By Irfan Ahmed ISLAMABAD, Feb 01 (INP-WealthPK): The CPEC digital connectivity is acclaimed as a “recreation-changer” in Pakistan for its capability to redesign the economic system of Pakistan. The CPEC will contribute not only to Pakistan’s traditional economic system, but also substantially facilitate and enhance its digital economic system through various digital connectivity tasks in its domain. The 820-kilometer cross-border optical fiber cable – costing $44 million – extends from northwest China’s Xinjiang and enters Pakistan through the Khunjerab border after which it travels through Gilgit-Baltistan (GB) onwards to Islamabad and Rawalpindi where it connects with the existing optical connectivity network of Pakistan. The cable is also connected with the first ever local Internet Exchange Point (IXP) in Islamabad to exchange and control internet visitors. The internet service providers (ISPs) can connect at a single point, which will serve as a secure interconnection point to exchange the local information within the country by avoiding international network hyperlinks. The cable will decrease the cost of internet with improved performance besides promoting and facilitating regional economic cooperation and enabling various ICT integration services between both the countries. The cable will facilitate regional trade, e-commerce, e-governance, and will play a role in the development of industrials roads, railways, and ports. Source: ResearchGate The cable has vast benefits for Gilgit-Baltistan, as lack of digital infrastructure in GB is one of the main hurdles to an efficient cross-border trade between China and Pakistan across the Khunjerab border. The inception of the new fiber cable allowed for introduction of online Web Based One Custom System (WEBOC) at the dry port in GB which is the first customs dry port through which all cargo coming from the Khunjerab border must get cleared by the Pakistan Customs before entering the country. Previously, Pakistan had only one landing station for the respective submarine cable located at Karachi to handle the entire internet traffic of the country. Any fault in this landing station would interrupt the internet traffic countrywide. This cable helps to reduce dependence on the submarine cable routes and provides a more secure and reliable international communication network. The digital connectivity will positively contribute to economic development by optimizing existing and future coordination in the supply chain for e-commerce within Pakistan. It will help exchange of information, financial transactions, and physical goods and services. This connectivity will spread not only from many soft projects, but also to hard infrastructure projects such as online trade facilitation, e-commerce, and e-government. It will also play a supporting role in the construction and management of industrial parks, roads, rail, and ports. Such digital initiatives will also increase opportunities for startups and Small and Medium Enterprises (SMEs), especially through the new policy of digitization and e-commerce. According to a report on Pakistan’s e-commerce policy framework released by the Ministry of Commerce in August 2019, there were over 3.2 million SME units in Pakistan, accounting for 98% of all the enterprises. These units employ nearly 78% of non-agriculture labor force in Pakistan, contributing more than 30% to GDP and making approximately 25% of exports. E-commerce serves as an opportunity for Pakistan to learn from and interact with the Chinese technology giants like Tencent and Alibaba to make the most of its e-commerce potential. According to a report released by Export.gov managed by the US Department of Commerce, it is estimated that Pakistan has around 32 million Facebook users and one of the highest rates of smartphone penetration in South Asia at nearly 34 percent. There were 61.34 million internet users in Pakistan in January 2021, which increased by 11 million (+21%) between 2020 and 2021. In January 2021, Pakistan had 27% internet penetration rate. This makes it a potential market for e-commerce services and businesses. These digital optic fiber initiatives, thus, have great scope in Pakistan. A big chunk of Pakistan’s economy is informal, as the biggest parts of transactions are still conducted in cash. The bulk of local businesses, particularly the SMEs, are undocumented and hence taxes are avoided. E-commerce and digital initiatives would ensure transparency in transaction along with documentation of the undocumented transfer of money. A McKinsey Global Institute report has estimated that Pakistan can have an annual increase of 2 to 2.5 percentage points in its GDP along with creation of around 2.3 million new jobs between 2016 and 2030 by utilizing such digital services alone. To sum up, optical fiber is a win-win project for both Pakistan and China. Moreover, it will boost Pakistan’s economy by earning income through the digital forums and help reduce communication barriers in backward areas like Gilgit-Baltistan.