The Pakistan’s defense sector has seen the benefits of strategic relationships with Peoples Republic of China and France. The spectacular success of defense programs provides a blueprint for the kind of collaboration for needed for Robust Industrialization of Pakistan.
Pakistan needs to develop deep and lasting relationships with countries like Peoples Republic of China, France, Germany, Norway, Sweden, and United States. All countries in this Global Environment produce goods and services by mutual interdependence as opposed to 100% indigenous. However in strategic and critical areas based on national security retain a vigorous national capability.
These relationships now need to be expanded into the commercial sector for electronic/electrical and strategic components. Joint ventures, cooperative research and development efforts are undertaken to leverage Pakistan’s core competencies for more value added products.
United States of America:
The recent Major Non NATO Ally status with USA also opens up cooperation and co-funding in research with US entities. Annually few billion for research and development dollars are awarded by United States Agencies like Department of Defense (DOD), Defense Research Organization (DARPA), Department of Energy (DOE), National Aerospace and Space Administration (NASA) and other related entities. Pakistani State and private organizations can bid on these contracts in collaboration and in some cases alone on these contracts. Israel has done an extremely effective national effort in this area and has deployed technological superiority to augment its national security. Pakistan’s efforts to participate in this should include not only defense entities but also civilian and private entities. The civilian and private entity participation is vital even if Pakistan economic policies have to create and indirect support such efforts. The civilian and private participation opens areas which state entities would find difficult and at times impossible to get into. Time is of the essence as we hope for the best but must be prepared for the worst, re-imposition of sanctions under one pretext or another.
This relationship should primarily focus on technology generation, acquisition and benchmarking. Fringe benefits of export sales will accrue. The technologies currently under active pursuit are security, energy and torque management, nano-engineering, biotechnology, renewable energy unmanned aerial and space vehicles, missile defense, anomaly sensing, neural networks and cybernetics, to name a few. Most of these efforts are pursued by private and corporate America. The value proposition Pakistan can bring is low cost of engineering and development due to engineering labor costs.
The US Government Agencies funded research is managed through one of its national laboratories in most cases, some exceptions are made. The private and public corporations are the source of technology and commercialization. National Laboratories are partners in these efforts. Most willing corporations get tens of millions of dollars in US government funding, which is 50% co-funded. The exception being Department of defense where such research and development is 100% funded by US government.
The thrust of Pakistan’s initiative should be to get institutionally imbedded with US Government Agencies and Corporate America.
Peoples Republic of China:
The Strategic Relationship with Peoples Republic of China should form the cornerstone of Pakistan’s Global Strategic Relationships. To determine exactly how best to leverage this relationship it is best to look at the Geo-Strategic position of China and its future. China is currently in the middle of an explosive growth not only in its industry and technology but every aspect of its GDP but would remain in deficit in energy (oil etc) and food products. China this year imported more iron ore related materials than the USA and its oil import increased by 20%. The new vehicle sales/production exceeded by 4 million units (by contrast USA new vehicles sales are at 15 million units), up 60% from last year. This annual production and sales of new vehicles is to stabilize at 60 million units annually by middle of next decade (The current world’s vehicle production is 55 million units). In short China is experiencing what Germany, Japan and Korea has seen but with a market far exceeding North America and Europe put together. Putting it mildly; the financial centre of gravity is starting to shift from North America and Europe to the Pacific Rim (China). China is now concentrating on developing its interior and western China. This will create a demand for transit through Pakistan with associated benefits in services and goods. The Karakuram Highway will have a whole new meaning especially western Pakistan and Gwadar. Pakistan should position itself with China as what Mexico, Britain and Israel are together to United States. Pakistan’s Economic policies should encourage capital and businesses to invest in Pakistan for the long-term and Pakistan should leverage the component manufacturing base in China for value added products.
China’s energy needs to fuel the growth would be very large. China’s like other nations is looking for alternate energy sources other than liquid fuels. All indications are that natural gas is one of its primary alternatives. USA has 6% of worlds known reserves of Natural gas, which are 150% of its known oil reserves. However 60%-70% of world’s known natural gas reserves are south of Russia, north of Afghanistan and west of China. China in recent years has signed multiple agreements with Central Asian Republics for economic and energy. In private conversations China’s decision makers have said that they are content with liquid fuels for the eastern coastal belt, but will develop western and interior of China with a natural gas infrastructure. This is evident with rapid installation of natural gas compressors station especially in the interior and compressor factories.
These huge reserves would also be needed for fueling the growth in Pakistan and other South Asian nations. Pakistan would also be a natural conduit for export of these reserves for the rest of the world through Gwadar using double hulled container shipping (The Iranian and Russian options are not very popular with western nations). Asia should see an emerging market for direct natural gas powered appliances, power generation and other devices. This implies that air conditioners, refrigerators, etc are not powered by electricity but natural gas.
As it evident, Pakistan is in a unique Geo-Strategic place both in time and history. Appropriate economic policies will attract Multinational corporations not only for foreign direct Investment but more importantly to be the Asian Headquarters. Islamabad with its cosmopolitan nature and proximity to Central Asian Republics can be a strong alternative to Singapore. Gwadar is a strategic port for not only western China but also for landlocked central Asia. Due to Gwadar’s proximity to Middle East and Central Asian markets it would generate a manufacturing industry but manpower availability may be a weak point. If superhighways similar to USA and Germany are present in Pakistan where class 8 trucks can freely move goods, then manufacturing plant locations will be distributed to population centers alleviating poverty and creating employment.
China’s middle class is expected to grow both in size and affluence and its demand for consumer goods is expected over years to exceed Europe and later USA. Pakistan with its agriculture based sector can capitalize on value added agricultural goods for exports and then to maintain market share should invest in China with appropriate manufacturing locations. This effort should include joint ventures with Chinese entities.
In the electronics sector China has and investing heavily in silicon fabrication to such an extent that western corporations feel this will cause overcapacity. Only time will tell whether this was a strategically defensive or offensive move. Never the less China’s self sufficiency in electronics is a given and given the Chinese manufacturing cost advantage China should become a major electronic component supplier in the Global arena.
European Union – Particularly France, Germany, Norway, Sweden
Pakistan has had for decades a close relationship with France in the defense sector. The results of such relationship have borne fruit with Agosta submarine manufacture and the Mirage rebuild efforts. France in its current international stand is working on and needs intelligence, threat assessment, command and control electronics with same but independent capability as USA but more cost effectively.
Pakistan should explore markets such as maritime security systems development especially in view of piracy in the Malacca straits and Arabian Sea. The effort would encompass radars, unmanned aerial vehicles, Special EM and acoustic radars, command and control systems. These systems deployed and integrated over a region would provide reasonable security with a helicopter-borne response backed up by fast patrol boats, resulting in not only security but also reduced shipping insurance cost. Since this would be a niche market Pakistan should be able to command good profits manufacturing costs/productivity would not be a dominant factor. The technology and capability would leverage already what is present in the defense sector but also the advances would be feedback into the defense establishment further augmenting Pakistan’s defense. For example a Helios type unmanned aerial vehicle with ability to fly up to altitudes of 60,000 feet on solar/hybrid energy source with surveillance and communication equipment would not only provide a maritime security component but also Pakistan’s defense.
Germany has been the best and world class producers in diesel engines. The last ten years diesel engine technology has seen quantum leaps in fuel efficiency and emissions reduction with increases of power/performance. Pakistan’s need for diesel engines in the defense sector, agricultural implements, distributed power generation and to develop hybrid-diesel technology a joint ventures with appropriate German entities would be fruitful. Local production of diesel engines with electronic injection should be a high priority targeting both low and high power units.
The Scandinavian countries of Norway and Sweden have achieved a special status in the technology sector. For over a decade the Governments in these countries have provided research and development credits to corporate entities resulting in massive investment in research and development for over a decade. This has resulted in Scandinavian corporations enjoying the benefits and stature of technology leaders in the mobile communications and information technology fields. A point to note is Japan still enjoys the most power and space efficient electronics capability leadership in this world. Pakistan’s value addition would be to explore areas to merge Scandinavian and Japanese strengths for a niche market.
Edited by sfhussain, 22 September 2004 - 01:03 AM.