Boosting blue growth through development of maritime silk road

The Gravitational forces of global geopolitics and geo-economics is moving back towards East from the West and as this rebalancing unfolds, the 21st century will be the Asian Century. BRI is the key that not only integrates Asia but ensures stable and sustainable future of this continent. Asia is always a continent with socio-economic and cultural divides and to overcome these divisions into inclusive Asia integration on all fronts is very important so there is a strong need to work on three modes of connectivity: physical, digital, and people-to-people and BRI successfully doing this by reducing the gap between its various regions. The maritime infrastructure network which results from the BRI initiative could be one of the catalysts for Asian economic rejuvenation. In 2013 when China Proposed, the Belt & Road Initiative (BRI) refers to the Silk Road Economic Belt and the 21st century Maritime Silk Road with an aim to build trade and infrastructure networks by connecting Asia with Europe and Africa along the ancient trade routes of the Silk Road than BRI successfully gain international support only due to the Chinese leadership that provides inclusiveness and ‘level playing field’ that the current world order has failed to provide and there is no doubt in the fact that BRI would prove to be a game changer for not only Pakistan’s socio- economic development but for the future of South Asia from involvement of interest to support and now through participation and forge a common destiny for Asia Pacific and beyond. At this critical juncture when economies are slowing down and regional politics is overtaking regional economies, BRI offers a beacon of hope for the participating states.

It is projected that the BRI when it is fully operational will reduce travel times by up to 12 percent, reducing trade costs amongst its partner countries. The Belt and Road Initiative mainly focuses on connectivity of policies for unimpeded trade which will resultantly increasing trade up to 3-8% and it is predicted that the next decade will witness new supply chains and new regional trade lines despite the hovering clouds of the US-China trade war. Along with relocation of Chinese industries, there will be diversification in investment coming from the West with industries shifting to new destinations like Laos, Indonesia Cambodia, Vietnam and other South East Asian countries. Pakistan may also become a preferred destination for foreign industry relocation provided that it does well on the targets on the ease of doing business, and crafts the right match of incentives. China-Pakistan Economic Corridor (CPEC) as the game-changer project for Pakistan and the icon project of the Belt and Road Initiative, looking to be the ‘Buckle of the Belt’. It is widely understood that the BRI is incomplete without CPEC, which has manifested its real strength as a comprehensive transportation corridor thereby stimulating economic, trade, and industry cooperation for socioeconomic development. According to the 2018 report of the Commonwealth, the worldwide ocean economy is valued at a total of US$1.5 trillion per year. It is estimated, that by 2025, thirty-four percent of the total crude oil production in the world would come from offshore field and currently, the World Bank estimates that eighty percent of the global trade is carried via sea routes and aquaculture is the fastest growing food sector. Moreover, approximately 350 million jobs world-wide are linked to fisheries.

Pakistan, therefore, must seize favorable opportunities in the second phase of CPEC through opening-up of the BRI and mutual gains in collaboration with Chinese hi-tech industrial and capital advantage. In doing so, Pakistan needs to expand and rebuild existing industrial infrastructure, modernize railroad infrastructure through the Mainline (ML-1) project and develop the Gwadar Port as a smart and safe port city with correct hybrid governance structure in place to achieve tangible outcomes. According to the World Economic Forum (WEF), the US-China trade war may be a beginning of the opening up of China in the field of advance sciences and technologies which in itself may be an opportunity for Pakistan if carefully factored in the cooperation mechanism under CPEC while the bottleneck of energy has largely been removed in the early harvest phase, completion of work on the western corridor and all-weather yearlong connectivity through the Karakoram Highway (KKH) should be done in the ongoing phase. As it is commonly known in logistics, “a chain is no stronger than its weakest link”, at the same time, we also need to look at the clearance processes and establish customs special supervision areas at the SUST border post and Gwadar Port where time delays can cost the national economy significantly. Seamless connectivity through fast speed internet via optical fiber needs to be ensured to realize the true potential of the corridor.

The time is ripe for Pakistan to benefit from the regionalization of Asia and assume a leading role as the transshipment hub for the region. We must capitalize on the opportunity the BRI offers. On July 17, a freight rail route was established between Bishkek, Kyrgyzstan and Xian, China marking the opening up of the China-Europe freight route. A similar route can be established within South Asia if serious efforts are made. In the second phase of CPEC, the government is gearing up to uplift less developed areas of Pakistan, and promising greater regional integration. However, the biggest dividend can only be earned through the industrial cooperation phase by exploring new policy reforms and incentive packages to maximize the pull factor. The government is also taking steps to encourage private-sector participation and creating an enabling environment by reducing risks and promoting complementary policies to strengthen trade, logistics and business cooperation and improve business-to-business (B2B) links. The second round of the China-Pakistan Free Trade Agreement also offers enormous opportunities. If Pakistan succeeds in capturing even one percent of the Chinese market share through the BRI, this can increase Pakistan’s exports to new records. Alongside enormous economic opportunities from the BRI, there are certain challenges that require pragmatic handling. One of the major challenges is to achieve synergy and harmony in policy implementation and execution so that economic reforms are achieved in shortest possible time for mutual gains.

In order to achieve Blue Boost it is mandatory for all connected countries including Pakistan to —

• Accurately value the contribution of natural oceanic capital to welfare, in order to make the right policy decisions that trade-offs different sectors of the blue economy.
• Investment in, and use of the best available science, data, and technology is critical to underpinning governance reforms and shaping management decisions to enact long-term change.
• Prioritizing each sector of the blue economy through appropriate investments and should be based on accurate evaluation of its national capital.
• Anticipating and adapting to the impacts of climate change is an essential component of a blue economy.
• Ensuring ocean health will require new investment so, targeted financial instruments like blue bonds, insurance and debt schemes must be announced to ensure maximum gains in terms of financial, social, and environmental returns.
• The effective implementation of the United Nations Convention on the Law of the Sea is a necessary aspect of promoting the blue economy concept worldwide. That convention sets out the legal framework within which all activities in the oceans and seas must be carried out, including the conservation and sustainable use of the oceans and their resources. The effective implementation of the Convention, its Implementing Agreements and other relevant instruments is essential to build robust legal and institutional frameworks, including for investment and business innovation. These frameworks will help achieve SDG commitments, especially economic diversification, job creation, food security, poverty reduction, and economic development.
• Realizing the full potential of the blue economy also requires the effective inclusion and active participation of all societal groups, especially women, young people, local communities, indigenous peoples, and marginalized or underrepresented groups. In this context, traditional knowledge and practices can also provide culturally appropriate approaches for supporting improved governance.
• Developing coastal and marine spatial plans (CMSP) is an important step to guide decision making for the blue economy, and for resolving conflicts over ocean space. CMSP brings a spatial dimension to the regulation of marine activities by helping to establish geographical patterns of sea uses within a given area. The private sector can and must play a key role in the blue economy. Business is the engine for trade, economic growth and jobs, which are critical to poverty reduction.

The downturn in Pakistan’s economy is steepening with the trade deficit rising to approximately 371.6 billion in November 2018 from 246 billion in the corresponding month last year. Although the exports have improved to 18.7 percent but the effect is marred by a jump in imports to 23.2 percent from the last fiscal year and many debates have surfaced, regarding the worsening condition of the economy, since the Pakistani rupee has devalued against the US dollar. According to the World Bank, the inflation in Pakistan is expected to remain high till the fiscal year 2020. In such times of instability in the economy, adopting blue economy can reap unsurmountable benefits to Pakistan so, time to follow Blue’s Clues.