Economic renaissance for KP?

Khyber Pakhtunkhwa (KP) is distinguished by its immense natural potential. Yet like other provinces, it currently faces significant challenges across economic, social, security, and political domains.

Amid societal polarisation and escalating terrorism, coupled with limited economic opportunities, the government faces mounting pressure to balance development efforts; ensure equitable resource distribution; and make policy decisions that reinforce stability and peace.

Despite these challenges, long-term strategic thinking is vital to shaping policies that meet the people’s expectations amid the day’s adversities, including declining purchasing power. This approach is essential for fostering political order in an era characterised by empowered individuals, politicised bureaucracy, and persistent crises.

With a population exceeding 41 million, where 50% are youth and nearly five million are out-of-school children, the current economic and political climate presents a unique opportunity to invest in meaningful and transformative change.

In the current environment overwhelmed with rival politics, the government must break free from the short-term thinking that has hindered our economy for decades and implement policies that address the significant challenge of achieving lasting prosperity, as even in the bleakest circumstances, there will always be a requirement to improve welfare and security.

Demographic diversity exacerbates issues like unemployment, environmental degradation, reduction in investor confidence, and social inequalities, making it crucial for the government to adopt comprehensive strategies to address these multifaceted challenges, including a few urban areas capable of providing a workforce to support multiple major industries.

At this pivotal moment, the KP government must adopt a proactive approach to assess vulnerabilities and implement robust risk mitigation measures. The conventional formula for achieving prosperity relies on the pursuit of inclusive economic growth. A holistic and multifaceted strategy is essential, for leveraging geography, and hydropower potential, exploring renewable energy sources, driving industrialisation, and capitalising on CPEC investments.

Encouraging investments in technology, mining, tourism, agriculture, and renewable energy will help create a more resilient economic base. Local and foreign private investments are required in education, and vocational training is required to build a skilled workforce that can meet the demands of modern industries; at present, only a few urban areas are capable of providing a workforce to support multiple modern industries.

Policy responses to the economic crisis unanimously recommend that in a politically vulnerable environment, sustainable economic decisions require a whole-of-government approach. This approach must involve a comprehensive suite of institutions specialising in economic policy settings, investor services, sector development, business regulation, and public resource management.

Such an integrated strategy is essential to attract more investment, including bringing back departed investors and those with whom MoUs were signed during Dubai EXPO in 2020, such as the proposed hydrogen plant and integrated tourism zones. Achieving the goals under the SDGs and ensuring the sustainability of PPP (public-private partnership) projects will necessitate increased investment in public infrastructure in the initial stage.

The critical roles of the Khyber Pakhtunkhwa Board of Investment & Trade (KPBOIT), Khyber Pakhtunkhwa Economic Zones Development and Management Company (KPEZDMC), Small Industrial Development Board (SIDB), Khyber Pakhtunkhwa Information Technology Board (KPITB), and Small and Medium Enterprises Development Authority (SMEDA) cannot be overlooked in this context.

Together, these organisations form a robust ecosystem that supports investment, industrial development, and the growth of small and medium enterprises. Addressing various aspects of economic development — from infrastructure and policy advocacy to business support and market access — is pivotal in driving the economic growth of KP.

Achieving transformative economic development led by the private sector and foreign direct investment (FDI) requires implementing several strategic measures. The government must be prepared to innovate, whether by designing new incentive packages or temporarily relaxing regulations to rejuvenate economic efforts. However, despite the intention to achieve economic outcomes, results can be hindered by political differences, institutional weaknesses, infrastructure and connectivity gaps, and regulatory and legal challenges.

If these gaps are not bridged, the proposed target of completing 600MW of energy by 2028 and the expansion of the wheeling model implemented at the Pehur HPP may remain a dream.

The central focus should be on developing 2–3 special economic zones (SEZs) in Rashakai and Daraband, and industrial zones in Abbottabad and Peshawar, as well as around the Khyber Pass Economic Corridor Project. This includes promoting private sector development, expanding primary production in agriculture, livestock, and minerals, improving infrastructure and logistical services, nurturing cottage industries, and growing the tourism industry, which presents a significant opportunity through CPEC.

The plan for achieving this is outlined in the KP Industrial Policy and the Commerce and Trade Strategy 2020, based on three pillars: revival and rehabilitation, growth, and competitiveness. Additionally, attracting private investment in the TVET sector through a top-down approach is crucial to leveraging individual, collective, and natural endowments, ultimately yielding sustainable security, prosperity, and hope.

To attract investment in the current charged environment, the KP government must build sector-specific institutional expertise, as organisational support for sector-specific engagement is limited. The limited exposure of the existing staff from PPP cells to investment attraction at the BOI further restricts their performance. The promised goals of the digital economy, digital access, digital skills, and digital governance are also far from being achieved, impacting the ease of doing business and potential public-private partnerships, as well as the important Youth Skill Development and Employment Programme, which aims to build conventional and industrial IR4.0 skills.

Reducing poverty and creating employment are challenging tasks. Despite various obstacles and constraints, pragmatic steps driven by strong political will can help achieve these goals. Rapid economic growth can only become a reality through improved human development outcomes and developing industrial growth and by nurturing an efficient government through modern training, otherwise political instability coupled with a lack of effort and planning may even lead to the destruction of already installed productive capacity.

At this stage, the KP government and other provincial governments need to focus on less complex initiatives and projects through an incremental approach and meet the ever-rising demand for economic wellbeing. The fast development of SEZs such as Rashakai as centres of industrial excellence with a vocational training facility may be a sustainable step in that direction.

The writer is a project management specialist and is a faculty member at various institutes/universities, while also having served as a diplomat in China and Vietnam. He can be reached at: [email protected]

Disclaimer: The viewpoints expressed in this piece are the writer's own and don't necessarily reflect Geo.tv's editorial policy.

Originally published in The News