America's track
record of interfering in the affairs of many nations under the guise of human rights. In 2018,
America was likewise indifferent to how India ran the New Delhi office of Free Balochistan,
an India-backed campaign.

E. BRO INITIALS
Under the BRI framework, the corridor is expected to act as a bilateral "flagship"
project. China and Pakistan have both recognized and planned the importance of the
corridor (Global Times 2018). CPEC comprises investment, infrastructure, and tax
advantages for Pakistan. The corridor is more significant to China than the economy.
Although it can be a forerunner of socioeconomic development in Western China,
namely Xinjiang, CPEC can also work as a bridge to extend markets and connect not
only inside China but also outside the country. The corridor, for example, might be
linked to South Asian and Central Asian railway and road networks. In terms of
complementarity, even the port of Gwadar can function with Chabahar (Daye 2016).
Simply put, the CPEC's success is vital to the BIS's strategy, negotiation,
implementation, and expansion. However, if the project in question is still beset by
issues, as described, and these issues are not resolved in the medium or long term,
the corridor will have an impact not only on itself but also on other BRI projects. To
begin with, CPEC's unfulfilled, unrealized, and unresolved security and governance
concerns have the potential to cause unease among all parties in the region and
around the world. President Xi Jinping's "One Belt, One Vision" was met with
skepticisms by some of them (such as India) (OBOR). Second, the CPEC's lack of
coordination is likely to deter bilateral and multilateral economic cooperation in
Southwest and Central Asia. There is no doubt that such (dis)politics will have a
negative impact on China's and Pakistan's economic interests, religion, language, and
economy, despite the fact that it involves more than two countries with different
cultural or political histories. Thus, at the political level, some countries share a bitter
history with China, which could allude to the failures of the CPEC while discouraging
discussion of the BRI at the national and extra-regional levels.

F. HR DYNAMICS FOR CPEC

Some financial corridors have arisen globally as equipment for local collaboration and
improvement in recent instances of financial improvement. In Pakistan, there is a loss
of appropriate interest in the field of human resource development, which has been
neglected for decades (Abbasi & Burdey, 2008; Asrar-ul-Haqq, 2015). The concept of
HRD in Pakistan is based on the country's standard human development. HRD is in its
infancy and is usually regarded as part of a country's overall human development.

21 | P a g e
 HRD in Pakistan is defined as covering for building people's capacity to meet the
needs of country-wide manpower planning on the macro-level, and as an education
and development element of any human resource control branch on the micro-level,
according to available literature (Asrar-ul-Haqq, 2015). The launch of a well-built and
appropriate HRD coverage for Pakistan has been spurred by the current financial
move forward between China and Pakistan.
Pakistan suffers numerous major issues, including a shortage of trained people, brain
drain, a lack of entrepreneurship, a lack of public education, unemployment,
extremists, and so on, making the current HRD situation a project. (AsrarulHaq,
2015). Economic globalization and the establishment of 4,444 international company
entities in the country have aggravated the problem. This underscores the necessity
for a national strategy. On June 30, 2017, at 10:56 a.m., a policy regarding (PT) HRD
was retrieved from Cornell University Library. Many academics have discovered that
HRD is about "health, culture, safety, community, and various other concerns that are
not generally considered human resources planning or humans" at the national level.
"Perceived Capital Investment" is also relevant (McLean, 2004, p. 269). Only if the
HRD is properly considered will OBOR, also known as the "Knowledge Corridor," have
a long-term and sustained impact on the economy. Pakistan's administration, on the
other hand, has intended to focus on the development of national human resources
since the two countries' economic pact. This appears to be a reaction strategy
established for CPEC to address the current need for human resources. In this regard,
the Pakistan Planning Commission approved the development of a PKR9,780 billion
advanced institutions known as "21st Century University." In addition, the ministry
intends to complete the establishment of additional institutes across the country, as
well as in Gwadar, Balochistan.

G. ENERGY DYNAMICS
In this age of progress, energy plays a critical role in reshaping the financial
development of developing countries, and it is remembered as one of the most
important major impetuses of financial development across the board (Pokharel,
2007). The relationship between energy creation and monetary development has
been extensively studied in the literature, with the majority of research assuming that
increased energy creation leads to monetary development (Hou, 2009). Essentially,
energy is the primary aspect that promotes personal fulfilment as well as monetary
and societal growth (Enu, 2014). Furthermore, in developing economies, energy
demand is influenced by financial developments. As a result, developing economies
are attempting to avoid an energy deficit by improving their energy administrations
(Toman and Jemelkova, 2003) through a variety of collaborative initiatives. In
addition, Pakistan has a 4500 MW energy deficit on a daily basis. For many years,
Pakistan has been subjected to routine force reductions of up to 5 hours per day,
resulting in a 2.5 percent slowdown in the country's financial progress. As a result,

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 CPEC has addressed the issue of energy shortages by issuing authentic notes with a $
33 billion interest rate. Furthermore, it is estimated that 10,400 MW of power will be
delivered by March 2018 under the Early Harvest umbrella. Even though some of
these early collection initiatives will end in 2020, they would increase Pakistan's
electricity generation capacity to 10,000 MW before the end of 2018. There are
certain projects, such as the Balloki power plant and the Bhakki power plant.
Downloaded by Universiteit Utrecht at 08:56 on April 22, 2018 (PT) plants, the
Neelum–Jhelum Hydropower Plant, and the Tarbela IV Extension Project under CPEC,
which would help Pakistan understand their dream of overcoming power shortages
and propelling the economy toward prospering and improvement. Pakistan also
plans to import power from Tajikistan and Kyrgyzstan as part of the CASA-1000
project, which is expected to be completed in late 2018. Additionally, energy
undertakings of early collect are being developed by Chinese private force maker and
Exim bank of China is giving them finance at a 5-6% rate of premium while
administration of Pakistan will buy power from Chinese firm on renegotiated rates.

H. LOCAL RESIDENTS’ PERCEPTIONS

Because of the necessity of road and transportation infrastructure over cost, it is
encouraged and supported everywhere. Existing research has revealed that people's
perceptions of environmental, cultural, economic, and social repercussions alter their
willingness to contribute to and support transportation infrastructure traffic and
roads, such as CPEC. Roads and transportation are vital to an area's long-term success
and effectiveness, as well as its growth and prosperity. Local people's support and
willingness are critical for these infrastructure development projects. The majority of
the time, citizens' aid is based on benefits; if roads and modes of transportation are
judged more profitable than their costs, they will be supported; otherwise, they may
object, and users may encounter additional issues with local inhabitants. People rely
on utilities to function safely and reliably, therefore knowing the entire observable
impact of a road and traffic development project, as well as its dimensions, is critical.
Social effect can be defined as elements that can have a positive or bad effect on a
person's or a group's behavior, emotions, well-being, and lifestyle. The social and
cultural implications of transportation and transportation infrastructure on the local
community are numerous. Previous research has shown that roads and
transportation have a favorable impact on the host community because they enable
access to standard education, help eliminate poverty and ignorance in the region,
enhance the local economy, and improve surname lifestyles. It allows local citizens to
visit a nearby medical Centre in the city and town, allowing them to take use of
superior medical services and improve their health. Similarly, inhabitants in the
neighborhood benefit from having access to banks, markets, and a variety of other
basic amenities. Roads and transport maximize person-to-person contact, and
cultural events offer the chance to meet their friends and relatives.

23 | P a g e
I. PAK-CHINA ECONOMIC COLLABORATION
The Belt and Road Initiative (BRI), as China's most powerful mega-project with the
potential to transform the geopolitics and economies of dozens of countries along the
projected routes, has piqued the interest of politicians, governments, and students
from a wide range of fields. Debates among family members throughout the world
have focused on the prospects and challenges that China faces in completing the BRI.
Although current research on China's motivations has identified a few factors that
explain why the country is pursuing the effort, no study has systematically and
completely examined the role of geostrategic, financial, and geographic factors in
tandem. We employ the time period geoeconomics to fill the gap in the literature in
this study.
Geoeconomics was coined to explain how states build their financial relationships
beyond maximizing financial gains and primarily based on geopolitical and financial
security issues. "The use of financial tools to sell and shield countrywide pastimes and
to provide useful geopolitical effects" is what geoeconomics is all about. The
intentions of the Chinese government in presenting the BRI and its ramifications for
international sites along the route, Asia, and the global political and monetary system
have been the subject of a larger debate. In this context, Beijing is fusing new ideas
such as the Chinese dream or Asia for Asia, forming new institutions such as the Asian
Infrastructure Investment Bank (AIIB), and introducing new local and cross-local
plans such as the Belt and Road Initiative (BRI) to build new governance ideas, norms,
and rules. From a neorealist perspective, argued that China sees the US method in
Asia as a risk to its country-wide interests.

J. GEOGRAPHICAL LIMITS
Pakistan currently has two operational deep-sea ports: Karachi Port and Port Qasim.
Their capacity expansion plans will not be able to keep up with the expected rise in
demand in the next years, necessitating the need for a third port to bridge the gap.
Because of the widespread growth in demand in the coming decades, Karachi Port, in
particular, faces full-size physical impediments and may no longer be able to develop
at the same rate. These challenges arise mostly as a result of its location, namely in
Karachi's metropolis, which has seen a rapid expansion in recent years. Despite
having sufficient physical space for expansion, Port Qasim's rate of development is
impeded by its up-circulation location, which is more than forty kilometers from the
open sea, resulting in long turnaround times for travelling ships. This isn't a problem
for cargoes that are connected to industry near the port, but it does pose a cost risk
for cargoes with origins and destinations elsewhere. In light of this, it was judged
appropriate to construct and launch a third deep-sea port for Pakistan in order to

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 ensure that future nationwide development is not inhibited by a loss of national port
capabilities. Given the
expected rapid increase in demand for port capacity, its miles are also critical to
continuing to expand Gwadar port's potential over the next decade.

K. THE NEXT STEP:

Pakistan must take initiatives to transform obstacles into possibilities. When faced with
governance issues, the Pakistani government should adhere to a key principle: the creation of
forums where local, regional, provincial, and federal stakeholders can weigh in on the
government's priorities. CPEC has both advantages and downsides. Stakeholders should
determine and define which entities and/or services are legally and institutionally accountable
for maintaining order. Currently, common legislatures, notably in Sindh and Balochistan, should
work with the central government's two sides (common and military) in accordance with the
National Action Plan (NAP) adopted in 2017 for the dread conflict. Similarly, the military has been
enlisted through the establishment of military courts to prosecute ordinary individuals for
psychological warfare-related crimes. Nonetheless, because these courts are temporary and
have a January 2019 termination date, they give the sense of being an unusual measure (Hussain
2017a, b). It is critical to create a large and major legal and institutional structure that supports
the country's interests at all levels in this way. Actually, it's extremely challenging. To make this
happen, local and state legislatures, territory offices, and the federal government should convene
to evaluate, plan, and possibly administer such a vast administration system. The Chinese
government, as well as the heads of various businesses, should train their workforce in
accordance with Pakistan's social standards, demanding qualities, political framework, and
regulatory guidelines and guidelines. If this is considered in the strategy, conflicts with legal
requirements may be avoided in the future.
However, the Pakistani military's excellent efforts in Balochistan and FATA have stabilized the
security situation, indicating that the policy to separate Pakistan and suppress CPEC has failed.
Since 2014, the country has seen historic lows in violence. In Operation Zarb-E-Azb, the Pakistan
Army vanquished its biggest domestic opponent, the Tehreek-e-Taliban Pakistan, and its armed
forces have been praised internationally as one of the best counter-terrorist and conventional
forces in the world. Terrorism has dropped to new lows, tourism and investment are up, and,
most importantly, the BRI and CPEC are on schedule. Several CPEC projects have been completed
successfully, while others are still in the works.
CPEC, which is primarily a business enterprise, has faced international and regional criticism. On
a global scale, the United States sees this as a threat to its hegemony and superpower status.
China's economy has already surpassed that of the United States on a parity basis, and it is now
on track to surpass that of the United States in the next years. Diplomacy, the economy, and the
military were the three pillars that supported US hegemony. The United States' economic and
diplomatic hegemony is currently under threat. The most recent diplomatic example is the United

25 | P a g e
States' defeat at the United Nations General Assembly. The economic troubles of 2007 have
already shaken the foundations of the American economy. Furthermore, the United States'
economy has been severely harmed by the ongoing war on terror and other wars that it has
initiated. As a result, China's economic expansion further complicates the position for the United
States.

On a regional level, India is caught between two dilemmas: I it cannot perceive positive advances
in Pakistan, and ii) it sees China as a threat to its ambition to become an Asian power. India is the
only country that sees developmental and economic interventions as a danger to its security. It
is openly discussing destroying CPEC in order to stifle Pakistan's progress. On the other hand, it
anticipates China's dominance in Asia. However, the key here is that China has already
established itself as Asia's undisputed great power. Furthermore, China is growing in order to
play a global role rather than a regional one.
Despite China's repeated declarations that it does not seek confrontation with any country, the
United States and India continue to form partnerships in order to cause Beijing problems. Along
with Australia and Thailand, the United States and India are working to form a four-country
alliance. India and Japan are also collaborating on the Asia Africa Growth Corridor. The
Transatlantic Trade and Investment Partnership (TTIP) and the Trans-Pacific Partnership (TPP)
were presented as alternatives to the BRI, and countries were asked to join them. Many analysts,
however, believe that TTIP and BRI are complementary because TTIP deals with software and BRI
with hardware in terms of trade and economic integration. However, Mr. Trump has withdrawn
from these projects, and they are no longer relevant, particularly without the United States.
One thing is evident from the debate above: China's critique stems mostly from the political and
economic fronts, rather than from objective facts and
data.Countries appear to be more interested in attaching security ties to the BRI than discussing
its economic potential.On the home level, Pakistan's government has struggled to communicat
e effectively with local and international players about CPEC.It has been considered as a success
by the administration, which has projected it for glorification by attempting to sell it to voters
without considering the consequences.As a result of this mentality, other political parties have f
elt undercut.As a result, in order to stay relevant, some political groups have begun to challeng
e key aspects of CPEC.Domestic political point scoring has exacerbated the misunderstanding, w
hich has been exploited by opponents to establish their case. CPEC is a project between two "St
ates," not governments, as all governments and political parties must recognise. The initiative w
ill continue regardless of who is in power. As a result, it is preferable to discuss projects in parlia
ment or at meetings rather than on television. Finally, one takeaway emerges from the debate
above: CPEC was never studied using a purely academic or program-based approach. It always
has been studied with bias, either pro or against. There is a need to study CPEC on a scientific
basis and without any biases.

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 Energy Projects Under CPEC
Project
# Name Progress Update Pictures

Completed Projects

1 1320MW  Project
Sahiwal Coal- Completed
fired Power on 28th
Plant October
2017.
 Current
Status:
Operational.

2 1320MW  Project
Coal-fired completed
Power Plant on 25th
at Port April 2018.
Qasim  Current
Karachi Status:
Operational

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 Project
# Name Progress Update Pictures

3 1320MW  Project
China Hub completed
Coal Power on 14th Aug
Project, Hub 2019.
Balochistan  Current
Status:
Operational
 Video:

4 660MW  Project
Engro Thar completed
Coal Power on 10th July
Project 2019.
 Current
Status:
Operational

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 Project
# Name Progress Update Pictures

5 1000MW • 400 MW project

Quaid-e- completed in August
Azam Solar 2016.
Park
• 600MW under
(Bahawalpur)
Implementation.

6 50 MW  Project
Hydro China completed
Dawood on 5th April
Wind Farm, 2017.
Gharo,  Current
Thatta Status:
Operational.

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 Project
# Name Progress Update Pictures

7 100MW UEP  Project

Wind Farm, completed
Jhimpir, on16th June
Thatta 2017.
 Current
Status:
Operational

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 Project
# Name Progress Update Pictures

8 50MW  Project
Sachal Wind completed
Farm, on 11 April
Jhimpir, 2017.
Thatta  Current
Status:
Operational

9 100MW  Second
Three Gorges Wind Farm
Second and completed
Third Wind on 30th
Power June 2018.
 Third Wind
Project
Farm
completed
on 9th July
2018.
 Current
Status:
Operational.

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 Project
# Name Progress Update Pictures

10 Matiari to  Project
Lahore ±660 completed
KV HVDC on 1st
Transmission September
Line Project 2021.
 Current
Status:
Operational.

Under Construction Projects

11 1320 SSRL  Mine

Thar Coal Financial
Block-I 7.8 Close (FC)
mtpa & achieved on
Power Plant 30th Dec
(2×660MW) 2019.
 Power Plant
(Shanghai
Financial
Electric)
Close (FC)
under
process.
 66% work
Completed.
 GoS-WUA
signed on
25th
February
2021.

12 330MW  Financial
HUBCO Thar Close (FC)
Coal Power achieved on
Project (Thar 30th Jan
Energy) 2020.
 73% work
completed.

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 Project
# Name Progress Update Pictures

13 330MW  Financial
HUBCO Close (FC)
ThalNova achieved on
Thar Coal 30th
Power September
Project 2020.
 51% work
completed.

14 884MW Suki  Financial

Kinari Close (FC)
Hydropower achieved in
Project, KP Feb 2017
 70% work
completed.

15 720MW  Financial
Karot Close (FC)
Hydropower achieved in
Project, March 2017.
AJK/Punjab  90% work
completed.
 Expected
completion
in April
2022.

16 300MW  Tariff
Coal-Fired determined
Power in Sep 2019.
Project at  Land
Gwadar acquired in
Feb 2020.
 GoP-IA and
PPA signed
on 8th April
2021.
 Financial
Close (FC)
under
process.

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 Project
# Name Progress Update Pictures

Under Consideration Projects

17 1124MW  Land
Kohala Acquisition
Hydropower process
Project, AJK started.
 TPA, TPPA
and GoP-IA
signed on
25th June
2020.
 GoAJK-IA
and GoAJK-
WUA signed
in April
2021.
 Financial
Close (FC)
under
progress.

18 700.7MW  Land
Azad Pattan Acquisition
Hydropower process
Project, started.
AJK/Punjab  TPPA, GoP-
IA, and
GoPb-WUA
Signed in
July 2020.
 GoAJK-IA
and GoAJK-
WUA signed
in December
2020.
 Financial
Close (FC)
under
progress.

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 Project
# Name Progress Update Pictures

19 1320 MW  LoI stage

Thar Mine
Mouth
Oracle
Power Plant
& surface
mine

20 50MW  LOI Stage

Cacho Wind
Power
Project

21 50MW  LOI stage

Western
Energy (Pvt.)
Ltd. Wind
Power
Project

REFERENCES
REPORT
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Khawaja,S.(2006).Unleashing the growth potential of SMEs in Pakistan through productivity

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Rohra,C.I.,& Panhwar,I.A.(2009).The role of SMEs towards exports in Pakistan economy. Australian

Journal of Basic and Applied Sciences,3(2),1070-1082

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Hussain, M. (2017). CPEC: Challenges and the way forward. California: Dudlex Knox Library.

35 | P a g e
Khan, W. A., Jawaid, S. T., & Siddiqui, D. A. (2020). CPEC: a route for outflow of illegal wealth from
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nwal, S., Pitafi, A. H., Pitafi, A., Nadeem, M. A., Younus, A., & Chong, R. (2019). China–Pakistan Economic
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Malik, A. R. (2018). The China–Pakistan Economic Corridor: A Game Changer for Pakistan’s. Global
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Rasheed, Z., Muhammad, N., Ali, Y., & Yousuf, S. (2017). Energy optimization in the wake of China
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Aftab, K. And E. Rahim. (1986). The Emergence of a Small Scale Engineering Sector: The Case of Tube

well Production in the Pakistan Punjab. Journal of Development Studies.

Bhutta, K., Khan,J., Omar,A., Asad, U. (2009). An Exploratory Study of the Characteristics Affecting the

Success of SMEs. International Journal of Entrepreneurship and Small Business.

WEBSITES

R. (2021, September 28). Pakistan Discussing Expansion Of CPEC To Afghanistan: Envoy. DAWN.COM.
https://www.dawn.com/news/1648845.

Karachi businessmen urged to invest in Gwadar, CPEC projects. (2021, July 10). Dawn Newspaper.
Retrieved from https://www.dawn.com/news/1634240/karachi-businessmen-urged-to-invest-in-
gwadar-cpec-projects

G. (2017). Long Term Plan for China-Pakistan Economic Corridor (2017-2030) (1st ed.). Retrieved from
https://www.pc.gov.pk/uploads/cpec/CPEC-LTP.pdf

F. F. (2016). SME sector backbone of economy. Pakistan Observer. https://pakobserver.net/sme-

sector-backbone-of-economy/
SBP to increase financial assistance for SMEs. (2018). Pakistan Today.
https://profit.pakistantoday.com.pk/2018/08/27/sbp-to-increase-financial-assistance-for-
smes/
Study Reports.
(n.d.).SMEDA.https://smeda.org/index.php?option=com_phocadownload&view=category&i
d=188&Itemid=1027
The Small and Medium Enterprises and Poverty in Pakistan: An Empirical Analysis - Munich Personal
RePEc Archive. (n.d.). MPRA.COM. https://mpra.ub.uni-muenchen.de/50506/

36 | P a g e
Amit Ranjan. (2020, July 21). Is Pakistan Hurtling Towards a Debt Trap With a String of

Hydropower Projects With China? The Wire. https://thewire.in/south-asia/pakistan-china-

hydropower-projects-cpec-debts

Rasheed Khalid. (2021, March 21). ‘CPEC not a debt trap.’ The News.

https://www.thenews.com.pk/print/802860-cpec-not-a-debt-trap

‘CPEC posing challenges to domestic industry.’ (2016, November 12). Dawn.

https://www.dawn.com/news/1295750

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