Pakistan’s model of industrialization rooted in Special Economic Zones (SEZ) and its efforts to bridge the industrial shortfall through SEZs is a story of a fiasco.

With the aim to emulate successful Asian economies for manufacturing growth in the country, Pakistan passed the SEZ Act in 2012. The country adopted the Special Economic Zones model of industrialization with the passage of the SEZ Act.

However, a lack of coherent planning and favourable support system along with institutional corruption are among the multitude of reasons for the policy failure.

Writing for Geopoliticainfo, regional expert di Valerio Fabbri argued that a major reason for unsuccessful manufacturing growth is Pakistan’s over-reliance on China for all capital and technological needs.

“The SEZ projects under the umbrella of the China Pakistan Economic Corridor (CPEC) are facing considerable delays due to protracted Chinese decisions on investments and local protests. Even the passage of Pakistan SEZs Act (Amendment) in 2016, which paved the way for a 10-year exemption from customs duties and taxes for all capital goods imported into Pakistan could not expedite their development,” he said.

Fabbri contended that a deeper analysis of the role played by China in the majority of these projects reveals the reasons behind slow pace of growth of CPEC SEZs.
He says the terms of support extended by Beijing in the majority of these projects has either been highly conditional or overly exploitative.

Fabbri further argues that even after unconditional support, out of the nine SEZs under CPEC, only three have witnessed some meaningful progress. But the remaining projects continue to be entangled in Chinese discussions, studies and surveys.

Almost a decade after Beijing initiated the CPEC, the implementation of its important projects is in jeopardy as Pakistan is heading into an economic crisis while Chinese investments are drying up.

A majority of the CPEC projects, which are already delayed, appear to remain only on paper now. Protests, corruption , and delays are further contributing to the CPEC’s woes. This makes the CPEC a failure in achieving its goals–bringing prosperity to Pakistan and allowing China direct access to the Middle East, the HK Post reported.
Beijing has cut the funding to the CPEC by more than half in 2022.

Similarly, the existing projects, mainly power plants, are likely to face disruptions as Islamabad struggles to secure the necessary funds to operate and maintain them.

— Report in Beijing News Net