Pakistan can enter global value chains via SEZs: ADB

ISLAMABAD: Special economic zones (SEZs) can help a country become a productive part of international trade activities and Pakistan was well-positioned to emulate the successful experiences of China and Malaysia, technocrats said on Friday.

“The SEZs provide the opportunity to locate Pakistan in the global value chains to boost economic development,” said Yang Xiaohong, country director Asian Development Bank (ADB), Pakistan Resident Mission, at a workshop on organised by CAREC Institute and Board of Investment (BoI).

Xiaohong added that this can be attained by producing value-added products. Guntur Sugiyarto, principal economist at ADB, said about 40 percent of Pakistan’s GDP was required to convert the left-behind districts into growing economic regions over the span of next 30 years.

“SEZs can help Pakistan to make economic development process more inclusive across the districts and regions,” Sugiyarto said.

Giving his remarks, Naeem Zamindar, chairman BoI, said through China-Pakistan Economic Corridor (CPEC) investment, China had given Pakistan a major opportunity. “Now we need to capitalise on it for becoming a growing and equitable economy,” Zamindar said.

Dr Yang Zhenshan, associate professor at Institute of Geographical Sciences and Natural Resource Research, stated the SEZs have helped China in creating a 90% boost in foreign direct investment (FDI). “For efficient SEZs, institutional building is of prime importance,” Zhenshan said adding the recipe includes localised strategies, necessary infrastructure efficient use of land, enabling policies, and strategic geographic positioning of SEZs.

He said in order to reap maximum benefits, both medium and long term impacts of SEZs should be taken into account at the time of designing SEZs. “Wrong SEZ strategies can harm the investors that may lead to lower FDI and can result in the failure of SEZs,” Zhenshan. He also advised Pakistan to capitalise on its existing cheap labour and land to attract investors.

Guan Rong, secretary general Association of SEZs, China, said while developing an SEZ, deciding its location is of key importance. “It should be based on market forces, depending on the availability of resources and facilities necessary to develop an SEZ e.g. infrastructure, energy and connectivity,” Rong said.

Dr. Ziqian Liang, Deputy Director of CAREC Institute, said the SEZs were not only important for reaping economic benefits, but also for creating innovation, best practices and knowledge transfer.

Professor Tao Yitao, director China Centre for Special Economic Zone Research, Shenzhen University, described the Chinese experience in constructing economic development and enlisted several points that helped in the process including Chinese leadership’s persistence in opening up China to international markets and introducing market reforms. “Transformation from a communist model into a mixed model also led to avenues of innovation and creativity that fuelled the economic development in China, Yitao said adding this was mainly led by the Shenzhen SEZ.

Dr Hasri A Hasan, senior director, Strategic Planning and Risk Management, Northern Corridor Implementation Authority, Malaysia, was of the view small and medium enterprises (SMEs) were at the heart of economic development. “The role of Northern Corridor Implementation Authority is to plan, promote and facilitate the implementation of economic corridor initiatives,” Hasan said.

He added that in order to attract investment in less developed regions, Malaysia has given prolonged tax holidays to the investors. “With the help of economic zoning, Malaysia has successfully developed its less developed regions,” Hasan shared adding Malaysia has also tapped the potential of regional corridors by collaborating with Thailand based on a synergistic and complementary model.

Approximately 35 mid to senior level officers from federal, provincial and regional governments participated in the three-day workshop titled “Special Economic Zones (SEZs) as Drivers of Economic Development.”