Beyond Infrastructure: Converting CPEC Connectivity into Market-Access Gains

Executive Summary

Pakistan’s development challenge is no longer only to expand physical connectivity; it is to make connectivity commercially valuable for firms, workers and consumers. Roads, ports and energy infrastructure can lower the physical cost of reaching markets, but they do not automatically generate export growth, productive investment or stronger participation in global value chains. These outcomes also depend on predictable border procedures, reliable logistics, competitive industrial clusters, capable institutions and firms able to meet market requirements.

This policy viewpoint argues that CPEC 2.0 should treat market access as an explicit performance objective. The proposed approach links infrastructure with customs and trade facilitation, multimodal logistics, special economic zone (SEZ) readiness, SME export capability and measurable accountability. The World Bank’s World Development Indicators place Pakistan’s exports of goods and services at about 10.4% of GDP in 2024, illustrating the economy’s limited export orientation; this is a macroeconomic indicator, not by itself proof that CPEC infrastructure has failed or that CPEC caused the trend.

The paper recommends a phased programme: (i) within 12 months, establish a common market-access scorecard, validate baselines and assign named agency owners; (ii) over 1–3 years, remove priority customs, logistics and SEZ bottlenecks through service standards and coordinated delivery; and (iii) over 3–5 years, evaluate outcomes and scale only those interventions that demonstrate results. Success should be judged by measurable changes in clearance time, logistics reliability and cost, operational SEZ performance, firm-level export participation, export diversification and investment—not by infrastructure completion alone.

1. The Policy Problem: Connectivity without Market Access

CPEC’s first phase expanded important elements of Pakistan’s transport and energy infrastructure. This has created assets that can support domestic integration and external trade. Yet infrastructure is an enabling condition rather than a sufficient condition for competitiveness. A road or port produces broader economic gains only when firms can use it reliably, at a competitive total cost, and connect it to customs, warehousing, production, finance and destination markets.

Pakistan’s export-to-GDP ratio remains low. World Bank data indicate exports of goods and services were approximately 10.4% of GDP in 2024. The indicator includes both goods and services and should not be confused with merchandise exports alone. Pakistan’s merchandise exports reached approximately US$32.1 billion in FY2024–25, according to Pakistan Bureau of Statistics figures reported by Associated Press of Pakistan. These figures describe different measures and periods and should not be combined as if they were the same series.

The policy question is therefore not whether connectivity investments matter, but how public institutions can ensure that the resulting network lowers trade costs and helps firms reach customers. Four constraints deserve particular attention: fragmented agency processes; uneven border and customs performance; incomplete logistics links between production areas and gateways; and SEZs that may be designated or developed without all utilities, services and export-oriented firms being operational.

Read More: A Decade of CPEC – Building Connectivity and Regional Integration

China should also be seen as an export market, not only as a source of investment, technology and infrastructure cooperation. The China–Pakistan Free Trade Agreement Phase II gives Pakistani exporters preferential access, with tariff concessions applied from 1 January 2020 and duty-free entry for 313 tariff lines of particular export interest to Pakistan. These preferences will not convert into sales automatically. Firms need better product quality, standards compliance and certification, sufficient production capacity, market intelligence and direct buyer links. CPEC 2.0 should therefore connect corridor and zone development with specific export opportunities in the Chinese market.

2. A Practical Market-Access Framework

Market access is the ability of a firm to reach domestic and international customers reliably, predictably and at a competitive delivered cost. It depends on the full journey from production site to buyer—not just distance or road quality.

Infrastructure → Transport Connectivity → Logistics Reliability → Trade Facilitation → Market Access → Firm Productivity → Export Competitiveness

The framework implies that government should identify the binding constraint along each priority trade route and industrial cluster before committing to additional capital spending. For one firm, the constraint may be an unpredictable border delay; for another, it may be the lack of reliable electricity, freight services, cold storage, standards certification or access to working capital. Policy should be designed around these bottlenecks and verified through firm-level evidence.

3. Where the Conversion Chain Breaks

3.1 Customs and border management

Digital declarations and risk-based inspections can reduce avoidable processing and improve predictability, but performance should be measured using current, route-specific data. FBR reported in 2021 that documentary and border-compliance times had fallen to 24 hours for specified import and export measures; these historical figures are not a current nationwide guarantee. Pakistan Single Window’s FY2024–25 annual monitoring report records preparatory work for a Time Release Study, including study design and data requirements. The study’s validated results should be used when available to establish current baselines.

Priority actions are to publish the latest validated Time Release Study results, extend interoperable digital processes across relevant agencies, publish service standards and report exceptions. Performance measures should distinguish documentary compliance, customs release, other-agency release and total cargo dwell time.

3.2 Multimodal logistics and rail freight

Roads, railways, dry ports, ports and border crossings should be planned as a connected logistics system. A rail service will not attract freight simply because rail transport can be cheaper over some distances: shippers also require schedule reliability, suitable terminals, predictable wagon availability, competitive handling charges and last-mile connections. Before setting a national rail-freight target, the responsible agencies should establish a consistent baseline for freight tonnes, tonne-kilometres, modal share, service reliability and end-to-end cost.

A practical first step is to select a small number of high-volume freight flows—such as port-to-industrial-cluster routes—and compare road and rail on total delivered cost, transit time, reliability and emissions. Expand services only where the commercial case and shipper demand are demonstrated.

Read More: Agricultural Growth and Collaboration through CPEC

3.3 SEZ readiness and industrial linkages

An SEZ should be judged by operational readiness and firm performance, not only by land allocated or investment announced. Relevant conditions include reliable electricity and gas, water and wastewater treatment, worker transport, digital connectivity, customs support, predictable approvals and effective investor aftercare. Zone-level reporting should separate announced investment from financial close, construction, commercial production, employment, domestic sourcing and exports.

The recommended approach is to prioritise a limited number of zones where infrastructure and investor demand can be brought together quickly. Each zone should have a public readiness plan with named owners, milestone dates, utility dependencies and an investor grievance mechanism. New commitments should be sequenced against evidence of demand and implementation capacity.

3.4 Institutional coordination and the private sector

Market access cuts across federal ministries, provincial departments, regulators, ports, customs, transport operators and zone authorities. A new coordinating body is not necessarily required; the immediate need is clear end-to-end accountability, agreed service standards and a mechanism to resolve cross-agency blockages. The existing CPEC governance arrangements should be used where possible, with a designated lead for each deliverable and escalation to the appropriate committee when milestones are missed.

Exporters, manufacturers, freight forwarders, shipping lines, SME associations and zone investors should be consulted through structured quarterly sessions. Each session should produce a short issue log identifying the constraint, responsible agency, agreed action, deadline and resolution status. This will make private-sector consultation a problem-solving mechanism rather than a one-off event.

4. International Lessons for Pakistan

International experience is most useful when treated as a set of principles to test against Pakistan’s institutional and commercial conditions—not as a model to copy wholesale.

These examples support a common lesson: infrastructure, trade facilitation and industrial policy should be planned together. The appropriate policy transfer is the operating principle, not an unsupported claim that another country’s outcomes can be replicated automatically.

5. Implementation Risks and Mitigation

6. A Phased Action Plan

7. Measuring Success: A Credible Scorecard

A scorecard should use indicators with clear definitions, a named source, a reporting frequency and an accountable data owner. It should distinguish outputs (for example, a digital module launched) from outcomes (for example, shorter and more predictable clearance times) and economic impacts (for example, higher firm exports). Targets should be set only after the baseline is validated; inventing targets before confirming current performance would weaken accountability.

The scorecard should be published annually, with a short quarterly implementation dashboard for actions under direct government control. Where a series is unavailable or not comparable, the scorecard should state “baseline to be established” rather than insert an estimate without a defensible method.

Read More: Gwadar’s Strategic Role in CPEC and the Belt & Road Initiative

8. Policy Recommendations for CPEC 2.0

1. Make market access an explicit CPEC 2.0 objective. Assess major initiatives against expected changes in trade cost, reliability, firm productivity, investment realisation and exports, in addition to construction milestones.
2. Use existing governance structures to enforce accountability. Name a lead agency and a responsible official for each action, set deadlines, publish progress and establish an escalation route for unresolved dependencies.
3. Modernise trade facilitation on the basis of measured delays. Complete and publish the PSW Time Release Study, expand interoperable data exchange and use risk-based inspection while retaining necessary compliance and security controls.
4. Prioritise a small number of SEZs for end-to-end operational readiness. Link utilities, investor services, transport, workforce development and target value chains; scale after performance is demonstrated.
5. Pilot multimodal logistics solutions on commercially viable freight routes. Use shipper demand and measured total cost, time and reliability to guide rail, dry-port and port investments.
6. Connect SMEs to actual export opportunities. Combine standards certification, buyer matching, trade finance, logistics support and market intelligence rather than relying on general credit or training programmes alone.
7. Institutionalise transparent monitoring. Publish an annual market-access scorecard with validated baselines, definitions, source links, responsible agencies and explanations for missed targets.
8. Require evaluation before expansion. Use pilot results and cost-effectiveness evidence to decide which interventions should be scaled, redesigned or discontinued.

Read More: BRICS and the Changing Architecture of Global Finance

9. Conclusion

CPEC has expanded infrastructure that can support Pakistan’s domestic integration and international trade. The next phase must focus on the systems that turn these assets into economic value: predictable customs, reliable multimodal logistics, operational SEZs, export-capable firms and accountable institutions. Physical connectivity is necessary, but its economic return depends on how effectively firms can use it.

A practical market-access agenda does not require a new layer of institutions or an unverified catalogue of ambitious targets. It requires validated baselines, clear agency ownership, a limited set of commercially grounded pilots, measurable service standards and regular public reporting. CPEC 2.0 should therefore be judged not only by what is built, but by whether it helps Pakistani firms reach markets more reliably, compete on delivered cost and expand sustainable exports.

Mujtaba Arshad

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Mujtaba Arshad is a Research Associate at the Centre of Excellence for CPEC (CoE-CPEC), Pakistan Institute of Development Economics (PIDE), Islamabad. He holds an MPhil in Economics from Quaid-i-Azam University, Islamabad, where he secured second position in the Economics Department. His research focuses on regional connectivity, economic integration, trade facilitation, maritime logistics, export competitiveness and industrial development under CPEC Phase II. His work examines how transport infrastructure, border management, logistics systems and special economic zones can support Pakistan’s integration into regional and global value chains. He has published policy analysis and commentary on CPEC, Gwadar, regional trade corridors, industrial development and Pakistan’s economic transformation in national and international media. His research interests include evidence-based policy design, measurable implementation frameworks and practical reforms to strengthen Pakistan’s trade and investment performance.