ECONOMIC MISSILE

In the 1970s, Zulfiqar Ali Bhutto forged forward this notion for an unassailable defence system for Pakistan. We spent years of tireless labour to finally achieve the target of successfully establishing our very own nuclear program and give Pakistan invincible fortification. Half a century down the line, we both have the bomb and — with electricity, gas, petrol, and other shortages — are on the verge of eating grass too.

Here, one may ask, why do we not consider economic well-being as a variable when deciding on our defence strategies? We have seen nuclear superpowers like Russia being dismantled due to their economic crisis, and lack of prioritization of economic growth. Relying solely on defence to protect a country does not work, because the defence and the nation’s economy are inextricably linked.

To constantly think about enhancing the defence without solving the underlying economic situation is really a grand waste of effort in the current worldview where most wars are being fought at the fiscal front. We are never going to get a full recuperation if we do not address the inherent spread of the pandemic that our economic situation has become.

As of 2020, Pakistan imports over USD 5 billion worth of chemicals on an annual basis. Most of these chemicals are used as raw materials for other chemicals required by the local industry. Along with this, Pakistan exports over 1 million tons per annum of Naphtha which is a by-product by our refineries. The chemical companies abroad use this Naphtha in their crackers and produce a range of chemicals which they then sell back to Pakistan for a much valuable exchange.

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Pakistan is simply wasting its valuable feedstock of Naphtha, for minimal foreign exchange earnings in millions, and thereafter, it spends billions on import of chemicals derived from the same Naphtha. These include Polyethylene, Poly-Propylene, Para-Xylene, Ethylene Glycol and a couple of more, costing an estimated USD 2 billion annually. These chemicals form the backbone of modern economies and are found in a wide range of consumer and industrial products, many of which are considered essential for daily use. The use of these chemicals is too wide to be penned down in a list. From being used in everyday household items, to powering up modern energy systems; they are the largest drivers of global oil demand.

On the contrary, a two million tons per annum of a Naphtha Cracker facility integrated with a petrochemical complex, primarily aiming high volume chemicals import-substitution, would cost an estimated USD 4-6 billion. This offers a very appealing scenario in terms of payback period on the investment. It could further help Pakistan to export PE/PP to China at seven days’ margin under the CPEC route, keeping in mind that China currently imports PE/PP for USD 20 billion per annum.

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One can convincingly counter-argue that building a naphtha cracker complex is in Pakistan’s own interest as it would stipulate a robust industrial ground and essential infrastructure that will trigger economic pursuits and help in developing other allied industries and small businesses. We have witnessed this happening in China, India, Malaysia, South Korea, Thailand, and Vietnam where such investments in refining and petrochemicals supported the countries in achieving prosperity and remarkable economic growth.

The Government of Pakistan is aware of the significance and the potential of the local chemicals and petrochemicals industry. Several concrete measures are being brought into practice to enhance the volume of Pakistan’s overall exports. The government intends to work with all related stakeholders to draw comprehensive strategies that will help boost our penetration into global markets.

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Keeping the economic independence of Pakistan as a sole objective in mind, this would have far-reaching effects on the economy of Pakistan and will greatly help towards the maximization of chemical import substitution.

The realization of this vision shall save valuable foreign exchange for Pakistan and strengthen the economy against USD which is the dire need of current times. Just as we needed an atomic bomb when Indian defence threatened our security, we are in dire need of an economic missile in the form of naphtha cracker to give our industry an invincible safeguard.