CPEC Phase II: PakistanS SEZ Expansion and Deepening China Investment Ties

Islamabad – Pakistan is experiencing a significant surge in its Special Economic Zone (SEZ) growth, a cornerstone of the second phase of the China-Pakistan Economic Corridor (CPEC). The number of approved SEZs has risen dramatically from seven to 44,with 37 new zones receiving notification thru concerted efforts led by the Board of Investment (BoI). This expansion signals a pivotal shift towards SEZ-led industrialization and strengthened business-to-business (B2B) cooperation between Pakistan and China,forming the core of the upgraded CPEC framework.

The Evolution of CPEC: From Infrastructure to Industrialization

The initial phase of CPEC, launched in 2015, primarily focused on infrastructure development – roads, railways, and energy projects – aiming to address Pakistan’s critical infrastructure gaps. The CPEC Authority, established in 2019, has been instrumental in streamlining project approvals and fostering collaboration. However, CPEC Phase II represents a strategic evolution, prioritizing industrial cooperation, technology transfer, and value addition. This shift recognizes the need to move beyond infrastructure and build a robust, export-oriented industrial base within Pakistan.

BoI’s Central Role and Key Achievements

The BoI serves as the primary Pakistani agency coordinating with China’s National Development and Reform Commission (NDRC) through the Joint Working group (JWG) on Industrial Cooperation.As its inception, the Project Management Unit of the CPEC-Industrial Cooperation Development Project (PMU CPEC-ICDP) has been vital in revitalizing Pakistan’s SEZ framework. Recent progress, as highlighted during a briefing to Minister for Board of Investment, Qaiser Ahmed Sheikh, includes:

• Karachi Industrial Park (KIP): Advancements in the development and operationalization of KIP, aiming to attract significant chinese investment in manufacturing.
• Gilgit-Baltistan SEZ: Initiatives to develop the Gilgit-Baltistan SEZ, strategically positioned to leverage regional connectivity and promote economic activity in the area.
• Bin Qasim Industrial Park (BQIP): Approval of the land Lease Policy for BQIP, resolving a long-standing obstacle for investors and paving the way for increased investment. This policy streamlines land acquisition processes, reducing bureaucratic hurdles and fostering investor confidence.
• Utility Provision: Facilitating the provision of essential utilities – electricity, water, and gas – to SEZs, ensuring they are ready for operation and attracting businesses.

Addressing Structural Bottlenecks and Policy Reforms

The approval of the Land Lease Policy for BQIP is notably significant.Historically, complex land acquisition procedures and unclear lease terms have deterred potential investors.This new policy provides a clear and clear framework, reducing risk and encouraging investment. Furthermore, the BoI is actively working to streamline regulatory processes and improve the overall investment climate within the SEZs. This includes simplifying customs procedures, reducing tax burdens, and providing one-stop-shop services for investors.

CPEC 2.0: A Long-Term Vision for Industrial Growth

The long-term plan for CPEC Industrial Cooperation has been finalized and is being implemented through a structured Action plan aligned with the transition to ‘CPEC Phase 2.0’. This phase emphasizes industry-led growth, export-oriented manufacturing, technology transfer, and value addition, with SEZs serving as the primary platforms for achieving these goals. The focus is shifting from simply attracting foreign direct investment (FDI) to fostering joint ventures and promoting technology transfer, enabling Pakistani industries to upgrade their capabilities and become more competitive in the global market.

Alignment with Pakistan’s National Development Framework

CPEC Industrial Cooperation is strategically aligned with the government’s “Uraan Pakistan” 5Es Framework – Exports, E-commerce, Energy, Environment, and Equity. Specifically, it aims to advance exports, enhance competitiveness, and promote sustainable economic development through joint-venture-based industrialization. This synergy ensures that CPEC initiatives contribute to Pakistan’s broader national development objectives.

Commemorative Initiatives and Future Outlook

2026 marks the 75th anniversary of diplomatic relations between pakistan and China, presenting a unique possibility to further strengthen bilateral ties. The PMU CPEC-ICDP has planned a series of commemorative and investment-focused initiatives throughout the year to deepen industrial cooperation. These initiatives will likely include investment forums, trade exhibitions, and high-level meetings between government officials and business leaders.

Investor Facilitation and a Commitment to Transparency

The BoI has reaffirmed its commitment to proactive investor facilitation, policy coordination, and effective implementation of CPEC industrial cooperation initiatives. It will continue to collaborate closely with federal and provincial stakeholders to ensure a predictable, transparent, and investor-pleasant environment for both domestic and foreign investors. This includes providing comprehensive support services, addressing investor concerns promptly, and ensuring compliance with international best practices.

Key Takeaways

• SEZ Expansion: A significant increase in approved SEZs from 7 to 44 demonstrates pakistan’s commitment to industrial development under CPEC.
• Shift to Industrialization: CPEC Phase II prioritizes industrial cooperation, technology transfer, and value addition, moving beyond infrastructure development.
• Policy Reforms: The approval of the Land Lease Policy for BQIP addresses a key structural bottleneck for investors.
• Strategic Alignment: CPEC initiatives are aligned with Pakistan’s national development framework, “Uraan Pakistan.”
• Strengthened Bilateral Ties: The 75th anniversary of Pakistan-China diplomatic relations will be marked with investment-focused initiatives.

The ongoing expansion of SEZs and the deepening of industrial cooperation between Pakistan and China under CPEC Phase II represent a significant opportunity for Pakistan to accelerate its economic growth, diversify its industrial base, and enhance its competitiveness in the global market. Continued commitment to policy reforms, investor facilitation, and strategic alignment will be crucial to realizing the full potential of this transformative partnership.

Published in Dawn,January 17th,2026