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Exploring Opportunities to launch Mainline-1

The Mainline-1 (ML-1) project has hit another roadblock with China still unwilling to approve the financing of the project. The ML-1 project is meant to be a part of the China-Pakistan Economic Corridor (CPEC) and Pakistani officials consider it to be pivotal for boosting economic activity in the country

The Mainline-1 (ML-1) project has hit another roadblock with China still unwilling to approve the financing of the project. The ML-1 project is meant to be a part of the China-Pakistan Economic Corridor (CPEC) and Pakistani officials consider it to be pivotal for boosting economic activity in the country.

 

Pakistan aims to follow China’s example of building domestic linkages and creating new markets. The railway project is meant to enhance connectivity and make movement of shipments more efficient and economical. The scope of the project includes doubling of railway track from Karachi to Peshawar along with increasing the speed of both passenger and freight trains.

 

The upgradation will benefit traders in cities across the country as the track passes through several cities including Hyderabad, Bahawalpur, Sahiwal, Lahore, Gujranwala and Rawalpindi. Rising costs in recent years have been a major challenge for local businessmen and such projects are necessary for improving competitiveness. The project is also meant to facilitate traders from landlocked Central Asian countries, thus turning Peshawar into a regional trading hub. Moreover, it has potential of creating millions of jobs in the country.

 

The project with an estimated cost of $ 6.8 billion was approved by the Government of Pakistan’s Executive Committee of the National Economic Council (ECNEC) in August 2020. Under CPEC framework, China was supposed to provide majority of the funding. However, China is now reassessing the situation due to Pakistan’s rising debts and restrictions imposed by international lenders. The Chinese side is also suspicious about the actual cost of the project.

 

Given the significance of this project to boost economic activity and improving competitiveness, the government should make all necessary efforts to secure funding for this project. In order to do that, the government must match its claims with practical steps.

 

There are two recommendations to attract funding for this project. The first one is to comply with the regulations by foreign lenders and improve Pakistan’s debt outlook. This will provide greater confidence to lenders and even open up financing opportunities for various other projects. Given the potential of Pakistani economy, more countries will also show interest in investing if the country’s economic indicators are moving in the right direction. The second recommendation is applying economic diplomacy and engaging more partners. As mentioned earlier, the project can facilitate traders from Central Asian countries so there is a possibility that their governments or financial institutions can participate in this project’s funding. Increased participation will also lower the debt burden on Pakistan.

 

Speaking at the Islamabad Security Dialogue held in March 2021, the Foreign Minister of Pakistan Shah Mahmood Qureshi stated that “our emphasis is shifting from geo-politics to geo-economics. Pakistan’s location makes it a natural hub for economic confluence for competing states. Rather than partake in geo-political competition and rivalries, Pakistan is advocating co-existence and win-win cooperation.” The Foreign Minister reiterated Pakistan’s position during his address to the Pakistan-Hungary Dialogue. He underlined that the Pakistani government, under the leadership of Prime Minister Imran Khan, attaches great importance to enhancing Pakistan’s trade and economic relations with our partners. He added that Pakistan’s “new economic security paradigm has three essential pillars: peace, development partnerships and connectivity.”

 

Pakistan is open to exploring new economic opportunities and increasing engagement with its partners. Previously, both China and Pakistan have welcomed third party participation in CPEC. However, the focus was mainly on attracting investors in the proposed Special Economic Zones (SEZs) under CPEC.

 

Since the launch of CPEC, both sides have increased their bilateral cooperation and paved the way for further engagements. During this period, many issues and challenges have been resolved which has helped in smooth implementation of CPEC projects. Furthermore, both sides have also reviewed the portfolio consistently and adjusted it to cover Pakistan’s development needs. In order to address the socioeconomic development challenges in the country, the present government pushed for making CPEC more inclusive and now there are a number of projects in place covering healthcare and skill development in various parts of the country.

 

The ML-1 project also offers huge opportunities for the people of Pakistan and can revitalize the railway system of the country so the government should not be discouraged or place the project on backburner. There are many opportunities to explore and partner countries will be encouraged if Pakistan displays a strong commitment and takes necessary measures.

 

China has applied geo-economic tools to great effect to secure its interests and Pakistan should look to take a page out of China’s book in order to make this project a reality.

Ali Haider Saleem

Written by Ali Haider Saleem

Ali Haider Saleem graduated with BS Economics from NUST and MSc Public Policy from Queen Mary University of London. He has worked at National Defence University and Institute of Strategic Studies Islamabad. His research interests include sustainable development, regional integration and security cooperation.

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