Industrial parks and special economic zones are part of the China-Pakistan Economic Corridor memoranda of understanding recently agreed between the leaders of the two countries. The key pre-requisites for the establishment of these zones are resolution of the energy crisis and building of a competitive infrastructure in Pakistan.
Energy and Infrastructure:
The first phase of the economic corridor is focused on $45.6 billion worth of energy and infrastructure projects. China's state-owed banks will finance Chinese companies to fund, build and operate $45.6 billion worth of energy and infrastructure projects in Pakistan over the next six years, according to Reuters. Major Chinese companies investing in Pakistan's energy sector will include China's Three Gorges Corp which built the world's biggest hydro power project, and China Power International Development Ltd.
Under the agreement signed by Chinese and Pakistani leaders at a Beijing summit recently, $15.5 billion worth of coal, wind, solar and hydro energy projects will come online by 2017 and add 10,400 megawatts of energy to the national grid. An additional 6,120 megawatts will be added to the national grid at a cost of $18.2 billion by 2021.
The transport and communication infrastructure—roads, railways, cable, and oil and gas pipelines—will stretch 2,700 kilometers from Gwadar on the Arabian Sea to the Khunjerab Pass at the China-Pakistan border in the Karakorams.
Starting in 2015, the Chinese companies will invest an average of over $7 billion a year until 2021, a figure exceeding the previous record of $5.5 billion foreign direct investment in 2007 in Pakistan.
Special Economic Zones:
Beyond the initial phase, there are plans to establish special economic zones in the Corridor where Chinese companies will locate factories. Extensive manufacturing collaboration between the two neighbors will include a wide range of products from cheap toys and textiles to consumer electronics and supersonic fighter planes.
The basic idea of an industrial corridor is to develop a sound industrial base, served by competitive infrastructure as a prerequisite for attracting investments into export oriented industries and manufacturing. Such industries have helped a succession of countries like Indonesia, Japan, Hong Kong, Malaysia, South Korea, Taiwan, China and now even Vietnam rise from low-cost manufacturing base to more advanced, high-end exports. As a country's labour gets too expensive to be used to produce low-value products, some poorer country takes over and starts the climb to prosperity.
Once completed, the Pak-China industrial corridor with a sound industrial base and competitive infrastructure combined with low labor costs is expected to draw growing FDI from manufacturers in many other countries looking for a low-cost location to build products for exports to rich OECD nations.
While the commitment is there on both sides to make the corridor a reality, there are many challenges that need to be overcome. The key ones are maintaining security and political stability, ensuring transparency, good governance and quality of execution. These challenges are not unsurmountable but overcoming them does require serious effort on the part of both sides but particularly on the Pakistani side. Let's hope Pakistani leaders are up to these challenges.
Pak-China economic corridor is a very ambitious effort by the two countries that will lead to greater investment and rapid industrialization of Pakistan. Successful implementation of it will be a game-changer for the people of Pakistan in terms of new economic opportunities leading to higher incomes and significant improvements in the living standards for ordinary Pakistanis. It will be in the best interest of all of them to set their differences aside and work for its successful implementation.
Here's a National Geographic Documentary on CPEC:
Chinese to Set New FDI Record For Pakistan
US-Pakistan Ties and New Silk Route
IPPs Enjoy Record Profits While Pakistan Suffers
Can Pakistan Say No to US Aid?
Obama's Pakistan Connections
Seeing Bin Laden's Death in Wider Perspective
China's Investment and Trade in South Asia
China Signs Power Plant Deals with Pakistan
Soaring Imports from China Worry India
China's Checkbook Diplomacy
Yuan to Replace Dollar in World Trade?
China Sees Opportunities Where Others See Risk
Chinese Do Good and Do Well in Developing World
Can Chimerica Rescue the World Economy?
Dear Prof sb,
Once Chipak is a great power, sir, I hope you will not forget your poor cousins from across the border.
Very good, thoughtful post.
CPEC is our ultimate future development
16 Industrial zones are under discussion. If we see it through properly, it will transform our economy and put us off from the drug of USAID and IMF!
Majumdar: "Once Chipak is a great power, sir, I hope you will not forget your poor cousins from across the border."
India has similar ambitious projects which, if implemented, will be transformational for the people of India and South Asia.
For example, Delhi-Mumbai Industrial Corridor being done with Japanese help is similar in scope, as is the Mumbai-Bangalore-Chinnai industrial corridor.
Eventually, I hope there will be some kind of South Asian regional economic connectivity and integration as well.
Railway transport is far more efficient than by roads, why the govt is stubborn to build motorways....because They are making money in road projects.
Anon: "Railway transport is far more efficient than by roads, why the govt is stubborn to build motorways....because They are making money in road projects."
There's a major rail link project as part of the CPEC agreement. It'll link Gwadar in Pakistan with Kashgar in China.
Quote: "Pakistan's history shows that we are the graveyard of such MOUs"
ADB provides loan to Pakistan to improve power transmission
ISLAMABAD, Dec. 12 (Xinhua) -- The Asian Development Bank (ADB) and Pakistan signed a 248-million-dollar loan agreement Friday to upgrade the country's power transmission operation and management in a bid to boost energy security, officials said.
The loan, which is the fourth under ADB's multitranche financing facility for the Power Transmission Enhancement Investment Program, will fund 10 subprojects, the ADB said.
They include providing upgrading systems to evacuate power generated from new thermal, wind and hydro power plants and to reduce power losses, and measures to strengthen network safety and security requirements.
This is the final tranche of the 800-million-dollar financing facility which was originally approved in December 2006. The state- owned National Transmission and Dispatch Company will continue as the executing and implementing agency for the program.
The infrastructure to be built or upgraded includes 281 kilometers of 500-kilovolt (kV) transmission lines from the Muzaffargarh grid station in eastern Punjab province, four new 220- kV grid stations, and an extension of 500-kV grid stations at Jamshoro in southern Sindh province and Gujranwala in Punjab.
Mohammad Saleem Sethi, secretary of economic affairs division for the Government of Pakistan and Werner E. Liepach, ADB's country director for Pakistan signed the loan agreement.
"Expanding and upgrading the transmission backbone will provide reliable and high-quality energy supplies to meet increasing demand from industrial, commercial, agricultural, and domestic customers," said Liepach. "It will support the government's strategy to provide people with better access to affordable electricity."
MOSCOW, December 10. /TASS/. Russian Technologies State Corporation’s representative Andrey Korobov and Pakistan’s Prime Minister Mian Muhammad Nawaz Sharif had a meeting on Tuesday, Pakistan’s information department reported.
At the meeting, which took place in London, Pakistan’s prime minister said his government initiated energy projects to overcome the energy crisis.
The information department does not publish details about projects, but a source close to the Russian corporation told TASS the Russian and Pakistani sides already had several meetings, including in London and in Moscow. The Russian-Pakistani intergovernmental commission in early December agreed on implementation of infrastructure projects in Pakistan’s oil and gas sector.
The source said the Russian corporation had signed a preliminary agreement with Pakistan’s state-run Inter State Gas Systems on implementation of several projects in the oil and gas sector.
“Next year already, the Russian company will begin projects on construction of oil and gas infrastructures, which are strategic for Pakistan,” the source added.
ISLAMABAD: Chinese Ambassador Sun Weidong Wednesday said trade volume between Pakistan and China was registered at $ 12.8 billion during the last 10 months, showing 10 percent increase than the corresponding period of last year.
Addressing students and faculty members during his visit to the National University of Science and Technology (NUST), he said that Pak-China relations were an example for the other countries. “Our friendship is stronger than iron friendship and it’s based on mutual respect and trust.”
The ambassador said that Chinese companies were only investing in Pakistan’s energy sector and not considered that as a loan. Currently China was investing in hydropower, coal power, and wind power projects to overcome the energy problem.
On Pak-China people-to-people relations, he cited one incident, which happened in 2008 Beijing Olympic that Pakistan team was the only team which got a standing ovation by Chinese people and considered them there only true friends.
He said China was currently become the largest on-line retail market as E-commerce activity exceeded to $ 1.6 Billion. “In the recent years China promotes innovation in the products and emphasize on its quality,” he added.
He said China was still the largest developing country as its two million people were living below poverty line.
Referreing to the Peshawar school tragedy, the ambassador said China was deeply shocked and saddened on it and continued to render firm support to the government and people of Pakistan in fight against terrorism and unremitting efforts in maintaining national stability and people safety.
The ambassador praised NUST staff for making the university as one of the best in Pakistan and in Asia also.
Earlier, the ambassador held a meeting with Rector NUST Engineer Muhammad Asghar. He was given a briefing on NUST and its achievements in the higher education sector.
Pakistan and Russia signed a most sought-after energy deal of $1.7 billion for laying a liquefied natural gas (LNG) pipeline from Karachi to Lahore. The supply of LNG is expected before March next year.
It is for the first time Islamabad and Moscow have signed an energy pact decades after their defence deal.
The energy agreement was signed during the visit of the Russian defence minister. Moreover, Islamabad and Moscow also signed a defence and military cooperation deal, a move seen by economic experts as ushering in a gradual improvement in ties between the two countries.
Before Gen Ziaul Haq’s military regime, Russia had helped Pakistan set up the Karachi Steel Mills and also supported the Oil and Gas Development Company Limited, which is still using old Russian machinery in exploring oil and gas.
Pakistan is currently working on two LNG pipelines as an alternative to the apparently doomed Iran-Pakistan (IP) gas pipeline project, which included LNG Gwadar pipeline and south pipeline from Karachi to Lahore.
The government has signed a deal with China to award $3 billion Gwader LNG pipeline and terminal project.
Earlier, Pakistan had offered China and Russia to lay IP gas pipeline but both the countries had backed out due to sanctions imposed against Iran.
“However, the government has offered Moscow to sign a deal on government to government basis of $1.7 billion for laying LNG pipeline from Karachi to Lahore during the recent meeting of Pak-Russia Joint Ministerial Commission following a defence deal between the two countries,” sources said.
There was a good development between Islamabad and Moscow in the JC meeting to enhance bilateral energy cooperation, the sources maintained.
Officials pointed out that the pipeline would be used to transport imported LNG from Karachi to Punjab, adding that LNG terminal was in progress and first supply of LNG was expected before March next year.
At present, existing pipeline network has capacity of transporting 320 million cubic feet of gas per day (mmcfd) LNG and therefore the government was going to set up additional LNG pipeline.
The regulator Oil and Gas Regulatory Authority (Ogra) has already allowed gas utilities Sui Northern Gas Pipeline Limited (SNGPL) and Sui Southern Gas Company (SSGC) to generate funds from gas consumers to set up LNG pipeline.
SNGPL has planned to invest $750 million and SSGC $300 million to set up LNG pipeline. This pipeline was also likely to link with Gwadar LNG pipeline in future to pump gas from Iran and also LNG supply through a terminal to be set up at Gwadar.
Officials said that Pakistan had almost done a deal with China to lay Gwadar LNG pipeline which would be connected to Iran and south LNG pipeline from Karachi to Lahore had been offered to Russia.
The government of Pakistan was keen to award contract of south LNG pipeline to Russia on government to government basis which would create competition with China.
“The presence of two countries [Russia and China] in energy sector would open new avenues for attracting more investment,” sources maintained.
Minister for Planning Development and Reforms Ahsan Iqbal Friday ruled out any plan to change the design of Pakistan-China Economic Corridor – a project symbolising new vision of Pak-China economic partnership.
“The Pak-China economic corridor is not a game changer but a fate changer for Pakistan and for the prosperity of three billion people of the region,” Ahsan Iqbal said addressing a press conference on Friday.
“Pakistan-China economic corridor is imperative for regional trade integration and to enhance economic activities in the country,” he remarked. Ahsan resolved that the mega project was aimed at uniting all federating units including the remote areas of Balochistan, Khyber Pakhtunkhwa, Punjab, Sindh, Azad Jammu Kashmir (AJK) and Gilgit Baltistan Region.
He added that a transit trade between Pakistan and China would be started from Gwadar, adding that backward areas of Balochistan would especially benefit from the economic corridor project.
The minister said that energy and infrastructure was more important for economic development of any country, and: “our government was working on strategic road map and formulated the vision 2025 to enhance infrastructure and energy projects with the cooperation of friendly China.”
The economic corridor and connected energy projects with a total investment of $45 billion during the next five years was a glaring example of the close friendship between the Pakistan and China.
He added that Pak-China energy corridor also included the project of generating 16,000 MW electricity to benefit the industrial zones and domestic consumers in the country.
The economic corridor would give Pakistan a pivot in the region boosting trade and commerce links with the regional economies, said Ahsan Iqbal. The 2,100-kilometer corridor would include special economic zones, a railways system and a model city, airport as well as a free port at Gwadar, he said.
The government, he said, was planning to establish a state-of-the-art industrial zone in Gwadar which would be a core feature of Pakistan-China trade corridor. The economic corridor considered the multiple route for the connectivity of urban and remote rural population of the country to provide equal development opportunities to the people.
The corridor, he said, was a landmark project which would connect Pakistan’s deep sea Gwadar port with China’s Xinjiang region bordering Gilgit Baltistan, an area full of natural resources.
Both Pakistan and China have launched a number of mega projects under the umbrella of economic corridor in several fields like energy, infrastructure and connectivity which would revitalise Pakistan’s economy.
To provide greater connectivity to Gwadar Port, he said, “Various initiatives have been taken as Gwadar can act as a hub for trade between Pakistan, China, Central Asia, Gulf Region and Afghanistan”, he added.
He said the Gwadar port had the potential to become the most convenient, economic and popular access route for Central Asian commerce and as an energy corridor. Ahsan Iqbal said Pakistan had important geo-economic and geo-strategic position to connect the whole region and convert it as trade hub for the entire region.
He regretted that again some quarters propagated against the Pak-China economic corridor that too when the Chinese president was expected to visit Pakistan.
He added that earlier the Chinese president’s visit was cancelled because of different rumours spread during the PTI-PAT sit-in at D-Chowk.
Ahsan Iqbal said the government had taken necessary steps to enhance economic and trade ties with all regional and other countries including the United States, China and Afghanistan in order to maintain peace and prosperity in the country and the region.
All political parties in the Khyber Pakhtunkhwa Assembly vehemently opposed any changes to the route of the Pakistan-China Economic Corridor and threatened resistance if the federal government chose the eastern route instead of the western one.
The Awami National Party (ANP) warned any change in the route could jeopardise the integrity of Pakistan for which the present rulers would be held responsible.A joint resolution passed unanimously by the assembly called upon the federal government to initiate work on the western route of the corridor without making any changes to it. “The economic corridor route is planned to connect Gwadar with China’s Kashgar through Karakorum Highway, Abbottabad, Dera Ismail Khan, Mianwali and Zhob,” the resolution read out by the parliamentary leaders said. “This project will have positive effects on the economy of KP, Fata and underdeveloped areas of Balochistan and Punjab,” it said. Aligning the economic corridor, it noted, through another route via Punjab would be great injustice with the people of the less developed KP, Fata and Balochistan.
“The Pakistan-China Economic Corridor has immense significance for the economic progress of the country, particularly the Pakhtun belt,” said ANP’s Sardar Hussain Babak who delivered an impassioned speech to warn the Pakistan Muslim League-N-led federal government against what he described continued discrimination against the Pakhtuns.“If the federal government did not change its mind about changing the route of the economic corridor, we will resist it tooth and nail,” he threatened.
“If the route is changed, we are all set to go for a protest campaign,” warned Qaumi Watan Party’s Sikandar Sherpao. “We are ready to go to any extent on this issue,” he warned. He said the air, land and rail routes were already concentrated in Punjab and changes in the route of the economic corridor would increase the sense of deprivation and alienation among the Pakhtuns.
He said the economic corridor was a $45 billion Pakistan-China bilateral agreement that included the construction of highways, railroads, and laying of gas and oil pipelines. He said the corridor would create hundreds of thousands of jobs and would earn Pakistan an annual $100 million. He argued that the western route was the shortest and feasible and hoped it would boost economic activity in KP. “It will help us in properly tapping the oil and gas reservoirs in our southern districts,” he said.
The joint resolution also noted the importance of the route for the region’s development. “This project is important for the economic development of this region which has remained underdeveloped due to terrorism,” the resolution said.
Sardar Hussain Babak said the western route was 653 kilometres shorter than the eastern route. He alleged that Prime Minister Nawaz Sharif was furthering the interests of Punjab and was interested in the development of his native province only. “If the prime minister considers he only represents Punjab and that he has nothing to do with the rest of the country, he should come up with a clear statement,” Babak said.
Imran Khan’s Pakistan Tehreek-e-Insaf, which is ruling KP, did not take up the issue of change in the route of the economic corridor. However, it supported the stance of the opposition parties regarding the change of the route. “We agree with whatever Sardar Babak said,” announced the Minister for Public Health Engineering Shah Farman. “The government and the opposition are in agreement on this issue.”
China and Pakistan make an oddball but enduring couple
We tend not to see things through Beijing’s eyes. If we are to make sense of shifting realities, we will have to try. From Beijing, the world can seem a hostile place. The US, with its unshakeable faith in liberal democracy, may not be actively seeking regime change in China but it would surely welcome the collapse of the Communist party.
In conjunction with other countries, including India, Australia and Japan, Washington is trying to contain China’s regional military ambitions. Neighbouring countries like the Philippines and Vietnam, which until recently had been reassured by Beijing’s “smile diplomacy”, have grown wary. Even North Korea, almost wholly dependent on Chinese largesse, has grown defiant.
Pakistan looks like Beijing’s one true friend. One of the first countries to recognise the People’s Republic in the early 1950s, Islamabad was a bridge between China and the US. When Henry Kissinger, who later became US secretary of state, made his secret visit to China in 1971 to prepare for normalisation of US-China relations, he sneaked in from Pakistan. And for Beijing, Pakistan has been a way to keep India off balance.
In return, Beijing has kept Pakistan’s military equipped when supplies dried up from elsewhere. Beijing also provided information and enriched uranium for Pakistan’s nuclear bomb. When a US stealth helicopter crashed during the 2011 operation to kill Osama bin Laden, the Pakistanis showed the wreckage first to the Chinese. China built Pakistan a deepwater port at Gwadar on the Indian Ocean.
Andrew Small, author of a book on the relationship, says Beijing has earned real leverage. In 2007, under Chinese pressure, Islamabad raided the Lal Masjid “Red Mosque” after militants kidnapped several Chinese citizens. Chinese pressure has been one factor behind Pakistan’s offensive against militant groups in North Waziristan. For years, the US pushed for the same thing without success. The China-Pakistan axis is worth watching if only because it shows the limits of Beijing’s non-interventionist policy. As it gets sucked into the global whirlpool, it faces the risk of blowback. China now has to deal with attacks by members of the Uighur, a Muslim minority ethnic group. Some may be ideologically inspired — if not planned — in Pakistan’s lawless tribal belt. Like the US, Beijing worries Pakistan may not always crack down as hard on terrorists as it pretends.
Despite all this, China has stayed the course while Washington has blown hot and cold. That raises the intriguing notion of whether the US and China could work more closely in Pakistan. While there is much that divides their strategic interests, a surprising amount unites them. Beijing and Washington want a stable, viable Pakistan, not a viper’s nest of terrorist export. Both want to ensure the Pakistani military keeps a firm hold on nuclear weapons. Both want Pakistan to rein in support for the Afghan Taliban in the wake of US troop withdrawal from Afghanistan.
Some detect signs that Beijing has become more open to the idea. Wang Jisi, a Chinese foreign policy expert, has said that China’s “western periphery” offers a rare opportunity. In east Asia, the US pivot is seen as containment and the two are locked in what he says is a zero-sum game. In Pakistan and Afghanistan, however, Beijing and Washington have “significant scope for co-operation”. It is in neither’s interests for Pakistan to fail. If they could work together in that cause, it would be the oddest thing of all.
The National Highway Authority (NHA) on Friday told the Senate Standing Committee on Foreign Affairs that for the early operationalisation of Gwadar Port, the existing route of China-Pakistan Economic Corridor (CPEC) project is being upgraded and it will not be changed. Briefing the committee, Chairman NHA Shahid Ashraf Tarar said that the work has been started on the existing infrastructure for the CPEC project, adding that the plan consists of both long-term and short-term projects.
He told the committee that the decision to use the existing infrastructure has been taken following consultation with the Chinese authorities and the original route was not possible due to lack of funds. Senator Haji Adeel, who chaired the meeting, expressed resentment and stated that the project should be completed according to the original plan so as to create opportunities for the less developed parts of the country.
He also shared a map of the route of the project, saying that the original route has been changed due to which less developed areas could be deprived. Later, talking to media persons, Haji Adeel reiterated that work should be started on the original plan of the CPEC project to prevent deprivation of the small provinces and the less developed areas.
In its previous meeting, the NHA chairman told the committee the original route needs $12 billion, which is not possible due to the non-availability of the required funds. He said that existing infrastructure will be upgraded, as the government plans to operationalize Gwadar Port in May this year. He said that at this stage the original plan of the CPEC from Khunjerab to Gwadar via Mianwali, D I Khan, D G Khan, Khuzdar and Turbat is not possible and Chinese authorities have also asked Pakistan to use the existing network of the motorways.
To finance infrastructure projects connecting South Asia, Southeast Asia, Central Asia and Europe along an integrated land corridor
China has taken a firm step to implement its vision of the Silk Road Economic Belt — an initiative to integrate the economies of Asia and Europe along the Eurasian corridor — by putting into operation its $40 billion infrastructure fund for this purpose.
The fund, flagged in November last by Chinese President Xi Jinping, has started functioning on the lines of Private Equity (PE) venture. With China as the fulcrum, it is meant to finance development of roads, rail tracks, fibre optic highways, and much more, that would connect South Asia, Southeast Asia, Central Asia and Europe along an integrated land corridor.
Funds can also be allocated for the Maritime Silk Road (MSR), which envisions development of ports and facilities, mainly in the Indian Ocean. These ports will be connected to the hinterland by a string of land arteries, which will eventually hook up with the main Silk Road Economic Belt at specific junctions.
Xinhua quoted President Xi as saying during the November meeting with officials from Bangladesh, Cambodia, Laos, Mongolia, Myanmar, Pakistan and Tajikistan that the purpose of the fund is to “break the connectivity bottleneck” in Asia.
The Chinese President had offered investors from Asia and beyond to join the Silk Road fund for the development of specific projects.
The $40 billion fund was in addition to the decision to establish a $50 billion Asian Infrastructure Investment Bank, which is also meant to help finance construction in the region.
On Monday, the semi-official China Business News quoted Zhou Xiaochuan, governor of the People’s Bank of China (PBOC), as saying the $40 billion fund “has already started operations, with registration on December 29 and the first board meeting on January 6”.
China has poured part of its foreign exchange reserves in the fund, which include investors such as the China Investment Corp, the country's sovereign fund, and China Exim-Bank.
Analysts point out that as its economy slows down from its earlier blistering pace, China has developed large overcapacity in construction material, including cement and steel. China’s “One Road, One Belt” strategy, aimed at establishing new “growth engines” along the Eurasian corridor, could well absorb some of this surplus.
In an editorial in China Daily, Justin Yifu Lin, former chief economist of the World Bank, wrote: “The strategy is good for the stabilisation and development of the world economy and China, as it has a large overcapacity in construction materials.”
APC rejects changes in Pak-China Economic Corridor (PCEC) route -
The All Parties Conference (APC) here on Tuesday rejected the proposed changes in the Pakistan-China economic corridor route from Khyber Pakhtunkhwa to Punjab and asked the Pakistan Muslim League-Nawaz (PML-N) led-federal government to rollback its decision in this regard. The APC was held under Awami National Party (ANP) in Islamabad. Leader of the opposition in the national assembly, Syed Khursheed Ahmed Shah Asfandyar Wali Khan, vice chairman Pakistan Tehreek-e-Insaf (PTI) Shah Mehmood Qureshi, Mehmood Khan Achakzai, Aftab Ahmed Khan Sherpao and other leaders participated in the conference. ANP chief Asfandyar Wali Khan has said that changes in the trade corridor will increase sense of deprivation among the people in Khyber Pakhtunkhwa, FATA and Balochistan. He said that it is not only trade route but many other development projects are also related with this. The ANP chief said that the corridor can play major role in curbing the menace of terrorism. He said that if the government is serious to strengthen Pakistan, they needed to strengthen provinces. He asked the government not to reverse the mistakes committed in the past. Asfandyar Wali said that following the terrorists brutal attack on Army Public School (APS) in Peshawar the whole nation united. He said that all the political parties supported Prime Minister Nawaz Sharif in war against terrorism. It is mentioning here that the proposed change in the route of Pakistan-China Economic Corridor drew stiff resistance from political parties despite its immense economic potential The 45 billion US dollars Pakistan-China Economic Corridor (PCEC) is believed to be the game changer for the region. It will connect Gwadar with Kashgar town in the autonomous Xinxiang region in China through highways, railroads and pipelines of gas and oil, boosting the economy in all the towns that would become part of this mega economic project. The PCEC is likely to serve as gateway for trade between China and the Middle East and Africa. The project is to cut a 12,000-kilometre route between Middle East and Chinese ports. The two countries, Pakistan and China, have already signed agreements for constructing an international airport at Gwadar, upgrading a section of 1,300-kilometre Karakorum Highway and laying a fibre-optic cable from the Chinese border to Rawalpindi. In November last year, Chinese government announced financing companies to build energy and infrastructure projects worth $45.6 billion under the PCEC. The project has hit controversy after major political parties in Khyber Pakhtunkhwa and Balochistan launched protests against the change in the original route, which is believed to deprive a major portion of Khyber Pakhtunkhwa, Balochistan and Fata of an opportunity of development, business and jobs. Major political parties in Khyber Pakhtunkhwa and Balochistan are still opposed to any change in the route of the Pakistan-China Economic Corridor. The opposition parties have expressed anger over change in the route in the Upper House by staging walkouts twice in a single session. The Khyber Pakhtunkhwa Assembly unanimously rejected any change in the route by the federal government. The Awami National Party has also written a letter to the Chinese envoy to Pakistan, seeking a meeting to discuss how the change in the route is to affect the two already backward provinces and Fata. -
See more at: http://www.khybernews.tv/newsDetails.php?cat=2&key=NzYzNDQ=#sthash.EzN4ii3l.dpuf
The gesture of a few senators follows China and Pakistan’s decision to re-route the Corridor mostly through Punjab – Nawaz Sharif’s home province – and thus avoiding some of the country’s most restive areas in both Khyber-Pakhtunkhwa and Balochistan – where the Gwadar port is.
The decision to re-route the Corridor signals that security is the main obstacle to the realization of the project. Chinese ambassadors in Pakistan have repeatedly stressed the need for Pakistan to guarantee the safety of Chinese workers in the country, while the difficulties of conducting business in Pakistan has brought to the cancellation of several contracts, and to the delayed completion of many other projects. Perhaps the most notorious incident involving Chinese citizens in Pakistan is the 2007 kidnapping which led to the Lal Masjid (the Red Mosque) conflict. A year before, in 2006, three Chinese engineers were killed by in an attack claimed by the Baluchistan Liberation Army in Hub, a town west of Karachi. Since then regular incidents have threatened the good relations between the two countries, and led to numerous apologies and promises by the Pakistani authorities to their Chinese counterparts. Many have started to question the feasibility of the China-Pakistan Economic Corridor as well, often highlighting the troubles in managing the already built Gwadar port.
Political instability in Pakistan is another major concern for the realization of such mega-projects. In September Chinese President Xi Jinping’s visit to Pakistan was cancelled in light of the ongoing protests in Islamabad led by Imran Khan’s Tehrik-e-Insaf (PTI) and Pakistan Awami Tehrik (PAT). Officially postponed, the visit has not been rescheduled yet, while recently Pakistan Minister for Railways suggested that Prime Minister Nawaz Sharif could visit China in November to urge investments in infrastructure development programmes, thus highlighting once again how unbalanced this relation is.
China is also concerned with potential Islamist spill-over in its Muslim province of Xinjiang. Although, since the early 2000s, Beijing continuously evoked the Pakistan-based East Turkestan Islamic Movement (ETIM) – which was listed as a terrorist organization by the United Nations in 2002 – as responsible for most incidents in Xinjiang, it remains to a certain extent still unclear whether such organization effectively exists. In fact, despite a Uyghur population of about 3,000, Pakistan seems largely unmoved by the East Turkestan cause, and the number and capability of Uyghur militants in Pakistan remain very limited. Although, at least in public, China has refrained from openly blaming Pakistan for Xinjiang’s escalating violence, it seems inevitable that those events have an impact of the two countries’ relations, and thus on China’s willingness to invest in Pakistan.
The recent protests, moreover, come from senators from the provinces of Khyber-Pakhtunkhwa and Balochistan. If the situation in Khyber-Pakhtunkhwa is relatively well known, China has several reasons to worry about Balochi groups, thus far some of the keenest opponents to Chinese investments – which in Balochistan are concentrated particularly in mineral resources. In most cases those groups do not seem to oppose Chinese companies per se, but rather intend to use them as a threat to force Pakistan’s central government to deal with their requests. Many Baloch nationalists are also afraid that projects such as the Gwadar port might represent an effort to drown out their call for independence. For Beijing, on the other hand, the major concerns lie with Pakistan’s apparent incapacity to limit the capacity of Baloch insurgents to attack its interests in the region, thus jeopardizing future projects and investments.
- See more at: http://www.chinausfocus.com/finance-economy/more-troubles-along-the-china-pakistan-economic-corridor/#sthash.0RhMrt5z.dpuf
From IHS Jane's 360:
Chinese foreign minister Wang Yi reiterated calls for the implementation of the China-Pakistan Economic Corridor (CPEC) to be expedited during his two-day visit to Pakistan on 12 February.
As part of China's wider plans to increase connectivity in Asia, the CPEC is planned to connect Gwadar port in Pakistan's Balochistan province to Kashgar in China's western Xinjiang province through road infrastructure, railways, and oil and gas pipelines. In November 2014, the Chinese government committed to investing USD45.6 billion until 2020 for the various projects included under the CPEC, of which USD15 billion will be spent on renewable energy projects to alleviate Pakistan's energy shortages.
However, the CPEC's route has been the subject of intense domestic debate in Pakistan over the past month, resulting in two walk-outs from parliament. The Khyber Pakhtunkhwa and Balochistan provincial governments have accused the Pakistan Muslim League - Nawaz (PML-N) federal government, which draws its support primarily from Punjab, of altering the CPEC's road transportation route away from the two comparatively underdeveloped provinces. The PML-N government on the other hand argues that it plans to use the existing road network in Punjab and Sindh on an interim basis while the route through Khyber Pakhtunkhwa and Balochistan is developed, which could take as many four years according to current government estimates.
While the intensity of debate indicates the CPEC's likely initiation, the possibility of losing the broader development that it represents underpins the risk of protests and riots in Khyber Pakhtunkhwa and Balochistan in at least the three-month outlook. Already in Quetta, Balochistan's provincial capital, traders went on general strike backed by local political parties on 13 February. Protests are likely to remain relatively peaceful and cause less than 24 hours of disruption, unless a major political party intensifies its opposition. The most likely is Imran Khan's Pakistan Tehreek-e-Insaf (PTI), which heads the Khyber Pakhtunkhwa government. The party has already launched two major protest movements, including a four-month anti-government sit-in that ended in December 2014 as well as a cargo blockade in Khyber Pakhtunkhwa from November 2013 to February 2014.
Express Tribune Op Ed by Pervez Tahir:
Traditionally, the Chinese side stays clear of Pakistan’s internal political controversies. Its interest in the project is, however, obvious. It extends its economic outreach in general and opens up laggard western regions to the world. The equity argument to bring these regions on a par with others ends at Khunjerab. Beyond Khunjerab, hard economics takes over. As the principal investor, the Chinese side would look for the quickest and the most cost-effective route to Gwadar. It is also necessary to make this sleepy port functional. Security costs may also have been factored in. As a recipient with minimal choices, this is what the government seems to be doing by filling the gaps in the Havelian-Islamabad-Lahore-Multan-Sukkur-Ratodero-Khuzdar-Gwadar route. Four ‘early harvest’ projects — land acquisition and shifting of utilities for the Karachi-Lahore motorway, construction of the Lahore-Abdul Hakim-Khanewal section, construction of the Multan-Sukkur section and construction of the Raikot-Havelian-Islamabad section — were included in the Public Sector Development Programme of 2014-15. The last two are largely financed by Chinese credit. Earlier this month, a delegation visited China to fast-track these projects.
No one knows which was the original route. The opposition claims that it passed through southern K-P, Zhob and Quetta. This is the shortest but the costliest route in terms of time and money. What was the opposition doing when the projects related to the eastern route were made part of the development budget? Waking up to the change now rather than debating it in the budget session reflects politicians proverbial lack of interest in economic matters. This late realisation and insistence on the most difficult route might endanger the entire Pakistan-China Economic Corridor project, which includes a focus on energy and economic zones and not just transit trade. In terms of cost, economic advantage and future opportunities, the middle ground is occupied by the route connecting Abbottabad, Mianwali, D I Khan, D G Khan, Ratodero, Khuzdar, Turbat and Gwadar. The route fulfils the original dream of the Indus Highway as an alternative artery. It connects the backward districts of all the provinces and is linked to Fata, Quetta and Zhob. Proximity to Central Asia, Afghanistan and Iran brings the concept of the economic corridor into full bloom. The time to exploit the full potential of Gwadar will also be reduced.
When all but one opposition party meets, as is being reported in the press, the one deemed to promote the cause of just one province, it is hoped that the development of Pakistan will be the main consideration. The current focus of the government on completing the eastern route may make immediate economic sense, but its long-term potential is limited. The Chinese fully understand that the opening up of new areas pushes the frontiers of economic opportunity further, while diminishing returns set in quickly from investment in relatively developed areas. So the equity argument does not end at the Chinese border. It extends to Pakistan also but without sacrificing the economic advantage. There could be no better Marshall plan than this connectivity.
The federal cabinet of Pakistan, during a meeting Monday, approved the Pakistan-China economic corridor, a media report said. Approval was also given along for starting negotiations with Beijing for importing 1,000 megawatts of electricity from China by laying a new transmission line, Dawn online reported. The Pakistan-China Economic Corridor (PCEC) is the country's biggest road project launched by the government. Work on one of the sections of the PCEC was initiated in December 2014, under which a motorway from Havelian to Thakot as phase one of the Islamabad-Raikot section of the corridor would be constructed. The Havalian to Thakot section of the corridor is being financed by China while other phases will be carried out on the basis of build, operate and Transfer (BOT).
Even though the project had not yet got off the ground, the China-Pakistan Economic Corridor, Moody’s Investor Services – one of the three largest credit rating agencies in the world – has described the project as a ‘credit positive’ for the country, implying that the economic growth generated will eventually help the government’s finances.
“The government’s support for the implementation of the so-called China-Pakistan Economic Corridor (CPEC) is credit positive for Pakistan because it will spur investment activity, boost bilateral trade flows and help ease the country’s growing energy shortages,” Moody’s said in a note issued to clients on Monday, according to a report in the International Business Times.
The $46-billion project would create a 2,000-kilometre road and rail link from China’s western hinterlands to the Gwadar Port, creating a network of infrastructure in Khyber-Pakhtunkhwa and Balochistan to match the one originally built by the British (and expanded by successive Pakistani governments) in Punjab and Sindh.
Moody’s has the lowest rating for Pakistan, at Caa1, just two grades above default. The rating implies that Pakistan is dependent on favourable economic conditions to be able to pay its obligations. Standard & Poor’s – a rival credit rating agency – has a rating of B, two notches above the Moody’s rating. Fitch, the third credit rating agency, does not have a current credit rating for Pakistan. Both Standard & Poor’s and Moody’s have a stable outlook for Pakistan.
The influx of investment into Pakistan is what prompted Moody’s to view the economic corridor as a positive from a credit perspective. The credit rating agency uses several macroeconomic indicators to determine its rating for Pakistan’s government, including investment as a percentage of the total size of the economy.
Pakistan’s investment-to-GDP ratio is 14.6%, far lower than the median of 22.9% for countries with a B-rating, said Moody’s.
Another reason Moody’s believes this project will be positive for Pakistan is their belief that Islamabad will be able to get Beijing to finance several energy projects throughout the country that would reduce the cost of power generation, ultimately lowering the need for electricity subsidies – a key burden on the federal budget – and improving economic growth, which would in turn increase tax revenues for the government. Those two effects combined could substantially reduce the budget deficit.
The rating agency acknowledged that much of the project’s key benefits would not materialise until 2017, but stated that it believes at least some of the benefits from the economic corridor would likely begin accruing even before then.
While China is Pakistan’s largest trading partner, foreign investment from China has historically been relatively low. Over the past decade, more than a quarter of the $30 billion in foreign investment into Pakistan has come from the United States, with China’s investment being among the lowest from larger economies. However, over the last year, China was Pakistan’s largest foreign investor.
The project has run into some snags in the Senate, with lawmakers from Khyber-Pakhtunkhwa and Balochistan alleging that the Nawaz administration is redirecting the route of the corridor to pass through Punjab and Sindh rather than their provinces. In addition, Beijing has balked at funding projects that are not directly related to connecting its economically deprived western regions to Gwadar Port.
Chairman China’s Three Gorges (CTG) Corporation Chun Lu has planned to invest $10 billion in Pakistan initially that will ultimately jack up its investment up to a whopping $100 billion on long-term basis with focus on the energy sector.
The Chairman, CTG Board of Directors, Chun Lu, leading a nine-member delegation had a meeting with the Finance Minister, Senator Ishaq Dar, here on Tuesday and disclosed its plan of investment. A four-member IFC team also attended the meeting.
During discussion, Chun Lu said the CTG had plans to invest 10 billion dollars in Pakistan, ultimately taking up the investment to 100 billion dollars in the long run with focus on the energy sector.
He said the CTG had entered into collaboration with the IFC forming CSAIL (China Three Gorges South Asia Investment Limited) and both of them would undertake energy projects in Pakistan. The CTG chairman said they already had undertaken investment in projects which would generate 3,000MW electricity, and had plans for further such ventures in collaboration with the Pakistani side. He also evinced keen interest in investing in the ongoing projects.
Finance Minister Ishaq Dar welcomed the investment plans of CTG and their collaboration with the IFC for projects in Pakistan. He said the government attached due importance to its ties with China and wished this strong relationship could be translated into a robust economic partnership.
He said CTG’s 100 billion dollar investment plan would greatly add to realisation of this objective.Both the sides agreed to form their respective teams to discuss modalities for CTG’s investment ventures in Pakistan. The finance minister nominated senior officials from the Ministry of Finance, Ministry of Water & Power and the FBR for detailed discourse with the CTG team. He said all possible cooperation and facilitation would be offered to the CTG for investment in Pakistan.
Karachi: Prime Minister Nawaz Sharif on Wednesday laid the foundation stone for the Karachi-Lahore Motorway (M9) that would connect this southern port city with the northern parts of the country.
The first phase of the mega project is expected to be completed in two-and-a-half years and cost 36 billion rupees (Dh1.2 billion).
At the brief inaugural ceremony, Sharif said that it was his earnest desire to begin the work on the motorway project.
In the first phase, the Karachi-to-Hyderabad section would be completed within two-and-half years and then work would begin on the Hyderabad-to-Sukkur section of the grand road.
The length of the road will be more than 1,100 kilometres once complete.
The prime minister said that the government was trying to shore up the resources for the next phases of the eight-lane motorway so that faster communication means could help the country enter the next development phase.
He also mentioned the work on the other roads, which were being constructed in the Hazara division of the Khyber Pakhtunkhwa province.
Sharif said that work on Khunjerab-to-Gwadar road was being carried out and it would be part of the Pakistan-China corridor.
He vowed to set up a network of motorways all over the country so that all the provinces could be interconnected, with a faster means of travelling between them.
The construction of M9 has been awarded to the Frontier Works Organisation (FWO) for the next 25 years on built-operate-transfer basis.
According to the contract agreement, the existing four-lane Karachi-Hyderabad Super Highway would be converted into six-lane 9M meeting international standards.
The project is being on public-private partnership basis and this would be the second-largest project in the country to be built on such basis.
FWO would pay 143 billion rupees to the state-run National Highway Authority (NHA) and another share of 109 billion rupees as tax to the government of Pakistan.
Beijing’s focus and commitment to the PCEC is also manifest in the recent visit to Islamabad of a high profile Chinese expert group on long-term planning of the PCEC. Led by Hu Dongsheng, deputy director general of the China Development Bank, the 19-member group held extensive discussions on the project. Both sides emphasised the need to speed up the process of drafting the PCEC long-term plan, which includes not only roads but a lot of social infrastructure in Balochistan and other areas aligned with the corridor. If realised, the PCEC will not only benefit Pakistan in terms of improvement of its economy and security condition, but also contribute to regional peace, stability and prosperity.
The Gwadar-Kashghar route was originally planned to run through Bisima, Khuzdar, Kalat and Quetta onto Zhob, D I Khan, Hassan Abdal and onwards to Kashghar but it has been changed to Bisima, Ratodero and towards Punjab, which means bypassing the Baloch and Pakhtun areas. That is why there were recent protests in the Senate by members from Khyber- Pashtunkhwa (K-P), Fata and Balochistan. According to the new plan, the corridor route turns from Havelian towards the east and links up with the Islamabad-Lahore Motorway, to include Punjab. From here, the corridor is linked to the Lahore-Karachi Motorway and then to Gwadar. Officials at the Planning Commission argue that the completion of infrastructure in K-P and Balochistan will take a few years and thus it was imperative to utilise the existing infrastructure. This was done, insist officials, to accommodate Chinese concerns rooted in the security condition in K-P and Balochistan.
Apparently, the federal government altered the PCEC route and made it longer by 300 kilometres, without taking the Pakhtun and Baloch stakeholders into confidence. This is yet another example of the surreptitious and the high-handed approach towards the smaller provinces. The reaction from within the two provinces was natural and requires attention by the federal government.
As this bickering simmers in Pakistan, the Chinese leadership is worrying about future developments. President Xi is expected to visit Islamabad soon and will hopefully provide a fresh impetus to the PCEC-related projects, which Beijing firmly remains committed to. Chinese officials say the corridor project is not just meant for one region, but for the economic development of the whole of Pakistan. Chinese diplomats in Islamabad are both enthusiastic as well as concerned about the controversy surrounding the corridor. There will be quite a spectacle if protestors from Balochistan and K-P greeted President Xi, said an official. Why can’t Pakistani leaders sit together and flesh out the issues in an amicable and transparent way, wondered another visitor from Beijing. While there may have been complex internal security challenges as well as Chinese concerns that might have prompted changes in the corridor route but why was this done in such a controversial manner? Pakistan needs unity, transparent political conduct and a people-focused commitment like never before.
From India's Economic Times:
Silk Road projects could benefit India: CII official
BEIJING: The Silk Road projects announced by Chinese President Xi Jinping could benefit India's infrastructure development, a Confederation of Indian Industry board member said today.
"I am not aware of how it politically affects India but it makes sense from business and economic sense as it aimed to improve infrastructure and connectivity," said Shekhar Datta, Board member of the governing council of the Confederation of Indian Industry ( CII).
While India has its own ini ..
Read more at:
Year of friendship: ‘#China helping #Pakistan overcome energy shortage’ #loadshedding http://tribune.com.pk/story/861049/year-of-friendship-china-helping-pakistan-overcome-energy-shortage/ …
Speaking about a number of ongoing power projects set up by China in Pakistan, Chinese Ambassador Sun Weidong said that the country was ready to support its neighbour overcome the energy crisis.
He was speaking at a seminar on “21st Century Maritime Silk Road and China-Pakistan Economic Corridor (CPEC),” on the sidelines of the opening session of the Pakistan-China Business Forum, here at the Comsats Institute of Information Technology (CIIT).
The ambassador said that after their completion the energy projects would inject 10,000MW electricity in Pakistan’s power sector.
The envoy said that cooperation between the two countries would continue in other areas such as infrastructure, transport, education and poverty alleviation too.
He said that the friendship between the countries was based on the ideas of peaceful coexistence, mutual understanding and a focus on development.
The ambassador invited Pakistani businessmen to explore opportunities in China.
He termed 2015 as the year of friendship and exchange of delegations between the two countries.
Weidong said that the two countries were committed to pushing bilateral relations to a new level.
Earlier, while addressing the inaugural ceremony, Federal Minister for Science and Technology Tanveer Hussian stressed on devising national strategies for human resource development and promotion of science and technology.
Federation of Pakistan Chamber of Commerce and Industry (FPCCI) President Mian Muhammad Idrees said that the forum provided businessmen from the two countries the opportunity to improve bilateral trade relations.
The Board of Investment (BOI) Secretary, Iftikhar Hussain Babar invited Chinese investors to invest in various sectors including energy and infrastructure in Pakistan. He said that the $45 billion China-Pakistan Economic Corridor (CPEC) was a great gift from China.
CIIT Rector Dr Junaid Zaidi said that the university had introduced an academia-driven model of business cooperation by conducting the forum.
On Sunday, a number of activities including panel discussions, seminars and workshops were held at the venue.
MoUs were signed between business conglomerates from China and CIIT for development of a “Commodity Exhibition and Trade Centre” in Islamabad.
From Wall Street Journal:
China will build a pipeline to bring natural gas from Iran to Pakistan to help address Pakistan’s acute energy shortage, under a deal to be signed during the Chinese president’s visit to Islamabad this month, Pakistani officials said.
The arrival of President Xi Jinping is expected to showcase China’s commitment to infrastructure development in ally Pakistan, at a time when few other countries are willing to make major investments in cash-strapped, terrorism-plagued, Pakistan.
The pipeline would amount to an early benefit for both Pakistan and Iran from the framework agreement reached earlier this month between Tehran and the U.S. and other world powers to prevent Iran from developing nuclear weapons. The U.S. had previously threatened Pakistan with sanctions if it went ahead with the project.
“We’re building it,” Pakistani Petroleum Minister Shahid Khaqan Abbasi told The Wall Street Journal, referring to the pipeline. “The process has started.”
The pipeline will bring much-needed gas to Pakistan, which suffers from a crippling electricity deficit because of a shortage of fuel for its power-generation plants. Pakistan has been negotiating for months behind the scenes for China to build the Pakistani portion of the pipeline, which will cost up to $2 billion.
Tehran says that its 560-mile (900-kilometer) part of the pipeline from an Iranian gas field is complete. Iran has long pressed Pakistan to build its half of the scheme.
Pakistan hasn’t begun construction, however, in light of threatened sanctions from the U.S. for trading with Iran. Islamabad had been trying to work around the sanctions by asking the Chinese to construct the pipeline but not yet connect it to the Iranian portion. The prospect of an Iran nuclear agreement, which would ease the sanctions in stages once the deal is completed, has given Islamabad further impetus to clear the project. Among the first restrictions to be lifted, according to the framework accord, would be prohibitions on Iranian energy exports.
“This [Iran nuclear agreement] will help us in getting a few things which were coming into the way of the Iran-Pakistan gas pipeline to be cleared and we will move forward,” Pakistan’s ambassador to Iran, Noor Muhammad Jadmani, said Sunday in Tehran, according a report on IRNA, the official Iranian news agency.
Pakistan is negotiating with China Petroleum Pipeline Bureau, a subsidiary of Chinese energy giant China National Petroleum Corporation, to build 435 miles (700 kilometers) of pipeline from the western Pakistani port of Gwadar to Nawabshah in the southern province of Sindh, where it will connect to Pakistan’s existing gas-distribution pipeline network.
China Petroleum Pipeline Bureau referred questions to CNPC, which didn’t respond to a request for comment.
The cost would be $1.5 billion to $1.8 billion for the pipeline, or $2 billion if an optional Liquefied Natural Gas terminal at Gwadar is included in the scheme. Under the deal, 85% of the financing will be provided by a Chinese loan, with Pakistan coming up with the rest.
The remaining 50 miles (80 kilometers), from Gwadar to the Iranian border, will be built by Pakistan. The pipeline, which would take two years to build, would eventually supply Pakistan with enough gas to fuel 4,500 megawatts of electricity generation—almost as much as the country’s entire current electricity shortfall.
The pipeline would give Iran a market to its east for its gas. The pipeline scheme, conceived in 1995, originally was supposed to extend to India. Tehran blames U.S. pressure for India dropping out in 2009.
‘If ‘One Belt, One Road’ is like a symphony involving and benefiting every country, then construction of the China-Pakistan Economic Corridor is the sweet melody of the symphony’s first movement.’
—Wang Yi, China’s foreign minister
Chinese President Xi Jinping is set to unveil a $46 billion infrastructure spending plan in Pakistan that is a centerpiece of Beijing’s ambitions to open new trade and transport routes across Asia and challenge the U.S. as the dominant regional power.
The plan, known as the China Pakistan Economic Corridor, draws on a newly expansive Chinese foreign policy and pressing economic and security concerns at home for Mr. Xi, who is expected to arrive in Pakistan on Monday. Many details had yet to be announced publicly.
“This is going to be a game-changer for Pakistan,” said Ahsan Iqbal, Pakistan’s planning minister, who said his country could link China with markets in Central Asia and South Asia.
“If we become the bridge between these three engines of growth, we will be able to carve out a large economic bloc of about 3 billion living in this part of the world…nearly half the planet.”
Beijing’s primary concern is that instability in neighboring Pakistan and Afghanistan is spilling into China’s predominantly Muslim northwest, and could grow worse with the withdrawal of U.S. troops from the region.
China sees a historic opportunity to redraw the geopolitical map by succeeding where the U.S. has largely failed, building critical infrastructure that could kick-start economic growth and open new trade routes between China and Central and South Asia. A cornerstone of the project will be to develop the Pakistani port of Gwadar, a warm-water port run by the Chinese on the doorstep of the Middle East.
If realized, the plan would be China’s biggest splurge on economic development in another country to date. It aims over 15 years to create a 2,000-mile economic corridor between Gwadar and northwest China, with roads, rail links and pipelines crossing Pakistan.
The network ultimately will link to other countries as well, potentially creating a regional trading boom, Pakistani and Chinese officials say.
The Pakistan program has been described by Chinese officials as the “flagship project” of a broader policy, “One Belt, One Road,” which seeks to physically connect China to its markets in Asia, Europe and beyond.
“If ‘One Belt, One Road’ is like a symphony involving and benefiting every country, then construction of the China Pakistan Economic Corridor is the sweet melody of the symphony’s first movement,” Wang Yi, China’s foreign minister said during a visit to Pakistan in February.
Andrew Small, author of “The China-Pakistan Axis: Asia’s New Geopolitics,” said China was reacting to the perceived failure of Western aid to make a significant difference to Pakistan. “The Chinese response is that you haven’t done it on a large enough scale,” Mr. Small said. “They’re saying that it is only by doing it on this kind of big-bang scale that you’re going to have the transformative economic effect that Pakistan needs.”
Gwadar, operated by a state-run Chinese firm, is set to begin commercial operations this year, and one of the deals to be signed by the Chinese president while in Pakistan is a final agreement on building a new international airport there, Pakistani officials said.
Mr. Small said propping up Pakistan economically furthers China’s regional competition with India. China sees Pakistan as a strategic counterweight to India. Conversely, the U.S. is backing India, which President Barack Obama visited in January, as a counterweight to China, despite Washington’s long relationship with Islamabad....
Shifting Allegiances – Rethinking #US-#Pakistan Relations as Pakistan grows closer to #China and #Russia http://on.cfr.org/1CYQRZw via @CFR_org
The once strong U.S.-Pakistan relationship may be set to expire. Since the Afghan-Soviet war (1979-1989), Pakistan has served as a key U.S. ally in the Middle East—providing a base for military operations, participating in the counterterrorism operations in Afghanistan and Pakistan, and mediating relations between the United States and China. This bilateral relationship expanded in 2001 under President Bush, who increased humanitarian and military aid from $187.7 million in 2001 to $2 billion the year after 9/11—totally $20 billion in the subsequent decade. However, recent Pakistani political and military decisions reveal shifting allegiances, calling into question the strength of U.S.-Pakistan relations.
In recent months, Pakistan has embarked on a number of initiatives that support U.S. regional interests. Much of Pakistan’s renewed attention to countering terrorism was spurred by the December 16, 2014, Peshawar school attack—the most violent terrorist attack in Pakistan’s history—in which Taliban militants killed 145 people, including 132 children. Subsequently, in December 2014, the Pakistani government created National Action Plan (NAP) to crack down on terrorism. In January 2015, Pakistan began a process of deepening military ties with Afghanistan to strengthen border security. Also in line with U.S. interests in the region, Pakistan is pursuing friendlier relations with India by resuming dialogues for the first time in almost one year amid tensions on the contested Jammu and Kashmir border. As a result of Pakistan’s counterterrorism efforts, the State Department’s approved Pakistan’s request for nearly $1 billion in military equipment.
In recent months, Pakistan’s allegiances have begun to shift as the country strengthens relations with China and Russia, two countries with which Pakistan’s interests increasingly align. Pakistan’s deepening regional ties have reached an unprecedented level, according to a study by the non-profit group, Pew Charitable Trusts, and pose a direct challenge to U.S. regional influence. Most recently, on April 16, Chinese president Xi Jinping announced plans to embark on a $46 billion infrastructure spending plan in Pakistan known as the China Pakistan Economic Corridor and, in early April, Pakistani president Nawaz Sharif approved an approximately $5 billion deal with China to purchase eight submarines with the potential to attach nuclear warheads. With a security interest in filling the vacuum left by the drawdown of U.S. troops from the region in order to stem the growing threat of terrorist attacks in West China and promises of unprecedented investment to Pakistan, Pakistan may default to a partner with which its interests more directly align—China.
Pakistan’s recent actions reflect an increasingly different set of priorities. While Pakistan’s rivalry with India, quest for regional alliances, and pursuit of a strong military arsenal are not new, the country’s growing alignment of interests and unprecedented collaboration with potential U.S. rivals—China and Russia—threaten the stability of a bilateral relationship founded primarily on Pakistan’s reliance upon the United States. The United States should question whether it is clinging to an outdated perception of U.S.-Pakistani relations.
The regional security in South Asia and the adjacent regions to the west and north are on the cusp of a profound transformation. Broadly, there are three vectors involved here.
One, Iran’s integration with the international community as a ‘normal country’, a process that has already begun; two, the historic entente between Russia and China which has consolidated almost immeasurably in the past one year period since the New Cold War tendencies began appearing; and, three, a largely-unnoticed but extremely significant shift in the foreign-policy priorities of Pakistan, a genuinely ‘pivotal’ state in the politics of South Asia, given its highly strategic geographic location in the South Asian region, from where it impacts regional security in Central Asia and West Asia.
The state visit by the Chinese President Xi Jinping to Pakistan on Monday in many ways brings together the three vectors. The visit is, on the face of it, a bilateral event of historic significance to the long-standing ties between the two relationship, which from all accounts can be expected to add much strategic content to the relationship and elevate it to an altogether qualitatively new level.
However, China is also playing the long game insofar as Beijing is actually beginning the implementation of its “One Belt, One Road” initiative, which is a global project in character and scope and all but prefaces China’s inexorable rise on the world stage as a superpower.
It is extraordinary that China is committing such massive investment in excess 40 billion dollars in a single country, undeterred by the perception in the western financial circles that Pakistan is a “failing state” and a revolving door of international terrorism.
In the eighties or nineties, this would have lent itself to interpretation as “India-centric” and as a diabolical move by the Chinese policymakers to strengthen Pakistan’s capacity to challenge India, a common foe. But that is no more the case today. The impulses driving the Chinese policies toward Pakistan today are to be found elsewhere.
First and foremost, Pakistan’s stability has come to be a matter of serious concern from the perspective of China’s internal security needs, which is attributable not only to the spurt in terrorist activities in Xinjiang by groups that are to be traced to the Af-Pak region, but also out of China’s emergent concerns as a stakeholder in regional stability that is an imperative need to advance its regional and global policies (politico-military, economic and cultural) more optimally.
The dramatic shift in the Chinese thinking apropos of the issues of terrorism in South Asia and Beijing’s unmistakable empathy with India’s concerns as a victim of terrorism testify to this. A leading Indian daily brought this home today reporting from Beijing an extraordinary statement attributed to the head of the Chinese foreign ministry think-tank Institute of South and Southeast Asian and Oceanic Studies, Hu Shisheng that China finds itself “awkward diplomatically” to have taken a “neutral stand” on the terrorist attack on Mumbai in November 2011.
Hu said, “India’s concerns over terrorism will be addressed in a more constructive way. China also suffered due to terrorism.” He said China has suffered from U.S. double standards on terrorism and should not behave in a similar fashion.
Without doubt, Pakistan (along with Central Asia and Iran) becomes a gateway for China to the world market and it is crucial for Beijing that Washington’s ability to block this gateway is “zero”. Pakistan is actually the single most critical gateway for China in the emergent paradigm. Arguably, that alone could explain the extraordinary extent to which China is making the stabilization of Pakistan a real-time dimension to its own national policies of development.
Pakistan first beneficiary of Asia Infrastructure Bank spearheaded by China:
One of the earliest recipients of money from the international bank spearheaded by China appears to be Pakistan. In his weekly roundup of news from the Frontier Markets, the Wall Street Journal’s Dan Keeler writes, “Pakistan received some welcome news this week with the revelation that China plans to invest as much as $46 billion there as a core part of its efforts to open new trade and transport routes across Asia. China’s newly-established Asian Infrastructure Investment Bank and its Silk Road Fund could be used to help finance the spending plans, a senior Chinese official said.”
Additionally, Chinese Premier Xi Jingping said in an article for the Pakistani press that, “This will be my first trip to Pakistan but I feel as if I am going to visit the house of my own brother.”
Both China and Russia have begun an all-out charm offensive to move the Pakistani government in their direction. China certainly sees an opening in that part of Asia with the departure of the US military from Afghanistan; while Russia seizes on a much-needed market by committing $3 billion to build an LNG pipeline from Karachi to Lahore.
The Pakistan economy appears to be the biggest benefactor here, as reflected in the benchmark index of the Karachi Stock Exchange (KSE100), up more than 20% in one year. US investors can gain exposure there only by investing in the iShares MSCI Frontier 100 ETF (
), in which Pakistan has a 9.51% slice.
Read more: http://www.nasdaq.com/article/frontier-markets-pakistan-investments-cm466838#ixzz3Xs9RHQfn
China signed 51 agreements with Pakistan in a ceremony in Islamabad Monday that could ultimately lead to $48 billion in infrastructure projects.
For now, $28 billion in spending is planned. China President Xi Jinping made his first state visit to Pakistan to unveil the development program known as the China-Pakistan Economic Corridor; it will include railway upgrades and power plant construction. China and Pakistan share a “mutual antagonism toward India, but their economic ties had lagged behind,” The Wall Street Journal reports.
Xi and Pakistani Prime Minister Nawaz Sharif highlighted five projects, including a $1.4 billion dam that will deliver 720 megawatts of electricity, and a $1.5 billion solar power park that will add 900 megawatts of power to the grid.----------
Renaissance Capital analysts Daniel Salter, Charles Robertson, Seki Mutukwa and Omair Ansari write that Pakistan is “an undervalued reform story” and add:
“The government is delivering on privatisations with the Habib Bank stake sale, and initial shipments of LNG [liquefied natural gas] have started to arrive (an important first step in rebalancing the country’s energy mix). On the negative side, the government again delayed the anticipated gas tariff hike until July. … If there has been one theme that has worked well in EM of late it is reform. Pakistan ticks many of the boxes here, yet trades on a far lower valuation (8.4x 12-month forward P/E) than other emerging markets and frontier market reform stories such as Vietnam (13.5x), India (16.8x), Philippines (20.0x), Bangladesh (21.4x) or Sri Lanka (13.4x). We believe Pakistan should be of interest not only to frontier funds, but also to mainstream emerging market investors able to look outside of their benchmark index. We like cement, consumer and, to an extent, banks top-down. Our top picks from our bottom-up coverage are: Lucky Cement (LUCK.Pakistan), DG Khan Cement (DGKC.Pakistan) and Packages (PKGS. Pakistan).”
In February and March, the MSCI Pakistan Index fell by over 20% in dollar terms, and the 13% drop in March was the largest in five years, Renaissance Capital reports. But the MSCI Pakistan Index started to rebound this month, up roughly 9%. So far in April, the iShares MSCI Frontier 100 ETF (FM) is up 4%, the WisdomTree India Earnings Fund (EPI) is down 1.5%, and the iShares MSCI India ETF (INDA) has tumbled 2.6%.
During Xi Jinping's visit, a $44 million cross border fibre optic data communication system project, a digital terrestrial multimedia broadcast pilot project at Murree, a $1.4 billion Orange Line Mass Transit project in Lahore are on the cards.
China also wants to develop a commodity exchange facility at Gwadar and is asking Pakistan to provide land for the projects. Another project for a massive investment park in Balochistan is also under consideration.
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the ISPAK chief said Transworld Associates (TWA) and Pakistan Telecommunications Company Limited (PTCL) act as the internet gateway to Pakistan and provide bandwidth to local internet service providers. TWA and PTCL are connected with four undersea fiber optic cables that include I-ME-WE, SEA-ME-WE-3, SEA-ME-WE-4 and TWA-1.
The country’s internet traffic is currently running on SEA-ME-WE-3and TWA-1 and catering to the entire telecommunications traffic, which has caused massive traffic congestion, Siraj said.
The breakdown of SEA-ME-WE-4, however, has caused more problems than I-ME-WE.
“It’s like you have four roads catering to the traffic; what will happen if two of these roads are closed,” Wahaj said.
“The estimated time to repair has not been announced as of yet, as PTCL and TWA are in communication with SEA-ME-WE-4 consortium members to determine the time it will take to repair the cable,” Wateen Telecom added.
SEA-ME-WE 4 provides a telecommunications link between Singapore, Malaysia, Thailand, Bangladesh, India, Sri Lanka, Pakistan, United Arab Emirates, Saudi Arabia, Sudan, Egypt, Italy, Tunisia, Algeria and France.
The cable is approximately 18,800 kilometres long, and provides the primary internet backbone between South East Asia, the Indian subcontinent, the Middle East and Europe.
If enacted, that (Pak-China Corridor) plan would enable China’s naval vessels and merchants to bypass the Malacca Strait, long a haven for pirates and militants who prey on unsuspecting ships. The CPEC would allow the government and banks in the mainland to lend to Chinese companies operating in Pakistan, facilitating construction along the route. Some of the other line items in the deal aim to fix Pakistan’s failing energy infrastructure: the CPEC calls for $15.5 billion in investments ranging from coal to solar and hydroelectric power, scheduled to become part of Pakistan’s national electricity mix in 2017. That will follow a fiber optic cable linking Xinjiang and Rawalpindi, which will come at the cost of $44 million.
China has plenty of incentive to unleash a spigot of investment, despite fears that Pakistani radicals are stoking violence in Xinjiang among the 10 million Uyghur Muslims that live there. Beijing has already pushed heavily for other projects in the region, including the 1,240 km Karachi-Lahore motorway, a six-lane, high speed corridor expected to be completed in the fall of 2017, and orchestrating upgrades to public transportation, including metro and bus service, in six cities, including Lahore, Karachi, and Rawalpindi. Modernizing the Karakoram highway, which runs 1,300 km from Kashgar, the ancient silk road crossing in Xinjiang, all the way into the heart of the Punjab, Pakistan’s biggest province, will also prove critical.
All of that leads to Gwadar, which China hopes to transform into a free-trade zone on the order of a Singapore or a Hong Kong, another major focus for Chinese investors. That carries geopolitical weight. China’s aid to Pakistan now exceeds American spending, which has totaled $31 billion since 2002. Washington’s investments have slowed since counterterrorism funding authorized by Congress during the Afghan surge has dried up.
It’s not as though China isn’t interested in military issues. President Xi also used the occasion to finalize a deal to send eight submarines to Pakistan, in a long-promised deal. They’re also working to get on shared ideological ground: the Research and Development International think tank (RANDI), will be chaired by Pakistani and Chinese leaders. That unfortunate acronym became the butt of plenty of Twitter jokes on Monday. But the group could wield serious influence, especially in thinking up plans to help Pakistan fight terror and potentially determining the role of mediators in talks with the Taliban in neighboring Afghanistan.
China’s grand plan for Pakistan’s infrastructure has taken shape over the course of President Xi’s visit. It will have a major impact on what the future holds for Islamabad, and the entire Indian Ocean basin.
I really enjoyed your article. I am currently writing a paper on the PCEC and would like to ask if you could provide me with any resources further explaining the planned special economic zones. Your help would be greatly appreciated. Thanks!
Recent pictures of the Chinese President Xi Jinping's aircraft being escorted by eight made-in-China Pakistani JF-17 Thunder fighter jets as it entered the Pakistani airspace reflect the expanding relationship of the two countries. On his two-day visit to Islamabad in April, Xi committed $46 billion of investments in Pakistan. This is roughly three times the foreign direct investment Pakistan has received in the last decade. This is also more than the $31 billion Pakistan got in US aid since 2002, according to the US-based Congressional Research Service. Clearly, Xi's visit has larger geopolitical ramifications. And for India, it could be a cause for concern.
The investment would go into building the China-Pakistan Economic Corridor. This would include a road connecting Gwadar port in Balochistan with Kashgar in Xinjiang province of China via Pakistan-occupied Kashmir. The 3,000-km corridor would have industrial parks and 10.4 GW of power projects worth $15.5 billion. China is already upgrading the 1,300-km Karakoram Highway despite Indian opposition. The highway, being built by state-owned China Road & Bridge Corporation, is expected to be ready by September this year. China's help in developing infrastructure in the disputed part of Kashmir is seen as its support to Pakistan's claim on this region.
Another reason to worry for India is that China has the rights to operate the Gwadar port, which increases Beijing's influence in the Arabian Sea. The new road and the Gwadar port would help China boost trade with Europe, West Asia and Africa. This will also give China easier access to West Asian oil, especially from Iran. China is one of the biggest consumers of Iranian oil and this route would help it transport oil before it completes a pipeline from Gwadar to Kashgar. Beijing is also helping Islamabad complete the Iran-Pakistan gas pipeline at a cost of $2 billion.
The growing engagement between China and Pakistan may prove to be a stumbling block for India's ambitious plans to boost ties with Afghanistan and Iran. India had committed $100 million to develop the Chabahar port in Iran, but the project is stuck. The port is important for India to access Afghanistan by bypassing Pakistan. Islamabad has already rejected New Delhi's proposal on the SAARC motor vehicle pact that would have allowed seamless transit to vehicles from South Asian countries. Pakistan's refusal makes it impossible for Indian transporters to use the land route to Afghanistan. Prime Minister Narendra Modi, on April 28, told the visiting Afghan President Ashraf Ghani that India was ready to receive Afghan trucks at the Integrated Check Post at Attari, on the India-Pakistan border. But that won't be enough.
Meanwhile, the infrastructure projects Chinese companies are executing in Pakistan will allow free movement to vehicles of the two countries. And while China's relations with India are also improving - Xi visited India in September last year and Modi is heading to China in May - New Delhi will still be wary of Beijing's growing clout in the region.
#Pakistan turns desert into a sea of solar panels. — The Daily Climate 1000MW #solarpower #renewables
https://shar.es/1rJ4ZK via @sharethis
One of the world’s largest solar plants has been opened in Pakistan with the aim of supplying clean, reliable energy and helping alleviate the country’s chronic power shortages.
The plant, spread over more than 200 hectares of desert land in the south of Pakistan’s Punjab province, will generate 100 megawatts (MW) in its initial phase and more than 300MW by the end of the year, according to government officials.
More than a third of Pakistan’s population do not have access to electricity, and power shortages are a serious impediment to economic growth.
Inaugurating the plant, Nawaz Sharif, Pakistan’s prime minister, said: “Since I became prime minister, my one goal has been to eliminate darkness in Pakistan and bring lights back to the country.”
Mushahidullah Khan, the Federal Minister for Climate Change, told the Climate News Network that the government is determined to make use of what it sees as the country’s enormous solar energy potential.
He said: “Tackling our energy crisis is the top priority of the present government as we believe it is vital in order to achieve economic growth, alleviate poverty, boost agricultural and industrial production and – through the provision of clean, solar power – reduce the country’s carbon footprint.”
The plant – called the Quaid-e-Azam Solar Power Park – was constructed in less than a year by China’s Tebian Electric Apparatus Stock Company, at a cost of US$131 million.
China has been forging ever closer economic links with Pakistan as part of a plan to link China’s western Xinjiang region to the Pakistan port of Gwadar on the Arabian Sea. The government in Islamabad says China is likely to invest more than $30 billion in solar and other power projects in Pakistan in the coming years.
At present, more than 60% of Pakistan’s power is generated from oil and gas, and about 30% from hydro power.
Pakistan is considered to be one of the countries in the Asia-Pacific region most vulnerable to the impacts of climate change.
In particular, the flow of water in the Indus river – upon which millions depend for hydro power and for irrigating crops – has become increasingly erratic due to changing rainfall patterns, glacial melt in the western Himalayas region, and the impact of widespread deforestation.
Government officials say they are determined to push ahead with more solar and wind projects throughout the country.
Asjad Imtiaz Ali, chairman of Pakistan’s Alternative Energy Development Board, said the development of solar and other renewable energies was hampered in the past by inconsistencies in government policy, and by a lack of understanding of clean energies.
“Solar energy is especially suited to remote areas in the country where connectivity to the national grid is difficult, such as Punjab, Baluchistan and Sindh provinces,” he said.
As part of the push for more solar projects, the government recently announced the abolition of duty on the import of solar panels.
China-Punjab Economic Corridor? by Adnan Amir
Out of the $28 billion worth projects, Punjab gets $11 billion, Khyber Pakhtunkhwa (KP) $2.5 billion and Balochistan gets nothing. That’s right, not a single penny out of $28 billion would be spent in Balochistan which is the most backward province in Pakistan. Sindh would get $9 billion from these projects; however the major chunk of that amount would be for the Lahore-Karachi Motorway, a project meant for Lahore. There is no justifiable reason whatsoever which can be floated to defend this unjust division of projects among the four federating units of Pakistan.
During the agreement signing ceremony that took place in Prime Minister House on April 20, only the Punjab Chief Minister was present. The other three chief ministers were not invited. It’s not just about invitations, no person from Balochistan and KP was chosen for the workgroups that finalized the details of CPEC with Chinese officials. It would not be an exaggeration to say that Prime Minister Nawaz Sharif and his brother Shehbaz Sharif orchestrated the show only to benefit their support base in Punjab.
This deal that was supposed to bring prosperity to Pakistan has become controversial from the outset. The KP Chief Minister, Pervez Khattak has openly criticized the federal government for preferring Punjab over other provinces. The legislators of Balochistan Assembly dubbed the agreements between Pakistan and China as between Lahore and Beijing. Shah Mahmood Qureshi, Vice president of PTI, who also belongs from Punjab, has criticized the federal government for its Punjab-centric approach in distribution of CPEC projects.
The route of CPEC rail and road link was the first thing that triggered the controversy. The original route of CPEC would pass from the center of the country. It would start from Gwadar-Ratodero-Dear Allah Yar-Dera Ghazi Khan-D.I Khan-Hassanabdal and all the way to Kashghar. PML-N government has created confusion over the original route. They have come up with a mindboggling concoction that the CPEC would not be one road but a network of roads. That’s wildly untrue because as per the original plan, there would be one main route, ranging from 2 to 6 lanes. During the agreement signing ceremony, the government of Pakistan agreed with China on the eastern route that would take the Gwadar-Ratodero-Sukkur-Lahore-Islamabad-Abbotabad route. Clearly this route is meant to benefit Lahore at the expense of two backward provinces of Pakistan, Balochistan and KP.
Coming to the inaugurated projects, Lahore already has a Metro Bus service, but the government of Pakistan is establishing an Orange Line Mass Rail transit system in the city. China would provide $1.6 billion for this project. A branch of Industrial and Commercial Bank of China would be established in Lahore. And where would the China Cultural Centre be established? No prizes for guessing. Would it not be fair if these projects were divided equally among all four provincial capitals? I guess it would not be acceptable to the Punjab centric agenda of PML-N.
Protests have already erupted against what is being termed as China-Punjab economic corridor. Right and left wing parties in both KP and Balochistan are on the same page on this issue, which is a rare occurrence. Federal Minister Ahsan Iqbal has already given his verdict on the protestors and he is in the process of distributing certificates of treachery. He said, “Hidden hands, some politicians, and also India are trying to make the multi-billion dollar framework [CPEC] controversial.” According to the criteria set forth by Mr. Ahsan Iqbal, this article must also be the work of hidden hands to sabotage the interests of Pakistan. Fortunately, for PML-N government, a draconian cybercrime bill is in the pipeline that would be used to crush any dissent to anti-federation policies of their government on internet.
New Silk Road Could Change Global Economics Forever
Beginning with the marvelous tales of Marco Polo’s travels across Eurasia to China, the Silk Road has never ceased to entrance the world. Now, the ancient cities of Samarkand, Baku, Tashkent, and Bukhara are once again firing the world’s imagination.
China is building the world’s greatest economic development and construction project ever undertaken: The New Silk Road. The project aims at no less than a revolutionary change in the economic map of the world. It is also seen by many as the first shot in a battle between east and west for dominance in Eurasia.
The ambitious vision is to resurrect the ancient Silk Road as a modern transit, trade, and economic corridor that runs from Shanghai to Berlin. The 'Road' will traverse China, Mongolia, Russia, Belarus, Poland, and Germany, extending more than 8,000 miles, creating an economic zone that extends over one third the circumference of the earth.
The plan envisions building high-speed railroads, roads and highways, energy transmission and distributions networks, and fiber optic networks. Cities and ports along the route will be targeted for economic development.
An equally essential part of the plan is a sea-based “Maritime Silk Road” (MSR) component, as ambitious as its land-based project, linking China with the Persian Gulf and the Mediterranean Sea through Central Asia and the Indian Ocean.
When completed, like the ancient Silk Road, it will connect three continents: Asia, Europe, and Africa. The chain of infrastructure projects will create the world's largest economic corridor, covering a population of 4.4 billion and an economic output of $21 trillion.
A look at the first project, currently under development, provides a good example of how China plans to proceed.
The first major economic development project will take place in Pakistan, where the Chinese have been working for years, building and financing a strategic deepwater port at Gwadar, on the Arabian Sea, that will be managed by China as the long-term leaseholder.
Gwadar will become the launching point for the much delayed Iran-Pakistan natural gas pipeline, which will ultimately be extended to China, with the Persian section already built and the Pakistan-Chinese section largely financed and constructed by the Chinese.
The pipeline is also set to traverse the country, following the Karakoram Mountain Highway towards Tibet, and cross the Chinese western border to Xinjang. The highway will also be widened and modernized, and a railroad built, connecting the highway to Gwadar.
Political parties on Thursday hammered out a consensus on the route of Pak-China Economic Corridor during an All Parties Conference chaired by Prime Minister Nawaz Sharif.
The APC agreed that the western route of the corridor would be completed first, which would be built from Hasan Abdal to Gwadar, passing through Mianwali, Dera Ismail Khan and Zohb.
The prime minister told the meeting that a parliamentary committee would be formed to monitor the project while working groups would also be formed to address the concerns of all the provinces.
The prime minister said China had provided a unique opportunity in the form of economic corridor.
During the meeting, Federal Minister for Planning and Development Ahsan Iqbal said no new road would be built as part of the project instead different roads would be connected to link them with Khunjrab.
He dispelled the notion about a change in the original route of the Pak-China Economic Corridor.
The minister told the participants of the APC that the Pak-China corridor was not only the name of a road rather it was a portfolio consisted of different projects, including infrastructure, energy, Gwadar port and industrial cooperation.
This was the second APC to be called on the CPEC project. The first APC took place on May 13. The conference has been called to build consensus among political parties and remove any concerns they have regarding the mega project.
"I hope this becomes a tradition that even in the future we sit together to bring about consensus to move forward on national issues," said Sharif in his opening address to the attendants of the meeting.
Chinese Ambassador Sun Weidong said that Pakistan and China would make greater efforts to develop the Karakorum Highway (KKH) Phase II (Takot to Havelian section), Gwadar Port Eastbay Expressway, New Gwadar International Airport, Karachi-Lahore Motorway (Multan-Sukkur section) and other priority cooperation and energy projects.
Ambassador Weidong said that the outcome in terms of MoUs signed during this visit is encouraging, but the more important part is to implement these agreements and deliver results. Action speaks louder than words, he said, adding the China Pakistan Economic Corridor (CPEC) is a historical opportunity for bilateral cooperation and future development. He said there is a lot of potential to further develop bilateral relations and opportunities always belong to those with vision and action.
He said the Chinese government would continue to encourage Chinese enterprises to invest in Pakistan in support of Pakistan’s economic and social development. China’s support for Pakistan is sincere, down-to-earth and mutually beneficial. Recalling that the year 2015 is the Year of China-Pakistan Friendly Exchanges, he said both the countries will arrange various activities to promote broad exchanges in culture, education, local administration, youth, think tanks and media.
The ambassador said that China has set up a cultural centre in Islamabad to encourage mutual learning and exchanges in the fields of culture and art. In next five years, he added, China will provide 2,000 training opportunities for Pakistan and train 1,000 Chinese language teachers for Pakistan, to support Pakistan in strengthening human resource development and language teaching.
The two countries, he emphasised, should continue with youth and media exchange visits. “We will translate and publish more quality publications from each other. We will hold a photo exhibition on China-Pakistan friendship history. We will also organise receptions for Pakistani friends from all circles in order to reunite with old friends while making new friends,” he added.
Weidong said that President Xi’s recent visit has been quite fruitful with regard to CPEC. It will cover all the provinces of Pakistan, benefit all Pakistani people, create new job opportunities and help upgrade the overall economic strength of Pakistan. China, he further said, has decided to provide free assistance to support FATA reconstruction and related livelihood projects. He said that China would also provide assistance to promote Gwadar community welfare. These measures will effectively promote economic development in the mid-western part of Pakistan and improve people’s livelihood. It is hoped that a good use would be made of the Chinese assistance so as to produce positive results as soon as possible, he added.
During President Xi’s visit, he said, both sides agreed to formulate the 1+4 cooperation structure ie to take CPEC at the centre and take Gwadar Port, energy, transport infrastructure and industrial cooperation as the four keys. Both sides agreed to increase the bilateral trade volume to $20 billion within the next 3 years, he added. The Silk Road Fund will collaborate with a Chinese company to invest in the clean energy projects such as Karot Hydropower Station. This is the first investment project of the Silk Road Fund since its establishment.
That ambassador said that China also announced to provide assistance for reconstruction activities and well-being projects in FATA so as to improve the people’s livelihood. Both countries have also decided to establish China-Pakistan Joint Research Centre for Small Hydropower, Joint Cotton Bio-Tech Laboratory and Joint Marine Research Centre. CCTV News and documentary channels will be broadcast in Pakistan soon, he said. Three pairs of cities between the two countries have established sister-city relations.
The owner of the world’s largest hydroelectric dam, China Three Gorges Corporation, is willing to participate in a financing consortium to fund up to $50 billion of hydroelectric power projects in Pakistan.
The Chinese government-owned CTG expressed an interest in financing projects in Pakistan in conjunction with the International Finance Corporation, a World Bank subsidiary. This disclosure was made at the meeting of the Cabinet Committee on Energy on June 18. The offer comes on top of the $46 billion in financing for power and transportation infrastructure being provided by the Chinese government and Chinese banks to Pakistan for the construction of the China-Pakistan Economic Corridor (CPEC).
If the offer pans out, it would make China the biggest financier of infrastructure in Pakistan by far. CTG owns and operates the Three Gorges Dam, the world’s largest hydroelectric power plant with a capacity of 22,500 megawatts, nearly matching in one power plant the entire installed capacity of the Pakistani grid of 23,500 MW.
Read: China-Pakistan Economic Corridor: Lines of development – not lines of divide
According to studies conducted by the Water and Power Development Authority, Pakistan has an identified potential of producing up to 60,000 MW of hydroelectric power, of which 40,000 MW is located in a region called the Indus Cascade, which begins in Skardu in Gilgit-Baltistan and runs through to Tarbela, the site of Pakistan’s biggest dam, in Khyber-Pakhtunkhwa.
The biggest project the government has already identified and begun preliminary work on is the Diamer Bhasha dam, which would require $15 billion to construct and would have a nameplate capacity of 4,500 MW.
Pakistan’s energy sources have gone through cycles. Up until the 1980s, the bulk of electricity in Pakistan came from hydroelectric power. In 1994, as the country’s energy needs surged, the government initiated a policy to attract private investment in thermal electricity. Oil prices were low in that decade and so the government made the decision to use oil-fired power plants, a decision that proved costly when oil surged to $100 a barrel, prompting Islamabad to search for cheaper ways of producing electricity. Among those cheap ways is hydroelectric power and coal-fired thermal electricity.
Among other projects the government wants to seek Chinese financing for is the Neelum-Jhelum power project in Azad Kashmir. The 969 MW Neelum-Jhelum hydroelectric power project has been facing rising costs, mainly due to the delays caused by a lack of funding. The project was initially slated to cost $1.8 billion, but will now cost $4.2 billion due to the delays, a major cause of concern for its initial consortium of Middle Eastern financiers which included the Islamic Development Bank (IDB), the Kuwait Fund for Development (KFD), the Saudi Fund for Development and the OPEC Development Fund.
The government now expects to raise Rs100 billion ($1 billion) in local borrowing for the plant, in addition to $576 million in foreign borrowing. The government has approached the state-owned National Bank of Pakistan to arrange financing for the local currency component. The Middle Eastern lenders have so far committed $692 million, of which they have disbursed $260 million so far.
“The disbursement of the remaining $433 million has been stopped by the lenders as they are demanding that the contractors should provide performance guarantee for the additional work (variation orders) and cost escalation,” said one source familiar with the cabinet’s deliberations on the matter.
Pakistan government is not offering any sovereign guarantees for projects being built by Chinese companies on build-operate-transfer (BOT) basis which is the bulk of the the $45 billion CPEC investments. These projects are being financed by three Chinese banks as explained by Financial Times below:
Financial Times on China Investment in Pakistan:
The details emerged as President Xi Jinping began a visit to Pakistan bearing promises of more than $45bn in infrastructure investment.
It follows Beijing’s diplomatic success in securing the support of 50 countries for the China-led Asia Infrastructure Investment Bank, despite US objections.
Extra financing for infrastructure could help support China’s weakening economy and the majority of foreign construction projects will most likely be undertaken by Chinese companies.
Increased foreign currency lending would likely also help China boost financial returns on its forex reserves, which are now mainly invested in low-yielding US treasuries.
China’s three state-owned non-commercial lenders — China Development Bank, Export-Import Bank of China, and Agricultural Development Bank of China — are collectively known as “policy banks” because they are explicitly devoted to financing infrastructure and other policy priorities within China and abroad.
Respected financial magazine Caixin reported on its website on Monday that the cabinet’s plan involves the central bank injecting $32bn in forex reserves into CDB and an additional $30bn into Ex-Im Bank. The capital injections will come in the form of entrusted loans that convert to equity, the magazine reported. The Ministry of Finance will inject a further unspecified amount directly into Agricultural Development Bank.
“For CDB and Ex-Im Bank to support ‘One Belt, One Road’ they need a source of stable foreign-exchange funding,” Caixin quoted a senior CDB source as saying.
China’s boost to its export credit agency stands in stark contrast to the US where the US Export-Import Bank is fighting for survival amid a push by some Republicans to shut it down once funding runs out in June.
GE’s top international executive warned at the weekend that the closure of the US Ex-Im Bank would add to sense that Washington was stepping back from international economic leadership.
China’s forex reserves stood at $3.7tn by the end of March, according to official data.
China Development Bank has provided funding for many of the country’s most ambitious financial diplomacy initiatives, including loans-for-oil to Russia, Brazil and Venezuela. Both CDB and Ex-Im Bank also provide trade credit to support Chinese exports.
Earlier this month China’s cabinet approved a plan to reform the three policy lenders but provided few details. For years the government has said it intends to transform the institutions into commercial entities, but progress has been slow.
The policy banks do not take deposits and fund themselves mainly by selling bonds that carry an explicit sovereign guarantee. The banks sell both renminbi bonds within China and USD bonds in the offshore market.
Experts have warned that the banks are undercapitalised. The Ministry of Finance and China Investment Corporation each own 50 per cent stakes in CDB, but the bank has not received a capital injection since 2008.
The Financial Times reported last year that CDB had asked several foreign clients to delay drawing down lines of credit previously offered, apparently due to funding strains.
CDB’s capital adequacy ratio stood at 11.28 per cent at the end of 2013, according to the bank’s most recent annual report. That compares to 13.18 per cent for China’s banking system as a whole at the end of 2014.
Chinese Ambassador Sun Weidong has said that China would establish Bio‑Tech Research Laboratory in Pakistan under a joint venture programme to promote agriculture sector in the country.
The lab would offer excellent opportunities to carry out joint study and research and also enhance maximum cooperation between scientists of both countries, he said.
He called for maximum cooperation between the two countries in the fields of science, technology, agriculture and power sector.
Meanwhile Chinese Embassy sources here in Islamabad said Ambassador Sun paid a productive visit to Multan on July 10 and 11. He met Asad Ullah Khan, Commissioner of Multan and exchanged views on strengthening friendship and bilateral cooperation.
He paid site-visits to Fatima 2x60MW Bagasse Power Plant and encouraged the Chinese companies to participate in the construction of power projects in Pakistan. The Fatima 2x60MW Bagasse Power Plant constructed by Chinese contractor is applying advanced and environment-friendly technology, which will become a high-efficiency biomass power plant and add electricity to the Pakistani grid when being completed in 2016.
Ambassador Sun visited a Chinese Cotton Ginning Company and Multan Cotton Research Station. The Chinese Company aims to build a cotton industrial chain in Multan. The Multan Cotton Research Station is part of the China-Pakistan Joint Bio-Tech Laboratory. Chinese President Xi Jinping and Pakistani Prime Minister Nawaz Sharif witnessed the signing of the MoU of this Joint Laboratory in April this year.
The Research Station has bred 16 cotton varieties of antivirus, heat and drought tolerant species. The Ambassador said, Chinese side would like to seek the possibility to expand the agriculture cooperation between the two countries.
He reiterated China’s support to the China-Pakistan Economic Corridor, including infrastructure construction and production capacity cooperation. He called for cultural and people-to-people exchanges. He said that the Chinese side will provide Chinese government scholarship for students in Multan to study in China. He is fully convinced that the deep-rooted friendship between the two countries will be passed on from generation to generation.
Ambassador Sun also visited the culture and historical sites in Multan during his tour.
#Pakistan’s trade deficit of $22b in FY15 almost equals $19 billion remitted by diaspora http://www.pakistantoday.com.pk/?p=428958 via @ePakistanToday
Pakistan’s merchandise trade deficit surged by 10.68 per cent to $22.095 billion in 2014-15 from $19.963 billion in the preceding fiscal year, according to the data of Pakistan Bureau of Statistics.
Exports have been witnessing a falling trend since July 2014. However, imports rebounded which was reflected in higher volumes of machinery, food products, transport, agriculture, chemicals and textile groups.
The government has projected a trade deficit target of $17.2 billion for the fiscal year.
An official report reveals that the trade deficit witnessed in 2014-15 was the highest since 1980-81. The second highest trade deficit was recorded at $21.271 billion in 2011-12, mainly driven by imports of consumer goods and higher international crude prices.
The import bill reached $45.98 billion in 2014-15 as compared to $45.073 billion in the previous year, an increase of 2.01pc. Its target for the year was projected at $44.2 billion. In June 2015, the imports volume reached $4.394 billion as compared to $4.318 billion in the same month last year, an increase of 1.76pc.
Monthly imports, during the year, averaged at $3.8 billion as compared to $3.758 billion in 2013-14. Around 50pc of Pakistan imports were originated from just a few countries like China, Kuwait, Saudi Arabia, UAE, India, Indonesia, etc.
During the fiscal year, imports from China increased sharply to 23pc from 17pc a year ago.
The trade imbalance in favour of China is highly alarming. Free Trade Agreements signed with some of the countries appear to have been playing a major role for this imbalance. By and large, the relative shares of imports from other countries have remained almost the same.
On the other hand, exports fell by 4.88pc to $23.885 billion during the period under review as compared to $25.11 billion a year ago, the highest ever export figure recorded as of yet. In June 2015, the export proceeds fell to $2.016 billion as against $2.018 billion in the same month last year.
Monthly exports averaged at $1.997 billion as against $2.098 billion during 2013-14.
The country’s exports have been stagnant at $24-25 billion for the last few years.
According to a UN study, covering a 30-year period (1980-2011), India’s share of world exports improved from 0.43pc to 1.7pc; Bangladesh’s from 0.04pc to 0.14pc; Malaysia’s from 0.74pc to 1.34pc and Thailand’s from 0.37pc to 1.35pc.
Pakistan’s share, however, remained stagnant at 0.15pc.
Since January 2014, when duty-free access to the European Union under the GSP+ scheme was granted, Pakistan’s exports to Europe spiked by 21pc, but this was at the cost of other markets.
Pakistan’s exports base and markets are extremely narrow.
Over 55pc of its exports earnings are contributed by the cotton group alone. Leather, synthetic made-ups and rice contribute about 14pc of total exports. Unfortunately, these items are relatively low value-added products.
In 2014, 37 per cent Pakistanis hoped for a better economic future. In 2015, it increased to 47pc, registering a 10pc improvement, according to the latest Pew survey.
Other nations on this list include Nigeria, Argentina, India and Spain.
In 2014, 64pc people in India saw their future as bright, which increased to 74pc in 2015.
The survey by the Washington-based Pew Research Centre, however, shows that most Pakistanis (51pc) are unhappy with the current economic situation while 47pc say it is good. Others declined to comment.
Forty-eight pc see economic situation in Pakistan improving over the next 12 months, 23pc say it will remain the same and 13pc say it will worsen.
Fifty-one pc Pakistanis believe that when today’s children grow up, they will be financially better off than their parent but 22pc say they will be worse off.
The report also includes a World Bank economic categorisation, which places Pakistan in the lower middle group with a gross domestic product of $241 billion, GDP per capita based on purchasing power parity at $4,886, and average GDP growth of 4.4pc between 2005 and 2014.
The survey of 40 nations finds that publics in fewer than half of those countries have a positive view of their nation’s economy.
But there are signs of growing public faith in economic recoveries in some of the world’s largest economies.
Roughly four-in-ten Americans, Europeans and Japanese say economic conditions are good in their countries. Such sentiment is up 30 percentage points in Japan from a low point in 2012; up 23 points from the 2009 low in the United States; and up 23 points from the 2013 low for the median of five European Union nations surveyed.
Overall, people in emerging economies and developing countries are more likely than those in advanced economies to believe that economic conditions will improve over the next 12 months.
The IMF expects global growth in 2015 will be marginally slower than that in 2014. Only in developing nations does a majority (58pc) expect conditions to get better.
Prime Minister Nawaz Sharif on Monday said the Peshawar, Karachi motorway under the China, Pakistan Economic Corridor (CPEC) project should be completed by 2017.
“Work on different sections of the Peshawar, Karachi motorway should be completed by 2017,” the premier said, while chairing a meeting to review the progress of projects under the China, Pakistan Economic Corridor (CPEC) project.
During the meeting, PM Nawaz directed authorities to expedite work on the projects under the CPEC to materialise the dream of a prosperous Pakistan.
“Energy projects under CPEC should be completed on fast-track,” the premier said.
Read: CPEC to be completed at all costs: Army chief
“Railway stations from Peshawar to Karachi should be upgraded and maximum facilities should be provided to the passengers,” he added.
PM Nawaz also upheld that the Gwadar International Airport should be completed in the shortest possible time.
Earlier this week, Army chief General Raheel Sharif visited Panjgur area of Balochistan and vowed to torpedo the campaign run by the country’s enemies against the CPEC and help get the project off the ground.
Read: Eastern CPEC route unfeasible: report
Emphasising the importance of the CPEC, the army chief said construction of these roads would link Gwadar port with the rest of the country at Chaman and the Indus Highway.
With #Iran’s Help, #India Eludes #China and Bypasses #Pakistan in Race for Gas Riches http://bloom.bg/1gNasI4 via @business
With U.S. sanctions easing, India is racing to build a port in Iran that will get around the fact that its land access to energy-rich former Soviet republics in Central Asia has been blocked by China and its ally Pakistan.
“We’re seeing the latest manifestation of the Great Game in Central Asia, and India is the new player,” said Michael Kugelman, a South Asia expert at the Washington-based Woodrow Wilson International Center for Scholars. “It’s had its eyes on Central Asia for a long time.”
While the world focuses on what Iran’s opening means for Israel and Arab nations, the ramifications are also critical for Asia. Closer Iran-India ties would allow New Delhi’s leaders to secure cheaper energy imports to bolster economic growth and reduce the influence of both China and Pakistan in the region.
The six nations that make up Central Asia hold at least 11 percent of the world’s proven natural gas reserves, as well as substantial deposits of oil and coal, according to data compiled by BP Plc. Afghanistan says its mineral wealth is valued at $1 trillion to $3 trillion.
“Iran can offer us an alternative route to Central Asia,” Indian Foreign Secretary S. Jaishankar said in Singapore on July 20. “The resolution of the nuclear dispute and lifting of sanctions will allow our agenda of energy and connectivity cooperation to unfold seriously.”
India can be the first country to benefit from the deal in Asia, an Iranian diplomat told reporters in New Delhi this week. Iran was seeking billions of dollars in investment from India for ports, railways and airports, the diplomat said, asking not to be identified due to government rules.
Even before the deal to end sanctions was clinched, India reached an agreement to upgrade the Iranian port of Chabahar on the Arabian Sea. Two Indian state-run companies -- Jawaharlal Nehru Port Trust and Kandla Port Trust -- have plans to invest $85 million to upgrade two berths.
On a five-nation Central Asian tour last month, Prime Minister Narendra Modi backed an ambitious transit route through Iran that would effectively connect Europe to India by a series of sea, rail and road links. Currently, cargo from India has to go by air or take a detour through the Suez Canal.
Pathway to Europe
China is the biggest economic player in Central Asia. It’s the top commercial partner for every nation except Afghanistan, with its $48 billion in trade to the region dwarfing that of India, according to data compiled by Bloomberg. Turkmenistan pipes almost 80 percent of its gas to China.
China has welcomed the nuclear deal, noting in a statement that Iran once played a pivotal role in the ancient Silk Road trade route linking Europe and the Far East.
Pakistan is also important. The only Muslim-majority country with a nuclear bomb has refused to allow Indian trucks to pass through to Central Asia, and plans to build overland gas pipelines from Iran and Turkmenistan had long stalled.
“Pakistan has essentially had a stranglehold over India’s policy in the region,” said Harsh V. Pant, a professor of international relations at King’s College London. “India wanted to break that. Now, that constraint has been removed.”
Even so, Pakistan doesn’t see much of a threat, according to Commerce Minister Khurram Dastgir Khan. China is investing $45 billion in an economic corridor through Pakistan stretching from China’s western border to the Arabian Sea. Pakistan is also seeking a free-trade agreement with Iran.
“The scale of Chinese investment in Pakistan and in the corridor really dwarfs anything Indian is attempting in Iran,” Khan said in an interview in Islamabad on Wednesday.
For industrial cooperation, the two countries China and Pakistan) are planning industrial parks (along CPEC). According to local media, the Pakistani government has proposed 29 industrial parks and 21 mineral economic processing zones in all four provinces. A joint working group would decide and identify the industrial parks, said Pakistani Minister for Planning, Development and Reform Ahsan Iqbal, who hailed the CPEC as a "game changer" and a once-in-a- lifetime opportunity for Pakistan.
Last month Pakistan's Chief of Army Staff Gen. Raheel Sharif inspected the under-construction road network as part of the CPEC. According to the army, 502 km out of the 870-km road network linking the Gwadar Port with the rest of the country have been completed by Frontier Works Origination (FWO). During the inspection, the army chief also vowed that the CPEC "will be built at all costs."
The Gwadar Port started its long-awaited operations on May 11 as the first private container vessel docked at the deep-sea port. Local fish was exported to the international market through containerized shipment. Speaking at the commencement ceremony, Pakistani Ports and Shipping Minister Kamran Michael said a new dimension was added to the history of the Gwadar Port.
For industrial cooperation, the two countries are planning industrial parks. According to local media, the Pakistani government has proposed 29 industrial parks and 21 mineral economic processing zones in all four provinces. A joint working group would decide and identify the industrial parks, said Pakistani Minister for Planning, Development and Reform Ahsan Iqbal, who hailed the CPEC as a "game changer" and a once-in-a- lifetime opportunity for Pakistan.
The Pakistani government has shown strong willingness to push forward the construction of the CPEC. During a high-level meeting held in Islamabad on July 27 to review the pace of work on CPEC projects, Prime Minister Sharif directed that projects under the CPEC be put on fast-track through mobilization of resources and completion of financial and technical formalities.
His endorsement for the projects is also shared by Pakistani President Mamnoon Hussain, who said in his message on the country' s 69th Independence Day on Aug. 14 that the CPEC "will lead to economic revival in Pakistan."
An Indian view of CPEC---China-Pakistan Economic Corridor:
From China to Pakistan: A well-thought-out 3,000km lifeline
Pramit Pal Chaudhuri and Imtiaz Ahmad, Hindustan Times, Beijing/Delhi/Karachi| Updated: Aug 30, 2015 01:58 IST
Through September, working groups of Chinese and Pakistanis will finalise 40-plus projects to launch the $46 billion China-Pakistan Economic Corridor (CPEC). Both governments see this as more than just a construction project. The corridor is designed to transform Pakistan’s economy—and potentially China’s global status.
Already in the Arabian Sea port of Gwadar, the southern terminus of the corridor, the Chinese have begun upgrading the harbour. So has the expansion of the highway out of the port, a road that will run 3000 kilometres to the Chinese border town of Kashgar.
Much of the corridor’s initial expenditure is on power plants. Nearly $34 billion of the corridor’s funds will go to energy projects, with over half of this going to electricity production. When completed, Pakistan’s national grid will receive 10,400 MW additional power.
Beijing’s logic is simple. As an ex-Chinese ambassador to Pakistan explained, “Solving Pakistan’s power deficit is the first step to stabilising its economy.” Pakistan struggles with rolling blackouts thanks to an annual power deficit of about 5,000 MW. The contracts also help Chinese makers of generators, solar cells and the like, all of which suffer from huge overcapacity and need overseas buyers. Pakistan’s Prime Minister Nawaz Sharif, publicly says before his term ends in 2018, power cuts will be a thing of the past.
The CPEC agreement goes far beyond a port, highway and power plants. Gwadar will be all but rebuilt with a hospital, new drinking water supply and an international airport. The agreement spans Chinese biotech for cotton farmers to a multi-million dollar fibre optic network to slots on Pakistani Television for Chinese shows.
While the Karachi-to-Kashgar axis—Gwadar included—receives the most attention, it is only the easternmost of three corridors. Plans exist for central and western alignments—the latter running from Gwadar to Quetta and beyond.
Beijing has made the eastern alignment priority, postponing the central alignment that many Pakistanis prefer. China cites the July 2013 memorandum which says construction would “take the easiest [route] first”.
This has not gone down well with many provinces. Balochistan economic advisor, Kaiser Bengali, complained the present plan would not help economic activity in backward areas. Senator Taj Haider of the Pakistan People’s Party, noting wealthy Punjab would benefit the most, has promised his party would “protest” against “the choice of route” and “the placement of some of the projects”. Under pressure from the military, however, the provinces have grudgingly endorsed the corridor. Balochistan chief minister Abdul Malik Baloch, a strident critic, is among those who have backtracked recently.
China has security concerns about the two other alignments, fed by Pakistani fears that India would somehow sabotage the corridor’s construction.
Pakistani army chief, General Raheel Sharif, last month twice warned “enemies of the state” would try to stop the corridor.
Islamabad plans to train 12,000 security personnel to protect the coming hordes of Chinese workers. This will be in addition to the 8,000 security personnel already deployed to guard existing Chinese workers. Chinese media has already fretted about its workers being abducted. Reports say Chinese and Pakistani intelligence are sharing information on the anti-corridor activities of “foreign hostile agencies”—a reference to India’s Research and Analysis Wing.
It may very well sound like a cliché, but Samad Dawood – the 32-year-old CEO of Dawood Hercules – made a valid point.
“Why is there so much negativity in what we read about Pakistan,” he asked. “Why is it that the good things about business and the economy don’t get the same amount of coverage?”
Samad sounded upbeat for a man whose family business, by its own standards, went down post 1960s.
The Dawoods were either the first or the third richest business family in Pakistan in terms of assets owned, as per two separate researches cited by Stanley A. Kochanek in his extensive book “Business and Politics in Pakistan”.
They were everywhere – from the production and distribution of textiles, paper, rayon, chemicals and fertiliser to banking and shipping. But the nationalisation of the 1970s and division among family interests relegated them to the sidelines.
Their re-emergence came about when the family branch, led by Hussain Dawood, acquired a controlling stake in Engro Corporation, one of Pakistan’s largest private sector conglomerates.
But that came at a price that saw them re-invent themselves and forgo legacy.
Even after the nationalisation, Dawood Group kept a few businesses with itself – the Dawood Hercules Fertiliser and textile units, which included Burewala Textile Mills, Dawood Lawrencepur and Dillon, which were their mainstay for years.
It is said that Burewala owes its development to Ahmed Dawood, the group’s founder, who established massive textile mills in the city.
But now they are not in the textile business and Dawood Hercules’s fertiliser has been sold off. “We had a choice to make as far as textile operations were concerned. They required significant amount of capital to be globally competitive,” said Samad, Hussain’s youngest son.
Another option was to pump additional liquidity into Engro. They opted for the latter.
Since the mid-2000s, Engro has expanded massively – first came a $1.1-billion investment in a new urea plant, then the launch of a food division with Olper’s packaged milk, a unique 217MW power plant that uses permeate gas, building the country’s first LNG terminal and finally, the $2-billion investment plan to develop a coal mine and power plant in Tharparkar.
Dawood Hercules, the holding company, which has a majority stake in Engro, also has substantial shareholding and management control of Hub Power Company, another cash-cow.
Most of its focus is on energy projects.
“Why should a small SME entrepreneur invest in a generator?”
“Good businesses have to solve large problems … and better the solution the more value gets created for stakeholders.”
Dawood’s three power projects in the pipeline include two 660MW plants that will be built by Hubco and will use imported coal, the Thar power plant and a 50MW wind farm.
#UK rolls out red carpet welcome for #China's Xi. Hoping for Billions in Investment Including Nuclear Power Plant http://reut.rs/1MzhmsK
What does #China own in the #UK? #Pakistan 10th largest recipient of #Chinese investment ($24 billion) since 2005 http://www.bbc.com/news/business-34542147 …
China may be the world's second-largest economy behind the US, but it has more money in the bank than any other country.
Indeed three of the world's 10 biggest sovereign wealth funds are Chinese, together holding more than $1.5tn (£988bn) in assets.
And despite the slowdown in the Chinese economy in the past five years, the government has been putting this money to good use, particularly so since it recovered from the global economic slowdown sparked by 2008's financial crisis.
In fact, overseas investments have grown from $20bn in 2005 to $171bn last year. And, as the chart below shows, the UK is one of China's favourite places to invest.
In the first half of this year, Chinese investment in the UK fell sharply - just $1.8bn compared with more than $8bn in the whole of 2014.
But this figure is likely to be boosted significantly this week with the announcement of a number of deals while President Xi Jinping and his delegation visit Britain. Backing for a new nuclear power plant at Hinkley Point in Somerset could well be announced, while a separate deal for another nuclear plant at Bradwell in Essex has also been mooted.
If these and other deals like them don't come off, then the UK could well slip behind Italy - which has seen huge inflows of Chinese cash in the past two years - as China's favoured European investment destination.
Almost half of all China's global investments have been in the energy sector, many of them designed specifically to provide power for the Chinese. While the country's overall population may not grow significantly beyond its current 1.4 billion, an explosion in the middle class as wealth increases will see demand for energy rocket.
And as China develops technologies to satisfy this demand, it will become increasingly keen to export them. This is precisely why China is so keen to showcase its nuclear technologies in the UK.
But energy has not been China's primary interest in the UK. In fact, property investments far outweigh those in energy. The motivation here is far more straightforward - profit. The Chinese simply see UK commercial property as a good bet. Unsurprisingly, this is also the main motivation behind the huge sums of money China has pumped into the UK's financial sector.
From Washington Post:
The new Pakistan-China Economic Corridor will move from here in the mountains down the Karakorum Highway into central Pakistan. From there, even more highways will be built to provide access to Gwadar Port in Baluchistan.
The initial outlines of that corridor already are visible here in northern Pakistan, where the highway snakes past mountains, glaciers and rocky gorges. At times, motorists can see the donkey trails from the original Silk Route, which traders traveled for more than 600 years before the 15th century.
China is spending hundreds of millions of dollars to upgrade the highway, one of the world’s most dangerous thoroughfares. To make it safer, Chinese engineers are smashing through mountains to build dozens of miles of tunnels, some of which are inscribed with the phrase “Pak-China Friendship Tunnel.” They are adding bridges, guardrails and concrete overhangs to funnel landslides and avalanches away from travel lanes.
To fully reach its economic potential, however, the country must overcome the continued threat of Islamist militancy as well as a severe electricity shortage that significantly increases the cost and difficulty of doing business here.
To address that problem, China is promising Pakistan 18 new energy projects, including nine coal-fired power plants, five wind farms, three hydroelectric dams and one solar park. When completed, the projects will add 16,600 megawatts to Pakistan’s national grid, more than offsetting the electricity shortage, even with a projected annual growth rate of 7 percent by 2018, said Iqbal, the minister for planning and development.
Over the past 13 years, the United States has given Pakistan about $10.5 billion in economic assistance and $7.6 billion in security-related aid. The U.S. military also reimbursed Pakistan $13 billion in counterterrorism support related to the war in Afghanistan, according to the Congressional Research Service.
The United States “was just not interested in building dams, electrical power plants, railways, roads and bridges and ports” in Pakistan, Nasr said.
China, by comparison, views its relationship with allies through a prism that is “geopolitical, geo-strategic” but also “geoeconomic,” Ma said. “According to Chinese philosophy, if you want to achieve some goal, you have to take a comprehensive approach, political, economic, military and social.”
A major terrorist attack or Pakistani political crisis, common in a country that has witnessed three successful military coups since its founding in 1947, could quickly cause the Chinese to reassess their relationship, he said.
“Much of the skepticism reflects the rather dismal American experience in Pakistan over the years,” Hathaway said. “You almost never get results commensurate with the effort or money you put into it.”
Within 100 miles of the border, for example, cellphone coverage is sparse. But when motorists reach the top of Khunjerab Pass, 3G service from a Chinese cellular provider bleeds across the frontier.
That’s the sort of modern convenience that Ameer Ullah Baig, a 60-year-old yak farmer who sleeps outside with his herds in the summer, is looking forward to.
Before the original Karakorum Highway opened in the 1970s, Baig said, his family relied on ponies and mules to get around and had to make wool overcoats to stay warm. Now, however, he rides a motorcycle to round up his herd and sleeps in a sub-zero, synthetic sleeping bag that he thinks was made in China.
“The highway was a blessing in disguise,” he said. “And I expect the same thing from the economic corridor.”
#China-#Pakistan economic zones along #CPEC coming up fast!- http://www.khaleejtimes.com/business/economy/china-pakistan-economic-zone-is-coming-up-fast …
Pakistan takes a giant step forward and made lucrative offers to foreign and Pakistani investors to build several Special Economic Zones, or SEZs including banks, industries and businesses.
The bonanza is to ensure a fast track building of China-Pakistan Economic Zone (CPEC) - stretching from the shores of the Sea of Japan to Iran, and down south from the UAE to Central Asian Republics. The up-tick in the Pakistani economy on the back of two years of pro-business Prime Minister Nawaz Sharif's government, and the continued strength of the Chinese economy - which holds vast foreign investment funds and policy to spread out - to build a big new business zone. The new, and strong, resolve to go ahead with the project was the highlight of recent contacts between President Xi Jinping and Sharif.
"In view of the large number of potential investors, particularly from UAE-Saudi Arabia-Middle East as well as US and EU, and the interest they have shown, the government has laid down 'The eligibility criteria.' Out of the applicants, the government will pick up financially the strongest, most innovative, and the state-of-art corporations to grant land and other key facilities," a minister told this writer.
Nearly half a dozen ministers, heading ministries of finance to planning, petroleum to industries to commerce and electricity, are tasked by Sharif with speeding up the CPEC and the SEZs' projects.
"The Chinese are making the initial investment of $46 billion in the CPEC project. It includes an investment of $33 billion in energy alone so that the new projects, as well as the existing ones, and the country at large faces no energy shortage. But, the overall investment will be much larger, as the projects move ahead, production pattern expands, and their input requirements get bigger and bigger. A big push is also expected from the private Chinese corporations and the banks," Ahsan Iqbal, minister for planning told this scribe.
He said Pakistan and China will establish a joint investment and industrial cooperation working group to establish industrial zones and SEZs under China Pakistan Economic Corridor.
"It will identify the location to establish SEZs, industrial zones and industrial parks under CPEC." Major General (retired) Dr Zahir Shah has been named as its project director.Commerce Minister Khurrum Dasgir, at the same time, informed this writer, "within months of the startup of even some of the industrial units, planned to be located in the CPEZ, or the proposed individual SEZ's, we project that our exports outside the country will see a quick jump. We have already made provisions to help these units to manufacture all types of products which we can be exported, and have a big global demand. These products range from processed and 'Halal' food to chemicals. Necessary arrangements are part of our new three-year export strategy policy which will cover the period from 2015 to 2018."
"The criteria" comprises 12 conditions for grant of land, related development and construction requirements for the individual SEZ projects to ensure their viability, productivity and financial and business success for the investors and Pakistan. The investor's proposal will be approved on the basis of the following conditions: A special economic zone (SEZ) will have a minimum size of 50 acres of land.
On its completion and development, the zone should generate economic activity in terms of exports, employment and other performance indicators at least equal, or more than the total overall capital cost, incurred over a period of five years. On completion, it will provide import substitution and generate direct and indirect exports.
#CPEC facing significant startup problems in #Pakistan. Poor governance, dysfunctional bureaucracy. #China http://www.dawn.com/news/1215449
Now that the initial euphoria of ‘higher than the Himalayas and deeper than the deepest sea’ is over, the $45bn China-Pakistan Economic Corridor is beginning to hit the ground realities.
As is expected of such a major initiative, some teething problems are coming to light, requiring a lot of legal and procedural clarifications and adjustments. Most of these seem to be exposing the general lack of preparedness and casual handling of projects that has become the hallmark of our bureaucratic culture.
Also read: CPEC to benefit entire region, say analysts
This has resulted in repeated project delays, cost overruns and unquantifiable lost economic opportunities. Cost rationalisation, according to Planning Minister Ahsan Iqbal, had alone created a Rs490bn cushion in the last fiscal year.
Pakistan has been struggling to convince Chinese authorities to accept around a 10pc cost overrun for the $1.5bn Lahore Orange Line Metro Train even though the project has yet to take off
While dealing with external players, such lethargy and poor project handling can have exponential costs. Pakistan has been paying substantial commitment charges without utilising loans from development lenders every year and this has to be taken care of on an urgent basis.
Following the 6,600MW Gadani Power Park debacle arising out of a half-baked plan, the two sides seem to have learnt the lesson to take up ‘early harvest’ projects that are ready to take off immediately and could be expected to deliver results before the PML-N goes into the next polls with a success story on having reduced the power shortfall.
Focal persons are now being appointed in all the ministries and agencies concerned with the CPEC to expeditiously process any hitches and glitches.
Meanwhile, a mega coal-based project previously being pushed for Sahiwal is reported to have faced financing problems because of the infrastructure required for transporting coal. It has now been replaced, at least on paper, with two smaller coal power projects at Thar and Hub to compensate for Sahiwal’s lost capacity.
Pakistan has recently been struggling to convince Chinese authorities to accept around a 10pc cost overrun for the $1.5bn Lahore Orange Line Metro Train even though the project has yet to take off.
The Chinese Exim Bank was insisting on a loan agreement of $1.48bn to be signed with the Punjab government as originally discussed, but Pakistani authorities want this to be increased by another $147m to meet contingencies that arise during the project’s implementation.
The local authorities have to be blamed for originally negotiating the project for $1.48bn with the Chinese before getting the cost escalated to $1.63bn through the Executive Committee of the National Council. Unless an arrangement for the ‘additional requirement’ is made, the project cannot achieve financial close. The financing cost of the 27km Rs165.2bn project is also reported to be on the higher side despite it being in the ‘concessional category’.
On top of these, the Chinese have sought tax exemptions on insurance and financing on almost all CPEC projects.
At the heart of the problem is the IMF’s condition under which the government has withdrawn the powers of the taxation authorities to grant exemptions through statutory regulatory orders.
At present, no tax exemption is permissible on insurance premiums paid to non-resident companies because only a low rate of 5pc is applicable, while all CPEC projects are mostly covered by the state-owned Chinese firm Sinosure. The Chinese authorities want the insurance premiums paid to Sinosure to be exempted from the income tax
#China’s new Silk Road to the West is an opportunity Britain must grasp | via @Telegraph #CPEC #Pakistan
Op Ed by Sir John Peace, Chairman Standard Charter Bank
On a visit to Pakistan in April, President Xi announced $46bn in investments and credit lines in a planned China-Pakistan economic corridor. Earlier this year, one of China’s largest construction companies signed construction deals in Africa worth a combined $5.5bn. Both are OBOR projects, providing a platform for the cash-rich Chinese to invest, as well as the opportunity to lift growth across the world.
As these countries benefit economically from the infrastructure investment, Britain should be poised to take advantage. The British government has already indicated its support for the Asia Infrastructure Investment Bank. British banks like Standard Chartered, which has had a continuous presence in China since 1858, are well placed to assist with the financing of OBOR.
It is not only financial services, but a range of British business that should invest in OBOR, harnessing our expertise in PPP, engineering and supply chains.
For example, last week’s agreement signed by Standard Chartered and other banks with the London Metals Exchange reflects the increasing demand for commodities from OBOR projects.
The opportunities to invest in and support these infrastructure projects will be exciting.
We should endeavour to ensure British business is welcomed in these markets, ready to support them and trade with them as they establish themselves in the new world order. British luxury brand Burberry, for example, has been investing across south-east Asia, most recently opening a new store in Bangkok. It’s a long-term investment, just as China is investing in OBOR for long-term prosperity.
Start of #CPEC witnesses economic activities in #Balochistan #Pakistan. New hotels, businesses along completed route
Federal Minister for Planning and Development, Prof. Ahsan Iqbal on Thursday said social and economic activities have started in Balochistan along with the roads being constructed there as part of China Pakistan Economic Corridor (CPEC).
Under CPEC, two international standard roads are being constructed-- from Gwadar to Quetta, and from Gwadar to Khuzdar to Ratodero, he said.
" I was pleased to see, the local people have started setting up hotels, shops and houses along the completed portions of the CPEC routes linking Gwadar with China. This corridor shall bring social and economic change in Balochistan," he expressed his satisfaction while addressing a seminar on CPEC here.
The seminar titled " China Pakistan Economic Corridor: A Road to Peace and Prosperity of the Region" was organised by an NGO , Rabita Forum International (RFI) and presided over by its Chairman RFI, Nusrat Mirza. It was attended by a large number of students from different universities and the teachers.
RFI Chairman , Nusrat Mirza said the seminar was organised to create awareness among the students about the importance and prospects of CPEC, and what the role they could play in transforming CPEC into a big success for the country.
The universities would have to prepare groups of professionals to meet the demands of the projects/activities emerging during and after execution of this very important international plan of CPEC, Nusrat Mirza said.
The Federal Minister for Planning and Development assured that CPEC would be equally beneficial for all the provinces. Like Gwadar, he continued, Gilgit-Baltistan would be gateway to CPEC.
46 billion dollars CPEC would prove a game changer for entire region. It would interlink South Asia, Central Asia and Europe , and open billions of dollars market for Pakistan and other regional countries, he said. He elaborated that CPEC plan is divided into four parts : 1) setting up the most modern port of Gwadar which would increase our trade manifold, 2) strengthening of energy sector by adding more than 10,400 MW to the system and upgradation of the transmission system, 3) development of infrastructure based on three routes linking China with all the provinces of Pakistan, 4) industrialization mainly in Gwadar under Pak-China partnership and cooperation.
#China to support #Pakistan to ensure security of new economic zone, says Chinese general. #CPEC http://www.scmp.com/news/china/diplomacy-defence/article/1878647/china-support-pakistan-ensure-security-new-economic?utm_source=&utm_medium=&utm_campaign=SCMPSocialNewsfeed … via @SCMP_News
Beijing will back Pakistan to ensure the security of a new economic corridor granting access to the port of Gwadar that aims to create direct links between China and the Arabian Sea, a top general has pledged.
Central Military Commission vice-chairman Fan Changlong told Pakistan's army head Raheel Sharif on Thursday that Beijing looked forward to close cooperation "to ensure proper management and security of CPEC", according to a Pakistani military statement.
The China-Pakistan Economic Corridor is an ambitious US$46 billion project giving Beijing greater access to the Middle East, Africa and Europe through Pakistan, via a highway to Gwadar port on the Arabian Sea.
Fan's visit, the first by a Chinese general of his seniority in more than a decade, came two days after Pakistan handed hundreds of hectares of land over to China for the development of a free-trade zone in Gwadar as part of the project.
The development is part of China's ambition to expand its trade and transport footprint across Central and South Asia while countering American and Indian influence. India has expressed wariness about the project in the past, though analysts recently said concerns would arise only if there were "defence-related matters".
Fan, who headed a high-level military delegation, on Thursday met Sharif at the Pakistani army headquarters in Rawalpindi to discuss "matters of mutual interest, regional security, steps for regional stability and enhanced bilateral defence collaboration", the statement said.
Fan said China "deeply appreciates" Pakistan's efforts to eliminate militancy, particularly by the East Turkestan Islamic Movement, which Beijing says is active in the Xinjiang region, which borders Pakistan.
Xinjiang - the homeland of China's 10 million Uygurs, a mostly Muslim ethnic minority - is sporadically hit by deadly violence. Beijing has claimed that militants from the movement are hiding in Pakistan, a claim that has been supported by local security sources.
"China values the efforts of Pakistan Army in fighting ETIM," Fan said, adding that China and Pakistan were "best iron brothers, good friends and strategic partners".
Fan also met Prime Minister Nawaz Sharif in Islamabad on Thursday, with Sharif lauding Islamabad's friendship with Beijing as a "cornerstone" of its foreign policy.
The government of Baluchistan province - Pakistan's poorest - handed over about 280 hectares of a 923-hectare swathe of tax-exempt land in Gwadar on Wednesday. Beijing will develop that land under a 43-year lease.
The rest of the land would be handed over under the agreement with the public China Overseas Port Holding Company "soon", senior Pakistani government officials said.
The #China-#Pakistan corridor: A fate-changer? #CPEC https://en-maktoob.news.yahoo.com/china-pakistan-corridor-fate-changer-100536811.html?soc_src=mediacontentsharebuttons&soc_trk=tw … via @YahooNews
By Anatol Lieven:
These projects, if realised - and this is a very big if - have the potential to bring in tens or even hundreds of billions of dollars in additional investments. They could restore Pakistan's economic growth of the early 1960s, which led economists at the time to predict that the country would be one of the future leading economic powers of Asia.
This dream was lost when Pakistan recklessly attacked India over the Kashmir dispute in 1965, and Zulfiqar Ali Bhutto subsequently abandoned free market policies in favour of a horribly corrupt and badly managed populism.
China certainly does not favour either international terrorism or a new security crisis in South Asia. Ideally, therefore, future Indian leaders might come to see an Indian interest in seeking reconciliation with Pakistan so as to link up with the Chinese corridor and open land routes for India to the Middle East and Europe.
This would require, among other things, serious work on a consensus between Delhi, Islamabad, Beijing and Washington on how to seek a peace settlement in Afghanistan.
The biggest obstacles to China's plans lie not in strategic threats but in the corruption, dysfunction and incompetence of Pakistan's governing structures, and the culture of patronage which dominates Pakistani politics.
Thus in the area of transport, Pakistan railways are a shambles compared with those of India, though the two countries inherited the same systems at independence. Pakistan International Airlines has been in crisis for years, above all because - as with state-owned banks and industries - politicians (and generals when in power) have used it as a source of patronage and stuffed it with their relatives and supporters. This has led to the grotesque figure of 776 PIA employees per aircraft, one of the highest rates in the world.
Pakistan needs a huge outside investment in infrastructure in part because of its own chronic inability to raise taxes. At barely 10 percent of GDP, Pakistan's tax-collection rates are among the lowest in Asia. Pakistan suffers chronic electricity shortages in part because it cannot get the population to pay its electricity bills.
It does not have to be this way. Under President Ayub Khan in the late 1950s and early 1960s, a combination of a relatively honest, dynamic and far-sighted administration with plentiful US aid (above all for infrastructure, as with China's plans) and sound international advice led to Pakistan achieving some of the highest rates of economic growth in the world.
If Chinese money and Chinese influence can return Pakistan to those rates of growth, then this will not only help to stabilise Pakistan and create a barrier to violence there. It will also mark China's arrival as a truly great - and positive - force on the world stage.
#Pakistan could turn into a transit trade hub between Central #Asia, Southeast Asia and #MiddleEast-#Europe. #CPEC http://tribune.com.pk/story/996406/pakistan-could-turn-into-a-transit-trade-hub/ …
Beijing also wants to reach Central Asia through the CPEC. As Afghanistan is not willing, China and Pakistan are working on an alternative route – the Quadrilateral Agreement on Traffic in Transit. This route will deprive Afghanistan of an opportunity to cash in on the benefits that will emerge from the CPEC.
Before the agreement on the $46-billion CPEC, Pakistan gave control of Gwadar Port to a Chinese company for developing and running the facility. China also plans to establish an oil refinery at the port.
Tajikistan, which is seeking oil imports from Kuwait via Pakistan, has been offered access to the port. Tajikistan may also have the facility to bring goods from Middle Eastern states and other countries.
Tajikistan is the only country among Central Asian states which is keen to give road and energy access to Pakistan. This can make Pakistan a trade hub as it will provide access to other Central Asian nations as well.
In such a scenario, Balochistan will win a substantial share in economic development and will be able to stave off negative consequences of the insurgency. Economic prosperity will overcome the threat of terrorism and ensure stability in the entire country.
#China Railway Construction & Zahir Khan Constructors win bid for 1100 Km of #Karachi-#Lahore Motorway in #Pakistan http://ecoti.in/cPjMaa
China Railway Construction Corp. said on Wednesday it has secured a 9.38 billion yuan ($1.46 billion) contract jointly with a Pakistani company to build a highway in Pakistan.
The company said that its unit, China Railway 20th Bureau Group Co, and Zahir Khan & Brothers Engineers & Constructors won the bid to build a 1,152 km section of a highway between Karachi and Lahore in Pakistan.
Earlier this year, Pakistan and China signed energy and infrastructure deals worth $46 ..
Here's an Indian Sikh visitor's view of Pakistani roads:
The Lahore Ring Road is much like the Delhi Ring Road, only much wider and with lesser traffic. It merges into the Lahore-Islamabad motorway which is even bigger and better. The drive to Nankana Sahib was pretty smooth through the town of Sheikhupura and the only roadblock we hit was on the outskirts of the town which was in a state of lockdown due to the rush of Indian devotees. Massive police presence could be seen and street after street was cordoned off with cement road blocks and razor wires to prevent access to the Gurdwara. -
See more at: http://indianexpress.com/article/blogs/a-surreal-drive-through-pakistan-discussing-modi-bihar-and-patiala/
#China entrepreneurs explore joint ventures in #Pakistan #CPEC http://www.pakistantoday.com.pk/?p=469870 via @ePakistanToday
A delegation of Chinese entrepreneurs visited the Islamabad Chamber of Commerce and Industry to explore business partnerships and joint ventures in Pakistan for various products including construction machinery, heavy duty vehicles, consumer electronics, hardware and glass wares.
The delegation was representing some big companies of China including FOXCONN Technology Group, China JiangSu NanTong LiuJjian Construction (CAMBODIA) Group, Wealthpower Technology Ltd, and Suzhou Super Glass Optical Technology Co Ltd. FOXCONN Technology Group has 1.2 million employees all over the world out of which 8 million were working in China.
The delegation informed that FOXCONN Technology Group was the most dependable partner for joint-design, joint-development, manufacturing, assembly and after-sales services to global computer, communication and consumer-electronics (“3C”) leaders and was looking for partners in Pakistan for manufacturing and distribution of these products. Similarly, CAMBODIA Construction Group produced big cranes, heavy duty construction machinery, trucks and were interested to start joint ventures in Pakistan.
The delegation members said that after the finalisation of China-Pakistan Economic Corridor project between the two countries, many Chinese investors were taking increased interest in Pakistan for investment and they have come on an exploratory visit to find out opportunities of investment and joint ventures in Pakistan. They also invited the ICCI delegation to visit China to find out business matchmakings.
Speaking at the occasion, LCCI President Atif Ikram Sheikh and Vice President Sheikh Abdul Waheed briefed the Chinese delegation about lucrative investment opportunities in Pakistan’s IT, construction, infrastructure development and other sectors. They said Pakistan was a big market of over 180 million people with strong demand for consumers’ electronics including computers, laptops, mobile phones, printers, copiers and digital cameras etc, and the Chinese investors should set up manufacturing plants in Pakistan to exploit these opportunities.
They said the government had started many construction projects in various cities while the CPEC would usher in more projects in energy and infrastructure development. They said Chinese investors should make Pakistan a production hub to meet domestic needs and export products to other regions. They assured that the ICCI would extend all possible facilitation to Chinese investors for investment and joint ventures in Pakistan.
New #railway tracks to be laid from Kotri to Attock in #Pakistan under #CPEC- http://www.khaleejtimes.com/international/pakistan/new-railway-tracks-to-be-laid-under-cpec …
Some 1,254 kilometres of railway track from Kotri to Attock City via Dadu, Larkana, Jacobabad, DG Khan, Bhakkar, Kundian will also be upgraded.
Islamabad: Pakistan has planned a major installation and upgradation of railway tracks under the China-Pakistan Economic Corridor, Radio Pakistan reported on Sunday.
Under the plan, new railway tracks will be laid from Gwadar to Quetta and Jacobabad via Besima.
Five hundred and sixty kilometres of track will be laid from Bostan to Kotla Jam on main line-II via Zhob and Dera Ismail Khan, while 682km of track will be laid from Havelian to Khunjrab, the state-run broadcaster's website said.
Upgradation of 1,872km of railway track from Karachi to Peshawar via Kotri, Multan, Lahore, and Rawalpindi (including Taxila-Havelian) - along with dualisation of track from Shahdara to Peshawar - will also be carried out.
Some 1,254 kilometres of railway track from Kotri to Attock City via Dadu, Larkana, Jacobabad, DG Khan, Bhakkar, Kundian will also be upgraded.
Further, the government on Saturday gave its final go-ahead to four mega projects, including two road construction schemes under the China-Pakistan Economic Corridor (CPEC) at a revised cost of Rs862 billion - Rs214 billion or one-third higher than original estimates.
The Executive Committee of National Economic Council (Ecnec) approved the 969-megawatt Neelum Jhelum Hydropower project as well as CPEC's 118-kilometre-long Havelian-Thakot and 392-km Sukkur-Multan sections of roads. It also approved the National Highway N-70 East-West Road Improvement Project.
#China, #Pakistan ink $2 billion deal to build massive #coal power plant in Sindh - The Economic Times #CPEC #Energy http://economictimes.indiatimes.com/news/international/business/china-pakistan-ink-2-billion-deal-to-build-power-plant-in-sindh/articleshow/50273768.cms …
BEIJING: China and Pakistan today signed a $2 billion agreement to jointly build a massive coal- fired power station in Pakistan's southern Sindh province.
The project will cost in excess R$2 billion, including the exploitation of a 3.8-million-tonne coal mine and the construction of a 660,000-kilowatt power station near the mine, China's state-run Xinhua news agency reported.
China will contribute USD 800 million to the financing, while the Pakistani partners will provide $500 million, mainly through China Development Bank and Habib Bank.
The project is expected to be completed by the end of 2017, and it will be the first such project in the China- Pakistan Economic Corridor.
The corridor will be a 3,000-kms long network of roads, railways and energy infrastructure between the ports of Gwadar in Pakistan and Kashgar in China's Xinjiang.
It was established to help lift Pakistan out of its economic slumber and boost growth for the Chinese ..
#Pakistan is "the only all-weather strategic partner" of #China - Global Times. #CPEC
In April when President Xi Jinping visited Pakistan, China and Pakistan elevated the bilateral relations to "all-weather strategic cooperation partners." China has established partnerships with a lot of countries in the world, but Pakistan is the only one that is called an "all-weather strategic cooperation partner."
For countries with different social systems and ideologies that want to collaborate with each other, the China-Pakistan relationship has become a model to follow. This type of relationship is not based on common values and systems, but on same or similar strategic and security interests. Today common security concerns still exist, and some new concerns like global terrorism and maritime security have arisen for both sides in recent years.
Since the beginning of the 21st century, the basis of China-Pakistan cooperation has expanded. The "One Belt, One Road" initiative and China-Pakistan Economic Corridor has enlarged bilateral strategic and cooperative partnership to a more comprehensive framework.
Before, the basis of the all-weather partnership mainly included political, strategic and security cooperation, now the closer economic ties have become a part of this basis, which makes two countries form a "community of shared destiny." The two sides not only have common economic interest and common security concerns, but also share the dream of national peace, stability, and prosperity. "Shared destiny" is the solid foundation for our cooperation in international affairs.
China-Pakistan international cooperation has some key features as follows: First, China and Pakistan respect principles, value friendship, and "share weal and woe." When dealing with international affairs, both sides take the Five Principles of Peaceful Coexistence as the basic principle; when facing international affairs, both sides advocate justice and fairness, protect the common interests of developing countries, and have the courage to speak up.
In addition, China-Pakistan cooperation is always based on close communication and coordination, deep understanding of the other side's situation and interest, and full consideration of the other side's feeling. Pakistan always gives China full support on the Taiwan, Tibet, Xinjiang, and South China Sea issues. China is also a strong supporter of the independence, sovereignty, territorial integrity, and national dignity of Pakistan.
In 1972, the People's Republic of China used its veto power for the first time to support Pakistan at the UN Security Council by refusing to admit Bangladesh, the former East Pakistan, to the UN. After 1989, every time when China was blamed by the US and other Western countries at the UN Commission on Human Rights, Pakistan was always the first one to stand up and speak for China.
China and Pakistan conform to trends of the times, expand scope of cooperation, and jointly resolve challenges. After the Cold War, especially in the 21st century, the world has seen a trend toward peace, development, and cooperation.
Apart from traditional security issues, more and more non-traditional challenges arise. As a result, China-Pakistan cooperation has expanded from political and security fields to economy and trade, climate change, food and energy security. China takes the interests of Pakistan and other developing countries into careful consideration when it negotiates with Western countries.
#China #Pakistan Economic Corridor: 27 sites identified for Special Economic Zones (SEZs)| Business Recorder. #CPEC
The federal government has identified as many as 27 sites in provinces, Islamabad Capital Territory (ICT) and Gilgit-Baltistan for setting up of Special Economic Zones (SEZs) under the China Pakistan Economic Corridor (CPEC), it is learnt. Sources in the Finance Division and the Planning Commission told Business Recorder that provincial governments have also been requested to allocate land for sites of SEZs.
The federal government has identified seven sites in Balochistan for the establishment of SEZs. The sites identified in Balochistan for industrial estates are as follows: (i) Gwadar with 3,000 acres for mines, minerals, food processing, agriculture and livestock, (ii) industrial estate at Lasbela (1,290 acres, iron steel, hardware, paper industry, pharmaceuticals), (iii) industrial and trading estate at Turbat (1,000 acres, manufacturing), (iv) Dera Murad Jamali with 50 acres, (v) Winder Industrial and Trading Estate, (vi) mini industrial estate Khuzdar (50 acres) and (vii) Bolan Industrial Estate (1,000 acres). The government has identified three sites in Sindh to set up Special Economic Zones, which include Chinese industrial zone near Karachi (2,000 acres, Exclusive Chinese Industrial Estate), Textile City at Port Qasim, Karachi with (1,250 acres) and Marble City at Karachi with (300 acres).
As per official documents, eight sites in Khyber Pakhtunkhawa province have also been identified for special economic zones. They include, marble and granite based industrial estate at Mansehra (80 acres, mining), industrial estate Nowshera (1000 acres, manufacturing), expansion of Industrial Estate Hatter (424 acres, manufacturing), industrial estate at Chitral (80 acres, food processing) as well as Industrial Estate Ghazi (90 acres, manufacturing) and industrial estate Dera Ismail Khan (188 acres, manufacturing).
Industrial estate at border of Kohat and Karak and industrial and economic zone at Bannu (400 acre) in KP have also been identified as sites for SEZ under CPEC. The government has identified seven sites for special industrial zones in Punjab. These included Multan Industrial Estate phase-II (80 acres), Rahim Yar Khan Industrial Estate (450 acres), Bhalwal Industrial Estate (400 acres), DG Khan Industrial Estate (3815 acres), Mianwali Industrial Estate (600 acres), Rawalpindi Industrial Estate (200 acres) and Pind Dadan Khan Industrial City (10000 acres) for agri, textile, food processing, livestock, manufacturing & energy).
Additionally, the existing under-development sites would also be included in SEZs for the CPEC. One site for special economic zones in Gilgit-Baltistan Moqpondass (2,000 kanal, mining & food processing) and one for Islamabad Capital Territory has also been identified under the CPEC.
#WorldBank report warns #Pakistan of ‘substantial’ fiscal risks from #CPEC sovereign guarantees. #China loans
Sovereign guarantees against the $46 billion China-Pakistan Economic Corridor (CPEC) investment and a likelihood of ramping up spending ahead of the next general elections could carry substantial fiscal risks for Pakistan, warned the World Bank (WB) on Thursday.
In its latest report titled Global Economic Prospects 2016, the Washington-based global lender has highlighted challenges and opportunities that CPEC offers to Pakistan. “Sovereign guarantees associated with CPEC could pose substantial fiscal risks over the medium term,” it noted.
State Bank of Pakistan (SBP) Governor Ashraf Wathra, and former finance minister Dr Hafiz Pasha have also expressed similar views about the implications of the CPEC investment on Pakistan’s external and fiscal accounts.
Wathra had said there was a need to divulge more details on debt and investment portions of CPEC, stressing the need for more transparency on part of the government. Pasha had projected that loans contracted under CPEC will push the country’s total external debt to $90 billion.
Commenting on the WB report, Pasha said Pakistan can offset the impact of the loans by increasing its exports by at least 50% in the next three to four years. He added that the game-changing project has financial implications for the country that have to be highlighted for better management of debt.
However, the government remains unable to give a well-thought out strategic trade framework, particularly at a time when exports are nose-diving. The last framework expired in June last year.
WB also warned that the hard won fiscal consolidation gains may be lost if spending ramps up in the period ahead of the 2018 elections.
The lender highlighted the opportunities for Pakistan in the next few years. It argued that over the near to medium term, the country stands to benefit from rising investments from China under CPEC, the return of Iran to the international economic community and persistently low international oil prices.
CPEC investment is estimated at around $45 billion until 2030. This includes $11 billion mostly public investment and $33 billion private investment in energy projects. The government has to give sovereign guarantees against the private investment including payments against power produced by the plants set up under CPEC.
WB said stronger growth and investment in Pakistan is predicated on reforms to strengthen the business climate, an improvement in the security situation, implementation of CPEC and an associated easing in energy constraints. It warned that these developments might not materialise as expected.
The lender noted that macroeconomic adjustment in Pakistan under an International Monetary Fund programme was progressing, while efforts to crack down on violent crime in Karachi are supporting investor confidence. It said CPEC agreement has further bolstered investor optimism, and, if implemented, has the potential to lift long-term growth.
Pakistan can be richer with rapid urbanisation: report
WB cautioned that fiscal deficits and public debt levels remain high. It said the debt-to-GDP ratio at 65% was high, which was the result of years of fiscal slippages. It said recently industrial activity has slowed in India and Pakistan, while external trade remains weak.
The global lender also highlighted challenges that the South Asia region faces in intra-regional trade. As a share of GDP, intra-regional exports are smaller than anywhere in the world, it noted. On average, India, Pakistan, Sri Lanka and Bangladesh’s exports to each other amount to less than 2% of total exports.
Average trade costs between country pairs in South Asia are 85% higher than between country pairs in East Asia, reflecting border barriers, poor infrastructure and transport connectivity, and generally poor business environments.
MedCong: Medical corridor between #Pakistan and #China to collaborate in health sciences and serve the poor. #CPEC
KARACHI: Medcong will serve as a medical corridor with China that will benefit poor patients in the two countries, said former federal minister and former Higher Education Commission chairperson Prof Attaur Rehman on Friday.
He was speaking at the inauguration of the first-ever three-day Pak-China Medical Congress (Medcong). The event, attended by senior medical experts of the two neighbouring countries, was inaugurated by Prof Rehman.
The Medcong, which is jointly being organised by Pakistan Medical Association (PMA) in collaboration with Chinese Medical Association (CMA), aims at paving the way for a medical corridor between Pakistan and China.
Addressing the ceremony, Prof Rehman said that Pakistan and China have strong high-level collaboration with each other. “The relations between both the countries have been improving day by day in various sectors, including education, research, medical, infrastructure building and other fields,” he said.
Prof Rehman said the establishment of a medical corridor with China will benefit the two countries’ poor patients. Tremendous opportunities exist for the medical students and researchers of the two countries, once provided with a chance to work together, he said.
CMA president Prof Yan Fei Liu said in his speech that Pakistan is magnificent, rich in natural resources and cultural heritage. “This ancient and magical land gave birth to a brilliant civilisation,” he said. “The Pakistani people are kind-hearted, hardworking, talented and courageous with the spirit of perseverance and [are] unyielding.”
According to him, CMA and PMA are going to make coherent efforts to build a Pak-China medical corridor to deepen the implementation of the China-Pakistan Economic Corridor and to seek bilateral exchanges and cooperation in medical education, patient caring, academia exchanges, medical information and experience sharing.
Prof Tipu Sultan, senior doctor and chairperson of the organising committee of Medcong said that China and Pakistan have been dear and close friends since long. “The academic and professional cooperation between the PMA and the CMA will bear great results,” he said.
A 44-member delegation representing the medical fraternity from China, including CMA vice-president and secretary-general Dr Keqin Rao, CMA deputy secretary-general Dr Lingo Lu, CMA international relations department deputy director Qing Long Meng and CMA project manager Weili Zhao are participating in the congress. The delegates, comprising medical experts from Sri Lanka, England and United Arab Emirates, are also participating in the congress along with their counterparts from different parts of Pakistan.
A memorandum of understanding (MoU) was also inked by the PMA and its Chinese counterpart, the CMA, during the congress. Both the PMA and CMA were declared sister concerns under the MoU while the decision to rotate the event every two years in the two countries will also be finalised.
#China Powers up #Pakistan: The Energy Component of the CPEC | The Diplomat #CPEC
China and Pakistan held a ceremony beginning construction for the planned Karot hydropower plant on January 10, marking the start of one more energy project on the China-Pakistan Economic Corridor. The $1.65 billion hydropower plant, spearheaded by China’s Three Gorges Corporation, was the first project to receive funding from China’s Silk Road Fund. Upon completion (scheduled for 2020), the Karot plant will provide 720 MW of energy harnessed from the Jhelum River.
The Karot plant is part of the broader China-Pakistan Economic Corridor, or CPEC, which itself is part of China’s “Belt and Road” initiative to link China with Europe (and all the regions in between). Though the CPEC is often understood solely in terms of transportation infrastructure – developing the Chinese-controlled port at Gwadar and linking it to China via rail and road – that’s not the only aspect of the project. Under the “1+4” cooperation framework unveiled during Chinese President Xi Jinping’s April 2015 visit to Pakistan, the CPEC is the “1,” with the “4” representing key areas of the larger strategy. Energy is one of those four areas, along with Gwadar Port, transport infrastructure, and industrial cooperation. In fact, China and Pakistan officially broke ground on five new energy projects, all of them considered part of the CPEC, during Xi’s visit to Pakistan last year.
Along with the Karot hydropower project, the CPEC also includes Chinese construction of the world’s largest solar plant in Punjab Province. The first section began providing electricity in August 2015; the second portion is currently under construction by Chinese firm Zonergy. When completed by the end of this year, the entire solar plant is expected to produce up to 1,000 MW of power.
Another project is a coal power plant at Port Qasim, which was in fact the first energy project included under the CPEC framework. According to China Daily, the plant, being constructed by Powerchina Resources Ltd., will cost $2 billion and should be finished by the end of 2017. The project will consist of two 660 MW coal plants, for a total energy generation of 1320 MW.
Of course, Chinese investment in Pakistan’s energy sector predate the CPEC — just look at perhaps the most famous joint project, the $10 billion expansion of the Karachi nuclear power plant. But the scale of the CPEC energy projects are mind-boggling.
All told, 14 Chinese-constructed energy projects in Pakistan tied to the CPEC are supposed to provide an additional 10,400 MW of electricity by March 2018 – more than enough to make up for Pakistan’s 2015 energy shortfall of 4,500 MW. And that’s only part of the story. According to China Daily, there are a total of 21 planned energy projects in the works under the CPEC framework. Altogether, these projects should eventually produce 16,400 MW of power, roughly the same as Pakistan’s current capacity.
As they say, the best-laid plans often go awry, so it’s likely not every project will be completed on schedule (or even at all). But the sheer scale of China’s energy plans for the CPEC ensures that it has a chance to be a game-changer for Pakistan, where rolling blackouts are common due to energy shortages.
#CPEC for #Punjab or #Pakistan: Myth versus reality. #PTI #PMLN #PPP http://tribune.com.pk/story/1029155/cpec-for-punjab-or-pakistan-myth-and-reality/ …
The primary concern of the smaller provinces as reflected in the resolution of the K-P assembly that the western alignment is not on the priority list of the centre. This claim is wildly being repeated without any evidence to back it up. In fact, the work is underway on the western and eastern routes simultaneously. The Frontier Works Organisation is working to complete the missing 400km link between Gwadar and Surab passing through Quetta, Zhob, Dera Ismail Khan and Peshawar.
In order to make Gwadar operational in the shortest possible time, the eastern alignment linking Karakoram Highway to existing motorways is the best bet. Given high traffic volume, thriving industries and security on the eastern route, it is much more feasible to kick-start the project. With work in progress on the central, western and eastern alignments simultaneously – linking Gwadar, Pakistan to Kashgar, China within 15 years under the CPEC – there is no reason to make the whole project controversial by mere speculations.
Is motorway prerequisite for the corridor?
Some in the provinces are demanding Zhob-Mughal Kot (N-50) or Qila Saifullah-Wagum (N-70) on the western route be constructed six lanes on the pattern of Karachi-Lahore Motorway. It makes no sense because of negligible traffic at the moment on the route. Of course, this route would have to be expanded with the passage of time as the traffic volume increases with the economic activity along the corridor. Without going into the technical nitty-gritty, it suffices to say that the same size lane is being constructed across the border on Chinese side. So, motorway is not needed at this time on the western route.
Economic zones: K-P on top
Another major concern of the smaller provinces is the alleged shifting of the industrial parks along the original western route to the eastern route thus denying the dividends of the project to the people of K-P and Balochistan. Some fact checking reveals that Board of Investment (BoI) has identified 27 economic zones out of which eight fall in K-P. The committee of BoI tasked to identify the potential sites for economic zones has worked in consultation with the provinces. However, it’s subject to approval by the joint working groups of China and Pakistan.
CPEC energy goes into national grid
Some have questioned the criteria for the allocation of the energy projects to the provinces. As a matter of fact, the energy generated by the projects under CPEC would be added to the national grid for nationwide distribution regardless of its installation point. So, the location of the power plant does not really matter. Most of the energy projects are located either close to the source or the load centre.
Contrary to all the noise, benefits to the largest province Balochistan are also enormous. Once developed, Gwadar would serve as a game-changer not only for the country but also for the entire region. Preliminarily, seven industrial parks have been marked in the province, making it the second highest number after K-P. It would open new jobs for the locals, uplifting them from extreme destitution.
Who gets the lion’s share?
Here arises a question: who will benefit the most from the CPEC once executed as envisioned by its authors? It will benefit the whole of Pakistan given the presence of various projects under CPEC spread across the length and breadth of the country. All the provinces stand to benefit from the project as all the provincial capitals – including Lahore, Karachi, Peshawar and Quetta – would be the major nodes of the project.
The inauguration ceremony of M8 was attended by Balochistan Chief Minister Nawab Sanaullah Zehri, General Raheel Sharif, Commander Southern Command Lt Gen Amir Riaz and other high ranking military and civilian officials.
The prime minister on the occasion also praised the services and sacrifices rendered by the Frontier Works Organisation (FWO) in the construction of CPEC.
“Despite security problems, work is in full-swing on construction of roads in Balochistan,” added Nawaz.
Prime Minister Nawaz elaborated that after completion of CPEC and other related projects, Balochistan would not be dependent for financial aid on the federal government.
“CPEC would ensure economic development of Balochistan,” he said, adding that the people of the province would be major beneficiaries of the mega project.
“Projects cannot be completed through mere slogans, rather a strategy was imperative for completion of projects,” he said.
The prime minister also reiterated his commitment on the occasion and said efforts were being made to develop Balochistan and bring it at par with other parts of the country.
ARMY CHIEF INSPECTS PROJECTS:
Meanwhile, Gen Raheel visited Hoshab area in Southern Balochistan to inspect new roads being built by army engineers as part of the China Pakistan Economic Corridor (CPEC).
According to DG ISPR Lt Gen Asim Saleem Bajwa, Gen Raheel lauded the pace and quality of work done by the Frontier Works Organisation (FWO).
In Pasni, the COAS held a meeting with Balochistan governor, chief minister and chief secretary.
The total road being built by the FWO for CPEC is 870kms long, out of which, 632kms have been completed within the last one and a half years.
Earlier in January, Prime Minister Nawaz Sharif had inaugurated the western route of the (CPEC) in Balochistan’s Zhob and laid the foundation stones of two key projects – upgradation of the Zhob-Mughal Kot section of the Dera Ismail Khan-Qila Saifullah Highway (N-50) and the Qilla Saifullah-Waigam Rud Road section of the Multan-Dera Ghazi Khan-Qilla Saifullah Highway (N-70).
The CPEC is a 3,000-kilometer network of roads, railways and pipelines to transport oil and gas from Gwadar Port to Kashgar city, northwestern China’s Xinjiang Uygur autonomous region.
#Pakistan Sees Growth Surging to 7% as #China Invests Billions. #CPEC #Economy #GDP http://bloom.bg/20FGmpv via @business
Pakistan will see its annual economic growth rate surge to 7 percent in two years as it reaps the benefits from China and others investing more than $40 billion in infrastructure, according to the Finance Ministry’s top bureaucrat.
Prime Minister Nawaz Sharif’s government is showing investors he’s serious about implementing economic reforms by heading toward completion of an International Monetary Fund loan program, Finance Secretary Waqar Masood Khan said in an interview in Islamabad on Wednesday.
“We still face challenges in achieving a higher growth," Khan said. “Compared to our potential, our growth rate is significantly low.”
Sharif is targeting growth of 5 percent for the current fiscal year ending in June, an eight-year high, as he works with the IMF to turn around an economy hindered by energy shortages and terrorism. China’s plans to invest $46 billion in an economic corridor are fueling optimism that growth is set to reach new heights.
Since Pakistan started taking IMF loans in the 1950s, it has struggled to see them through. It came close under former military president Pervez Musharraf, who didn’t take the last installment of that loan.
Khan said completing an IMF loan program “is always very tough." He declined to say whether the government would seek to borrow more from the IMF in the future.
“We will cross the bridge, when we come to it,” he said.
Khan doesn’t see hurdles in selling a stake in national carrier Pakistan International Airlines Corp., a condition for the release of IMF loan installments. Protests by the national carrier’s employees last month halted its flight operations.
"It is evident that there is more interaction required between the stakeholders,” he said. “The government’s commitment to bring strategic partner in PIA and other power companies is there and would be accomplished through a consultative process.”
The Sharif government has raised about $1.5 billion selling its remaining stakes in banks such as United Bank Ltd. and Habib Bank Ltd. That has helped increase the central bank’s foreign reserves to about $16 billion, Khan said.
Logistic, #Technology Park to be built for $1.5 billion in #Pakistan as part of #CPEC. #China
Federal Minister for Science and Technology Rana Tanveer Hussain said the Pak-China Science, Technology, Commerce and Logistic Park would be established in Islamabad at the cost of $1.5 billion.
Hussain, addressing a press conference, said it would be set up as part of the China-Pakistan Economic Corridor and serve as a platform for technological and commercial linkages between the two countries besides promoting investment and financing, e-commerce and research and development.
Game changer: All provinces will reap benefits of CPEC, says PM
The Minister said Pakistan would provide 500 hectares of land for the establishment of the Park and all other investment would be made by China. He said three sites had been tentatively identified and a delegation of Xinjiang Production and Construction Corporation would be arriving this month to finalise the site.
He said that the foundation stone of the project is expected to be laid in March next year and it would be completed in ten years in three phases. The minister said that this project would create job opportunities for 1,500 Pakistanis.
The minister stressed the need to move towards latest technology from obsolete one in order to compete with the rest of the world. In this regard, the government would allocate bigger share of the budget next year for the promotion of science and technology, he added.
The minister said that COMSATS Institute of Information Technology (CIIT), under the administrative control of Ministry of Science &Technology, had been holding Pak China Business Forums since 2012. In the forum, COMSAT invited Tech companies from China to participate with the main objectives of attracting Chinese investment in joint ventures in Pakistan.
Weighing in on benefits: Implementing transit fee on CPEC routes
Chinese companies have been showing increasing interest for the forum. From the 57 companies that visited in 2012, the number has risen to 125 in the 4th forum in 2015.
#Pakistan’s #FDI: fuelled by #China - http://FT.com #CPEC http://www.ft.com/intl/cms/s/3/88e071b8-e6e4-11e5-a09b-1f8b0d268c39.html#axzz42c8MTY7F …
Pakistan has no shortage of hurdles to overcome in its efforts to attract more foreign direct investment, from systemic corruption to security issues. But one of the biggest impediments to investment, especially in the manufacturing sector, has been the country’s inadequate, unreliable power supply.
China, as it so frequently does, has stepped into the breach.
Large-scale investments by Chinese power companies have given a significant boost to Pakistan’s FDI figures in the past year and will create a virtuous circle for the longer term by improving power supply and therefore making the country more attractive to investors in other sectors.
Last year was a bumper year for investment into Pakistan. The country received 39 greenfield investments totalling an estimated $18.9bn in 2015, according to fDi Markets, an FT data service.
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This compares with 28 projects for $7.6bn in 2014, and marks a high point for greenfield capital investment into the country since fDi began collecting data in 2003.
The number of projects is the largest since the country attracted 57 greenfield projects back in 2005.
China has emerged as the number one source country for investment into Pakistan, surpassing the second-ranked United Arab Emirates, primarily due to its investments in power.
China-based Shanghai Electric, a power generation and electrical equipment manufacturing company, announced plans last year to establish a 1,320 megawatt coal-based power project in Tharparkar, scheduled to launch in 2017 or 2018. Traditional energy and power projects made up two-thirds of last year’s total greenfield investment into Pakistan at $12.9bn, with alternative energy bringing in a further $1.8bn.
Among the more notable projects, UAE-based Metal Investment Holding Corporation announced plans to partner with Power China E & M International to invest $5bn to build three coal-fired plants at Karachi’s Port Qasim. But the transportation sector is also showing promise, with 12 projects totalling $3bn being announced or initiated last year.
Pakistan will be hoping an improved power supply can help it compete more strongly for regional investment flows and that this in turn will unleash economic growth. The country’s economic performance has been respectable — GDP growth increased from 2.7 per cent in 2011 to 4.7 per cent in 2014, according to the World Bank.
The World Bank estimate for 2015 was 5.5 per cent growth, and the forecast for 2016 is the same figure. But this is below the regional average and is a far cry from the rampant growth being experienced in neighbouring India. The World Bank expects growth in South Asia to reach 7.3 per cent in 2016.
If it wants to keep up with faster-growing rivals, Pakistan will need to keep fuelling its economy, and its FDI flows, with raw power.
#Pakistan releases cofessional video of #India spy Kulbhushan Yadav admitting to #RAW role in #Balochistan: Pakistan http://www.business-standard.com/article/news-ians/indian-spy-admits-to-raw-role-in-balochistan-pakistan-116032901151_1.html#.VvqfeFaB-ME.twitter …
Pakistan on Tuesday released a video in which an arrested Indian spy is heard confessing New Delhi's alleged involvement in terrorist activities in Balochistan.
Kulbushan Yadav says in the video that he had been directing various activities in Karachi and Balochistan "at the behest of RAW", the Indian intelligence agency, and that he was still with the Indian Navy.
Yadav added that he had played a role in the deteriorating law and order situation in Karachi, Dawn reported.
The video was released at a press conference attended by Pakistan Army spokesman Lt Gen Asim Bajwa and Information Minister Pervez Rashid.
Terming Yadav's arrest a "big achievement", Bajwa said Yadav was directly handled by the RAW chief and Indian National Security Adviser Ajit Doval.
"His goal was to disrupt development of the China-Pakistan Economic Corridor (CPEC), with Gwadar port as a special target," Bajwa said.
"This is nothing short of state-sponsored terrorism... There can be no clearer evidence of Indian interference in Pakistan."
Yadav is heard saying in the video that he was still a serving officer in the Indian Navy and would be due for retirement in 2022.
"By 2002, I commenced intelligence operations. In 2003, I established a small business in Chabahar in Iran.
"As I was able to achieve undetected existence and visits to Karachi in 2003 and 2004. Having done some basic assignments within India for RAW, I was picked up by RAW in 2013 end," Yadav said.
He said his purpose was to meet Baloch insurgents and carry out "activities with their collaboration".
Law enforcement agencies arrested Yadav in an intelligence-based raid in Balochistan's Chaman near the border with Afghanistan last week. He held a valid Indian visa.
India denied Yadav was an intelligence operative and said he was formerly from the navy. New Delhi also demanded consular access to Yadav, which has been denied.
Yadav was shifted to Islamabad for interrogation, during which an unnamed official said the spy revealed he had bought boats at the Iranian port in Chabahar in order to target Karachi and Gwadar ports, Dawn reported.
#China-#Pakistan logistics complex construction. #CPEC #Internet #Ecommerce #Warehouse #Transport #Manufacturing http://www.business-standard.com/article/news-ians/construction-of-china-pakistan-logistics-complex-begins-116040100513_1.html#.Vv6lCLG7OZw.twitter …
Construction on a logistics complex that will deepen bilateral trade between China and Pakistan began in Xinjiang on Friday.
According to the government, the project that began in Tashkurghan Tajik county covers an area of 883 mu (about 58 hectares) and will take a total investment of 3 billion yuan ($464 million), Xinhua reported.
The first stage of the three-stage project includes an internet service administration centre, a cross-border e-commerce enterprise incubator, and a modern warehousing and logistic centre, Xinhua reported.
In the meantime, a comprehensive transportation system, especially for cross-border and cold-chain logistics, will be further developed. RMB settlement will be introduced as well.
Further stages will see the completion of a commodity exhibition centre, manufacturing and assembly factories, hotels, entertainment facilities and vehicle maintenance station.
The county of Tashkurghan sits 3,200 metres above sea level in the Pamirs, linking Xinjiang's Kashgar and the port city of Gwadar in Pakistan.
The county's Karasu Customs, China's only land port open to Tajikistan and an important post along the planned China-Pakistan Economic Corridor, officially opened last year after 10 years of preparation.
From United Nations Industrial Development Organization (UNIDO):
Pakistan Manufacturing Value Added (MVA):
MVA per capita at constant 2005 prices increased from US$135.03 in 2005 to $143.84 in 2014
MVA as percentage of GDP at constant 2005 prices in US$ decreased from 18.05% in 2005 to 17.41% in 2014
India Manufacturing Value Added (MVA):
MVA per capita at constant 2005 prices increased from US$155.73 in 2005 to $168.42 in 2014
MVA as percentage of GDP at constant 2005 prices in US$ decreased from 15.10% in 2005 to 13.85% in 2014
China tops the list of world's 10 largest industrial producers. It is followed by the US, Japan, Germany and South Korea, according to United Nations Industrial Organization (UNIDO).
India ranks 6th in the world in terms of total manufacturing output in 2013, up from 9th place in 2008,
India's manufacturing value added (MVA) per capita of 161.7 in 2013 is among the lowest in the world. It's up from 131.9 in 2008.
In fact India's 2008 MVA per capita of 131.9 was lower than Pakistan's 141.1. Since 2008, Pakistan's MVA per capita has slipped to 139.1 in 2013 while India's has increased to 161.7 in this period.
Bangladesh's MVA per capita has jumped from 82.2 in 2008 to 118.3 in 2013.
On UNIDO’s industrial competitiveness index, most industrialized countries lost ground in the last three years. Among the five most competitive are four high-income countries (Germany, Japan, the Republic of Korea and the United States), along with China ranking fifth. The four are among the world’s most industrialized countries and, with China, account for 59 percent of world MVA.
A newer and increasingly common option in conventional power projects involving Chinese contractors is a project finance structure
such as a BOT (build-operate-transfer). Under a BOT, developers set up and arrange loans to a special purpose vehicle (SPV) in the host country. Some 70-80% of the capital costs of construction will come from these loans, and the remainder will be provided by the developers through equity and / or other loans.
The SPV then enters into all the contracts needed for the project, including an engineering procurement construction (EPC) contract with the contractor. If the funding is from China, this EPC contract will almost always be with a Chinese contractor.
Conventional power projects are seen as particularly 'bankable' BOT projects, because the technology is usually tried and tested and there is a high likelihood that performance requirements will be met. These projects also do not generally require significant land acquisitions, or need extensive underground works, reducing the risk of delays and unforeseen problems. Many jurisdictions, in fact, now have standard form power purchase agreements and implementation agreements that offer to allocate project risks between the offtaker, the government and the developers in a split that is attractive to many lenders.
It has taken Chinese contractors some time to get used to EPC contracts under project financed structures, as these tend to be tough on the contractor. Rates of delay and performance liquidated damages, and the caps on these, are generally much higher, and the contractor's rights to additional time and cost are limited. Many of these rights have to match the power purchase agreement that the SPV has negotiated with the offtaker. However, the upside for the contractor is that the developers are often willing to pay a higher contract price in return for the contractor taking on these additional risks.
Where the finance for the project is coming from Chinese banks, the Chinese contractor may enjoy stronger bargaining power, although that is not always the case. There are plenty of Chinese contractors with the skills needed to build these power stations, and developers will often use the threat of switching negotiations to a competing contractor to get their way in negotiations.
Evolution to investment
Even before the launch of OBOR, the larger and more experienced Chinese contractors had begun the transition from a traditional contractor business model to a 'contractor plus investment' model. Now, the signs are that a significant proportion of OBOR projects will involve Chinese contractors making investments in the projects that they are engaged to construct, and conventional power projects have been among the first to use this structure.
The China Pakistan Economic Corridor (CPEC) has been among the first to see innovative project structures. The Thar Coal Block II project involves the development of an open pit coal mine and 660MW mine mouth power station through two SPVs set up by a consortium of Pakistani and Chinese investors, including a major Chinese contractor who will act as both EPC contractor and SPV equity participant. Project finance loans, including conventional RMB and Rupee Islamic tranches, are provided by syndicates of Pakistani and Chinese lenders including Habib Bank, United Bank, China Development Bank, Industrial and Commercial Bank of China and Construction Bank of China.
- See more at: http://www.conventuslaw.com/report/chinas-one-belt-one-road-policy-increasing-the/#sthash.3Jx66DDF.dpuf
Modernising #Pakistan through #China. #CPEC by Farhan Bokhari
Reality check long overdue
While Pakistan’s civil institutions responsible for public work increasingly show a dismal performance, the Pakistan army continues to remain responsible for a variety of construction-related mega projects in otherwise inaccessible areas.
This follows more than five decades of experience by the army in undertaking challenging assignments including the Karakorum Highway or KKH, the road built with Chinese assistance, which links China’s Xinjiang province with Pakistan’s northern Gilgit-Baltistan province and onwards to the country’s plains. At the outset with the CPEC too, the army’s promise to provide a full security cover for Chinese workers in Pakistan, marked the critical element that buttoned up this project.
In the long term, Pakistan’s ruling politicians may have a valid point in seeking to lead the CPEC initiative. And yet, that ambition needs to be built with a long overdue reality check. The country’s civilian authorities need to embark on an internal reform plan first rather than seek to block the army from assuming a lead role in the execution of the CPEC.
Such a plan must be built upon three equally vital aspects. First, there needs to be a complete political consensus over the geographic layout of the CPEC and its associated projects. Signs of infighting between different political groups have in fact harmed the view of Pakistani politicians, reinforcing their image as a short-sighted warring bunch rather than a mature and politically responsible community.
Second, it’s vital to put safeguards in place for a radical improvement in the performance of key civil institutions, enabling them to take greater responsibility for the execution and eventual management of CPEC related projects. The total work cut out under this initiative will likely continue till the end of the next decade if not beyond. This creates a sufficient time frame for the army to first take charge of this valuable initiative and hand over responsibilities for its eventual management to Pakistan’s civilian infrastructure following a set of robust reforms.
Finally, it’s important for Pakistan’s ruling politicians to consider different types of fallouts from antagonising the armed forces, all in the name of promoting democracy. In the case of the CPEC, some politicians have eagerly pushed for exclusive civilian control on this project as a step towards strengthening Pakistan’s democratic evolution. Yet their initiative will only be an exercise in futility until such time that they reconcile themselves with Pakistan’s fundamental realities.
For now, General Raheel Sharif and the Pakistan army exclusively remain the main guarantors for the success of what is set to transform Pakistan as never before.
#BMI Research puts #Pakistan in top "10 emerging markets". Key Growth Drivers: #Auto & #Textiles #Manufacturing Hub http://read.bi/29mmYQT
"Pakistan will develop as manufacturing hub over the coming years, with the textile and automotive sectors posting the fastest growth at the beginning of our forecast period. Domestic manufacturing investment will be boosted by the windfall from lower energy prices compared to the last decade, and improved domestic energy supply."
A new report from BMI Research has identified the "10 emerging markets of the future" — the countries that are set to become new drivers of economic growth over the next 10 years.
BMI estimates that these countries will cumulatively add $4.3 trillion to global GDP by 2025 — roughly the equivalent of Japan's current economy.
In general, manufacturing and construction are the sectors that will drive the economies. BMI reports that new manufacturing hubs are set to emerge in Bangladesh, Myanmar, and Pakistan, and that these countries will see particularly strong growth in exporting manufacturing industries. And construction growth is going to be widespread throughout all the countries — partly to facilitate increases in urban populations and partly to help develop the manufacturing sector.
On the other hand, extractive industries — like mining, oil, and gas — are going to play a far smaller role in driving growth than they have the past 15 years.
While it might provide bright spots for some countries, the report states, "the ubiquitous commodity-driven growth model that was derailed by the 2012-2015 collapse in commodity prices is not coming back."
Via @NPR: #India's Lagging #Manufacturing Sector Slows Job Creation. #Modi #Achhedin #BJP
India needs an uptick in manufacturing to employ millions who enter the labor force every year. The slow expansion is imperiling India's ability to create jobs and lift millions out of poverty.
And you often hear about India having the world's fastest-growing economy. And it is growing at 7.6 percent. But beneath that headline is another reality. Manufacturing in the country is lagging, and that's hurting India's ability to create jobs and lift millions of people out of poverty. Let's go to New Delhi and NPR's Julie McCarthy.
JULIE MCCARTHY, BYLINE: Manish Dhariwal, chief financial officer of PPAP Automotive Limited, steps onto the factory floor as a downsized second shift punches in.
MANISH DHARIWAL: Each part has a different design.
MCCARTHY: He sweeps his hand across a display case of strips that seal car doors and windows, components he sells to the largest Japanese car manufacturers. PPAP enjoys a 90 percent market share, but Dhariwal says sales are flat, and his operation is running at just 65 to 70 percent capacity.
DHARIWAL: There's a big problem because facilities are already there, and they are not, then, getting fully utilized. And the cost of manpower increases on an annual basis. So how do I find the money for that if there's no sales growth?
MCCARTHY: Dhariwal's company is hiring no new workers. That undercuts Prime Minister Narendra Modi's pet project, to make manufacturing the engine of employment. Ten million Indians enter the workforce every year. But according to the Labour Bureau, eight labor-intensive sectors, including automobiles, created only 135,000 jobs last year, the lowest in seven years...
RAJIV KUMAR: It's a ticking time bomb.
MCCARTHY: ...Meaning social instability. Rajiv Kumar adds, if you have no new jobs...
KUMAR: You don't, therefore, address poverty in any real sense. And you exaggerate inequalities in our country.
MCCARTHY: Kumar is former head of the Federation of Indian Chambers of Commerce. He says India's nearly 8 percent growth rate reflects a jump in the service sector but disguises sluggishness in manufacturing. Kumar urges the government to stop boasting about the GDP and focus on the number of jobs created.
KUMAR: Because that's what is the key. And if you have that as the key macroeconomic target, then growth will follow.
MCCARTHY: But Mihir Sharma, author of "Restart: The Last Chance For The Indian Economy," says India can unleash growth only if it becomes easier to do business. He says roads here are so bad, the bureaucracy so hidebound, it's often cheaper to fly raw materials in from overseas than to clear the hurdles within India. That includes, he says, India's labor laws, which make it hard to fire workers in shops with more than 100 employees.
MIHIR SHARMA: It might take months. It could take years. And that's to fire one person. We are not competitive because we just can't get the scale and get the flexibility that every other country in the world has.
MCCARTHY: Flexibility in the workforce is useful in the lean periods, says Vishal Lalani, whose factory churns out dashboards for commercial vehicles, a sector that tumbled. A recovery has kicked in. But Lalani says 6 to 8 percent inflation is eating at his bottom line. And Lalani echoes other entrepreneurs who say Prime Minister Modi's campaign, Make in India, is more slogan than substance.
VISHAL LALANI: That's the way I see it. And it's probably boosting India's image and giving people a feel-good factor. But there's not that much happening on the ground.
MCCARTHY: Demand in India's auto sector is picking up, but the number of new jobs created is negligible. Even in aspirational India, demand can only go so far without gainful employment. Julie McCarthy, NPR News, New Delhi.
Chinese-backed coal excavation and power plants will displace thousands of people and deplete groundwater in Thar, a region ravaged by drought.
The Thar desert in Sindh province contains 175 billion tonnes of lignite coal – one of the largest untapped coal deposits in the world. It is also one of the most populated deserts in the world – home to world heritages sites and endangered species. Most of the 1.6 million people who live in the Thar desert region live in poverty and are highly vulnerable to extreme weather events. Twenty five percent of people live within the proposed coal development area. They thought they would benefit, but that has not been the case.
It was only in 2015 that work began on the fields, when the Thar coal project was included as part of a string of energy and infrastructure deals signed under the USD 46 billion China-Pakistan Economic Corridor. These agreements included eight coal-fired power plants and a 3,000-kilometre network of roads, railways and pipelines to transport oil and gas from Gwadar Port on the Arabian sea to Kashgar, in the northwestern Chinese province of Xinjiang.
In December 2015, China approved a USD 1.2 billion investment for surface mining of Thar coal and the establishment of 660 MW power projects. The deposits are divided into 12 blocks, each containing 2 billion tonnes of coal. In the first phase the Sindh provincial government has allocated block II to Sindh Engro Coal Mining Company (SECMC) to excavate 1.57 billion tonnes of coal and build a 660 megawatt power plant. The plant is expected to send power to the Pakistani national grid by June 2019 and will later be expanded to produce 1,320 MW of power.
A state-owned Chinese company, the China Machinery & Engineering Corporation, is providing the machinery and technical support for the excavation of coal and building and running the power plant. The local company will provide human resources, management and be responsible for the distribution of power. SECMC say the project has created 200 technical jobs and 1,600 menial positions. But locals have been protesting that the company has not even given them the menial jobs. Around 300 Chinese, including the engineers, miners and experts are also working on the site.
The Chinese team have started excavating the first pit. In the first phase SECMC will relocate five villages, which are located in block II, including Thario Halepoto village.
SECMC has started paying villagers for their homes and agricultural land. SECMC’s chief executive officer, Shamsuddin Ahmed Shaikh, claims that his company will do all they can to help the villagers.
“We will construct model towns with all basic facilities including schools, healthcare, drinking water and filter plants and also allocate land for livestock grazing,” he told thethirdpole.net
He said that the company is paying villagers above market prices for their land – PKR 185,000 (USD 1,900) per acre. However locals say this price does not take into account its high environmental value and they do not want to be relocated to the new towns, the exact location of which is yet to be decided.
A SECMC official said that the company will plant 10 trees for every tree cut. So far the company has planted 12,000 trees in an 18 acre area called the Green Park and more trees will be planted in next two years.
SECMC’s Shaikh rejected such claims saying his company would only use 1,400 acres for two reservoirs to store the water extracted during excavation. “It will be natural underground saline water, not toxic or poisonous in any way and it will not affect any village,” he claimed.
#Chinese enterprise to boost green, sustainable energy development in #Pakistan under #CPEC - Global Times
China will help boost green, low-carbon and sustainable energy development to address power shortage in Pakistan, vowed a Chinese entrepreneur on Monday on the occasion as the two-day China-Pakistan Economic Corridor (CPEC) Summit and Expo are being held in Islamabad.
"This is one of our core concepts when we implement the out-going strategy. We share our advancing technologies and experiments with the countries we invested in," Yan Zhiyong, chairman of the Power Construction Corporation of China, or Power China, told Xinhua on Monday.
"We are not coming only for big projects, we are here to help countries, such as Pakistan, to plan and design their future energy development blueprints so as to address problems they are facing and to bring them into realities," said Yan, who is fighting for a responsible image for Chinese enterprises that increasingly engaged in world arena.
Many China-involved projects overseas are questioned by western countries over ecological issues. However, for his part, Yan said all the projects by Power China will abide by local standards if the countries have higher environmental protection clauses than that of China, while, if their standards are less strict, it will follow as same as China's regulation.
The eye-catching Port Qasim coal-fired power project in Karachi in southern Pakistan is one of the best examples of Yan's concepts. The project adopts a costly method to lower the temperature of the seawater used to cool the generating units so as to prevent from heating up water temperature around the coast.
Abiding by local and World Bank's environmental protection regulations, the Qasim power plant, with a total installed capacity of 1,320 megawatt, will provide 9,000 gigawatt hour power to meet Karachi's electricity shortage in the southern Asia country.
Meanwhile, the Qasim project will also create over 3,000 jobs for the Pakistani people directly and will increase 500 jobs or training positions for locals every year after its operation.
Yan said that it is very important to train more local people to be qualified to operate the power plant and other utilities invested or constructed by Power China. "It's just like the proverb which says give a man a fish, he eats for a day. Teach him to fish, he will never go hungry."
The chairman also suggested the Pakistani government to develop hydropower and wind power as the country obtains abundant water-power and wind-power resources.
"On one hand, utilizing local power resources will decrease energy import costs so as to lower energy prices domestically. That will benefit the people here. On the other hand, it will ensure Pakistan's energy security by depending on its own resources," according to Yan, adding that "we must put a country's demands into our consideration when we are going to launch a project."
Yan said the CPEC is a part of Chinas Belt and Road Initiative which aims at optimizing regional resources and enhancing connectivity between involving countries so as to achieve the goal of common development, and Power China has the ability to fulfill its role in helping Pakistan shake off energy shortage.
Earlier the day, addressing the inaugural session of the CPEC summit, Pakistani Prime Minister Nawaz Sharif said that the CPEC would not only serve as a game-changer for Pakistan, but a fate-changer for entire region by helping it get rid of economic deprivation and attain peace and prosperity.
"The CPEC is a new concept of diplomacy based on shared goals of prosperity for Pakistan and the region, and a project to eliminate poverty, unemployment and underdevelopment. It will not only improve Pakistan's own infrastructure but will also provide it the much needed know-how, knowledge and expertise in new technologies," said the prime minister.
Published: 27 Jun 2016
Pakistan Vision 2025 seeks to enhance the national transportation infrastructure by establishing an efficient and integrated transportation and logistics system. Establishing industrial parks and developing SEZs along the China–Pakistan Economic Corridor (CPEC) will strengthen the transportation network and logistics infrastructure. Road freight transportation contributed over 90% of the goods transported by land. Rail freight is likely to gain share due to modernization and expansion. High priority is given to road network development. Private sector participation in logistics infrastructure development is likely to gain momentum, and transportation and warehousing are likely to lead logistics industry growth during 2016–2020.
The potential opportunities in the logistics industry in Pakistan, is estimated at approximately US $ 30.77 billion in 2015. Key targets set in the national development initiatives for the transportation sector include reduction in transportation costs, effective connectivity between rural areas and urban centres, inter-provincial high-speed connectivity. Also high priority is given for the development of integrated road/rail networks between economic hubs (including air, sea and dry ports) and high capacity transportation corridors connecting with major regional trading partners
Up-gradation of all major airports to trans-shipment hubs, development of cargo villages, modernization of rail transport, E-commerce, CPEC related investments in industrial centres and Special Economic Zones (SEZs) will serve as primary macro drivers for logistics sector growth. CPEC related projects intend to upgrade and modernize road transport and related logistics infrastructure such as logistics park and establishment of cargo villages at major airports. Hence, high priority is given for road network development; private sector participation in logistics infrastructure development is likely to gain momentum.
Storage and Warehousing demand from CPEC related industrial corridors are likely to derive increased storage and warehousing requirements including cold chain logistics, establishment of Cargo Villages Ports will facilitate goods traffic to central Asian countries and evolve as a major transhipment hub in the region.
Freight forwarding opportunities expected to increase due to increasing trade activities through Karachi and Port Qasim. Trade reforms expected to increase volume of trade with increase in inter and intra-regional trade. Development of new port at Gwadar generates demand for warehousing, special economic zone, road and railway infrastructure network. As the connectivity and linkage improves, this port will emerge as one of the major transhipment hub in the region - transhipment goods to China, Central Asian countries
Energy and Transportation sectors are expected to see high growth due to increased investment relating to CPEC and National Transportation Plans between 2016 and 2020. This is expected to growth of transportation and warehousing segments between 2016 and 2020.
How #Chinese money will transform #Pakistan | The Third Pole. #China #CPEC
The development of the China-Pakistan Economic Corridor (CPEC) has spurred debate in all quarters. Some perceive it as a form of neo-colonialism criticising Pakistan’s government for promoting unethical business practices at the cost of ordinary citizens’ livelihoods. Others see the CPEC as an unprecedented opportunity for economic revival with potential for a number of positive spillover effects including stronger local institutions.
See: Interactive map: China Pakistan Economic Corridor
CPEC is a package of infrastructure projects worth USD 46 billion. About two thirds of this funding, USD 33 billion, is committed towards establishing energy and power projects in Pakistan. Ahmed Zulfiqar Siddiqui, a senior executive at China Power, says these projects will help alleviate the country’s chronic energy crisis which cost the nation 7% of its annual GDP last year. “The Chinese have invested in power generation from coal and LNG as well as hydel, wind and solar power. A new transmission line funded by them will carry electricity from new power generation units in Sindh to load centres in Punjab. Shanghai Electric, a sister company of China Power, has also expressed interest in acquiring a major stake in K-Electric, which is the main provider of electric power to over 20 million people in Karachi. The Chinese are therefore covering the entire power sector value chain – from fuel extraction (mining) to end-user distribution.”
If everything goes according to plan
Improved energy supply could enable Pakistan to boost its flagging indigenous industries such as textiles, agriculture and manufacturing, increase exports and ultimately lead to sustained economic growth in the long term.
See: China’s new silk road: What’s in it for Pakistan?
A Deloitte study predicts that if everything goes according to the plan, the combined value of CPEC’s infrastructure projects would be equivalent to 17% of Pakistan’s GDP in 2015. Moreover, the project is expected to create at least 700,000 direct jobs and serve as a springboard for the development of industries such as retail, tourism, hospitality, health and education. The expansion of these industries could potentially lead to synergies among various downstream sectors with benefits accruing to the larger population. But Siddiqui stresses the need for policies to ensure involvement of local unskilled labour and small contractors since the mega-construction projects will predominantly be executed by Chinese labour. He also highlights the need to protect established local industries against price competition from China since local firms may not be able to compete with cheaper Chinese industries.
The CPEC project may also benefit the real-estate industry along the trade route. In Gawadar, property prices have more than doubled in recent months due to demand for housing. Atif Alam, owner of RB Associates, a real estate agency which deals in property across the country, believes that demand for quality housing and recreation facilities will sky-rocket as more Chinese expats move to Pakistan and infrastructure development enables access to previously isolated areas of natural beauty or historic significance.
See: The China-Pakistan Economic Corridor winds through Gilgit-Baltistan
Excerpts of Deloitte & Touche report on CPEC:
It is estimated that if all the planned projects are implemented, the value of those projects would exceed all
foreign direct investment in Pakistan since 1970 and would be equivalent to 17% of Pakistan's 2015 gross
domestic product. It is further estimated the CPEC project will create some 700,000 direct jobs during the
period 2015–2030 and add up to 2.5 percentage points to the country's growth rate.
The CPEC will open doors to immense economic opportunities not only to Pakistan but will physically connect
China to its markets in Asia, Europe and beyond. Almost 80% of the China’s oil is currently transported from
Strait of Malacca to Shanghai, (distance is almost 16,000 km and takes 2-3 months), with Gwadar becoming
operational, the distance would reduce to less than 5,000 km. If all goes well and on schedule, of the 21
agreements on energy– including gas, coal and solar energy– 14 will be able to provide up to 10,400
megawatts (MW) of energy by March 2018. According to China Daily, these projects would provide up to
16,400 MW of energy altogether.
As part of infrastructure projects worth approximately $11 billion, and 1,100 kilometer long motorway will be
constructed between the cities of Karachi and Lahore,2 while the Karakoram Highway between Rawalpindi and
the Chinese border will be completely reconstructed and overhauled. The Karachi–Peshawar main railway
line will also be upgraded to allow for train travel at up to 160 kilometers per hour by December 2019.3
Pakistan's railway network will also be extended to eventually connect to China's Southern Xinjiang
Railway in Kashgar.4 A network of pipelines to transport liquefied natural gas and oil will also be laid as part of
the project, including a $2.5 billion pipeline between Gwadar and Nawabshah to transport gas from Iran.5
Oil from the Middle East could be offloaded at Gwadar and transported to China through the corridor, cutting
the current 12,000 km journey to 2,395 km. It will act as a bridge for the new Maritime Silk Route that
envisages linking 3 billion people in Asia, Africa and Europe, part of a trans-Eurasian project. When fully
operational, Gwadar will promote the economic development of Pakistan and become a gateway for Central
Asian countries, including Afghanistan, Uzbekistan, linking Sri Lanka, Iran and Xinjiang to undertake marine
Over $33 billion worth of energy infrastructure will be constructed by private consortia to help alleviate
Pakistan's chronic energy shortages,7 which regularly amount to over 4,500MW,8 and have shed an estimated
2-2.5% off Pakistan's annual GDP.9With approximately $33 billion expected to be invested in energy sector
projects, power generation assumes an important role in the CPEC project. Over 10,400MW of energy
generating capacity is to be developed between 2018 and 2020 as part of the corridor's fast-tracked "Early
#Pakistan Opens New 340MW Nuclear Power Plant Built With #China's Help. #CPEC
Pakistan Prime Minister Nawaz Sharif has inaugurated a nuclear power facility built with the assistance of China.
The plant at Chashma, in Pakistan's Punjab province, adds 340 megawatts to the national grid. Beijing has already constructed two other nuclear reactors, with a combined capacity of more than 600 megawatts.
The three power plants at Chashma are known as C-1, C-2 and C-3 respectively. They are are part of broader plans to overcome long-running crippling power shortages in Pakistan.
“The next (nuclear) power projectwith an installed capacity of 340 megawatts, C-4, is also being built here (in Chashma with Chinese assistance). God willing, it will be operational and connected to the national grid in April, 2017,” Sharif told Wednesday’s ceremony.
Pakistan’s current electricity output stands at around 16,000 megawatts, including nuclear power production.
The government plans to increase the power production by about 60 percent, mainly through Chinese-funded coal, gas and hydro-electricity projects under construction to try to boost Sharif’s re-election bid in next polls due in early 2018.
When Sharif took office in 2013Pakistanis were facingcompulsory power outages for up to 12 hours a day, crippling daily life and plunging businesses into darkness.
The prime minister in his speech Wednesday reiterated his election promise to resolve the crisis by the next elections.
Officials say that Chinese experts and engineers had been running the newly-built C-3 plant “on a trial basis” for three months until they formally handed over its control to their Pakistani counterparts Wednesday.
Beijing is also helping Islamabad construct two nuclear power plants in the southern port city of Karachi at a cost of around $10 billion. The projects, with a combined capacity of around 2,200 megawatts, are scheduled to be completed by 2021.
Under the agreement, China will also provide enriched uranium for fuel.
The Pakistan Atomic Energy Commission (PAEC) envisages a nuclear power production of around 8,800 megawatts by 2030.
Pakistan built its first nuclear power plant of 137 megawatts at Karachi in 1972 and it is still in operation, though at a much reduced capacity.
China is the only country helping Pakistan build nuclear power plants because Western nations have put a moratorium on the supply of these facilities citing Islamabad’s nuclear weapons program.
Under a multi-billion dollar cooperation agreement, Beijing is also helping Pakistan construct a network of roads, rails, communication and power projects to boostties between the two traditionally close allies.
The bilateral cooperation under the China-Pakistan Economic Corridor (CPEC) plans to link the northwestern Xinjiang region to Pakistani deep-water port of Gwadar Gwadar in the Arabian Sea, providing Beijing the shortest possible access for its imports and exports to international markets.
#Pakistan to build country’s first Naphtha Cracker Complex. #petrochemicals #manufacturing #materials #CPEC
In an unprecedented development to boost the economy, Pakistan is set to build the country’s first ever Naphtha Cracker Complex (NCC), a state-of-the-art “grand infrastructure” to change petrochemical raw substances into value-added products ranging from construction, home décor, appliances, furniture, medical care, paints, cleaning stuff and top of the line military gadgets.
The absence of a naphtha cracker complex means Pakistan has to buy all petrochemical feedstock from international market that take heavy toll on import bill and prices of long range of items.
India has nine naphtha cracker complexes providing it tremendous mileage in industrial and economic progress.
The creation of this complex will revolutionise the industrial landscape.
The game-changing development came after an 18-member delegation of Pakistan Chemical Manufacturing Association (PCMA) met recently with Federal Minister for Planning, Development and Reforms in his office, Islamabad where NCC was announced to be built to catalyse the economic progress.
Acknowledging NCC as a strategic need, Minister suggested PCMA to prepare feasibility report and viable business plan in consultation with market experts and technologists to help ministry to make it a reality.
NCC will have an impactful role in all industrial zones to be placed along the route of China-Pakistan Economic Corridor (CPEC), it was said at the meeting.
Chinese investors are contemplating to build a chemical and automobile city in Gwadar under the umbrella of #CPEC
Chinese investors are contemplating to build a chemical and automobile city in Gwadar under the umbrella of the China-Pakistan Economic Corridor (CPEC).
According to a private news channel, sources linked to CPEC project stated that the Chinese authorities have already initiated paperwork on said projects, which reflects their seriousness.
Analysts have advised owners of local automobile industry to start joint ventures with Chinese as this would help in transfer of technology as well as boost the local industry. Earlier, China announced to set up a steel factory under CPEC apart from various other projects.
China is developing the Gwadar port as a strategic and commercial hub under its ‘One-Belt One-Road’ initiative that promises shared regional prosperity. CPEC is one of many arteries of the ‘One-Belt One-Road’
In 2013, Pakistan handed over the Gwadar port to the Chinese company by annulling a deal with a Singapore company that could not develop the port after taking over in 2007. The ECC further approved amendments in the Gwadar Port Concession Agreement for operating and developing the Gwadar port and free zone.
On October 31, hundreds of Chinese trucks loaded with goods rolled into the Sost dry port in Gilgit-Baltistan as a multibillion-dollar project between Pakistan and China formally became operational.
The corridor is about 3,000-kilometre long consisting of highways, railways and pipelines that will connect China’s Xinjiang province to the rest of the world through Gwadar port.
Exclusive: CPEC master plan revealed
For industry, the plan trifurcates the country into three zones: western and northwestern, central and southern. Each zone is marked to receive specific industries in designated industrial parks, of which only a few are actually mentioned.
The western and northwestern zone, covering most of Balochistan and KP province, is marked for mineral extraction, with potential in chrome ore, “gold reserves hold a considerable potential, but are still at the exploration stage”, and diamonds. One big mineral product that the plan discusses is marble. Already, China is Pakistan’s largest buyer of processed marble, at almost 80,000 tons per year. The plan looks to set up 12 marble and granite processing sites in locations ranging from Gilgit and Kohistan in the north, to Khuzdar in the south.
“There is a plan to build a pilot safe city in Peshawar, which faces a fairly severe security situation in northwestern Pakistan”.
The central zone is marked for textiles, household appliances and cement. Four separate locations are pointed out for future cement clusters: Daudkhel, Khushab, Esakhel and Mianwali. The case of cement is interesting, because the plan notes that Pakistan is surplus in cement capacity, then goes on to say that “in the future, there is a larger space of cooperation for China to invest in the cement process transformation”.
For the southern zone, the plan recommends that “Pakistan develop petrochemical, iron and steel, harbor industry, engineering machinery, trade processing and auto and auto parts (assembly)” due to the proximity of Karachi and its ports. This is the only part in the report where the auto industry is mentioned in any substantive way, which is a little surprising because the industry is one of the fastest growing in the country. The silence could be due to lack of interest on the part of the Chinese to acquire stakes, or to diplomatic prudence since the sector is, at the moment, entirely dominated by Japanese companies (Toyota, Honda and Suzuki).
China signs MoUs worth $375m for investment in readymade garments sector in Pakistan
Chinese companies from different cities and provinces have expressed their interest in relocating their textile, garment and accessory production units to Punjab, with an expected investment of at least $25 million estimated for each unit.
This was stated by Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) Central Chairman Ijaz Khokhar at the three-day 18th International Textile Asia Exhibition. Besides marking the participation of over 500 foreign delegates, the exhibition also witnessed signing of MoUs worth $375 million for investment in Pakistan through joint ventures with local companies
Speaking on the occasion, Khokhar said that foreign companies are also committed to transfer their technologies, besides buying back Pakistani products after value-addition here, which would enhance export and lower Pakistan’s trade deficit with China.
Quoting the Chinese, he said, “We will make joint ventures with local companies from Gujranwala, Lahore, Sialkot and Faisalabad, and provide training to engineers from these cities and buy back products to export to China.”
The event was jointly organised by PRGMEA and Ecommerce Gateway Pakistan, who also signed an agreement to continue to jointly conduct this mega textile event in the future on an annual basis.
The PRGMEA chairman announced this on the last day of the exhibition. In his concluding remarks, he said that around 52,000 trade visitors registered their presence in the textile fair in three days.
Also present on the occasion, PRGMEA Vice Chairman Jawwad Chaudhry said that machinery and equipment displayed at the exhibition were of immense use to manufacturers producing value-added products for increasing volume of exports.
He hoped that local businessmen would benefit from this technology by adding value to their products.
He said that the Textile Asia Expo also featured businessmen to businessmen (B2B) meetings, a lot of important industry-related presentations and seminars on textile sector.
Chaudhry observed that the entire chain of the local textile sector was invited to attend the country’s largest textile show. The exhibiting countries included Austria, China, Czech Republic, France, Germany, India, Italy, Korea, Taiwan, Turkey, UK and USA among others.
Ecommerce Gateway Pakistan CEO Dr Khurshid Nizam said that such textile machinery fairs in Pakistan would increase productivity, resulting into better competitiveness.
Chinese textile units interested in relocating to Pakistan
The exhibition is aimed at focusing the Punjab potential of textile and garment machinery, accessories, raw material supplies, chemicals and allied services under one roof, as around 80% of textile industry is located in this province, Nizam added.
The exhibition also provided an effective platform for joint ventures and collaborations to the textile sector’s SMEs, he remarked.
The CEO observed that the three-day mega fair provided the local small textile industry a good opportunity where more than 315 international brands from around 27 countries displayed their products in more than 515 stalls.
Long term plans to be finalised in 50th CPEC review meeting
The long term Pakistan-China cooperation plan (2015-2030) will be finalised in the 50th China-Pakistan Economic Corridor (CPEC) 'review meeting' scheduled to be held today (Thursday) under the chair of Ahsan Iqbal, federal minister for planning and interior, a statement said on Wednesday.
“The meeting will finalise the long term plan in consultation with federal ministries and provincial governments, while ministry of railways will brief the meeting about the upcoming financing plan for the up-gradation of Mainline-1 (ML-1) from Peshawar to Karachi will be discussed,” the ministry said in the statement.
The ministry added that Pakistan and China were in the process of finalising the financing plan of $8.5 billion for the ML-1, whereas the next joint working group (JWG) meeting was expected to be held probably next month as the financing plan for the track was also expected to be finalised by November this year.
“Admitting the requirement for having overriding institutional framework to execute $46 billion China-Pakistan Economic Corridor (CPEC) under long term plan till 2030, Beijing and Islamabad have also agreed to build model industrial parks, each in all provinces, with Chinese financing of multimillion dollars,” the ministry said.
Moreover, it said that it was also under consideration to build model cities along the bank of Indus River, having a range of 300 kilometers, but it was yet to be seen as to how this ambitious plan was going to be finalised in a synergised manner.
“Officials from Chinese Embassy at Islamabad probably Chinese Ambassador, Chinese companies and officials from ministry of planning, line ministries and provincial governments would participate in the meeting,” the ministry said. It further said the forum would review progress on the ongoing projects including schedule and agenda of the next JWGs of energy, transport infrastructure, planning, and Gwadar. “It will further review the progress on consortium of business schools and Pakistan Academy of Social Sciences,” the statement said.
#Pakistan, #China to fast track #industrial cooperation under #CPEC. #SEZ #economy #Manufacturing
Pakistan and China have agreed to fast track the industrial cooperation under China Pakistan Economic Corridor (CPEC) to accrue maximum benefits of this important phase and ensure win-win situation for both countries.
This was decided in the first meeting of Joint Expert Working Group (JEWG) on industrial cooperation, held on Tuesday in Islamabad. The Pakistan side was led by Board of Investment (BoI) Secretary Azher Ali Chaudhry and the Chinese delegation was led by China International Engineering Consulting Corporation Director Du Zhenli.
On the occasion, the BoI secretary said that the main gain from the CPEC is the industrial cooperation which will not only provide a win-win situation for both countries but will ensure sustainability of this multi-billion dollar project. He said that the Chinese experience regarding establishment of industrial parks will be instrumental for Pakistan by using it as a tool for economic and social development of the country.
Zhenli, head of the Chinese delegation, mentioned that the entire visit remained highly productive and would go a long way to frame the future plans of industrial development in Pakistan. Both sides had a detailed discussion on relocation of industry from China, incentive package for relocation of industry, opportunities available under export promotion zones, identification of industry to be parked in special economic zones (SEZs), terms of engagements (ToE) for establishment of SEZs and upgradation of human resource development through promotion of technical education.
Both sides agreed to ensure finalisation of feasibilities and other codal formalities of prioritised SEZs before 7th Joint Cooperation Committee (JCC) meeting, expected to be held by the end of this year. The Chinese side expressed their satisfaction over the incentive package announced by Pakistani side and informed that a number of Chinese developers and enterprises are willing to invest in these SEZs.
Both sides agreed that SEZs under CPEC are open for all foreign and local Pakistani investors. Chinese developers and enterprises could enter into joint ventures with local developers and investors to ensure successful cooperation in this important sector of CPEC. Pakistani side shared a proposal to upgrade skill development in Pakistan in line with needs of CPEC which includes transformation of National Training Bureau (NTB) into state-of-the-art institute of technical and vocational training centre in federal capital for producing skilled workforce for CPEC projects, establishment of joint China Pak Training Institutes in the main cities falling under CPEC routes such as Gilgit, Abbottabad, Islamabad, DI Khan and Quetta as well as establishment of Public centres for a vocational training at Islamabad for imparting training to the youth and instructors on the “model of public centre” for vocational training, Tianjin. It was decided that the proposal would be further discussed in detail on the forum of JWG on industry cooperation likely to be held next month.
The Chinese Expert Group is on its eight-day visit to Pakistan to ensure transfer of knowledge and share Chinese experience in development of industrial sector with Pakistani officials, members of academia and business community. Besides conducting three training workshops in Karachi, Lahore and Islamabad, the group visited SEZs sites in Sindh, Punjab and Khyber Pakhtunkhwa.
#Chinese businesses plan $1 billion #investment in #Pakistan's #automotive, #textile, #agriculture, information #technology and #telecom sectors. #CPEC https://www.thenews.com.pk/print/497017-chinese-businesses-plan-1-billion-investment-in-cpec-projects
Chinese businessmen on Thursday expressed desire to invest around one billion dollars in Pakistan as China’s funded economic corridor projects entered into their second phase with focus on industrial and agriculture cooperation and Gwadar development. The 50-member business delegation apprised Minister for Planning, Development and Reform Khusro Bakhtyar of its investment plan during a meeting. They are keen to invest in various sectors, including automotive, textile, agriculture-related, information technology and telecom industries. Bakhtyar said the ministry of planning would facilitate investment to further the economic cooperation between the two countries.
“The government is focusing on promoting export-led industry and import substitution for sustained economic growth,” an official statement quoted the planning minister as saying. “China can help increase Pakistan’s exports by relocating export-oriented industries and initiating joint ventures in various fields. This will boost industrial cooperation besides strengthening bilateral economic partnership between the two countries.”
China initiated $62 billion worth of infrastructure and energy projects in Pakistan as part of its Belt and Road Initiative.
The minister said the country offers liberal investment policies to attract foreign investment in different areas. “Private sector of both the countries should forge partnerships for mutual economic benefit of the two countries,” he said. “There are investment opportunities in various sectors such as maritime, iron and steel, petrochemical, agro-based industries, tourism, energy, minerals and mines and textiles.”
Bakhtyar further said establishment of industrial zones has the potential to revive the country’s industrial sector. “It will also create job opportunities besides developing local industries.”
Pan Guangfeng, head of the Chinese delegation acknowledged the significance of Pakistan’s strategic location and the immense investment opportunities in the country. Guangfeng said the city of Chongqing is side by side with One-Belt-One-Road and a centre of heavy industrial activity in central China, especially the automotive and electronics industries of the region along with 37 industrial parks. The delegation head said the investors could raise $300 to 500 million for special economic zone (SEZ) infrastructure development with an umbrella investment of $1 billion in several sectors. He hoped that Chinese investment in Pakistan would help to create 500,000 direct jobs for local youths in addition to transfer technology and raise industries’ tech standards in Pakistan.
Members of the visiting delegation, comprising of chief executives and general managers of businesses from the City of Chongqing, have experience in developing economic zones and expressed their intention to facilitate in the development of SEZs. They highlighted the potential role of Belt and Road Initiative in contributing to the economic and social development of Pakistan and further explored the avenues of collaboration in technological innovation and up-gradation, job creation, ecommerce, and development of human resource capabilities through industrial cooperation between China and Pakistan.
The flaws in CPEC
The biggest so-called mystery about CPEC is as follows: if CPEC was supposed to be such a huge bonanza for Pakistan in terms of investment, which is it not showing up in the foreign direct investment (FDI) numbers? Why is Pakistan’s current account balance still negative? In fact, why is Pakistan’s current account balance actually getting worse?
The answer is relatively straightforward: because CPEC is not an investment into Pakistan, it is structured as a resource extraction exercise. Here is how it works: China announces that it has invested in a project in Pakistan worth, let’s say $1 billion. That $1 billion, however, is required to mostly be spent on Chinese equipment, and labour, a significant portion of which is to be imported from China as well, with very little by way of supplies coming from the local economy.
That $1 billion, therefore, never hits Pakistan’s economy as an investment. It is $1 billion that goes from the Chinese government or state-owned company to a state-owned company within China to pay for equipment. Even the Chinese labour gets its salaries deposited into bank accounts within China. The money, in other words, stays completely within China and so never shows up as foreign investment into Pakistan.
Where it does show up is in the trade statistics: that $1 billion of equipment will show up as an import, against which Pakistan will have to arrange foreign currency from somewhere. And it will show up as a liability on the balance sheets of whichever company or government entity is contracting with the Chinese government or state-owned company.
Let us recap what we get and what China gets out of this so-called $1 billion investment.
· $1 billion in sales for a Chinese state-owned company
· $1 billion in new loans for a Chinese state-owned bank at very high interest rates
· $0 in investment
· $1 billion in imports and increase in net trade deficit
· $1 billion in liabilities for a Pakistani company or government entity
As is evident from the above, this is an arrangement designed purely to benefit one party and that party is not Pakistan. It could still work out in Pakistan’s favour if the economic value of the asset being built was greater than the $1 billion in liabilities taken on to build it. Unfortunately, more often than not, it is far from clear as to whether that is the case.
#CPEC likely to contribute 3.5% to #Pakistan's #GDP: 'We have discussed trade amounting to almost $2.5 trillion which is going to be routed through various corridors and Pakistan sits at the epicentre of all this activity' http://a.msn.com/0F/en-xl/BBV7roZ?ocid=st
China's investment of over $60 billion in Pakistan's infrastructure and power projects under the China-Pakistan Economic Corridor (CPEC) is expected to increase Pakistan's economic growth by around 3.5 percentage points, said Standard Chartered Bank (Pakistan) CEO Shahzad Dada on Thursday.
'CPEC projects are estimated to contribute around 3.5 percentage points to Pakistan's GDP (gross domestic product) growth once they are fully delivered,' he emphasised while speaking at an event in Karachi.
Dada noted that most of the Chinese companies investing in Pakistan under CPEC were clients of the bank and Standard Chartered was itself involved in financing some of the projects as well.
Early harvest projects under CPEC are expected to be completed in the current calendar year. Later, short-term projects are anticipated to be completed by 2022, medium-term projects by 2025 and long-term projects by 2030 and beyond.
Pakistan achieved a 13-year high GDP growth of 5.8% in FY18. However, the growth is expected to slow down to around 4.4% in the current fiscal year and 4.1% in FY20, according to Fitch Solutions.
Dada highlighted that China and Pakistan signed a memorandum of understanding for investment of over $60 billion, of which infrastructure and power projects worth over $30 billion were under way. CPEC is part of China's wider Belt and Road Initiative (BRI).
'We have discussed trade amounting to almost $2.5 trillion which is going to be routed through various corridors and Pakistan sits at the epicentre of all this activity,' he pointed out. 'With the Belt and Road Initiative, there is expectation that trade is going to double, quadruple or rise even further.'
#CPEC 2.0 Focus on Boosting #Exports: Promotion of business to business relationship for #technological, #industrial investment & development to augment #Pakistan’s capacity to #export products, Says #Chinese Envoy to #Islamabad https://www.app.com.pk/pakistans-capacity-of-export-to-be-augmented-under-cpec-2nd-phase-envoy/ Associated Press Pakistan
Chinese Ambassador in Pakistan Yao Jing on Friday said that under second phase of China Pakistan Economic Corridor (CPEC), promotion of business to business relationship for technological and industrial development in order to augment Pakistan’s capacity to export was a priority area for the Chinese government.
He was speaking to Federal Minister for Economic Affairs Muhammad Hammad Azhar here at the minister’s office, said a press release.
The envoy congratulated Hammad Azhar on his elevation as Federal Minister.
The Ambassador reiterated commitment of his government to the strategic relationship with Pakistan and hoped that appointment of Federal Minister for Economic Affairs will further strengthen relationship between the two countries.
The Ambassador updated the minister on the progress made on account of implementation of CPEC related projects.
The envoy stated that in the second phase socio-economic sector projects, with grant financing for direct benefit of common man were also priority areas.
The minister stated that the CPEC is a flagship programme of Belt and Road initiative which is now entering into a new phase. He reiterated commitment of his government for implementation of next phase of CPEC for the benefit of people of Pakistan.
He acknowledged the historic relationship with China and the generous support it has been extending to Pakistan.
The minster also acknowledged the economic and financial assistance provided by China to Pakistan during difficult times. China’s position on the current situation in occupied Kashmir was vehemently appreciated.
New #industrial city near #Faisalabad in #Pakistan to create 300,000 jobs & attract Rs400 billion #investment in #automobiles, #textiles, #engineering, #pharmaceuticals, #food processing, #chemicals, #construction materials, #FGCG and packaging sectors.
The project will attract a huge investment in automobiles, value-added textiles, engineering and pharmaceuticals.
Prime Minister Imran Khan on Friday, January 3, performed the groundbreaking of the Allama Iqbal Industrial City in Faisalabad which is being established under China-Pakistan Economic Corridor and expected to create around 300,000 jobs and attract Rs400 billion investment.
During a day-long visit here, the prime minister performed the groundbreaking of the mega project by unveiling a plaque and also planted a sapling at the project site as part of his 10-Billion Tree Tsunami.
The prime minister was briefed about the significance of the project which is expected to create 300,000 jobs during the next five years.
The project will attract approximately Rs400 billion investment in automobiles, value-added textiles, engineering, pharmaceuticals, food processing, chemicals, construction materials, FGCG and packaging sectors. It will contribute to the country's GDP, increase the exports of the country and would also encourage the import substitution.
In total, nine special economic zones had been planned under the China-Pakistan Economic Corridor (CPEC) Industrial Cooperation Framework.
#Pakistan sees #FTA with #China, Belt and Road as path to recovery. #CPEC has entered a new phase, focusing not only on #energy and #infrastructure but also #industrialization and #socioeconomic development, and #modernization of #agriculture and #tourism https://asia.nikkei.com/Editor-s-Picks/Interview/Pakistan-sees-FTA-with-China-Belt-and-Road-as-path-to-recovery
On Jan. 1, the second phase of the Pakistan-China free trade agreement kicked-off. According to the minister, the first phase "resulted in a huge trade deficit in Pakistan," but the country recognized the need to correct the problem. "Under [the second phase], we can export 313 new items -- especially textile, surgical instruments, sportswear and agricultural products -- to China with zero duties."
Pakistan expects the new phase of the FTA will increase exports by $500 million to $600 million.
The 38-year-old minister noted other bright spots in the economy, saying that "tax revenues in July-November 2019 rose 17% from last year," driving down the current-account deficit by 73% in the same period.
Continuing on the upbeat note, Azhar said that Pakistan rose in the World Bank's Ease of Doing Business ranking to 108th, up 28 places from last year. He also pointed out that foreign portfolio investment has returned after three years, and that the benchmark stock index Karachi Stock Exchange 100, rallied 11,000 points in five months, hitting the 40,000 mark.
Furthermore, ratings agency Moody's upgraded Pakistan's outlook in December 2019 from Negative to Stable, based on a positive evaluation of policy changes and improvement in the country's balance of payments.
"The Pakistani economy has been stabilizing since last year," Azhar said. "Once we've completed stabilization, then we'll shift gears and enter a higher growth phase from [fiscal 2021]. I think we're out of the economic crisis."
Regarding GDP growth next year, the minister said it "depends on whether inflation and interest rates come down, but it will be certainly higher than the current fiscal year."
However, Pakistan is not yet out of the woods. Retail inflation in November was 12.7%. In addition, due to servicing a $6 billion bailout package from the IMF, the country had to hike gas and power tariffs. Inflationary pressure remains high.
"Most of the inflation is in food, and is seasonal. 20% to 25% of our economy is based on agriculture," Azhar explained, adding that suspending trade with India affected food prices. To reverse the trend, the minister stated that "our cabinet is already considering to lift the import embargo on medicines and essential items from India."
Pakistan also needs to increase tax revenues, partly by improving domestic tax collection. "Despite [declining] imports, tax collection is rising," he said. "If you look at domestic tax collection, it's growing at close to 25% to 30%."
The minister added that the government is becoming more aggressive in its approach. "We're using the latest technologies to track the flow of money and [guarding against] smuggling."
Pakistan's industry lobbies are chiming in with more demands for business-friendly policies to promote investment. They also want custom duties lowered and more government incentives. Last December, import duties on cotton were slashed to help the country's textile industry. In addition, Azhar has promised to increase lending to small and medium-sized enterprises, which contribute almost 40% to Pakistan's GDP.
Top CPEC Official @AsimSBajwa : Second phase of #CPEC crucial for #Pakistan's development: It has special emphasis on #agriculture, #industry, #trade, and #science and #technology. Just completed first phase was about #power and #infrastructure. #China http://www.xinhuanet.com/english/2020-05/07/c_139038471.htm
The second phase of the China-Pakistan Economic Corridor (CPEC) is crucial for the economic development of Pakistan, local media quoted Chairman of CPEC Authority Asim Saleem Bajwa as saying on Thursday.
The second phase of the multi-billion-dollar economic cooperation between Pakistan and China will have a special emphasis on agriculture, industry, trade, and science and technology, Bajwa said in an interaction with local media.
He said that the Pakistani government's priority about the second phase of CPEC is to make special economic zones functional, besides development projects in Gwadar, according to the report.
Bajwa, who also holds the additional position of the special assistant to the Pakistani prime minister on information and broadcasting, said that work for the completion of CPEC is in progress on a fast pace.
"There is no political hindrance in its way. The project is Pakistan's future as well as a tangible reality and no compromise will be made on it," local media quoted the official as saying.
Bajwa said Pakistan takes decisions which are within the best interest of the country and there is a political consensus that CPEC is the best for the interest of the country and for that matter "no external pressure against CPEC will be accepted," according to the report.
Many projects focusing on infrastructure and energy sectors in the first phase of CPEC have been completed and are already operational, and work on the second phase is underway. Enditem
Top CPEC Official @AsimSBajwa : Second phase of #CPEC crucial for #Pakistan's development: It has special emphasis on #agriculture, #industry, #trade, and #science and #technology. Just completed first phase was about #power and #infrastructure. #China http://www.xinhuanet.com/english/2020-05/07/c_139038471.htm
The second phase of the China-Pakistan Economic Corridor (CPEC) is crucial for the economic development of Pakistan, local media quoted Chairman of CPEC Authority Asim Saleem Bajwa as saying on Thursday.
The second phase of the multi-billion-dollar economic cooperation between Pakistan and China will have a special emphasis on agriculture, industry, trade, and science and technology, Bajwa said in an interaction with local media.
He said that the Pakistani government's priority about the second phase of CPEC is to make special economic zones functional, besides development projects in Gwadar, according to the report.
Bajwa, who also holds the additional position of the special assistant to the Pakistani prime minister on information and broadcasting, said that work for the completion of CPEC is in progress on a fast pace.
"There is no political hindrance in its way. The project is Pakistan's future as well as a tangible reality and no compromise will be made on it," local media quoted the official as saying.
Bajwa said Pakistan takes decisions which are within the best interest of the country and there is a political consensus that CPEC is the best for the interest of the country and for that matter "no external pressure against CPEC will be accepted," according to the report.
Many projects focusing on infrastructure and energy sectors in the first phase of CPEC have been completed and are already operational, and work on the second phase is underway. Enditem
#China Radio on #CPEC: Improvements in #energy & #transportation infrastructure have laid the foundation for the #industrial development of #Pakistan. The next phase of the CPEC project focuses on industrial cooperation. #industries #Manufacturing https://tribune.com.pk/story/2271510/cpecs-rapid-progress-laying-foundation-for-pakistans-industrial-development-cri-urdu
The projects implemented under the China-Pakistan Economic Corridor (CPEC), a flagship project of the Belt and Road Initiative, will not only benefit certain areas but also development in Pakistan, commented China Radio International (CRI) Urdu on Sunday.
“The way in which the CPEC projects have been implemented over the past five years and the results that have emerged show that the purpose of building up CPEC is not to benefit certain areas, but to promote development in Pakistan,” the CRI Urdu said of the progress made in the construction of CPEC projects.
The Urdu service stated that the infrastructure, construction of industries and the elimination of energy shortages will provide an environment for Pakistan according to its resources, which will also benefit the people of Pakistan and guarantee a bright future.
The Orange Line Metro train in Lahore is the first electric public transport project, the introduction of which not only increased travel facilities for the people but also created new jobs.
In the past five years, CPEC projects have created 55,000 direct jobs in the road infrastructure sector, of which 48,000 have been created specifically for local Pakistanis.
According to a spokesman for the Chinese Ministry of Foreign Affairs, major projects with a direct investment of US $25 billion have been completed since the inception of CPEC. The projects completed under it are are part of The Belt and Road Initiative.
As for the shipping of cargo, the trade began at the Gwadar port during the first six months of this year, through which up to 20,000 tons of goods were shipped to Afghanistan; the initiative also created jobs in the shipping sector. There was no doubt that these projects entailed infrastructure as well as energy supply, and job opportunities, the CRI maintained.
According to the proposed two-gap model of economist Hollis B Channery, developing countries should introduce foreign investment and stimulate exports to boost their national economies. In this regard, CPEC has played an important role in the development of Pakistan.
The initiative has also addressed the issue of limited investment potential, insufficient foreign exchange savings and deficits in Pakistan, and has provided excellent quality for Pakistan’s economic growth.
Pakistan’s GDP growth rate is significant and it has created 70,000 jobs in Pakistan, the China-based Urdu service added.
Since its inception, CPEC has considered the elimination of energy shortages in Pakistan as an important sector for construction. Over a period of five years, energy projects under the CPEC framework added 3,340 MW of electricity to Pakistan in early April 2019, accounting for 11% of the installed capacity in the country.
The shortage of electricity has been significantly reduced and in addition to power generation projects, China has built the Matiari-Lahore (an 878 km long, 660 kV) HVDC transmission line project in Pakistan – the second HVDC transmission line in the world to extend the life of the country's power grid.
The construction of the corridor is progressing rapidly, significantly reducing Pakistan's energy problem in the process. Improvement in the transportation infrastructure has laid the foundation for the industrial development of Pakistan. The next phase of the project focuses on industrial cooperation.
Given the pace of the projects, their completion and results, it can be said that CPEC is undoubtedly a new impetus for the sustainable development of Pakistan, the CRI added.
#China completes work on $1.7 billion project to transform #Pakistan’s dysfunctional national grid. The 878km, 660kV DC, #Matiari–#Lahore transmission line will provide the national grid with a new backbone. 1300 #Chinese & 650 #Pakistanis worked on it. https://www.globalconstructionreview.com/sectors/china-completes-work-17bn-project-transform-pakist/
A $1.7bn electricity transmission line on the China–Pakistan Economic Corridor (CPEC), which was begun in December 2018, was inaugurated in a ceremony held in Islamabad and Beijing at the end of last month.
The 660kV Matiari–Lahore high-voltage direct current line will provide Pakistan’s national grid with a new backbone and improve chronic problems with the country’s energy transmission and distribution grids.
The 878km line was financed and built by the State Grid Corporation of China, which will operate it for the next 25 years.
More than 1,300 Chinese and 6,500 Pakistani workers were employed on the scheme.
Hammad Azhar, Pakistan’s energy minister, said the project would bring stability to the country’s power system. Speaking at the online ceremony, he said the project would “enhance transmission capability and bring relief to consumers”.
Electricity generation in Pakistan has increased dramatically in recent years, thanks to the large-scale construction of mainly coal-fired plants funded by China.
As a result the country has an installed capacity of around 37GW and peak demand of only 25GW, although this is growing at a rate of about 5% a year. However the grid is able to handle only 22GW of power, resulting in chronic blackouts and load shedding, particularly in the summer when demand is highest.
However, problems occur in winter as well. In January of this year, the entire country suffered a blackout after a fault at a power station in southeast Sindh province caused the grid to lose its 50Hz frequency, which caused power stations throughout the country to close down.
This makes the reinforcement of the grid, arguably, the single most important infrastructure scheme for the country’s socio-economic development.
Zhang Jianhua, head of China’s National Energy Administration, told those present at the ceremony that the Matiari-Lahore line was the first large-scale transmission project of the CPEC, and would provide “solid assurance” for power transmission in the south and power supply in the north.
Speaking about the economic corridor in general, Azhar added: “The CPEC is of utmost importance for Pakistan. It will enable the country to enhance industrial production, upgrade energy and communication infrastructure and improve connectivity within the region.”
Of Pakistan’s 207 million people, roughly 58 million lacked access to grid electricity in 2018, including 46% of the rural population.
First HVDC transmission line tested with full load of 4,000MW
Dubbed as flagship China Pakistan Economic Corridor (CPEC) project, 660kV Matiari-Lahore HVDC Line is the largest ever transmission sector project of the country in terms of its capacity as well as one of the longest in distance, connecting power generation units in the south with load centers upcountry.
“The HVDC line transcends a geographical length of about 900 km, marking the start of an era of long-distance power transmission in the country,” said an official of National Transmission and Despatch Company (NTDC).
“It is a unique project in the sense that it introduces HVDC technology for the first time in the national grid, enriching the technology mix of the grid.”
The official added that the trial operation was being carried out through NTDC transmission system.
“The Project has a design capacity of 4,000MW and will help evacuate power from cheaper Southern coal power plants and deliver it to load centers in the North of the country.”
Above all, the official said, the ongoing trial operation of the transmission line helped in contributing the record highest power transmitted on August 11, 2021 at 24,467 MW through the national grid.
“In 2020, peak load sustained by the national grid was 23,370MW for one day and in 2018 it was just 20,811 MW. With the launching of HVDC Matiari-Lahore Transmission Project, power dispersal capacity of the national grid has seen a massive jump of 4000mw in one go,” said an official.
He added that the ongoing trial operation marked one of the last steps in the completion of the project.
“In this last stage it will be trial-operated for a few days continuously at various power levels and under various configurations to test it in full running condition,” said the official.
Furthermore, the Capability Demonstration Test of the Project will also be performed during this period.
It is informed that the equipment debugging, station commissioning, and system commissioning up to the level of high power bipole testing of the project has already been completed, certified by both the Independent Engineer from Italy and Owner Engineer from Canada.
Despite Covid-19 pandemic, the overall work was completed by end of 2020. Earlier, the project was expected to be commissioned by March 2021 after going through trial run. However, after reaching an amicable solution, the contractor and NTDC agreed in writing to conduct trial run during peak load of summer months with COD in September 2021.
Pakistan to Spend ‘Bare Minimum’ $6 Billion to Boost Growth
Targets 5% GDP growth next fiscal year to create new jobs
Finance chief sees this year’s fiscal deficit just above 7%
Video player cover image
WATCH: Pakistan's finance minister says the country plans to boost spending on large infrastructure projects by as much as 40% to create jobs.(Source: Bloomberg)
By Faseeh Mangi and Khalid Qayum
May 6, 2021, 8:37 AM PDTUpdated onMay 6, 2021, 9:46 PM PDT
Pakistan plans to boost spending on large infrastructure projects by as much as 40% to create jobs and foster productivity in an economy crippled by the coronavirus pandemic, Finance Minister Shaukat Tarin said.
The federal government will earmark as much as 900 billion rupees ($6 billion) for development expenditure in the year beginning July, Tarin, who took office last month, said in an interview in Islamabad. The economy needs to expand by 5% next year, he said.
“That’s the bare minimum we need for a country this size,” said Tarin, who is due to present a new budget next month for the world’s fifth most-populous nation. “There are almost 110 million youth.”
Tarin, a former banker, was appointed last month as the fourth finance minister since Prime Minister Imran Khan’s government took power in 2018. He also served in the role between 2008 and 2010, helping the nation avoid default by securing a bailout from the International Monetary Fund. He comes into office as Pakistan faces a third wave of coronavirus cases, prompting authorities to order a week-long shutdown that may weigh on economic activity and hurt incomes.
Tarin’s plan will reverse his predecessor’s decision to lower spending to narrow the budget deficit, which he estimates to be a little above 7% of gross domestic product in the current fiscal year through June, against 8.1% in the previous year. Tarin said he expects the deficit in the next fiscal to be 1 or 1.5 percentage points lower.
While balancing the budget will be key for Pakistan’s current $6 billion loan program with the IMF, the new finance minister is negotiating with the organization for more wriggle room to support economic growth.
The government’s GDP target for next year is a percentage point higher than the IMF’s 4% projection, and Tarin is seeking to boost growth to 6% in the year after. The Washington-based lender sees the economy expanding 1.5% in the current fiscal period after a rare contraction last year.
“We need 2 million jobs every year,” he said. “If we do not go into growth mode, we will have a major crisis on the streets.”
The central bank, which has cut interest rates to a three-year low to support the economy, has been on pause mode for a while and has left some of the heavy lifting to the government.
“First we have to get more revenues,” Tarin said, adding that he’s targeting about 6 trillion rupees next year in tax authority revenue, compared with this year’s 4.75 trillion-rupee target. “Unless we get more revenues, forget about any incentives to boost the economy.”
Other comments from Tarin’s interview:
On talks with the IMF: “All we are saying is that we are just basically going to give them alternate ways of achieving the same objective” including revenue generation and reducing energy debt, adding that the aim is for this to be the last IMF bailout in Pakistan’s history
Plans to tap undrawn allocated funds from Asian Development Bank and World Bank that total $20 billion
Aims to increase tech exports to $8 billion in two years, from an estimated $2 billion this fiscal year, a sector he said that he aims to support
Nation plans to soon launch global sukuk bond
ADB study stresses economic corridor development to transform Pakistan's economy
Pakistan has the potential of becoming a hub of economic activity for Central, South and West Asian countries if it follows the model of economic corridor development (ECD), the Asian Development Bank said in a study released on Wednesday.
The ADB study, titled "Economic Corridor Development in Pakistan: Concept, Framework, and Case Studies", examined how Pakistan could address economic challenges through ECD.
In the foreword, ADB Central and West Asia Department Director General Eugene Zhukov noted that Pakistan had not yet been able to attain a sustained growth path "to move beyond its historic lacklustre and stop-and-go pattern, characterised by 'booms and busts' every three to four years".
"Through market reforms, Pakistan needs to transform its economy into an export-led growth trajectory. In addition to improving the economy’s competitiveness and productivity with a vibrant private sector, it is critical to attracting domestic and foreign investments to support this transformation," he said.
The official went on to say that Pakistan had already adopted and implemented an ECD-focused strategy as part of its core development and growth framework.
"ECD can be one of the most credible ways to help the government achieve its socio-economic objectives of reaching the upper-middle-income status by 2025," Zhukov said.
However, he cautioned that private sector development and a fair and efficient tax system were also required for transforming the economy to export-led growth.
Defining ECD, the study said that it aimed to promote economic growth by connecting different economic agents along defined geographic areas.
When implemented successfully, ECD supports economies of scale and scope and induces economic transformation and diversification through foreign direct investment.
"By enhancing domestic connectivity and linking lagging regions [including secondary cities] with urban growth centres, ECD can help Pakistan become a hub of economic activity for Central, South, and West Asian countries," the study said.
It stated that the country could "revitalise" its economic growth through facilitating economic centres by bolstering them with an efficient transport network based on "robust infrastructure and supported by a business-enabling policy framework".
However, it pointed out that Pakistan currently lacked the administrative machinery for effectively managing ECD.
"Its complex tax administration and compliance requirements impede growth and expansion of private investment, project management and implementation are weak, and a coherent regulatory framework for land use and urban development is lacking."
The study proposed several recommendations which could enable Pakistan to tackle these challenges:
Empowering a central corridor planning and development agency to oversee the overall development and management of ECD.
Strengthening an overall policy framework for ECD, including streamlining policies for transport, logistics, public-private partnerships, land use, zoning regulations, business regulatory framework and taxation regimes.
Providing institutional support for skills development to align labour force skills with industry needs.
Link current industrial clusters and urban areas with new industrial hubs and urban centres through infrastructure networks.
Seeking ways to channel partial resources from overseas Pakistanis into profitable investment ventures to fund ECD-related projects.
The study also identified four routes that could be used for a pilot ECD programme: M4 Motorway linking Faisalabad and Multan, N70 (national highway) connecting Multan and Killa Saifullah, N50 (national highway) linking Dera Ismail Khan and Kachlak, and the Hazara Motorway (E35 Expressway) from Islamabad to Mansehra.
ADB study stresses economic corridor development to transform Pakistan's economy
Explaining the rationale behind selecting the routes, the study said: "[They] offer real untapped economic potential with opportunities to diversify; good development synergy for linking production networks especially small and medium-sized enterprises with markets and other economic agents; close links to the CPEC (China-Pakistan Economic Corridor) and Carec (Central Asia Regional Economic Cooperation) routes; and favourable prospects for connecting and realising the economic potential of underdeveloped regions in Balochistan and Khyber Pakhtunkhwa."
Maximising CPEC benefits
The study also touched upon CPEC and said that it could pull off a number of economic objectives if it was implemented successfully.
However, it cautioned that CPEC alone could not improve the economy and would need to be supported by structural reforms to unleash its true potential.
The ADB report suggested four policy recommendations to fully benefit from CPEC.
Undertaking structural reforms to facilitate private sector development.
Broadening the tax base to make use of the country's tax revenue potential and improve fairness of tax collection.
Utilising transport infrastructure under CPEC to maximise investment return and turn it into a multilateral initiative.
Expediting development of nine special economic zones planned along CPEC routes.
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Pakistan, China agreement on industrial cooperation a breakthrough: Dawood
The advisor added that the agreement will augment the process of B2B [Business to Business] collaboration and matchmaking. “[It would] pave the way for industrial relocation from China and export-led growth with numerous direct/indirect benefits to the economy,” he said.
“I congratulate BOI for this landmark achievement,” said Dawood.
The CPEC Joint Working Group (JWG) on Industrial Cooperation was established in 2016 and an MoU was signed between the parties in 2018. With the passage of time and as the CPEC entered its second phase, the need for a comprehensive Framework Agreement became imperative.
CCoCPEC to fine-tune PM’s China agenda
Both sides reached a consensus on the elevation of the MoU into a Framework Agreement in 2020.
The agreement reaffirms prioritised development and operations of the nine CPEC SEZs, with primary focus on the early completion of Rashakai SEZ in KP, Allama Iqbal Industrial City in Punjab, Dhabeji SEZ in Sindh, and Bostan SEZ in Balochistan.
For colonisation of these SEZs, the business-to-business matchmaking mechanism of Pakistani and Chinese enterprises has also been emphasised, which will proliferate the people-to-people and institution-to-institution linkages.
Abdul Razak Dawood
Signing of Framework Agreement on Industrial Cooperation between 🇵🇰Pakistan & 🇨🇳 China is a breakthrough for CPEC Phase II and a significant outcome of the PM’s visit to China. The agreement will augment the process of B2B collaboration and matchmaking 1/2
Abdul Razak Dawood
and pave the way for industrial relocation from China and export-led growth with numerous direct/indirect benefits to the economy. I congratulate BOI for this landmark achievement. 2/2
Pakistan light oil pipeline project undertaken by CPP completed
FAISALABAD, Jun. 13 (Gwadar Pro) –Recently, the MFM MoGas Project – (MFM MP) Phase-II (TS-3 & TS-4), constructed by China Petroleum Pipeline Engineering Co., Ltd. (CPP) was officially completed and successfully passed the owner's inspection.
“Since we officially entered the Pakistani market in July 2014 and registered the Pakistan Branch of China Petroleum Pipeline Engineering Co., Ltd. in October 2017, we have completed a total of 9 projects here. Beyond all question, the light oil pipeline project means another challenge for us," said Wang Desheng from the TS-3 & TS-4 EPC Project Department in an exclusive interview with Gwadar Pro.
“Our owner, Pak–Arab Refinery Limited (PARCO), operates a pipeline transportation system of more than 2,000 kilometers, from Karachi in the south to Lahore in the north, which can be described as the main artery that helps Pakistan’s north-south energy transmission. In recent years, demand for motor gasoline has grown rapidly in north and central Pakistan, so the PARCO started planning to use the same pipeline to transport gasoline to alleviate the shortage in the region, thereby stabilizing its market share in north-central Pakistan,” Wang told Gwadar Pro, “therefore, Mahmood Kot-Faisalabad-Machike (MFM) Pipeline Phase II Reconstruction and Expansion Project came into being, which also included our project.”
The TS-3 and TS-4 stations are located in Faisalabad and Sheikhupura, Punjab, respectively. The former includes a single gasoline storage tank (42 meters in diameter, 12.6 meters in height, and a tank capacity of 15,000 cubic meters), a fire water storage tank (15.24 meters in diameter, 13.1 meters in height and a tank capacity of 2200 cubic meters), etc. The latter includes 2 single gasoline storage tanks (42 meters in diameter, 12.6 meters in height and a tank capacity of 15,000 cubic meters), a fire water storage tank (18.2 meters in diameter, 14.63 meters in height and a tank capacity of 3500 cubic meters) and related supporting facilities.
According to Wang, their project has always adhered to the strictest engineering quality standards since the start of construction in November 2017 until the owner issued the completion certificate recently. “During the construction period of several years, our team overcame challenges such as local climate, customs differences, project safety, and successfully overcame the huge difficulties brought by the COVID-19 epidemic, and the project proceeded smoothly. It can be said that the owner's affirmation means our success,” Wang emphasized.
Besides, as for employment, the project also created a series of jobs to local technical talents. The reporter learned that during the peak construction period, the total number of people on site reached nearly 400. The project department recruited a group of skilled and experienced Pakistani engineers, and the person in charge of HSE also provided training on epidemic prevention and various rules and regulations.
In Wang’s view, there are huge opportunities for cooperation between CPP and Pakistani companies in the oil and gas industry, which has a considerable market in Pakistan. At present, the CPP has established good cooperative relations with major oil and gas industry owners such as SSGC, SNGPL, PARCO, ISGS, OGDCL, etc. in Pakistan, and has won a good reputation locally. “In the future, we will always pay attention to local policy trends and seize the opportunity to promote the comprehensive development of large-scale oil and gas projects in the China-Pakistan Economic Corridor. China-Pak friendship Zindabad!”
1/2 Pak Flood hit rural economy
Work produces things of value and transforms physical world in ways to make life better and survival possible.
But without organised and purposeful productive action, i.e., work, not possible for most people asis at the base of economic order
2/2 Flood hit rural areas
Agrarian to agriculture/livestock based or limited workshop industry. Limited Agri TFP + 15.4 million at poverty risk
1. Need for agri TFP improvement
2., Need to diversify economic base by Proto-industrialization,
How to Jump-Start Industrialization in Sub-Saharan Africa
May 27, 2021
By Yi Wen , Iris Arbogast
Most sub-Saharan nations have such low per capita incomes that it would take decades of double-digit growth to attain U.S. living standards.
Nations that industrialize successfully often begin with small-scale efforts and progress to mass-producing heavy industrial goods.
African countries could follow this development pattern with government-provided infrastructure and other support.
When considering income disparities across nations, the differences often can be striking, particularly for nations in the sub-Saharan region of Africa. Per capita income in many poor countries like these is 30 to 50 times smaller than in the U.S. In sub-Saharan Africa, 38 of 48 countries had gross national income (GNI) per capita levels below $2,300 in 2019, while GNI per capita was $65,850 in the U.S., according to data from the World Bank’s World Development Indicators database.
Generations of economists have studied economic development and given policy suggestions to officials in poor countries in Africa and elsewhere, but the disparities remain. To catch up to U.S. living standards, they would need to grow at about 11% per year for 40 to 50 years—an almost impossible standard that only China has come close to achieving in recent history.
The New Stage Theory of Development
The commonality between successful Asian countries’ industrialization (such as China’s rapid rise in the past 40 years) and successful European nations’ industrialization (such as the British Industrial Revolution in the 18th* and 19th centuries) is that these economies all went through three key stages during their industrialization, according to the New Stage Theory of Development (NST):1
Proto-industrialization, which features massive numbers of workshops in rural areas with small-scale production of basic consumer goods for long-distance trade
A first industrial revolution, which features mass production of labor-intensive, light consumer goods for domestic and international markets
A second industrial revolution, which features mass production of capital-intensive, heavy industrial goods
The first stage is very important but has been largely ignored by development economists. During this initial stage, rural farmers or poor households in urban areas use their free time to manufacture simple products and engage in long-distance trade. This raises their income and nurtures the formation of an increasingly unified market and primitive production networks, while developing entrepreneurship and labor skills. 2
During the second stage, large-scale factory systems become prevalent for light industries such as textiles, processed food, toys and furniture. This mass-production stage is labor-intensive, export oriented and benefits from poor countries’ comparative advantage in cheap labor. Mass production in the second stage is profitable only because proto-industrialization has created a large enough market and distribution networks for consumer goods.
Finally, the expansion of light industry in the second stage facilitates the formation of a large enough market for heavy industrial goods—such as means of transportation, energy, steel and heavy equipment. This is not only because the income of workers needs to be high enough to purchase big-ticket items such as automobiles, but because mass production of heavy industrial goods is profitable only after the second stage creates a mass-production chain to support their demand. 3
ADB CAREC Energy Report
Pakistan’s electricity sector has a total installed capacity of 34.5 GW, with thermal generation dominating
the power mix, having a share of 66% (National Transmission and Despatch Company 2020). Gas-fired
plants are the main source of power, having an installed capacity of almost 9.3 GW, while oil-fired power
plants have 6.5 GW installed capacity and coal-fired plants have 4.6 GW. Since the regulatory framework
allowed independent power producers to develop generation projects, multiple new thermal power
plants were constructed. As the country’s oil and natural gas reserves are diminishing, further growth in
alternative energy sources is needed.
Historically, hydropower was one of the main sources of electricity generation in Pakistan. The total
hydropower resource potential is estimated at 60 GW (Faizi 2020). However, with the expansion of
thermal power, its share in electricity has declined significantly and currently holds a 29% share of total
installed capacity. The country has 30 hydropower plants in operation, with a total installed capacity
of 9.9 GW, including 17 categorized as major hydropower and 13 as small hydropower units operating
mainly as a run-of-river units. The three main projects are Tarbela Dam (4.8 GW installed capacity),
Ghazi–Barotha (1.4 GW), and Mangla Dam (1.1 GW). Tarbela and Mangla dams, commissioned in the
1970s, are considered the main contributors to hydropower generation. To enhance the quality and
reliability of supply, Mangla Dam is planned for refurbishment, and Tarbela Dam for extension.
Pakistan’s first nuclear power plant, Karachi Nuclear Power Plant (KANUPP), began operations in 1970,
with a capacity of 100 megawatts (MW). Since then, nuclear power generation has experienced active
growth, and current capacity is 2.5 GW. Cross-country cooperation is a cornerstone of Pakistan’s strategy
to reach its goal of 8,800 MW of nuclear installed capacity by 2030. Currently, one new reactor of
1,100 MW is being built.
The country’s renewable energy potential has been realized to only a limited extent. The theoretical
potential of total wind energy is estimated at 340 GW, with the southern wind corridors being the most
auspicious—the Gharo–Keti Bandar wind corridor has over 50 GW of potential alone. However, only
around 1.1 GW of wind energy capacity is currently in operation. Likewise, solar power has tremendous
potential—as high as 2,900 GW, only about 0.4 GW of which is installed as of 2021. Although projects such
as the Quaid-e-Azam Solar Park (0.4 GW capacity) were successfully implemented, the lack of political
commitment, land availability, and the lower performance of outdated PV plants installed earlier are among
the reasons for limited development of renewable energy. Additional potential solutions include offshore
wind, floating solar PV in existing hydropower reservoirs, and wind farms near hydropower plants with
integration into existing grid infrastructure.
Power generation during fiscal year 2020 reached 121,691 GWh: 32% by hydroelectric plants, 57% by
thermal plants, 8% by nuclear plants, and 3% by renewable energy power plants.
Transmission and Distribution
Pakistan’s power T&D system is suffering from significant energy losses and disruptions. In 2020, 19.8%
of energy was lost during its transmission, distribution, and delivery to end consumers. Among the
10 distribution companies, losses vary greatly from 9% to 39% (NEPRA 2020). On average, the country
experienced 81 interruptions (system average interruption frequency index) lasting nearly 5,300 minutes
(system average interruption duration index) in 2020. The poor performance can be attributed to a
variety of factors, including poor technical conditions, insufficient collection rate of accounts receivable,
and issues with circular debt present in the country.
Pakistan had 7,470 kilometers (km) of 500 kilovolts (kV) and 11,281 km of 220 kV T&D lines in 2020.
ADB CAREC Energy Report
Transmission and Distribution
Pakistan’s power T&D system is suffering from significant energy losses and disruptions. In 2020, 19.8%
of energy was lost during its transmission, distribution, and delivery to end consumers. Among the
10 distribution companies, losses vary greatly from 9% to 39% (NEPRA 2020). On average, the country
experienced 81 interruptions (system average interruption frequency index) lasting nearly 5,300 minutes
(system average interruption duration index) in 2020. The poor performance can be attributed to a
variety of factors, including poor technical conditions, insufficient collection rate of accounts receivable,
and issues with circular debt present in the country.
Pakistan had 7,470 kilometers (km) of 500 kilovolts (kV) and 11,281 km of 220 kV T&D lines in 2020.
Distribution companies are responsible for T&D activities below 132 kV. Importantly, only 74% of Pakistan’s
population is connected to the power grid. With high electricity losses and frequent outages, Pakistan is
planning to introduce advanced grid management infrastructure and metering. Advanced conductors and
other smart grid upgrades could help reduce T&D losses.
There are two operators in Pakistan’s natural gas T&D system: Sui Northern Gas Pipelines Limited
(SNGPL), covering the central and northern regions of the country; and Sui Southern Gas Company
Limited (SSGCL), covering the southern regions. Total grid losses accounted for nearly 17% by SSGCL and
11% by SNGPL in 2020. According to estimates, average leakage rate is 4.9 leaks per km for SSGCL, and
2.2 leaks per km for SNGPL (for comparison, this value equals 0.2 in Germany and 0.4 in Massachusetts, on
average). The gas pipeline systems require a major overhaul and modernization to increase the efficiency
of transportation and to reduce leakages.
The federal government has decided to go ahead with the China Pakistan Economic Corridor (CPEC) amid the watchful eyes of international entities. The federal cabinet has approved the commencement of the second, and most important, phase of the CPEC project for industrial development of Pakistan.
According to reports, the industrial cooperation agreement between the two neighboring countries will be effective till 2025, with the possibility of further expansion. They elaborated that under the agreement, there will be capacity building and skill development of Pakistan’s CPEC workforce. The Ministry of External Affairs and Ministry of Law jointly endorsed the draft agreement, sources claimed.
To clarify, BoI is the lead agency of the Joint Working Group (JWG) on industrial cooperation under CPEC from the Pakistani side. On the other hand, the Chinese counterpart of the BoI is the National Development & Reform Commission (NDRC), China.
A framework agreement was also signed between both parties in 2022, which besides other matters of significance, also aims to foster skill development and capacity building of the local workforce. This shows the potential skilling and economic advancement that Pakistan anticipates would result from the current endeavor.
Here is what happened in the pursuance of the consensus reached in the Framework Agreement and the 10th JCC meeting of CPEC, held on 23rd September 2021, the NDRC– China has proposed that an MoC between BoI and the All-China Federation of Trade Unions (ACFTU) is likely to be signed, in order to strengthen workers’ exchange under CPEC Industrial Cooperation.
Sources further hinted that the proposed MoC envisages to conduct exchange programmes of Government officers and workforce associated with CPEC projects, through capacity building and skill development, Chinese language courses, and any other mutually agreed mechanism to promote people to people ties.
According to sources, BoI and ACFTU have reached consensus on the text of the draft MoC, which has been duly vetted by the Law Division, as well as been concurred by the Ministry of Foreign Affairs.
Based on the draft copy, available with Profit, of the MoC between the ACFTU of China and the BoI of Pakistan, there will be an agreement between the two entities to promote industrial cooperation, within the framework of the China-Pakistan Economic Corridor Industrial Cooperation (CPEC IC).
In the foreseeable future (2023-2025), and keeping in mind the COVID-19 pandemic, both sides will, on the basis of mutual consent, hold online workers symposiums at regular intervals, as well as, carry out relevant exchanges and cooperation. The online symposium will be designated for the workforces of both countries that are actively engaged in and contributing to the construction of CPEC. This will provide a platform to augment people to people exchanges through experience sharing and suggestions for the future development of CPEC.
Moreover, online seminars based on the Chinese’s successful experience in development for Special Economic Zones (SEZs) shall also be organized for the concerned stakeholders in Pakistan. Following the same timeline, in the next three years, both sides shall initiate an exchange programme by arranging activities in their respective countries to foster practical people to people and cultural exchanges on ground.
To provide first hand experience of the successful industrial models in China, the Chinese stakeholders shall facilitate the field visits of the concerned teams from Pakistan, including the Chinese SEZs, sources told Profit. Likewise, in order to mitigate the language barrier between the two countries’ workforces associated with CPEC, while promoting brotherly relations and cultural ties, both sides shall arrange exchange programmes by holding language learning courses in their respective countries.
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