Can CPEC Make Pakistani Manufacturing More Competitive?
By RiazHaq
CA
In addition to a basic sense of security, the cost of production and availability of required skills are essential for making manufacturing competitive. Cost has several components: labor cost and abundant, cheap energy and infrastructure. Skill comes from education and training infrastructure. Will CPEC (China-Pakistan Economic Corridor) help Pakistan achieve competitiveness on these fronts?
Pak-China Industrial Corridor Source: Wall Street Journal
Abundant, Cheap Energy
Costs rise dramatically if expensive plant and equipment are not fully utilized due to lack of gas and electricity. It is hard for a manufacturer to be competitive if its factories lie idle for many hours a day due to load-shedding as has been the case in Pakistan for many years.
Transport Infrastructure
Manufacturers rely heavily on efficient supply chains. They need required parts delivered on time to continue to operate. Others who depend on their output need to have their orders filled on a just-in-time (JIT) basis. All of this is not possible without reliable transport infrastructure over roads, rails, air and sea.
Skilled Labor
Energy and infrastructure are necessary but not sufficient to be competitive. Availably of skilled labor is just as important. If the education and training infrastructure does not supply the required skills, then it's not possible for an economy to be competitive.
China Pakistan Economic Corridor
Can China Pakistan Economic Corridor deliver energy, transport infrastructure and skilled labor to improve Pakistani economy's competitiveness? It appears that the first two will be in good shape after CPEC projects are completed. However, significant questions remain with regard to the education and vocational training infrastructure to build the required skilled labor pool.
Summary
Abundant, cheap energy, transport infrastructure and availability of skilled labor are essential for improving Pakistan's manufacturing competitiveness. It appears that the first two will be in good shape after CPEC projects are completed. However, significant questions remain with regard to the education and training infrastructure to build the required skilled labor pool.
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