Friday, October 7, 2016

China-Pakistan Corridor to Add over 2 Million New Jobs in Pakistan

China-Pakistan Economic Corridor (CPEC) is expected to add over 2 million direct and indirect jobs to Pakistan's economy and boost the country's GDP growth rate to 7.5%.

Jobs & Economic Growth in Pakistan: 

US-based consulting firm Deloitte and Touche estimates that China-Pakistan Economic Corridor (CPEC) projects will create some 700,000 direct jobs during the period 2015–2030 and raise its GDP growth rate to 7.5%,  adding 2.5 percentage points to the country's current GDP growth rate of 5%.


Pakistan Country Report in Shanghai Business Review Feb/March 2016

An additional 1.4 million indirect jobs will be added in supply-chain and service sectors to support the projects.  An example of indirect jobs is the massive expansion in Pakistan's cement production that will increase annual production capacity from 45 million tons to 65 million tons, according to a tweet by Bloomberg's Faseeh Mangi. Other indirect jobs will be in sectors ranging from personal services to housing and transportation.



CPEC Benefits for Pakistan & China: 

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, according to the Deloitte report.

Almost 80% of the China’s oil is currently transported from the Middle East through the Strait of Malacca to Shanghai, (distance is almost 16,000 km and takes 2-3 months). With Gwadar port in Pakistan 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.

India's War on CPEC: 

The biggest challenge that CPEC faces today is India's well-orchestrated effort to sabotage it. Not only are Indian leaders on record as opposing CPEC, the Indian Prime Minister Narendra Modi and his right-hand man Ajit Doval have unleashed a concerted effort to try to make it impossible.

Mr. Modi has openly expressed support for Baloch separatists and Ajit Doval has talked about Pakistan "losing Balochistan". A serving Indian Navy commander Kulbhushan Yadav has been arrested working undercover to wage covert war in Pakistan.

RAW Money Flow:

India has opened up a big money money spigot to use its agents to destabilize Pakistan. RK Yadav, an ex intelligence official of RAW, has in a TV interview (Siyasat Ki Baat with RK Yadav video 6:00 minutes), talked about RAW agents with "suitcases and cupboards full of money".

Ex RAW chief A.S. Dulat has said "money goes a long way" in intelligence operations.

Current National Security Advisor has talked about RAW recruiting terrorists with one-and-a-half times the money they are making from other sources.

RK Yadav has, in his book "Mission R&AW",  written about RAW money paid to late Pakistani politician Khan Abul Wali Khan in 1970s. He's also confirmed the existence of RAW-inspired 1960s Agartala Conspiracy that recruited Shaikh Mujib ur Rehman's Awami League to work for Indian intelligence.

More recently, London Police documents have revealed the testimony of MQM leaders Muhammad Anwar and Tariq Mir confirming that Altaf Husain received money from Indian intelligence.

Modi's Campaign to Isolate Pakistan:

While RAW is busy funding terror in Pakistan, the Indian Prime Minister Mr. Modi has launched a diplomatic offensive to have Pakistan declared a "state sponsor of terror". It's intended to deflect attention from Indian Army's brutality against innocent Kashmiris and to cover up his own proxy war of terror to sabotage CPEC in Pakistan.

Summary:

China-Pakistan Economic Corridor is a game-changer for Pakistan. It will build power plants and other infrastrastructure, boost Pakistan's GDP growth to 7.5% and add millions of new jobs to bring prosperity to Pakistan. Indian Prime Minister Modi is very unhappy about it and he has launched a multi-pronged concerted effort to sabotage CPEC by using covert wars and diplomatic offensives to hurt Pakistan. Can Pakistan defeat Indian plans and succeed in building a prosperous future? That is the big question. The answer depends on how well Pakistanis can unite to make it happen.

Here's a video by Gaurav Garg explaining why India wants to sabotage CPEC:

 https://www.youtube.com/watch?v=hd_z9kf8AeE




Related Links:

Haq's Musings

Modi's Covert War in Pakistan

ADB Raises Pakistan GDP Growth Forecast

Gwadar as Hong Kong West

China-Pakistan Industrial Corridor

Indian Spy Kulbhushan Yadav's Confession

Ex Indian Spy Documents RAW Successes Against Pakistan

Saleem Safi of GeoTV on Gwadar

Pakistan FDI Soaring with Chinese Money for CPEC

83 comments:

Ahsan H. said...

India is orchestrating terrorist attacks in Baluchistanto sabotage the development
projects in Gwadar. CPEC doesn't sit well with the Indians.

Rafay said...

I am not sure how they calculated 2.5% growth in gdp. I think they are banking on the fact that the new electricity produced will be supplied to industry which will increase GDP. However, my understanding is that wapda national grid cannot take more than 15-000-16000 MW load because it hasnt been upgraded in 40 years.

As for the job creation figure I agree that direct indirect jobs will be around 2 million. However, it is estimated that around 2 million youth enters the pakistan job market every year so the entire CPEC will meet job demand of just 1 year. At the same time, CPEC will kill millions of jobs particularly export oriented jobs like textile once china starts dumping its goods in gwadar. In fact, given the corruption level in pakistan, i can see a lot of chinese goods meant for export via gwadar being sold in pakistan similar to how NATO containers went missing. Goods meant for afghanistan are openly being sold in quetta and peshawar including cars, electronics and guns.

We have examples of transit countries like egypt that has suez canal through which most sea trade takes place. Suez canal has been built for over 100 years but still 26% of the egyptian population lives below poverty line.

Riaz Haq said...

Rafay: "I am not sure how they calculated 2.5% growth in gdp."

Developing countries like Pakistan have a COR (Capital-Output-Ratio) of 4, meaning each 4% of GDP invested adds 1% GDP growth.

With additional 10% of GDP invested, Pakistan should see extra 2.5% GDP growth.

http://www.riazhaq.com/2014/05/declining-investment-hurting-pakistan.html


Rafay: "As for the job creation figure I agree that direct indirect jobs will be around 2 million. However, it is estimated that around 2 million youth enters the pakistan job market every year so the entire CPEC will meet job demand of just 1 year."

Pakistan economy growing at about 5% creates jobs today without CPEC. That job creation will continue.

Rafay: " We have examples of transit countries like egypt that has suez canal through which most sea trade t"


CPEC includes plans for many new industrial units in special economic zones to be built along the corridor. Chinese and other investors will invest when they see a competitive infrastructure in place to produce and export products from Pakistan.

An example of this is Haier Pakistan that is currently producing refrigerators, deep freezers, washing machines, home air conditioners, commercial air conditioners, television sets, microwave ovens and other small appliances in a special economic zone (SEZ) on the outskirts of Lahore.


http://www.riazhaq.com/2015/04/haier-pakistan-to-expand-production.html

Muhammad Anees said...

Riaz: Developing countries like Pakistan have a COR (Capital-Output-Ratio) of 4, meaning each 4% of GDP invested adds 1% GDP growth. With additional 10% of GDP invested, Pakistan should see extra 2.5% GDP growth.

Query: How can we develop such figure when 60 or more Percentage of our economic is informal and undocumented, population growth overtakes the economic activity and there is no documented macro economic model for Pakistan? Is this based on introspection from some other countries?

Riaz Haq said...

MA: "How can we develop such figure when 60 or more Percentage of our economic is informal and undocumented, population growth overtakes the economic activity and there is no documented macro economic model for Pakistan? Is this based on introspection from some other countries?"

There's plenty of macro and micro economic data available in Pakistan from both government and private sources.

Pakistan Bureau of Statistics (PBS), State Bank of Pakistan (SBP) and multiple industry groups regularly publish such data.

You can see it in Economic Survey of Pakistan (ESP) , Pakistan Living Standards Survey (PSLM), State Bank of Pakistan Quarterly reports, PAMA, APCM, APTMA reports, etc

There's a lot of history in Pakistan showing correlation between investment and GDP growth.

For example, domestic savings rate reached 18% of the GDP and foreign direct investment (FDI) hit a record level of $5.4 billion in 2007-8. This combination of domestic and foreign investments nearly tripled the size of the economy from $60 billion in 1999 to $170 billion in 2007, according to IMF. Exports nearly tripled from about $7 billion in 1999-2000 to $22 billion in 2007-2008, adding millions of more jobs. Pakistan was lifted from a poor, low-income country with per capita income of just $500 in 1999 to a middle-income country with per capita income exceeding $1000 in 2007.

The PPP government summed up General Musharraf's accomplishments well when it signed a 2008 Memorandum of Understanding with the International Monetary Fund which said:

"Pakistan's economy witnessed a major economic transformation in the last decade. The country's real GDP increased from $60 billion to $170 billion, with per capita income rising from under $500 to over $1000 during 2000-07". It further acknowledged that "the volume of international trade increased from $20 billion to nearly $60 billion. The improved macroeconomic performance enabled Pakistan to re-enter the international capital markets in the mid-2000s. Large capital inflows financed the current account deficit and contributed to an increase in gross official reserves to $14.3 billion at end-June 2007. Buoyant output growth, low inflation, and the government's social policies contributed to a reduction in poverty and improvement in many social indicators". (see MEFP, November 20, 2008, Para 1)

http://www.riazhaq.com/search?q=Musharraf+human+capital

Muhammad Anees said...

Further queries.

As I am also player with the data and doing a bit of macroeconometrics research here, I find it very hard to get the same prediction using varieties of methods available and being applied by the IMF, World Bank and other agencies. This is why I asked for macroeconomic model so I can test if the data we commonly download from the sources as you mentioned, offers the same prediction as we expect.

Now, let me speak of the data itself, I guess you said, there is a positive correlation between Savings and FDI in Pakistan that has impulsed GDP positively. To me, using Data from World Bank on the same Savings, FDI and GDP, I see a negative correlation between Savings and FDI so how can they positively impact GDP to that extent. On the other hands, If I see the correlation between FDI and GDP over the same period, it becomes negative while Savings gives a positive correlation. Now, this finding from data and the predictiveness from your analysis, can I request if you use any Statistical method which can help me get the same results as you elaborated?

Regards

Riaz Haq said...

MA: "To me, using Data from World Bank on the same Savings, FDI and GDP, I see a negative correlation between Savings and FDI so how can they positively impact GDP to that extent. "

You have to look at the sum of domestic savings and FDI to see correlation between investment and GDP growth. It just makes common sense.

Counties such as China have enjoyed not only high domestic savings rates but also massive FDI inflows to drive rapid GDP growth since their economic reforms brought in by Deng Xiaoping in 1980s.

When you invest in energy and infrastructure projects and industries, you stimulate economic activity that results in higher GDP. That's what I see happening with CPEC in Pakistan.

Riaz Haq said...

The China-Pakistan Economic Corridor (CPEC) is an important consensus reached by the Chinese and Pakistani governments and of great significance in enhancing bilateral connectivity, improving people's livelihood and fostering pragmatic economic and trade cooperation.

"It was reported by an Urdu newspaper recently that the Chinese Ambassador to Pakistan informed Chief Minister Khyber Pakhtunkhwa and KP government that the western route doesn't exist in China-Pakistan Economic Corridor (CPEC). This is untrue," remarked a spokesperson in Chinese Embassy in a statement here on Wednesday.

He said China and Pakistan had put in place a sound mechanism of communication and coordination on the development of CPEC.

On November 12, 2015, the 5th meeting of Joint Cooperation Committee (JCC) of CPEC approved the principle of "one corridor with multiple passages", aiming at directly benefiting the socio-economic development of Pakistan, especially the western and north-western regions and providing effective connectivity to Gwadar Port, he added.

The spokesman said the Monographic Study of Transport Plan, approved in the 5th JCC, clearly mentions that Burhan-D.I.Khan-Quetta-Sorab section would provide much needed connectivity between major connection points of CPEC and would connect the western areas of Pakistan.

He said CPEC was for Pakistan as a whole and would bring benefits to all Pakistani people including people from the western parts.

With the joint efforts of both sides, CPEC projects are running well throughout Pakistan, and the CPEC is being comprehensively implemented. He said, CPEC projects in the western parts of Pakistan are making progress. A number of livelihood projects have also been implemented.

"We are committed to join hands with Pakistan to make continuous headway on the CPEC and deliver benefits to the people as early as possible," he added.

http://dailytimes.com.pk/islamabad/06-Oct-16/cpec-projects-in-western-parts-of-pakistan-making-progress-china

Muhammad Anees said...

Thanks for the insights. So if we could have converted both the Savings and FDI into positive correlation, our GDP could have gone multiple leaps if I presume from your observation on the on 4 investment to create GDP of 1 unit, the correlation between FDI and Savings when summed up is 0.86 which I can translate that both savings and FDI jointly increment by 4, the GDP should increase by 4(0.86) units. Then the understanding of your prediction becomes more complex.

To me, I think, the impact is translated to efficient macroeconomic governance, effective governance and corruption free system to boost investment. Yes, without proper planning and investment in education and health, the impact of CPEC might very low as compared to its potential to gauge it to benefits of such projects in advanced countries on a higher levels in literacy rates, technical education and governance indices.

Riaz Haq said...

#Russia Think Tank Analyst Andy Korybko: #India’s Hatred of #Pakistan Sabotaging North-South Corridor. #CPEC #China
http://katehon.com/article/indias-geopolitical-hate-pakistan-sabotaging-north-south-corridor

Nobody could have expected that India’s Prime Minister would have used the occasion of celebrating his country’s 69th anniversary of independence to provocatively talk about the state of Baloch affairs in Pakistan. Modi went out of his way to say that some members of this ethnic group “thanked [him], have expressed gratitude, and expressed good wishes for [him]…expressed appreciation for Prime Minister of India, for 125 crore countrymen”. This was an obvious suggestion that the Pakistani Baloch have more loyalty to India and identify its citizens – and not Pakistan’s --- as their “countrymen”, which was a premeditated infowar attack meant to incite further discord within the country just a week after a suicide bomber killed dozens of members of this community in a high-profile attack. Modi’s surprisingly aggressive and very clear intimation that he supports Baloch separatism in Pakistan is bound to lead to a problem sooner than later in the Iranian province of Sistan and Baluchistan right next door, which just so happens to host the Indian-financed port of Chabahar that forms the crucial and irreplaceable terminal for the North-South Corridor. This presents a developing threat for Iran and Russia, both of which are depending on stability in and around Chabahar to ensure the long-term strategic viability of the ambitious transcontinental corridor that will eventually connect South Asia with Western Europe by means of their transit territory.


India’s Research and Analysis Wing (RAW), its version of the CIA, has been actively working to destabilize Balochistan for decades, and one of its key operatives was even caught in the region earlier this year and admitted to preparing terrorist attacks there. Despite India’s red-handed involvement in stirring up trouble in the province, New Delhi officially refused to admit that it had anything to do with events there, which makes Modi’s patently obvious appeal to Pakistani Baloch separatists all the more unexpected and totally contradictory to the country’s previous public stance on the issue. It’s unmistakable that the Indian “deep state” (permanent military-intelligence-diplomatic bureaucracy) intends to escalate tensions inside of Pakistan as ‘payback’ for the protests that have been rocking Indian-administered Kashmir for the past month and a half, and the country’s media is all too eager to assist, having gone overboard in their characteristic jingoism by even comparing Balochistan to Bangladesh. Modi and his subservient favor-currying media outlets thereby discredited all legitimate local grievances that the Baloch might have peacefully held against Islamabad, such as complaints about the lack of provincial infrastructure and the China-Pakistan Economic Corridor’s (CPEC) focus on Punjab, but resolving these issues was never India’s intention to begin with.

Riaz Haq said...

MA: "CPEC might very low as compared to its potential to gauge it to benefits of such projects in advanced countries on a higher levels in literacy rates, technical education and governance indices. "

I disagree.

Economies of advanced countries are slowing down in spite of higher investment levels.

Why? Because it takes capital AND LABOR to grow the economy.

Ruchir Sharma, the Indian-American author of "Rise and Fall of Nations" and head of Morgan Stanley's emerging markets, says the most important predictor of future growth is demographics.

Countries with a young and growing labor force have a much better chance of future economic growth and stability than anything else.

Pakistan is doing very well on this measure.

Pakistan's work force is over 60 million strong, according to the Federal Bureau of Statistics. With increasing female participation, the country's labor pool is rising at a rate of 3.5% a year, according to International Labor Organization.

http://www.riazhaq.com/2015/07/pakistans-growing-population-blessing.html

Sharma addresses the question of Pakistan's low savings rate by saying "it's a chicken-or-egg issue: it's not at all clear which comes first, strong growth or high savings"

https://books.google.com/books?id=CBqZCgAAQBAJ&pg=PT148&lpg=PT148&dq=ruchir+sharma+rise+and+fall+of+nations+savings+rate&source=bl&ots=RFo0J0gSOU&sig=Gid5HW-C7yW91rKcAACDtrKsXEw&hl=en&sa=X&ved=0ahUKEwicy_GSxLXPAhVS2GMKHQv7AkAQ6AEIQDAF#v=onepage&q=savings%20rate&f=false

Rizwan said...

I love Pakistan, and want the best for it. But, nothing can bring economic revolution in Pakistan if we don't put our own house in order, starting with giving top priority to high caliber education, like Vietnam. We need to increase salaries of teachers to attract more qualified candidates, and improve teacher training programs as the first step. Btw, I am not a teacher, and I don't live in Pakistan. I

t has always been very hard to do business in Pakistan, and it remains so to this day. We need to streamline the process and cut out the red tape ( rishwat seeking middlemen) in order to make it easy to set up businesses in Pakistan.

We need to have an efficient justice system that operates without regard to money or status.

I don't see any of these happening real soon. So good luck. We will need it.

And you can already see the rapid growth of Vietnam, their education policies, teacher salaries, business environment. Just ask Professor Google. And they were destroyed by the Americans in the Vietnam war. Just ask Professor Google. Shame on us!

Rizwan said...

Pakistan's labor force, though young and rising, is mostly unskilled and illiterate, and unsuited for any contribution to serious industrial development.

Riaz Haq said...

Rizwan: "Pakistan's labor force, though young and rising, is mostly unskilled and illiterate, and unsuited for any contribution to serious industrial development. "

Pakistan's work force is much better educated today than it was in 60s and 70s when its economy grew much faster.


With half the population below 20 years and 60 per cent below 30 years, Pakistan is well-positioned to reap what is often described as "demographic dividend", with its workforce growing at a faster rate than total population. This trend is estimated to accelerate over several decades. Contrary to the oft-repeated talk of doom and gloom, average Pakistanis are now taking education more seriously than ever. Youth literacy is about 70% and growing, and young people are spending more time in schools and colleges to graduate at higher rates than their Indian counterparts in 15+ age group, according to a report on educational achievement by Harvard University researchers Robert Barro and Jong-Wha Lee. Vocational training is also getting increased focus since 2006 under National Vocational Training Commission (NAVTEC) with help from Germany, Japan, South Korea and the Netherlands and now China.

http://www.riazhaq.com/2011/10/pakistans-expected-demographic-dividend.html


#Pakistan, #China discuss increased collaboration in #vocational #training & #education #CPEC

http://tribune.com.pk/story/1126642/meeting-pakistan-china-discuss-collaboration-vocational-education/

Pakistan and China have agreed to increase collaboration in the field of vocational education and teacher training programmes.

The agreement came during a meeting between a delegation from China’s Tianjin University of Technology and Education (TUTE) and National Vocational and Technical Training Commission (NAVTTC) Executive Director Zulfiqar Ahmad Cheema here on Monday.

Cheema briefed the delegation about the working of NAVTTC and its recent initiatives such as establishment of job placement centres for its graduates.

He said the under-construction China-Pakistan Economic Corridor (CPEC) would open new vistas of prosperity and development and would create employment opportunities in Pakistan.

Cheema said the two countries should enhance their collaboration to reboot the TVET system in Pakistan.

Muhammad Anees said...

Dear Riaz,

Now, see how much of the countries planning goes in favour of developing skilled labour, educated masses, transparant business environment, conducive real investment (not financial where I have once calculated in last twenty years, in Pakistan, stock market grew by 63 times and GDP by 6 times, in US the same ratio has been 1 to 1 for major markets like Dow Jones), healthcare and governance. With out such investment in demographics and human capital, how can I predict CPEC can help me boost my economy when it can be improved by 60 times more to deduce from above calculation?

Now to check your observation of unemployment statistic and labour force, I am sure, Pakistan will only recover its current status of industries closed down, while it should have been added new businesses (new business after closure of more than the potential new without assuming above investment in human capital, how can I predict the most desirable outcome? Dont you think Pakistan will be at the sub-optimal equillibrium from CPEC?

Now to see the status of vocational and skilled based education system, how much Pakistan can boost the current system? I think this will need more investment than CPEC to bring the VT and Quality of Education as a whole if we start today and bring the level competitive to Chinese Education. Rest, I am sure, we both can predict the difference between a productivity and creativeness (for entreprenurship) within the local graduates and foreign graduates in Pakistan?

Without impediments, prediction of the benefits becomes unrealistic though, I again and again claim on social media that CPEC is a Platinum Hen, Laying Platinum Eggs For Unending Life :). You can guess how optimistic I am for CPEC but when I calculate the hindrances in the way to its impact and non-serious planning beyond the projects itself, I dont realise the predictions will work better off.

Any further thoughts? Nice to discuss with you by the way.

Riaz Haq said...

MA: "I have once calculated in last twenty years, in Pakistan, stock market grew by 63 times and GDP by 6 times"

Pakistan's total market cap of just $80 billion is a fraction of its GDP nearing $300 billion.

And Pakistan's shares are still selling at a big discount in terms of average price-earnings ratio of just 9.7 while other major indices in emerging markets like India are trading at much higher PE ratios of 15 or more.

Pakistani shares have a lot more room to grow to catch up to valuations in other emerging markets.

http://www.riazhaq.com/2016/10/shanghai-bourse-seeks-40-stake-in.html


Pakistanis are much better educated and more skilled than they were in 1960s and 1970s when Pakistan's GDP growth rate was much higher. I'm very optimistic about Pakistan's future growth prospects with new investments coming in.


http://www.riazhaq.com/2014/12/pak-china-industrial-corridor-to-boost.html


Anonymous said...

http://www.worldbank.org/en/news/press-release/2016/10/03/south-asia-growth-potential-realized-through-investment

Muhammad Anees said...

Dear Riaz,

I am thinking if the market capitalization is a component of GDP or not as I would then be seeing Pakistan's GDP to jump a few stairs upward. Unfortunately, my own calculations reveals that the transfer of resources from growth of the stock market to real investment and hence stimulating economic activity is (Stock Indices Growth: GDP) 63:6 ration compared to that of US as 10:10. This reveals stock markets weakly predict the economic growth in Pakistan.

Regarding Pakistani youth, a recent survey of employers revealed more than 75% of the youth is even not employable after graduations so I worry if the skillset you mention really an indicator to trust without keeping the employability. Yes, our youth is more talented but the outcome is not more than 50% of their potential.

Therefore, I argued that a mere cherishing of CPEC based expectation to transform the society/economy is a higher than optimism which makes the common people not celebrating the longer term benefits. This always happened in Pakistan and thus we hardly move up on the ladder of economic and social growth.

Riaz Haq said...

MA: "63:6 ration compared to that of US as 10:10."

Huge differences between US and Pakistan.

Pakistan's economy is a fast growing economy relative to the US economy.

Currently, US economy is growing at 2% while Pakistan's around 5%.

US stock market cap is 1.2X its GDP already. Pakistan's market cap is about a quarter of its GDP.

Pakistani shares trade at less than 10 times their earnings while those of US at 25 times earnings.

US stocks went through this growth phase in the decades after WWII. Pakistan's stocks (as well those in other emerging markets) are in that phase now. Pakistani companies listed on stock exchanges are growing much faster than US listed companies.

IN general, I disagree with your views and your calculations strongly based on my knowledge and years of experience dealing with the questions you are asking.

Anyway, good luck to you in your pursuit of econometrics.

Indian said...

How many of these economists and Riaz himself would dare to invest in Pak stocks.
My entire investments is only in American stocks, despite all the hype of BRICS.

Riaz Haq said...

Indian: "How many of these economists and Riaz himself would dare to invest in Pak stocks."

I am an investor in Pakistan ETF as are many people I know

Year-to-date, the Global X MSCI Pakistan ETF (PAK) has gained 21.7%, according to Barron's Asia.

http://www.riazhaq.com/2016/10/shanghai-bourse-seeks-40-stake-in.html

If nobody was buying, PAK wouldn't be performing so well.

Riaz Haq said...

#Pakistan PM #NawazSharif rushes to end #energy shortages ahead of 2018 poll. #loadshedding #PMLN http://reut.rs/2dY81Rj via @Reuters


Power supplies are not the only factor that will decide any poll. A further escalation in tensions with nuclear-armed rival India could destabilize the government, as could Islamist militant violence or street protests.

But Sharif has greater control over energy supply, and his government has spent billions of dollars building liquefied natural gas (LNG) plants, pipelines and dams, while private investors are financing wind and solar.

A major coal and two small nuclear plants are also due to come online before Sharif's term ends.

The power projects, coinciding with the biggest road building program in Pakistan's history, are central to Sharif's strategy to win the 2018 poll by promoting infrastructure as evidence of economic progress.

Pakistan's sputtering economy has rebounded in recent years, helped by lower global oil prices and improved security.

Chinese companies are arriving in force after Beijing outlined plans in 2014 to invest $46 billion in road, rail and energy infrastructure linking western China with Pakistan's Arabian Sea coast, with two-thirds of the money earmarked for energy.

STALLED REFORMS

The drive to boost generation above 17,000 megawatts (MW) and plug a 6,000 MW deficit has already yielded some results. Shortages in big cities, which two years ago went without power for 12 hours a day, are down to about six hours.

Sharif vowed last month that all scheduled outages would end before the next election, likely to be in May, 2018. His office said generation would hit 26,000 MW, a 3,000 MW surplus.

There are fears, including within Sharif's own ruling PML-N party, that the room for error has shrunk to zero and the ambitious targets could be missed, especially after two big hydro projects were delayed.

"There are a lot of moving parts with all these projects," said one Western diplomat in Islamabad. "The government has a comprehensive plan, but obviously there is some nervousness about the timelines."

Halting outages would breathe fresh life into Pakistan's economy, which needs to expand above 6 percent per year to absorb new entrants into the job market from a fast-growing population of 190 million people.

Economic growth hit 4.7 percent last July-June fiscal year, the fastest pace of expansion since 2008. Economists estimate energy shortages shave up to 2 percent off annual growth.

Some energy experts say Sharif's electricity goals are within reach.

The Asian Development Bank, lending Pakistan more than $1 billion to help alleviate the energy crisis, expects load shedding, or scheduled outages, will be eradicated by mid-2018.

SCARED TO PRIVATIZE?

Sharif's opponents, however, say the government is so fixated on boosting power generation that it has ignored reforms, like privatizing distribution companies, that would modernize the market and lower the cost of electricity.

Many Pakistani businesses complain about the price of power. Lahore barber Eijaz Ahmed, forced to down tools for several hours every day, fumes about spending up to 60 percent of his revenues on electricity.

"I cannot spend money on my children's education because I have to pay (expensive) electricity bills," he said, as his staff sat idle, waiting for power to return.

Riaz Haq said...

3 #Pakistan accelerators named among top 20 accelerators of #Asia & #Oceania. #startup #technology http://bit.ly/2ehPtjm via @techjuicepk

Gust and Fundacity recently released their Annual Asian and Oceanian Accelerator Report 2015. Three accelerators from Pakistan were featured in the top 20 active accelerators in the region – who accelerated the most startups in the past year. LUMS Centre for Entrepreneurship, PlanX and Invest2Innovate made it to the list.

This year’s report is a follow-up to the report released in 2014 and its main objective is to understand how the accelerator industry has developed in the region, how accelerators are funded and monetized, while providing insights on the direction of the industry in the near future. The report includes some very thoroughly researched statistics for which over 125 organizations were surveyed in the Asia/Oceania region, out of which 54 qualified as accelerators.

According to the report, the region saw a total investment of US $16,842,427. Australia took the lead with US $5,620,000 in investment. Not far behind was India at US $3,981,000, followed by South Korea at US $1,960,460, and China at US $1,920,000. India, however, took the lead by accelerating 568 startups in the year 2015 alone.

Going by the number of accelerated startups, this news does sound good for Pakistan. However, there is still a lot of work that needs to be done. It all boils down to the issue of quality versus quantity. Right now, we have a lot of emerging startups but very few of them are targeting hot markets.

According to the survey, because of the global prominence of Fintech, Internet of Things, Health, and Education, these were the hottest markets Asian accelerators were most interested in. Apart from Health, the rest of the markets remain largely untapped by Pakistani startups. In order to understand this, compare the amount of investment raised by Pakistan’s 54 startups and that raised by China’s mere 13 startups. The need of the hours is to bring a focus towards emerging segments in order to attract international venture capitalists.

The report also featured some insights about how accelerators in the Asia and Oceania Region fund themselves in order to remain functional. 30% of accelerators reported that they either received a mix of private and public funding or were 100% publicly funded. When it comes to generating revenues, most of them, it appeared, invest a small amount in their incoming startups in exchange for some equity. 43% of Asian and Oceanian accelerators earn revenue from startup exits within the short-term (within 12 months), while 62% of them plan to earn revenue from startup exits over the long-term (12 months or longer).

Salim said...

Do you think Pakistan will benefit on free trade with India?

Riaz Haq said...

Salim: "Do you think Pakistan will benefit on free trade with India?"


It'll be good for Pakistani consumers in the short term because India can produce many things cheaper because of economies of scale.

But it'll hurt Pakistan's job creation in the long term because some companies may add capacity to their plants in India to export to Pakistan rather than set up plants in Pakistan.

Pakistan wants to promote domestic production to create jobs for its growing labor force.

Excerpt of Wall Street Journal interview with President of Yamaha Motors in Japan:

WSJ: What about in South Asia?

Mr. Yanagi: We want to expand business in Pakistan and Bangladesh as soon as possible. We had a production venture in Pakistan but we dissolved it five years ago. We are now planning to begin local production again, on our own this time.

In Bangladesh, we import motorcycles from our plant in India on a small scale, but we are studying now the best way of running operations because of rising tariff barrier there.

http://www.wsj.com/articles/SB10001424052702304520704579128733162622954


Since this interview was conducted in Oct 2013, Yamaha has set up a motorcycle plant that began production last year in Pakistan.

“The new investment from Yamaha will create jobs and bring new technologies,” said Yamaha Motor Company President Hiroyuki Yanagi, adding that, “Pakistan is all set to become one of the top global markets of motorcycles.

http://tribune.com.pk/story/876873/investment-yamaha-resumes-assembly-in-pakistan/


Muhammad Anees said...

Salim:

Yes definitely. Pakistan has free trade movements with China, Sri Lank and Malaysia. You can see our trade has improved with these countries. There is always a benefit attached to the FTAs.

Anonymous said...

t'll be good for Pakistani consumers in the short term because India can produce many things cheaper because of economies of scale.

But it'll hurt Pakistan's job creation in the long term because some companies may add capacity to their plants in India to export to Pakistan rather than set up plants in Pakistan.

Pakistan wants to promote domestic production to create jobs for its growing labor force. +
++++++

So why are we importing cheap stuff from China then?

Rizwan said...

Riaz Sahib: You say "Youth literacy is about 70% and growing---". This does not jive with the Alif Ailaan report of 2015, which says, "by the higher-secondary level almost 85% are not in school" :

http://www.dawn.com/news/1139423

Riaz Haq said...

Anon: "So why are we importing cheap stuff from China then? "

Because China is also investing and creating jobs in Pakistan.

Haier Pakistan is currently producing refrigerators, deep freezers, washing machines, home air conditioners, commercial air conditioners, television sets, microwave ovens and other small appliances in a special economic zone (SEZ) on the outskirts of Lahore.

“Pakistan is one of eight countries around the world where the Chinese government plans to help its investors set up and operate SEZs, to use the country as a major base for manufacturing and exporting goods to the rest of the world. These zones have to be privately owned and operated,” said Afridi, who also heads the Haier-Ruba SEZ Company, according to Pakistan's Dawn newspaper.

http://www.riazhaq.com/2015/04/haier-pakistan-to-expand-production.html

Industrial parks and special economic zones are part of the China-Pakistan Economic Corridor memoranda of understanding 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.


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.


http://www.riazhaq.com/2014/12/pak-china-industrial-corridor-to-boost.html

ATUL said...

What are your thoughts on the $90 billion Delhi Mumbai Industrial Corridor being built with a seed of $9 billion revolving fund jointly by Japan and India?

Riaz Haq said...

Atul: "What are your thoughts on the $90 billion Delhi Mumbai Industrial Corridor being built with a seed of $9 billion revolving fund jointly by Japan and India?"


I think it's a very good idea. It will be needed to support India's rapid urbanization over the next several decades.

However, it's a very ambitious project, so ambitious that some along the route are skeptical about it. Here's a quote from The Guardian:

“I think DMIC is a giant sandcastle, a mirage that we are being shown so land prices can be racked up,” says Babu Singh Patel, 66, a farmer in Kallibillod village, which adjoins Pithampur. “When Pithampur is a failed dream, how can we believe they will build dozens more Pithampurs? We think the DMIC will never happen.”

https://www.theguardian.com/cities/2015/sep/15/indias-future-dmic-delhi-mumbai-industrial-corridor

Riaz Haq said...


Rizwan: "You say "Youth literacy is about 70% and growing---". This does not jive with the Alif Ailaan report of 2015, which says, "by the higher-secondary level almost 85% are not in school"


So you think they are not literate because they drop out before reaching higher secondary level?

What kind of logic is that?


The fact is that the number of out-of-school children has be dropping over the last several decades.

Pakistanis are much better educated now than ever before.

http://www.riazhaq.com/2014/03/history-of-literacy-in-pakistan-1947.html


As Bill Clinton likes to say: "Follow the trend lines, not the headlines".


http://www.feelguide.com/2015/05/03/headlines-trendlines-watch-president-clinton-explain-why-africas-on-the-brink-of-a-huge-future-2/

NBRX said...

The DMIC will rest on the foundation of Dedicated Freight Corridor which is in progress. The Western section has been initiated by Tata and L&T

Ramesh said...

"It'll be good for Pakistani consumers in the short term because India can produce many things cheaper because of economies of scale. "

REALLY !!!!

Free trade means Pak also have access to Indian market. So what stops Pak companies from achieving economies of scale by producing far more than they do to cater to joint P + I market.

Real reason is that, Pak will lose out to India in more lucrative areas like appliances, cars, buses, trucks, locomotives, rail cars where India is miles ahead of Pak in quality and manufacturing prowess. Some industries in Pak like apparel, processed food ( I love Pak made pickles) may prosper in joint market, but that will pale in front of what India can offer.

Riaz Haq said...

Ramesh: "So what stops Pak companies from achieving economies of scale by producing far more than they do to cater to joint P + I market. "

With free trade with India, Pakistani manufacturers will not have the built-in advantage of a much larger domestic protected market that Indian companies have enjoyed for decades.


Anonymous said...

Anon: "So why are we importing cheap stuff from China then? "

Because China is also investing and creating jobs in Pakistan.
===

So will Indian companies if Pakistan trades with India. India companies are already investing in Bangladesh.
http://www.firstpost.com/world/whats-ganges-barrage-project-and-why-bangladesh-wants-india-to-be-a-stakeholder-3044408.html

Riaz Haq said...

Anon: "So will Indian companies if Pakistan trades with India. India companies are already investing in Bangladesh. "


Bangladesh is India's client state as long as it's led by Shaikh Hasina. Pakistan is not and will never be.

India regularly threatens war against Pakistan. Recently, the threats have included unilateral abrogation of Indus Water Treaty.

Modi and his ministers talk about "boli naheen goli (bullets, not talks), "munh tod jawab" (jaw-breaking response) and Modi's "chhapan inch ki chhati" (56 in chest)

It'd be foolish for Pakistan to accept investment from India under these circumstances.

Riaz Haq said...

#Pakistan’s economy: powering ahead with rising investments, improving security & stability. #CPEC @GlobalCapNews http://www.globalcapital.com/article/b100tz98y8qr7q/pakistans-economy-powering-ahead …

A frontier market that was flirting with insolvency just three years ago, is now in rude
health. Investment is flooding into Pakistan from China, the West and the Gulf, attracted by
high returns, rising stability and an economy underpinned by strong growth figures and a
pro­ business government.

Pakistan’s economy is on a tear, growing at its fastest pace since the bubble years of the mid­
2000s. According to projections from the International Monetary Fund, the economy is set to grow
by 5.0% in 2017, up from 4.7% in 2016 and 4.0% in 2015. Emerging markets­ focused investment
bank Renaissance Capital tips gross domestic product to expand by an average of 4.4% a year
over the four years to end­ 2017, against a median of 2.8% over the five years to end­n2013.
At every level, there are signs of marked improvements in one of South Asia’s most vibrant
markets. Global institutions, attracted by the high yields on offer, are snapping up Pakistan
securities listed at home and abroad.
China is pumping billions of dollars into vast infrastructure projects that will open up the country’s
northern borders, allowing locally made goods, from cotton and textiles, to raw and produced food
products, to potash and fertiliser, to be shipped overland, into Central Asia and Russia, and
beyond.
Deepening markets
Pakistan’s efforts to widen and deepen its capital markets, and to foster the creation of an
innovative, knowledge­ based economy, are gaining traction. The country is rapidly becoming a key
provider of niche IT services, with upstart companies in Karachi and Lahore bursting with freelance
software coders, programmers, and application developers. The primary equity capital markets are
returning to action. An initial public offering completed in September by Loads Limited, saw the
auto parts maker raise $20m from local and foreign investors; more stock sales are expected in the
months ahead.

Riaz Haq said...

#Pakistan’s moment of opportunity Op Ed by visting #IMF Chief Chiristine Legard. #investment #debt #growth #exports https://www.thenews.com.pk/print/159423-Pakistans-moment-of-opportunity …

In this mixed global environment, Pakistan cannot rely exclusively on its trading partners to support growth. This means that the country will have to lean on the strength of its own policies. Four priorities are central.

First, make the economy more resilient. With uncertain global prospects, the economy needs to prepare for potential shocks that may come down the road. At 65 percent of GDP, Pakistan’s public debt remains too high, with too many resources going toward interest payments instead of public investment, education, and other growth-enhancing areas. The task at hand is to continue improving public finances while accumulating international reserves. In parallel, social safety nets need further strengthening to protect the most vulnerable segments of society.

Second, raise growth. Pakistan can grow at faster rates than the current 4-5 percent per year. This will require higher investment and greater productivity growth. Public investment in infrastructure can help remove obstacles to economic activity, and the China Pakistan Economic Corridor is a very good opportunity. With careful management of its financing arrangements, it can be a transformative success. Yet, the private sector also needs to step up in strengthening economic prospects.

Today, private investment in Pakistan accounts for only 10 percent of the economy – much below the average of 18 percent for emerging markets. Completing energy sector reforms and improving governance and the business climate will be crucial to enable faster private sector growth.

Third, the quality of growth matters. Economic growth in itself is not enough unless its fruits are broadly shared among the population. Two dimensions are very close to my heart: education and gender issues. More than six million children of primary school age, including 3.5 million girls, are currently out of school. Higher spending on public education is clearly important, but so are improvements to the quality of education. The country needs to ensure access to opportunity for all segments of society and equip its people with the skills needed for tomorrow’s job market.

Similarly, with only a quarter of women participating in the labour force, Pakistan can add significantly to its growth potential by integrating women better into the economy. This will make growth not only more inclusive, but also higher. IMF studies have shown that closing the gender gap could boost Pakistan’s GDP by almost one third.

Finally, believe in the global system. Pakistan’s exports are only about a quarter of what they could be based on the experience of emerging markets. There is vast untapped potential to trade with neighbours and integrate into global value chains. A sustained focus on regional and international engagement can help realise this potential.

I am confident that Pakistan can seize this moment of opportunity and transform itself into a dynamic, vibrant, and integrated emerging market country. Over the coming years, a stable and vibrant economy that creates sustainable jobs and spreads the fruits of growth more widely can be a strong force for overall domestic stability. The same applies to trade and cross-border investments, which tend to bring people together in the pursuit of mutual economic advantages, and can provide a stabilizing force in the region.


Rizwan said...

Please see my previous comments on this post and your responses. Just recently, the ADB Outlook 2016 was released. Here is the link to the article http://www.pakistantoday.com.pk/2016/04/01/business/pakistan-economic-outlook-positive-but-challenges-remain-adb/ but here is the quote of interest, “Low investment in human development has also left Pakistan with a workforce lacking the skills needed to help the country compete in global markets and to increase productivity by producing goods with higher value”, the report says. That is not much different from the sentiments I expressed earlier. We are doing better than before, but we SHOULD be doing a LOT better if we did things right. That is my only point. As it is, things have speeded up somewhat because of the CPEC shot-in-the-arm. I am cautiously optimistic, but what bothers me is that we always seem to be teetering on the edge of disaster- one step forward, two steps back. I would like t see some good analysis of what types of reforms we need in education and creating the right business atmosphere to speed up development in Pakistan. For example, what should we be doing to improve the level and quality of education in government schools, colleges and universities, and how? eg, fast track to improve teacher training, increase teacher salaries, increase student attendance, curriculum reform, etc. What can be done to improve the business climate for various industries? What can be done to make it easier to start a business? What policy changes need to be made to encourage the development of specific industries in Pakistan, eg chemical, pharmacology/drugs, industrial and manufacturing technology, machine tool industry (making machines that make machines), ceramics (not just tiles and dinnerware, but industrial ceramics), steel and metallurgy, household goods, electronics/electrical parts like capacitors, resistors, coils, transformers, silicon chips, food technology and food processing, etc., etc.. I mean the list is practically endless, and we are behind in everything, to varying degrees. We should be looking at what Korea did, because in the 50's they were poorer than us. In the 60's they studied us to see what we were doing right because of our rapid development in the early part of that decade, and look where they are now, and where we are.

Riaz Haq said...

Militants return to #Pakistan, hitting #China’s economic plans #CPEC #QuettaAttack

http://gulfnews.com/news/asia/pakistan/militants-return-to-pakistan-hitting-china-s-economic-plans-1.1918611

Quetta: A militant attack in Pakistan’s southwestern Balochistan province has shattered government claims it has been successful in its fight against terrorism.
Striking along the China-Pakistan Economic Corridor (CPEC) in Quetta, three armed men wearing suicide vests broke into a police academy late on Monday in a deadly assault that has since been claimed by the Daesh via a statement published on its Amaq news agency.
“These attacks are aimed at destabilising Balochistan and to create problems for CPEC, which certain countries don’t want to see as a success story,” said retired Brigadier Asad Munir, a defence analyst who served in Pakistan’s tribal regions.
Pakistan claims to have largely defeated militants who had wrecked the nation’s economy by violent strikes in past two years and killed thousands of people since the South Asian nuclear power joined the US war on terror in 2002.
But such brazen strikes indicate the battle is not over.


“The numbers and the way they were martyred, it has made all efforts of yours and security agencies futile,” Interior Minister Chaudhry Nisar Ali Khan told newly graduated police officers in Islamabad hours after the attack.
China’s reaction to the attack was low-key, suggesting its economic projects were not the target of the militant attack.
“It’s unrealistic to expect Pakistan’s domestic security situation to undergo fundamental changes in the near future,” said Zhao Gancheng, director of the Centre for South Asia Studies at the state-backed Shanghai Institutes for International Studies. “The attack on the police training academy last night was a reflection of Pakistan’s internal security risk; it happened in the province that the CPEC passes, but didn’t target the CPEC.”
China will cautiously push ahead with its projects and provide a boost in support for Pakistan’s military, he said.
The attack on the academy is the second worst in Pakistan this year, since a suicide bomber killed 70 people in Quetta’s government-run hospital in August.
Security authorities blamed Al Qaida-linked Lashkar-e-Jhangvi Al Alami for the attack, state-run radio reported citing Balochistan’s paramilitary force chief. By Tuesday afternoon, Daesh claimed responsibility.
The former security chief of Pakistan’s tribal regions, Mahmood Shah, cast doubt on the Daesh claims, saying Lashkar-e-Jhangvi Al Alami has a history of attacks in Balochistan and were trained by Al Qaida for urban fighting.
“The government has got to chalk out a new security plan for Quetta, Balochistan as militants keep coming and attacking it,” he said. “You want to have CPEC there and raising just a force isn’t enough.”
Prime Minister Nawaz Sharif, who aims to boost country’s economy to 7 per cent before his terms ends in 2018, condemned the attack and expressed concern over the safety of cadets.
Pakistan is banking on China’s $46 billion investment into the corridor that runs from China’s western part to Pakistan’s southwestern Balochistan to boost and develop the country’s economy.


Riaz Haq said...

Just went through this special report. The section o loans provides some useful information about the interest rates charged by Chinese

1- CPEC Fiber Optic Link (2%)
2- Orange Line (2.5%)
3- Gwadar's development (reduced to 0% from original 1.76%) on a loan 757Million USD
4- Energy projects financed at (5-6%)

more details on

http://www.fwo.com.pk/news-info/latest-news/430-cpec-special-report-in-shanghai-business-review

Original Source: Shanghai Business Review Country Report on Pakistan Feb/March 2016

Riaz Haq said...

BRIEF-S&P raises #Pakistan sovereign credit rating to B from B- http://reut.rs/2f9mxGt via @Reuters

Oct 31 S&P Global Ratings:

* S&P raises Pakistan sovereign credit rating to B from B-

* S&P on Pakistan - Improved macroeconomic stability has raised pakistan's growth prospects and bolstered its fiscal and external buffers

* S&P on Pakistan - Estimate Pakistan's GDP per capita to be US$1,500 in 2016

* S&P on Pakistan - Revised upward forecasts of average annual GDP growth to 5% over 2016-2019 from earlier estimate of 4.7%

* S&P on Pak- Rating reflects improved construction, services sector activity, low-cost oil,finance, high investment associated with China-Pak economic corridor

* S&P - Forecast Pakistan's gross general government debt to fall below 60% of GDP by 2018 Source text: (bit.ly/2e4Q4Ac)

Riaz Haq said...

Dailytimes | #CPEC to initiate flurry of economic activity in #Pakistan: #BASF - http://go.shr.lc/2eGkL2v via @Shareaholic

The China-Pakistan Economic Corridor (CPEC) would help initiate a flurry of economic activity in Pakistan, said Tay Jui Seng, an official of the German Chemical giant - BASF.

Talking to the media along with Faisal Akhtar, the head of BASF Pakistan, Seng said he would report back to his company as to how the BASF can participate in spurring the business activities in the Pakistani market.

Tay Jui Seng, who is the Business Management Transportation Performance Materials Vice President for Asia Pacific, is based at BASF's manufacturing facility in Shanghai. He undertook a three-day visit to assess the market as well as the opportunities available in Pakistan.

Seng pointed out that the BASF has research facilities based in many countries of the world and has been coming up with innovative products from time to time through research and development (R&D). BASF was in a position to provide quick solutions to the requirements of the businesses in Pakistan, which is an emerging market, he added.

He stressed that Pakistan can also benefit a lot from its human resource especially by imparting right type of education and training to productive use of their talent, energy and potential.

Seng also indicated that the BASF regularly trains their people from time to time to enhance their technical skills and know-how to serve customers more efficiently. He said that his company could also consider as to how it can participate in the CPEC activities through the supply chain mode.

Seng also referred to the impressive growth of the automotive industry in Pakistan and especially in the two-wheelers market. He hinted that cooperation may also be extended by the BASF for the construction industry as well as in chemicals and polymers and also address the quick solutions that are required towards the growth phenomenon in Pakistan.

Faisal Akhtar on the occasion said that Tay Jui Seng's visit augurs well and indicates towards the company's interest for further collaboration in the growth process in Pakistan where the business environment is now quite conducive.

It may be pointed out that the BASF Chemicals and Polymers Pakistan Limited has changed its name to BASF Pakistan (Private) Limited effective from November 1, 2016. A communication said that the management under its new name assures all its customers of the same continuous commitment to support businesses with products and services.

Riaz Haq said...

#Pakistan #cement sales up 16% in October on #infrastructure development. #CPEC https://www.thenews.com.pk/print/163071-Cement-sales-up-16pc-in-October-on-infrastructure-development …

Cement sales rose 15.88 percent month-on-month in October due to a rise in infrastructure development in Pakistan; although its exports fell almost two percent in the same month on a declining share in the Afghanistan’s market, industry data showed on Monday.

The All Pakistan Cement Manufacturers Association (APCMA) data showed that domestic sales stood at 3.008 million tons in October, while exports were recorded at 0.518 million tons. Total cement dispatches stood at 3.527 million tons, depicting a growth of 12.87 percent month-on-month (MoM).

An association’s spokesperson said the industry’s capacity utilisation logged at more than 92 percent in October.

In October, exports to Afghanistan decreased 23.4 percent year-on-year (YoY) to 0.193 million tons. Exports to India increased 27 percent YoY to 0.110 million tons in the same month.

Despite Pakistan-India tension, the growth was surprising. The spokesperson, however, said the uptrend might not continue given the unabated border skirmishes.

Cement exports to India are mainly through Wagah border and southern coast of India.

The data showed that cement sales grew 11.26 percent in the first four months (July-Oct) of the 2015/16 fiscal year. Exports also increased 9.57 percent in the same period.

In July-Oct, exports to Afghanistan slid 11.74 percent, while those to India climbed 101.88 percent.

The industry official expressed concern over a sharp rise in coal prices, impacting the cost of production. Coal price, which stood at $54/ton in May, increased to $105/ton.

Manufacturers urged the government to take measures to boost the investment in real estate sector and housing construction.

Currently, the cement industry is mostly depending on infrastructure development projects.

“A sustained growth in housing construction is essential to absorb the additional capacities that would be operational in the next two years,” the official said.

Insight Securities, in one report, said the local cement industry unveiled 23 million tons of expansion plans with around $2.5 billion investment.

Alone Lucky Cement, the country’s leading cement producer, announced to raise its production capacity by 1.25 million tons. A Chinese firm is also mulling to entering the market through a possible acquisition, indicating a jump in output.

The officials said local cement makers are planning an expansion to retain the market share.

The $46-billion China-Pakistan Economic Corridor projects, comprising a wide range of infrastructure development, gave a rise to construction activities.

The growth in housing apartment constructions around the country also increased the cement intakes.

Riaz Haq said...

#IMF: #Pakistan's Glass Half Full http://www.imf.org/en/News/Articles/2016/11/10/NA111016-Pakistan-Glass-Half-Full#.WCU4S_84y7U.twitter …

Pakistan: Glass Half Full?
November 10, 2016

Successful program completion points to moment of opportunity
Significant challenges remain ahead
Close partnership to continue through policy dialogue and capacity building
Pakistan’s economy has stabilized from near-crisis circumstances and economic growth has gradually increased under the recently completed three-year economic reform program supported by a $6.15 billion arrangement under the IMF’s Extended Fund Facility.

In an interview, Harald Finger, IMF mission chief for Pakistan, talks about the state of the economy, the challenges ahead, and the next steps for Pakistan.

IMF News : On her recent visit, IMF chief Christine Lagarde spoke about a moment of opportunity for Pakistan. What has Pakistan accomplished over the course of the just completed program, and in what sense is there now such a window of opportunity?

Over the past three years, Pakistan has greatly strengthened the resilience of the economy and began making inroads towards addressing long-standing structural economic challenges. Not everything worked out fully as envisaged, of course, but it is important for us to recognize the program’s achievements. For instance, foreign exchange reserves have tripled, supported by foreign exchange purchases and external borrowing.

The fiscal deficit declined by 2½ percent of GDP (not counting a large payment to clear energy sector arrears just before the program started). This was made possible by removing untargeted energy subsidies that disproportionately benefited the affluent, significantly raising tax revenue through removing exemptions and concessions, and taking a more systematic approach to bringing various economic groups into the tax net.

These measures allowed for an increase in investment spending and social protection. Enrollment in the Benazir Income Support Program has increased by 1½ million families, and stipends were raised by more than 50 percent.

In the energy sector, power outages have gradually decreased and financial performance is strengthening. As a result, accumulation of arrears in the sector has also declined significantly, thereby relieving pressures on the budget. Increased independence of the State Bank of Pakistan has improved the monetary policy framework. A new comprehensive strategy to improve the business climate has been adopted and started to be implemented.

While there have been important achievements, the outlook for economic growth has also turned broadly favorable. Exports and agricultural output have been declining amid a more challenging external environment and appreciating real exchange rate. These are important causes for concern. But private credit growth has been recovering, and strong machinery imports, cement consumption, and gradually rising core inflation also point to firm domestic demand. Moreover, large-scale investment under the China Pakistan Economic Corridor is beginning to be implemented.

With the authorities’ accomplishments in strengthening the economy’s resilience and a broadly favorable outlook for growth, the IMF's Managing Director, Christine Lagarde, spoke of a moment of opportunity for Pakistan during her recent visit to Islamabad. She emphasized that now is the time for the country to continue its transition toward becoming a full-fledged emerging market by addressing the remaining challenges and implementing policies for higher and more inclusive growth.

Riaz Haq said...

#CPEC: Will #India Start War With #Pakistan And #China Over It? http://www.valuewalk.com/2016/11/cpec-india-vs-pakistan-china/ … via @ValueWalk


By Polina Tikhonova

With China and Pakistan actively working on the CPEC, the uptick of irresponsible propaganda pieces coming from politicians and analysts – originating mostly from India – shows no sign of going away.

Such an opinion was expressed by Panos Mourdoukoutas, a contributor for Forbes. Mourdoukoutas argues that China has to either appease India or “forget” about the CPEC project.

A number of Indian government officials have expressed their concerns over the CPEC since the project was announced over three years ago. And while India, as alleged by Pakistan, has made numerous attempts to disrupt the project, the chances that India might actually start a war with China and Pakistan over the project remain equal to zero.

In fact, former Indian Ambassador Melkulangara Bhadrakumar said India would “lose heavily” if it remained opposed and isolated from the CPEC.

However, numerous Indian government officials believe the CPEC is designed to undermine India’s position in the region and see the project as a threat to India’s interests.

While that creates tensions between China and Pakistan on one side, and India on the other, authors of anti-CPEC propaganda pieces seem unable to provide at least one legitimate reason as to why India would go to war with China and Pakistan over the project.

China would protect the CPEC at all costs as the project is worth a whopping $46 billion and is a game-changer for both China and Pakistan. Disrupting the project would mean a direct declaration of war to China and Pakistan. And India knows it.

This past summer, the China Institutes of Contemporary International Relations suggested that Beijing will have “to get involved” if New Delhi attempts to disrupt the project.

---------


In his piece arguing that China is lagging behind India in terms of investments, Mourdoukoutas provides data that suggests India’s economic growth is set to outpace China.

Although India currently enjoys the rise of its economy, the country is becoming less attractive for investors in the long run. The reason? India is a “highly crowded trade,” as said by Herald van der Linde, head of Asia Pacific equity strategy at HSBC, in the bank’s Asia Equity Insights Quarterly.


“High fund holdings, premium valuations and slow pace of reforms make us reluctant to enter the market,” van der Linde wrote, adding that India’s earnings growth expectations are also slowing down.

Will India go to war with China and Pakistan over CPEC?

In his article, Mourdoukoutas also suggests that “if pro-Indian forces in Pakistan sabotage China’s CPEC route,” China should expect an open confrontation against India.

Mourdoukoutas also argues that it’s the reason why Beijing “should either appease New Delhi or forget about CPEC altogether.”

An open military confrontation between the world’s two most populous countries is very unlikely, especially considering the fact that India has already made several large-scale attempts to sabotage the CPEC.

Earlier this year, Pakistan alleged it had arrested a spy from India’s RAW, Kulbhushan Yadav. Islamabad believes that Yadav is responsible for hindering implementation of CPEC projects in Pakistan’s Balochistan province.

Riaz Haq said...

How will #Pakistan economy fare in 2017? #CPEC #IMF #SBP
http://www.khaleejtimes.com/how-will-pakistan-fare-in-2017


Finance Minister Ishaq Dar is claiming that Pakistan's GDP growth will rise to even 5.7 per cent as compared to FY-16.

---

The SBP, the central bank, has just unveiled its SBP Annual Review - 2015-16, which sheds light on most aspects of the country's economy, and previews the microeconomic targets for FY-17 in the light of the actual performance in FY-16.

The GDP growth in FY-17 is set at 5.7 per cent, but the SBP expects it to a range between five and six per cent. "If a higher projection is achieved, it will so for the first time since 2007. It will also a signal that the economy has fundamentally moved up to a higher growth trajectory. The current indications, based on the first four months of FY-17, are that it may not happen because farm output is down and it is not likely to rise in whole of FY-17. The Large Scale Manufacturing industry, which showed a rise of just two per cent in July-September as compared to the target of the planned target of six per cent," said Dr Hafeez Pasha, the former Finance Minister of Pakistan, who currently heads Karachi-Pakistan based Institute of Business Administration (IBA).

With limited growth in sectors like industry, trade, exports and banking but construction and real estate going up, and if the present trends continue, "the GDP growth rate is unlikely to exceed four per cent. This is substantially below the SBP projection of five to six per cent growth rate," Dr Pasha said.

The government's inflation rate target is six per cent while the SBP projects it at 4.5 to 5.6 per cent in FY-17. The actual inflation in the first four months, July-October, it was four per cent. "As such, the inflation rate projection by SBP of some increase in the rate of inflation appears to be valid," Dr Pasha also said.

The SBP expects the current account deficit in the range of 0.5 to 1.5 per cent of the GDP in FY-17, while the government puts it at around 1.5 per cent. This optimism is based on the revival of exports by five per cent. In fact, exports in the first four months of this fiscal have declined by six per cent and home remittances sent by Pakistanis working overseas are down by one per cent. The current account deficit has widened by 6.3 per cent, and already has reached 0.6 per cent of GDP.

But, where is progress and prosperity ending up? This stark question stems from the independent research and analysis that clearly confirmed this week that poverty in Pakistan is, in fact, rising, despite all claims by the government and multilateral institutes about economic progress and growth.

Christine Lagarde, managing director of the IMF, endorsed the official view of the pro-poor analysts, during her visit to Pakistan this week. But, addressing bankers and economists, Lagarde asked Pakistan to do more for the poor. She said: "Although more than 1.5 million poor households are now benefiting from targeted social assistance than three years ago, more efforts are required to end the agonies of the poor."

"Applauding other good efforts of Prime Minister Nawaz Sharif's government, Lagarde pointed out that power outages have gradually decreased and the financial performance of the power sector is strengthening. A country-wide strategy to improve the business climate is being implemented," she said at a joint press conference with Finance Minister Ishaq Dar. She also urged Pakistan that "corruption or the perception of corruption can only be eradicated through honesty, transparency and accountability."

Riaz Haq said...

#Pakistan PM #NawazSharif inaugurates Surab – Hoshab N-85 highway a key part of #CPEC western route in #Balochistan http://www.pakistantoday.com.pk/blog/2016/12/14/pm-nawaz-arrives-surab-to-inaugurate-road-network/ …

Prime Minister Muhammad Nawaz Sharif, Wednesday (today) said that the development of Balochistan means a new Pakistan is in the making.

“Building up of a new Balochistan means that a new Pakistan is being built,” the premier said while addressing a gathering in Turbat in connection with the inauguration of Sorab-Hoshab Highway N-85 on Wednesday.

The 448 km long Sorab-Hoshab highway forms an important link on the western route of the China-Pakistan Economic Corridor (CPEC) and has been built at an estimated cost of Rs22 billion.

“I have visited Balochistan the most number of times during my current tenure as prime minister and it has always been to inaugurate a project…this road will bring prosperity to the area,” Nawaz added.

“Travelling from Quetta to Gwadar used to take two days but now with the help of this road one can leave Quetta at sunrise and reach Gwadar by noon,” the prime minister said.

The prime minister said the road was proof that the government had brought progress back to the region.

“A new road brings new opportunities and gives new life to an area… you’ll see the progress in your area,” Prime Minister Nawaz said, adding that he did not want “to repeat the tale of how Balochistan was neglected, but now we will change the face of Balochistan, and Pakistan.”

“This road will connect Balochistan to the National Highway, to the rest of the country and to Afghanistan. The people of Gilgit-Baltistan will also benefit from it,” the premier said.

Criticising previous regimes, the prime minister said “those before us had this opportunity, but they wasted it…this work can only be done by someone with a vision. We have this vision…not only are we making roads…these roads are bringing children closer to schools and bringing employment and livelihood to the poor”.

Meanwhile, in an apparent reference to Pakistan Tehreek-e-Insaf (PTI) chairman Imran Khan, Nawaz said some people think they can assume power by creating an uncertainty in the country. The nation is able to determine the ones working for the development of the country as well as those playing with their emotions, he remarked.

Development, the premier reiterated, is the only way to take this country forward and the incumbent government has made it clear that the only way to rule is through service to the masses.

“Pakistan has to develop both in terms of material and spirit as this country has a history of ethical traditions and respect for each other,” Nawaz said before adding, “Masses will decide Pakistan’s fate in 2018 which is going to be a better year for the country.”

The project contractor – Frontier Works Organization (FWO) has completed 16 Bridges,1502 Culverts at N-85.

The project links Gwadar Port with National Highway network (N-25) near Surab/Quetta.

The road would provide the shortest link to Afghanistan and other Central Asian countries with Gwadar Port. With the completion of this project, the vital North-South road connectivity has also been completed.

Riaz Haq said...

#Pakistan Turns to #China in #Energy Binge With $21 Billion Investment. #Electricity #CPEC http://www.wsj.com/articles/pakistan-turns-to-china-in-energy-binge-1482062404 … via @WSJ


More than 10,000 Chinese workers are now building at least 10 partly Beijing-financed energy projects across Pakistan that are set to grow the country’s energy output by 60% within two years in the first major boost to supply in two decades.Mr. Sharif’s government plans to inaugurate a nuclear plant this month and a pipeline network in January that will carry large-scale gas imports upcountry.


“Never in the history of Pakistan has there been such a big package of electricity plants in the pipeline,” said Syed Akhtar Ali, in charge of energy at the Planning Commission, the ministry tasked with long-term development.

Mr. Sharif’s promise to solve the electricity crisis propelled him to office at a time when the energy deficit was knocking some 2 percentage points off growth, economists say, stifling industry and leaving school children to study by candlelight.

Pakistan’s economic growth has risen to almost 5% annually under Mr. Sharif’ and his government set a 7% target for the years ahead. That, his government hopes, will boost the moribund private sector, reduce unemployment and provide youth with more alternatives to extremism.

The energy plan is a centerpiece of that economic aspiration. Mr. Sharif is racing to fulfill his pledge and become the first incumbent to be re-elected in a country whose voters—or the interventionist military—have long ousted its leaders for their poor performance. Mr. Sharif, who led Pakistan twice before in the 1990s, hasn’t previously even completed a term in office.

“Electric power is going to be the swing factor in the election,” said Shahid Khaqan Abbasi, the minister for petroleum. “If we don’t deliver on power, we won’t be seen as having delivered.”

Mr. Sharif’s plan depends heavily on ​China, which​ is translating its long-term strategic ties with Pakistan into an economic partnership, part of a broader infrastructure push across Eurasia. China is financing many plants as commercial investments. But to expedite projects, the Pakistani government is funding ​some​ power stations in the run up to the election, including three gas-fired plants in Mr. Sharif’s home province of Punjab. The eventual aim is to more than double Pakistan’s current output of around 16,000 megawatts.

By comparison, Washington’s multibillion-dollar civilian aid program for Pakistan has been far less ambitious, adding 1,000 megawatts to the country’s power generation in recent years by enhancing existing power stations.

The plan is to add 10,000 megawatts of the new China-backed infrastructure, a mixture of coal, gas and hydro electricity, by early 2018, months before elections, at a cost of $21 billion. The schedule is tight. The massive amounts of natural gas and coal needed for the plants require an extensive delivery system of ports, pipelines and railways. The country also needs to upgrade its power distribution network to be able to carry the extra electricity.


“My concern is that gaps in longer term planning, including much needed structural, regulatory and market reforms, will once again fall by the wayside in the euphoria of having achieved a temporary electricity supply surplus,” said Jamil Masud, a partner at Hagler Bailly Pakistan, an energy consultancy,

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At Karachi’s Port Qasim, a $2 billion coal-fired plant is taking shape. After only 1.5 years under construction, one 400-foot high cooling tower is up and the second is almost complete. The hulking metal frames for the boilers are in place and a jetty for imported coal is taking shape. Around 4,000 people work on the site, 24 hours a day—half of them Chinese workers who aren’t allowed to step outside its boundary.

On the other side of the port, a massive tanker ship serves as a terminal for liquefied natural gas imports, which are piped across Pakistan. Three more terminals are planned by the government.

Riaz Haq said...

#Russia throws its weight behind #CPEC, #China-#Pakistan corridor, keeps #India on tenterhooks http://toi.in/eJCcoa via @timesofindia

Russia's nebulous public position on its growing ties with Pakistan continues to give sleepless nights to Indian policymakers who have sought to isolate Islamabad on the issue of terrorism.
After it officially denied reports that it had shown any interest in China-Pakistan Economic Corridor (CPEC), Moscow has not just declared strong support for the China-funded project but also announced its intention to link its own Eurasian Economic Union project with CPEC.
CPEC, which will link Gwadar in Pakistan's restive Balochistan province to Xinjiang in China, remains a major bugbear for Indian foreign policy as it passes through the Gilgit-Baltistan region in Pakistan occupied Kashmir (Pok) claimed by India. Beijing has shown scant regard for India's concerns despite PM Narendra Modi himself having taken up the issue of Chinese involvement in the disputed territory with President Xi Jinping.
Moscow last month emphatically denied Pakistan media reports that it was looking to involve itself in CPEC by acquiring access to the port built by China at Gwadar. Russia's ambassador to Pakistan Alexey Y Dedov has now been quoted as saying that Russia and Pakistan have held discussions to merge Moscow's Eurasian Economic Union project with the CPEC.
Dedov said Russia "strongly" supported CPEC as it was important for Pakistan's economy and also regional connectivity.
The mixed signals emanating from Moscow, as strategic affairs expert Brahma Chellaney said, are injecting uncertainty in the direction of the Russia-India relationship whose trajectory long epitomized constancy and stability.

"It is as if Moscow no longer sees India as a reliable friend or partner. Indeed, by seeking common cause with India's regional adversaries — including by supporting the China-Pakistan Economic Corridor through internationally disputed territory and engaging with the Pakistan-backed Taliban — Russia is challenging India's core interests," said Chellaney.

India continues to officially maintain that it doesn't see any "downward trend" in relations with Russia even as it works behind the scenes to convince Moscow that Pakistan remained the fountainhead of terrorism in the region. For India though, Russia further queered the situation in Afghanistan by declaring that it regarded Afghan Taliban as a national military-political movement. Russia is looking to engage the Taliban apparently to defeat IS but, as the MEA spokesperson warned last week, India wants any engagement with Taliban to respect the internationally recognized red lines, including giving up violence and severing ties with al-Qaida.
The comments made by Dedov are only the latest in a series of Russian doublespeak on Pakistan this year. As it officially conveyed to Moscow, India was disturbed by Russia's decision to hold its first ever joint military exercise with Pakistan days after Uri terror strike which left 19 Indian soldiers dead. The Russians justified it by saying that the exercise was meant to help Pakistan deal with terrorism

At the Brics Goa summit in October, Russia chose not to help India publicly name Pakistan based terrorist outfits like Lashkar and Jaish in the official declaration in the face of Chinese resistance.
Russia continues to insist that its ties with Pakistan will not come at India's cost. Asked about the Russia-Pakistan military exercise though, at the recent Heart of Asia conference, Russia's presidential envoy to Pakistan Zamir Kabulov said Moscow didn't complain about India's close cooperation with the US and so India also shouldn't complain about "much low level" of cooperation between Russia and Pakistan. India may or may not complain, but it's certainly watching with eyes wide open.

Riaz Haq said...

#China to set up large steel plant at #Gwadar, #Pakistan: Chinese Envoy. #CPEC http://www.app.com.pk/china-to-set-up-large-steel-factory-at-gwadar-envoy/ … via @Associate Press Of Pakistan

Acting Chinese Ambassador to Pakistan, Zhao Lijian Monday said that his country would set up a large steel factory at Gwadar to further expedite economic developments being carried out under China-Pakistan Economic Corridor (CPEC) framework.
“Both China and Pakistan would very soon sign an agreement to establish the steel factory, three times bigger than the free economic zone being set up in Gwadar city,” he made this announcement while addressing participants of a day-long conference on CPEC: Potential and Prospects organized by Strategic Vision Institute (SVI) here.
He said, industrial cooperation was the forth pillar of CPEC initiative and both the country would discuss it in the next meeting of Joint Cooperation Committee (JCC) of CPEC to be held in Beijing this month.
“After completion of energy projects, transport infrastructure and development of Gwadar Port, industrial cooperation between China and Pakistan will be the main topic at the next JCC,” he added.
Zhao Lijian informed that China was working a lot for the development of Gwadar Port which was built with the Chinese government’s assistance.
He said, after completion, the port was handed over to Singapore but there was no improvement even after passage of five years.
Finally, it was given to the Chinese government by Pakistan government and the port was made functional and a ship carrying Chinese goods left for Africa.
He said, a business centre, hostel for different companies, fisheries processing plant with cold storage facility had been established in the free economic zone spread over around nine kilometers.
About Gwadar airport up-gradation, he said, the new international airport would have landing facility for all the modern aircraft including A-380 Airbus after completion, adding, prior to the up-gradation only C-130 or propeller-planes could land at the old airport.
The Acting Chinese Ambassador said, a 150-bed hospital was being built for the treatment of local people while a vocational institute had been set up for imparting training of different skills especially for the fishermen.
Talking about different energy project being completed under CPEC initiative in different parts of Pakistan, he particularly mentioned about the coal-based power plants which were being built in accordance with environmental standard set by the World Bank (WB) and other concerned international organizations.
He said, China produces around 60 percent of its total power generation through coal based power stations using modern and state of the art technology.
“The environmental concerns will be taken into consideration during the completion of these power stations,” he added.
Zhao Lijian pointed out hydro power plant, coal based power plants, wind power plants and solar based power plants were being set up to meet the electricity shortage in Pakistan.
He informed that the Karot Power Plant was being financed by the Silk Bank established by the Chinese government.
The groundbraking of Suki Kinari, Kohala Hydro Power Project would be held early next year, he said and added, Sahiwal Power Plant and Port Qasim Power Plant would be completed by next June and December respectively.
He said, a power plant set up at Thar coal site would also be inaugurated in next June.
He said, HUBCO power plant, one of the biggest coal-based power plant, would provide constant and stable power supply throughout the year.

Riaz Haq said...

#China to set up large steel plant at #Gwadar, #Pakistan: Chinese Envoy. #CPEC http://www.app.com.pk/china-to-set-up-large-steel-factory-at-gwadar-envoy/ … via @Associate Press Of Pakistan

The Acting Chinese Ambassador said, the 50MW wind power plants and the 100-MW solar power plant set up at Balochistan would boost the power production and hoped there would be no loadshedding in Pakistan after completion of all energy projects.
Giving overview of transport infrastructure projects, he said, the Multan-Sukkur section of Peshawar-Karachi motorway would be completed at a cost of US$ 2.8 billion.
He pointed out that no other country was ready to support this project because of being less populated and having less-transport.
China came forward to build this project on Built-Operate-Transfer (BOT) basis in three years.
He said, KKH Phase-II would be completed at a cost of US$ 1.3 billion, adding, its Phase-I had already been completed while Phase-III would soon be planned.
About railways upgradation, he said, after completion of dual tracks, speed of trains could be enhanced upto 160 km per hours.
Speaking on the occasion, Chairman, Parliamentary Committee on CPEC, Senator Mushahid Hussain Sayed said, the CPEC initiative would be beneficial for not only Pakistan and China but also the South Asia and regions beyond.
He said, at a time when nobody was coming forward to help Pakistan, China extended support and confidence to its time-tested friend.
He informed that the land route of CPEC would connect 65 countries through Pakistan’s Gwadar port.
He said, China’s cooperation in energy sector, transport infrastructure development including railways upgradation, Gwadar port, development of Thar coal, Karachi-Peshawar motorway, employment to 10,000 Pakistanis and early harvest projects under CPEC had given a new impetus to economic growth.
“These projects have not only pushed Pakistan economic revival but also help integrate different parts of our country,” he added.
Mushahid opined that importance of Shanghai Cooperation Organization (SCO) had increased manifold for regional cooperation and after India’s stubborn attitude regarding South Asian Association of Regional Cooperation (SAARC).
In his welcome address, President, SVI, Dr. Zafar Iqbal Cheema said that the CPEC was not only a game changer for South Asia but also for Central Asia and regions beyond.
He said, CPEC would have global implications over the time, adding, it would promote trade and economic activities in the entire region.

Riaz Haq said...

Dr Jean-Francois Di Meglio, President of #Asia Centre in #France: "#CPEC is a game-changer for #Pakistan". #China
https://www.dawn.com/news/1303725/cpec-is-a-game-changer-for-pakistan

KARACHI: China may have more core benefits from the China Pakistan Economic Corridor (CPEC) but it’s a game-changer for Pakistan which will also benefit from it. Contrary to what some Europeans think, Pakistan has a strategic position in the region.

This was one of the main points raised by Dr Jean-Francois Di Meglio in his lecture on ‘The Economic, Strategic and Environmental Consequences of the New Silk Roads’ at the Area Study Centre for Europe (ASCE), University of Karachi, on Wednesday.

Dr Di Meglio, who is President, Asia Centre, France, said he was not an expert on CPEC so what he would talk about was based on his experiences. He said his talk was divided in two parts: Europe’s standpoint on the Silk Road project and China’s point of view.

Regarding the first part, Dr Di Meglio said when China announced the project in 2013, Europeans were doubtful about it. They thought since it was a 35-year project nothing could be achieved in the short term. They also thought that China was trying to rejuvenate something that used to exist in the past and there was no point doing it. Some people, however, harboured the notion that it was part of a grand plan. It was innovative because earlier the flow [of goods] was from West to East and now China was trying to reverse the direction of history.

Shedding light on what Silk Road used to be, Dr Di Meglio said in the late 20th century it was just a road but also entailed some key points and strategic places, one of which was the area crossing the border between Pakistan and Afghanistan. In modern history, he said, two significant events took place. The first was the Great Game between Russia and Britain at the end of the 19th century where Russia had accumulated wealth and wanted access to the sea; the other was the Afghanistan War that resulted in the disintegration of the USSR.

Dr Di Meglio said it was complicated for Europeans to talk about CPEC but countries like Germany and France had shown interest in it. With regard to negative feedback, some Central Asian countries were of the view that Russia was trying to re-establish links with China and the risk was that “China would be too much present”. But the Europeans discarded many important factors, he said.

On the Chinese approach to the situation Dr Di Meglio said [economic] reforms in China started in 1978 and after 35 years, in 2013, they came up with another project. If you looked at the dates, another 35 years added to 2013 would mean the arrival of the year 2048. In 2047 Hong Kong would come back to Chinese sovereignty fully; and 2049 would be the 100th anniversary of the People’s Republic of China. He said reforms brought in 1978 came through a simple process: enrichment. If the people were richer they would be easier to manage. The Silk Road had the potential of making some countries marginally richer. That could be done by building infrastructure and by linking them up with China.

Dr Di Meglio said CPEC was not an easy project but was not the most difficult to achieve either. There was room for Pakistani companies and politicians to take the initiative and speak to the Chinese for a level playing field as much as possible. Whosoever was going to benefit more from it, it was a game-changer for Pakistan. He argued that let’s say Pakistan was only benefiting 10 per cent from the project; even then you had other benefits like “influence” and “footprint”. He said some Europeans thought that Pakistan existed because there was a partition in 1947; they did not realise that Pakistan had an important strategic position.

On China’s ambitions, Dr Di Meglio said while it wanted prosperity and stability, it did not want domination in the region. China knew that in the past empires rose and fell. “The way to last long is not to dominate other countries but to play with them.”

Riaz Haq said...

#Pakistan gets additional $1 bn in #Chinese financing for roads, bringing #CPEC to $55 billion so far. http://reut.rs/2hkqJ7f via @Reuters

Dec 27 Pakistan expects to secure soft loans from China of about $1 billion this week for three road projects in the China-Pakistan Economic Corridor (CPEC), a Pakistani official said on Tuesday.

The roads lie on the western route of CPEC, a $55 billion network of roads, rail links, power plants and other infrastructure connecting western China to Pakistan's southern port of Gwadar.

They include roads from Raikot to Thakot, Yarik to Zhob and from Basima to Khuzdar, Ashraf Zaman, spokesman for Pakistan's National Highway Authority (NHA) told Reuters.

Zaman said a deal was reached with the Chinese to finance the three additional roads in November.

"Hopefully, agreement will be signed between the two countries in this regard in China-Pakistan Joint Cooperation Committee (JCC) meeting to be held on Dec. 29 in Beijing," he said.

Riaz Haq said...

#Pakistan Opens New 340MW Nuclear Power Plant Built With #China's Help. #CPEC

http://www.voanews.com/a/pakistan-nuclear-reactor/3653908.html

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.

Riaz Haq said...

#Pakistan winning war against #Terrorists. #Taliban #TTP #FATA #Karachi #MQM.

http://www.spectator.co.uk/2016/12/pakistan-is-winning-its-war-on-terror/

Violence has not just dropped a bit. It is down by three quarters in the last two years. The country is safer than at any point since George W. Bush launched his war on terror 15 years ago.

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The Taleban had long treasured a secure basis in Karachi, as had religious terror groups. That was a conventional crime industry specialising in kidnap, drug smuggling and extortion (every business had to pay protection money to gangs).

Pakistan’s politicians tolerated this. Pervez Musharraf, the army chief and president, was often accused of allowing the armed wing of Karachi’s largest political party, MQM, to operate with complete impunity.

This policy continued under Musharraf’s civilian successor, Asif Zardari, whose Pakistan’s People’s Party governed Karachi in coalition with MQM from 2008 to 2012. Five years ago we walked around gangster-infested Liyari town in Karachi’s port area with the local mafia don, Uzair Baloch. Baloch (now in jail) told us he could speak to Zardari whenever he wanted. The violence just rose and rose, until Zardari’s replacement Nawaz Sharif ordered his cabinet to Karachi and gave the state’s paramilitary arm, the Rangers, unlimited powers. This was the moment when political tolerance of violence ended.

We interviewed Major-General Bilal Akbar, director-general of Sindh Rangers for the past two-and-a-half years, at his HQ in the south of the city; he has since transferred to be the Pakistani army’s chief of general staff. After asking us to pass on his regards to Nick Carter, head of the British army (with whom he used to play bridge every Friday night when they were both stationed in Kabul), he explained the security situation.

In 2013 there were 2,789 killings in Karachi. In the first 11 months of 2016 there were 592. In 2013 there were 51 terrorist bomb blasts. Up to late November this year, there were two.

Three years ago, Karachi suffered from an orgy of kidnapping for ransom. There were 78 cases in 2013, rising to 110 the following year. This year, there have been 19.

[Alt-Text]
Some 533 extortion cases were reported in 2013; in 2016, only 133. Sectarian killing is sharply down: while 38 members of the Shia minority (who are brutally targeted in Pakistan) were killed in 2013, that figure was down by two thirds in 2016.

Major-General Bilal told us: ‘We have apprehended 919 target killers from the militant wings of political parties since September 2013. They confessed to over 7,300 killings. The daily homicide rate in the city is less than two now. It used to be ten or 15, and during ethnic clashes we could lose 100 lives a day.’

Just three years ago, according to the Numbeo international crime index, Karachi was the sixth most dangerous city in the world. Today it stands at number 31 — and falling.

Six months after he ordered the Rangers into Karachi, Nawaz Sharif took an even more momentous decision. The prime minister, whose initial instinct had been to negotiate with the Taleban and oppose the use of force, yielded to advice from his generals. He sent the army into North Waziristan, the Taleban stronghold on the Afghan border.

North Waziristan had not just provided a base for the Taleban leadership. It was a centre for the manufacture of explosives, suicide vests and military equipment, and for training camps, as well as drawing in foreign fighters from al-Qaeda. It was the epicentre of terrorism in Pakistan, which is why this intractable and remote area had been left alone by the army for so long.

In June 2014, General Raheel Sharif (now a national hero, and no relation of prime minister Sharif) took charge of a massive military offensive, Zarb-e-Azb. Taleban groups responded with a series of atrocities of which the most grotesque was the attack on the Army Public School in Peshawar, in which a reported 140 children were killed.

Riaz Haq said...

What Could Kill #Pakistan's Big Stock Market Rally ( 40% Market Gain in 2016)? via @forbes #KSE100 #CPEC #China

http://www.forbes.com/sites/panosmourdoukoutas/2016/12/27/what-could-kill-pakistans-big-stock-market-rally/#52b49eaed1f5

Pakistan’s stock market has been on a tear in recent years. The country’s main KSE index has gained close to 400% since 2009, and 40% this year alone—leaving neighboring markets in the dust.

Pakistan’s equities have had a number of things going their way, like an improving macroeconomic environment—rising economic growth and falling inflation and interest rates. The country’s economy grew close to 6 percent in 2016, up from 4.8 percent in 2015, with inflation running around 4 percent, down from 10 percent four years ago. And the 10 year Treasury bond has yielded 8 percent, down from 12.5 percent four years ago.

Then there are a couple of overseas endorsements for Pakistan’s market reforms. Like $1 billion in support from the World Bank – and a couple of domestic acquisitions from foreign suitors, such as the acquisition of Karachi’s K-Electric by Shanghai Electric Power Co.

Another overseas endorsement was the inclusion of Pakistan’s market into MSCI’s emerging market index.

So what could kill Pakistan’s big stock market rally?


The usual suspects that haunt frontier and emerging markets: inflation, corruption, and revolution. Not always in the same order.

At least that’s the experience of South Asia and Latin American countries which have been in a similar position before.

Pakistan’s low inflation, for instance, is hard to maintain at these levels, as a poor infrastructure creates bottlenecks, which could push prices of basic commodities higher. Besides, Pakistan is heavily reliant on imported oil, which has almost doubled since last January.

Then there’s corruption and cronyism, which lead to large government budget and current account deficits, while constraining competition and technological progress. In spite of some progress in the last five years, Pakistan is still high up on Transparency International’s Corruption Index.

And revolution can only be around the corner, as the country suffers from poor enforcement of the law, sharp income inequalities, and territorial disputes with India.

Adding to these concerns over the future of Pakistan’s equities is rising US interest rates, which make investing in emerging and frontier markets less appealing than shopping around inside the US economy.

That’s why investors should be very cautious about pouring more money into Pakistan’s equities at this point.

Riaz Haq said...

#China to Fund 4,000 MW Power Transmission Line in #Pakistan. #CPEC https://thewire.in/90574/china-power-line-pakistan/ … via @thewire_in

State Grid of China will help build a 4,000 MW power transmission line in Pakistan in a project valued at $1.5 billion, Pakistan said on Friday, the latest in a series of Chinese investments in its South Asian neighbour.

The high-capacity transmission line will be the first of its kind in Pakistan and will link Matiari town in the south, near a new power station, to Lahore city in the east, a key link in transmission infrastructure, the Pakistani government said.

An agreement on the project was signed on Thursday in Beijing between Mohammad Younus Dagha, Pakistan’s secretary of water and power, and Shu Yinbiao, chairman of State Grid Corporation of China, the government said in a statement.

Construction will begin in January, and should take about 20 months, said a spokesman for the Pakistani prime minister’s office.

Pakistan has been plagued by a shortage of electricity for years, with widespread rolling blackouts in both rural and urban areas.

The government has managed to reduce load shedding – scheduled power outages – in some areas, but production gaps and distribution woes remain.

The project is the latest in a series of big Chinese investments, most of which fall under a planned $55 billion worth of projects for a China Pakistan Economic Corridor.

The corridor is a combination of power and infrastructure projects that link western China to Pakistan’s southern port of Gwadar.

Other Chinese investment in Pakistan has included the acquisition of a majority stake by Shanghai Electric of the K-Electric power production and distribution company for $1.8 billion.

Last week, a Chinese-led consortium bought a 40 percent stake of the Pakistan Stock Exchange for an estimated $85 million.

nkc nkc said...

For the viewing pleasure of my pakistani friends.. chinese media covering cpec
https://www.youtube.com/watch?v=q5gURCNkDE4

nkc nkc said...

for the viewing pleasure of my pakistani friends.. chinese media covering cpec..

https://www.youtube.com/watch?v=q5gURCNkDE4

Riaz Haq said...

#Pakistan Builds New Missile Boat to Protect Key Trade Routes #CPEC #Gwadar http://www.defensenews.com/articles/pakistan-builds-new-missile-boat-to-protect-key-trade-routes …

Pakistan has commenced construction of a new type of missile boat as part of efforts to modernize its navy to ensure security for the China-Pakistan Economic Corridor (CPEC), a trade route linking western China to the Arabian Sea via Pakistan’s deep water port of Gwadar.

Pakistan hopes the CPEC will revive its economy, whereas China’s trade and energy resources will be bypassing the Malacca Strait.

First steel for the boat was cut Dec. 29. Images from the ceremony revealed it to be a development of the Azmat-class missile boat designed for Pakistan by China. Three Azmat boats have been built, one in China and two in Pakistan by state-owned Karachi Shipyard & Engineering Works (KSEW).

A statement by the military’s Inter Service Public Relations media arm revealed that the boat, which is considered the first indigenously designed missile boat, was developed by Maritime Technologies Complex and would have the “latest weapons and sensors.”

Though released images from the ceremony leave some questions unanswered about the new vessels' exact features, notable differences from the base model include new missiles, a redesigned forward superstructure and a possible replacement of the twin 25mm cannon.

The navy declined to provide further details regarding the changes.

Defense News first learned of the new missile boat during IDEAS 2016, Pakistan’s biennial defense exhibition held in November, when spokesmen for the shipyard KSEW and the sea service separately revealed the existence of the program.

Though unwilling to go into detail, they said the new design would feature new weaponry, sensors and materials. Future plans include an indigenous combat management system, anti-ship missiles and possibly air-defense missiles, the lack of which is presently a notable weakness.

The Azmat missile boats are armed with eight C-802A/CSS-N-8 Saccade anti-ship missiles, but the new design is clearly armed with six larger missiles. Speculation is that the weapons are the C-602, an export development of China’s YJ-62, which is in Pakistani service as a coastal defense missile named "Zarb."

The subsonic C-602 has a reported range of 280 kilometers and carries a 300-kilogram warhead. It packs a bigger punch and has longer reach than the C-802A.

However, last year, a Ministry of Defence Production report revealed a ship-board launcher for a land-attack cruise missile was under development.

Pakistan’s only surface-launched, land-attack missile is the indigenous Babur. Thus far there have been no reports of an anti-ship variant, but fitting the C-602 seeker to the missile would certainly expedite development.

News of the new missile boat comes amid Chinese reluctance to establish a permanent presence in the area, forcing Pakistan to forge ahead with efforts to improve its maritime security, albeit with Chinese help.

Riaz Haq said...

#Pakistan #cement production capacity projected to rise to 72 million tons a year in 2-3 years. #CPEC
http://tribune.com.pk/story/1285619/cement-production-capacity-projected-rise-26m-tons/

Encouraged by consistent domestic demand and government’s focus on a host of infrastructure projects, the cement industry has planned to increase its capacity by 26.25 million tons over the next two to three years to support a smooth growth of the national economy.

Reviewing the six-month performance of the industry, All Pakistan Cement Manufacturers Association Chairman Sayeed Tariq Saigol said sales of the industry rose 8.6% and reached 19.81 million tons in the first half (July-December) of current fiscal year 2016-17.

“The growth trend indicates that in the next two years the current production capacity of 46 million tons will be insufficient to meet domestic demand. The industry is making massive investments to add new capacities,” he said.

He anticipated that the capacity would increase to 72.25 million tons in the next two to three years with additional domestic sales of 26 to 28 million tons.

Saying that cement consumption was considered a strong barometer of economic growth, Saigol asked the government to consider reducing taxes in order to give a boost to cement demand.

He boasted that cement was one of the most technologically advanced industries that had made inroads even into the Indian market despite tariff and non-tariff barriers. “Pakistani industry should also be protected in the same manner,” he said.

In the 2016-17 budget, the government increased taxes on cement from Rs600 to Rs1,000 along with 17% sales tax. The increase would take government revenue on cement sales from the previous Rs2,492 to around Rs3,250 per ton, he said.

According to data released by the association, domestic cement sales grew 11.07% in the first half of current fiscal year compared to dispatches in the same period of previous year. Exports, however, fell 3.53% in July-December 2016.

Riaz Haq said...

#Pakistan announces financing for $1.8bn Suki Kinari #hydropower project. #CPEC #energy
http://www.energy-business-review.com/news/sk-hydro-secures-financing-for-870mw-hydropower-project-in-pakistan-100117-5712743 …

Pakistan has announced financial close for the 870MW Suki Kinari hydropower project, helped by the efforts and facilitation of the country's Private Power and Infrastructure Board (PPIB)

Being built by SK Hydro and Industrial & Commercial Bank of China, the $1.8bn project is expected to commence power generation by 2022. The project is expected to generate 3081GWh of electricity each year.

The hydro facility is located on River Kunhar, a tributary of River Jhelum, District Mansehra, in the eastern part of Khyber Pakhtunkhwa between Naran and Paras towns.

Construction on the project, which is said to be the first hydro independent power project (IPP) under the framework of China-Pakistan Economic Corridor (CPEC), has already commenced.

Following completion of 30 years of operations, the project will be handed over to the Khyber Pakhtunkhwa government.

The project’s lenders include Export-Import Bank of China, and Industrial and Commercial Bank of China (ICBC).

Power generated from the project will be sold to National Transmission & Despatch Company (NTDC), under long term power purchase agreement signed earlier.

The sponsors of the project include Saudi Arabia’s Al-Jomaih Holding Company, China Gezhouba Group Company and Pakistan’s Haseeb Khan.

In April 2015, SK Hydro signed an agreement with Export-Import Bank of China and Industrial and Commerce Bank of China (ICBC) for 75% of financing costs of the project.

Riaz Haq said...

#Pakistan #auto parts maker Loads Limited CEO more than bullish on nation's auto sector. #economy #manufacturing

http://tribune.com.pk/story/1310741/optimistic-loads-limited-ceo-just-bullish-pakistans-auto-sector/

Munir Bana advised many of his employees to buy the company’s shares as date of the book-building portion of the IPO neared. Many of them hesitated, but some of them opted to buy a personal stake in the auto part maker’s expansion plan.

Weeks later, many regretted their decision and those who bought the shares wished they had invested more.

After all, the share price of Loads Limited – the last listing on the Pakistan Stock Exchange in 2016 – jumped over 100% within a few weeks of trading. It is currently priced at Rs56.76 after starting on Rs34 and has also handed out 10% bonus shares and Rs1 as dividend to its shareholders.

“Our employees were hesitant to enter the stock market, but when I insisted many of them bought the company’s shares,” said Bana, the CEO of Loads Limited, one of the leading auto part makers in the country.

“Those who did not buy or purchase just a few shares now regret (their decision).”

Before offering 50 million shares through the IPO, the company first offered 2.5 million shares to its employees to engage them in the company’s future aggressive investment plans. The company eventually managed to raise Rs1.7 billion, an amount the company is now using for expansion of its production capacity.

Loads makes radiators, exhaust systems, mufflers, sheet metal components among other parts, and its clients include more than a dozen national and multinational companies engaged in the production of motorcycles, cars and heavy vehicles manufacturers.
Bullish on future growth

Bana, a Chartered Accountant, believes two developments have been positive triggers for the local auto industry — the China-Pakistan Economic Corridor (CPEC), a $55-billion investment and loan package that envisages changing the way China conducts trade, and the Automotive Development Policy (ADP) 2016-21 announced in March 2016.

Industry experts believe the auto sector would be a major beneficiary of CPEC, given the corridor’s vision of upgrading Pakistan’s road and highways network.

Officials say the country would need heavy vehicles not only during the construction phase, but also after the infrastructure projects are completed.

“New entrants and new models, as well as the increase in heavy vehicles, all speak for themselves,” he said.

Riaz Haq said...

Pakistan Dismisses Chinese Debt-Trap Concerns

https://www.bloomberg.com/politics/articles/2017-01-29/chinese-debt-trap-concern-dismissed-by-pakistan-as-gdp-quickens

Pakistan is confident of managing its rising debt obligations to China as the world’s second-largest economy boosts investment in the South Asia nation by about 20 percent.

Pakistan will be able to handle repayments of Chinese soft loans to the government and businesses, which are part of a more than $50 billion of projects under the so-called China-Pakistan Economic Corridor, or CPEC, Planning and National Reforms Minister Ahsan Iqbal said in an interview in the capital, Islamabad.

Rising debt levels in the $271 billion economy, a drop in export earnings and a widening current-account gap have raised concerns about the government’s ability to pay the obligations. Prime Minister Nawaz Sharif’s government is betting the investment on roads, ports and power plants will boost growth and generate enough revenue to repay borrowings.

“With 6 to 7 percent growth Pakistan will be in a very comfortable position,” Iqbal said. The “bulk of investment coming into CPEC is private sector investment, foreign-direct-investment, so that’s not going to disturb our debt-to-gross domestic product ratio.”

Pakistan’s government debt-to-GDP level is estimated to have risen to 66.1 percent last year from 64.2 percent in 2013, according to the International Monetary Fund.

The size of the Chinese-led investment projects has increased to about $55 billion from an initial $46 billion announced in 2015, according to Iqbal. It’s part of an initiative the Chinese government calls “One Belt, One Road” that aims to revive trade across Central Asia and into Europe via a network of railways, ports and highways.

Since coming to power China’s President Xi Jinping has sought to expand trade ties with its neighbors and position the country as an economic and military anchor in the western Pacific. U.S. President Donald Trump’s withdrawal from a long-planned Pacific trade pact has created a political and economic vacuum that China is eager to fill.

In November, Iqbal, who is heading the investment plans in Pakistan, said about $11 billion of the loans has been allocated to infrastructure projects at about 2 percent with payback in 20 years, along with a five-year grace period. The rest has been earmarked for generating electricity, with about 11,000 megawatts expected to be added by 2018 to end the nation’s chronic power outages.

However, analysts have raised doubts about Pakistan’s ability to finance repayments and repatriations if rising economic growth isn’t sustained and the government fails to reverse a drop in exports.

Despite a decline in oil imports, Pakistan has seen its six-month current account gap widen to 2.2 percent of GDP, or $3.6 billion, according to central bank data. This has been in part caused by increased imports needed for the Chinese projects, according to a BMI Research report this month.

The fall in exports has also added to doubts about Pakistan’s economic stabilization after it completed an International Monetary Fund in September. Overseas shipments fell to $21 billion is the last fiscal year, their lowest since 2010.

Riaz Haq said...

National Assembly approves Companies Bill 2017 to stimulate economic growth

https://en.dailypakistan.com.pk/headline/national-assembly-approves-companies-bill-2017-to-stimulate-economic-growth/

National Assembly on Monday unanimously passed the landmark Companies Bill with an aim to give a boost to national economy and stimulate economic growth.

The more than 500 clauses bill, the Companies Bill 2017 aims at replacing the Companies Ordinance 1984 in order to consolidate and amend the law, besides encouraging and promoting corporatisation in the country based on best international practices.

Created with detailed input by members both from the opposition and the treasury benches, this comprehensive bill will ensure maximum participation of members in decision making process of the company through use of modern electronic means of communication and aim to address the issues relating to protection of interest of minority share holders and creditors.

On the behalf of Finance Minister Ishaq Dar, Minister for Law and Justice Zahid Hamid moved the bill saying the bill will facilitate growth of economy in general and the corporate sector in particular by providing simplified procedure for ease of starting and doing business and greater protection of investors.

He said that the bill will provide adequate manners against fraud, money laundering and terrorist financing as necessary provisions have been proposed regarding powers of the SECP including joint investigation and provision requiring officers of a company to take adequate measures to curb such violations.

This bill also provides for relief and incentives to corporate sector especially small and medium size companies as market experts and business community were at unison during various consultation sessions on the bill.

The legislation will elevate Pakistan’s economy and address long-standing demands of the business community to compete with the international market players with the reduction in cost of incorporating and doing business.

It will also encourage the use of modern communication technology coupled with a simplified regulatory procedure and provide much needed relief to the corporate sector. Moreover, it will also address corporate solvency and growth in Pakistan through expeditious merger and acquisition mechanism. – APP

Riaz Haq said...

#China investment boosts #Pakistan's economic growth- #CPEC #infrastructure #power #ports #coal Nikkei Asian Review
http://asia.nikkei.com/Politics-Economy/Economy/Chinese-investment-boosts-Pakistan-s-economic-growth?page=2

More than $35 billion of the CPEC investment will be allocated to energy projects. Once completed by the end of next year, power generation projects are likely to help Pakistan overcome its crippling power shortages, a major bottleneck for growth. This is a big reason the CPEC is welcomed by many in Pakistan's industry, who say it is going to be a "game changer" for the country.

China also recognizes that the CPEC initiative will help secure the quickest trade route connecting the country's western Xinjiang region and other landlocked areas to the Arabian Sea, which could facilitate economic development in the Chinese hinterland. The infrastructure development initiative will also allow China to mitigate the problem of overcapacity at home by exporting materials and equipment to Pakistan.

There are proposals to develop a power plant, an airport and highways and other facilities particularly around the port of Gwadar on the southwestern coast of Pakistan, which is strategically important for China as it provides the country easy access to the sea.

-----

According to a local newspaper, $700 million of the $1.1 billion spent on CPEC-related projects in the July-September period last year was financed by loans from the China Development Bank. The amount is mainly earmarked for importing materials and equipment from China, which are needed to complete the projects.

Many in Pakistan have voiced concern over the country's rising debt obligations to China. Also, Chinese companies typically bring their own engineers and workers in large numbers to do work in Pakistan.

"Surging imports from China will damage local companies," said Ehsan A. Malik, CEO of the Pakistan Business Council, which represents 62 major companies and organizations. "Tax revenue and employment will not increase." He added, "CPEC may be a Trojan horse."

However, the logic of companies participating in CPEC is very simple. "We asked China, because nobody in the world finances coal projects," said Hussain Dawood, chairman of Dawood Hercules, a large Pakistani conglomerate that includes the Engro group, which is involved in the production of energy and chemicals.

"Investment in CPEC is not only from China," said Arif Habib, CEO of the Arif Habib group. "Companies from Germany, Denmark and Saudi Arabia are also showing interest."

Despite widespread concern about the health of China's economy, Ahsan Iqbal, Pakistan's minister of planning and development, said confidently: "The CPEC projects are a high priority for Chinese companies because they can expect good returns. Even though the Chinese economy is slowing down, the companies still have huge cash reserves."

Many Japanese companies also think the best thing to do now is to take advantage of Chinese-built infrastructure in Pakistan to expand their own business. No matter who invested, if energy and infrastructure investment gains momentum, it could stimulate Pakistan's economy.

Amid all the speculation, Pakistan is moving toward its goal of becoming the next big emerging market by gradually shaking off its reputation for terrorism, corruption and political blunders.

Riaz Haq said...

Pakistan’s Response to Hybrid War on CPEC?
The over 100 Pakistani martyrs who were killed over the past week as part of the joint US-Indian Hybrid War on CPEC don’t need to have their sacrifices be in vain.

By Andrew Korybko - February 17, 2017


http://regionalrapport.com/2017/02/17/pakistans-response-hybrid-war-cpec/

Pakistan was attacked by terrorists over the past five days when eight separate blasts ripped through the country and reminded the world that Islamabad is on the front-lines in the War on Terror. Unlike after the end of the Soviet intervention in Afghanistan, this time it wasn’t just ‘wayward freedom fighters’ boomeranging back to their home base and setting off a chain reaction of blowback, but dyed-in-the-wool terrorists hell-bent on wreaking as much havoc as possible in order to offset China Pakistan Economic Corridor (CPEC).

Old Tactics for New Reasons

This major contextual difference is attributable to the redefined geostrategic significance of South Asia across the past couple of years. The CPEC has become the driver of China’s One Belt One Road (OBOR) global vision of New Silk Road connectivity and the poster project for the emerging Multipolar World Order, thus making Pakistan the “Zipper of Pan-Eurasian Integration” at the “Convergence of Civilizations”.

The US and its unipolar allies such as India have a completely different conception for how the future should look, and are dead-set opposed to CPEC for the simple reason that it would undermine their hegemonic ambitions. Instead of joining the project and contributing to a win-win solution for all of Eurasia, Washington and New Delhi have decided to sabotage CPEC out of the pursuit of their own subjectively defined self-interests.

Pursuant to this goal, both actors utilize Afghan-based terrorists in order to destabilize Pakistan, understanding that this can in turn reduce the attractiveness of CPEC to international investors and partners. The thinking goes that if high-profile terrorist attacks capture the global media’s attention, they’ll inevitably succeed in leading the worldwide audience to once more inaccurately conflating Pakistan with instability, which in turn feeds speculation and thus creates a dire risk for the business vitality of CPEC.

Riaz Haq said...

Chinese investors are contemplating to build a chemical and automobile city in Gwadar under the umbrella of #CPEC

https://tribune.com.pk/story/1341071/gwadar-china-build-automobile-city/

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.

Riaz Haq said...

#India must join #China #Pakistan One Belt, One Road #CPEC initiative to stay in the game via @htTweets

http://www.hindustantimes.com/columns/india-must-involve-itself-in-the-china-pakistan-one-belt-one-road-initiative-to-stay-in-the-game/story-uTtxhRzcn8iCnUHsB91haJ.html

The recently held strategic dialogue between India and China provides a useful reality check on the state of the play. Over the past year, the relationship had reached an impasse owing to China’s unwillingness to support India’s entry into the Nuclear Suppliers’ Group and to allow Masood Azhar of Jaish-e-Mohammed to be placed on the United Nations Security Council’s terror list.

In both cases India had insisted that these were litmus tests of its ties with China. New Delhi’s stance stemmed from an under-estimation of the growing importance of Pakistan to China and from an over-estimation of its own clout. If the former underscored the inability of the government to get the measure of China-Pakistan convergence, the latter flowed from the curious belief that international influence was mostly about talking ourselves up.

-------------

The prospect of a trade war sparked off by Trump’s imposition of tariffs is surely a major cause for concern to the Chinese leadership. But they also know that United States does not hold all the chips. For one thing, China can retaliate against American exports on a range of things from aircraft to soya bean. More importantly, American tariffs will undercut global value chains and the accompanying deep integration of regulatory systems — commercial laws, taxation, intellectual property rights — fostered assiduously by the US in the past.

While this will hurt China in the short run, it also provided Beijing an opening to reorient economic integration in Asia under its leadership and on more congenial terms.

The collapse of the Trans-Pacific Partnership and the rolling out of the One Belt, One Road (OBOR) initiative have already provided Beijing the perfect setting in which to pursue a more ambitious agenda of Asian connectivity and integration. Chinese economists have also mooted ideas to channel a greater portion of Asian savings into investments in Asia — instead of persisting with the current pattern of effectively sending those savings to the US and allowing American banks and financial institutions to reinvest them in Asia. All this will take time and enormous effort, but the Chinese are well poised.

Politically, too, Beijing will stand to gain from Trump’s attitude towards longstanding partners in Asia. If an ally like Australia — which stood by the US even during the Vietnam War — came in for rough treatment, what are the odds that others are going to have smooth relationship with the Trump administration? To be sure, many of these countries will continue to be concerned about China but the emergence of countervailing coalitions may become difficult.

Unlike Beijing, New Delhi does not have many cards to play. Despite repeated expressions of interest, India’s record in fostering economic integration even in the subcontinent is underwhelming. Further, New Delhi has firmly refused to sign up to the Chinese OBOR initiative. The two sides did, however, discuss the possibility of cooperating on developmental activities in Afghanistan. Again, while this is welcome, New Delhi should recognise that Beijing does not really need to work with it in Afghanistan.

Riaz Haq said...

#UN Security Council Endorses #CPEC (#Pakistan) and #China's #OBOR projects. #India unhappy. # via @htTweets

http://www.hindustantimes.com/world-news/un-security-council-resolution-includes-china-s-bri-india-s-pok-claims-in-jeopardy/story-k6isroFAMdnlA6NtX4nPKN.html


A UN Security Council resolution has for the first time incorporated China’s Belt and Road Initiative (BRI), a multi-billion inter-continental connectivity mission that has a flagship project passing through Pakistan occupied Kashmir (PoK).

The resolution, which extends an ongoing UN assistance mission to Afghanistan, says international efforts should be strengthened to implement the BRI, President Xi Jinping’s legacy project about which he first spoke in 2013.

Beijing claims it has rounded up at least 100 countries in BRI’s support, including Pakistan, Bangladesh and Sri Lanka.

India is yet to sign up for the initiative. Foreign secretary S Jaishankar spelt it out to the Chinese government in February that India has a “sovereignty” issue with the BRI because its flagship project, the China-Pakistan Economic Corridor (CPEC), passes through PoK. According to diplomats, India endorsing the BRI would mean giving up its claims on PoK.

The UN endorsing the BRI could complicate the situation as far as India’s claims are concerned.

The resolution in question renewed the mandate of the UN Assistance Mission in Afghanistan for one year. In it, the 15-nation UN body urged to promote security and stability in Afghanistan and the region “to create a community of shared future for mankind”.

“Also included in the newly adopted council resolution was China’s Belt and Road Initiative, which aims to build a trade and infrastructure network connecting Asia with Europe and Africa along the ancient trade routes,” official news agency Xinhua reported.

The resolution “welcomes and urges further efforts to strengthen the process of regional economic cooperation, including measures to facilitate regional connectivity, trade and transit, including through regional development initiatives such as the Silk Road Economic Belt and the 21st-Century Maritime Silk Road (the Belt and Road) Initiative”.

The council resolution urged “further international efforts to strengthen regional cooperation and implement the Belt and Road Initiative”.

Besides the BRI, the resolution also mentions other projects like “regional development projects, such as the Turkmenistan-Afghanistan-Pakistan-India gas pipeline project, the Central Asia South Asia Electricity Transmission and Trade Project, the Chabahar port project agreed between Afghanistan, India and the Islamic Republic of lran”.

China has taken the inclusion of BRI in a UN resolution as a diplomatic victory of sorts.

Riaz Haq said...

Sleepy #Pakistan Village of #Gwadar Rises as #China's Gateway to the Middle East. #CPEC
https://www.voanews.com/a/pakistani-village-gwadar-china-gateway-to-middle-east/3816566.html


GWADAR, PAKISTAN —
Over the last six months, the skyline over the sleepy fishing city of Gwadar has been transformed by machines that dredge the Arabian Sea and cranes that set up shipping berths in what is projected to become Pakistan’s biggest international port.

Infrastructure developments have enabled the hammer-shaped Gwadar peninsula to emerge as the centerpiece of China’s determined effort to shorten its trade route to the Persian Gulf and obtain access to the rich oil reserves there.

A mini-“Chinatown” has appeared, with prefabricated living quarters, a canteen and a karaoke center. After hours, the workers have the grounds to play their favorite game, badminton.

---

Prior to that, he said, China had sailed materials through the South China Sea and the Indian Ocean to reach Gwadar.

The Chinese propose to cut down that 12,000-kilometer sea route by about one-fourth once they adopt the land route from the northwestern province of Xinjiang to Gwadar.

So eager is China to save on distance, time and expense — and the challenge posed by the U.S. Navy in the South China Sea — that it has weathered Pakistan’s unstable law-and-order situation to build its economic corridor.

Small wonder that the Chinese spokesman omitted an incident — related by locals to VOA — that the test convoy came under fire in Hoshab, Baluchistan, despite protection from a special security force.

Since then, Pakistan has enhanced its 12,000-plus security force to protect the Chinese. That has turned Gwadar into a military zone, with strict checks of vehicles and ID cards, plus an encampment of intelligence officials.

----
The Chinese, for their part, have taken heart from the security provided by Islamabad to plan ahead. A prefabricated coal plant will be brought from China to Gwadar to fire up its energy needs. Moreover, China will finance Gwadar international airport, according to the spokesman.

Distances inside Pakistan have shortened as the Frontier Works Organization builds a 3,000-km network of roads funded by Chinese investment.

----------

Gwadar Port Authority Chairman Dostain Jamaldini explains to delegations arriving daily from across the country that revenue generation is the key to uplifting the area.

He showed off a huge quadrangle in the center of Gwadar that “can even be seen on Google Earth.” There, he has recommended to Islamabad that a multipurpose lighthouse be constructed to guide incoming ships and generate revenue.

Until that happens, the fishermen who build wooden boats along Gwadar beach will likely lose their livelihood as their shanty homes are removed.

Already, the vacant plots in Gwadar’s Sinjhaar area overlooking the sea have been repossessed by the Pakistan Navy and earmarked for sale to military officials and politicians.

For the well-connected, a real estate boom is on the horizon. Trader Abbas Rashanwala said he waited for years for peace to come to Gwadar. Now his real estate business has taken off, with investors flocking in to buy land.

Many realtors are betting on Gwadar as on the stock market — making deals online or on the phone. Several sit in the Punjab, selling property they have never seen in Gwadar, all on speculation that prices will soon skyrocket.

Meanwhile, China’s investment in Gwadar is helping control maritime crime. Officials tell how traffickers from Africa and the Middle East used to dock on the beach at night to swap slaves for narcotics.

In February, 36 nations, including the U.S. and Russia, participated in the Pakistan Navy’s multinational patrolling of the Arabian Sea in a global recognition of China’s role in making the waterways safer.

Riaz Haq said...

China-Pakistan economic corridor unacceptable to India: Shivshankar Menon

http://indianexpress.com/article/india/china-pakistan-economic-corridor-unacceptable-to-india-shivshankar-menon-4623185/


THE CHINA-Pakistan Economic Corridor (CPEC), as it stands today, is not acceptable to India, Shivshankar Menon, a former National Security Adviser to the Government of India, said on Friday. “The sovereignty aspect of the CPEC, as proposed now, is unacceptable to us,” Menon said during a conference on The Belt and Road Initiative (BRI): India’s perspectives on China’s ambitious plan. The former diplomat’s statement comes at a time when China has made a fresh attempt at inviting India’s interest in President Xi Jinping’s pet project, the BRI, of which CPEC is a part.
On March 4, Chinese diplomat Fu Ying asked India to reconsider its position on the BRI keeping in mind the “larger picture”. India has been wary of the CPEC as a part of it passes through Pakistan Occupied Kashmir. “For India, there is an added contradiction that the CPEC passes through Indian territory under Pakistani occupation,” Menon said. By making “long-term financial investment in the initiative”, he said, China seems to “solidify and legitimise that occupation”, Menon said at the conference held in Mumbai by the Observer Research Foundation.
The conference was held to deliberate India’s position on the BRI ahead of China’s first international forum in May. Several economists, diplomats and mediapersons participated in panel discussions. While Menon acknowledged the economic benefits of the trans-continental initiative that connects 60 countries in Asia and Europe, he said that not all projects under the BRI were for economic justification, including the CPEC.
“Not all projects under the BRI are economically viable, which suggests that there is geo-strategic motivation involved,” he said, adding that most parts of the BRI passed through some of the “most insecure” regions. Menon, however, stressed that India would be more willing to join the BRI if it were more comfortable about the security in the regions concerned and the geopolitical context within which BRI is proposed.

Riaz Haq said...

#China to invest $50 billion in #Indus River Cascade for additional 40,000 MW hydropower in #Pakistan. #CPEC #OBOR

https://tribune.com.pk/story/1408444/mega-deal-china-invest-50b-develop-indus-river-cascade/

ISLAMABAD: In a major development that may attract $50 billion Chinese investment to Pakistan, Islamabad is expected to sign an MoU with Beijing on Saturday (today) for financing and developing the North Indus River Cascade which has the potential to generate 40,000MW hydro electricity.

The $50 billion investment comes on top of the $46 billion investment being provided by the Chinese government and Chinese banks for financing power and road infrastructure projects in Pakistan under the China-Pakistan Economic Corridor (CPEC).

With the signing of the MoU – which will be witnessed by Prime Minister Nawaz Sharif who is on an official visit to China – Beijing will emerge as the biggest financier of infrastructure projects in Pakistan.

According to the studies conducted by the Water and Power Development Authority (Wapda), Pakistan has an identified potential of producing up to 60,000MW of hydroelectric power.

Some 40,000MW of this potential power is located in the region called the Indus River Cascade, which begins from Skardu in Gilgit-Baltistan and runs through Khyber-Pakhtunkhwa as far as Tarbela, the site of Pakistan’s biggest dam in.

The Indus River Cascade includes Diamer-Bhasha Dam project for which Pakistan needs $15 billion financing. Other multilateral donors were not willing to invest on this project but now China has come up to finance this mega project.

Sources said the Chinese side conducted survey and studies on the North Indus Cascade including the sites of Pattan, Thacoat, Bunji, Dasau and Diamer in February 2017.

The Chinese side in their last high-level meeting agreed to convert the survey and initial study to an MoU whereby the Chinese will conduct a detailed study spanning over a period of three months on a developing roadmap for financing that will lead to initiation and completion of these mega projects.

Sources said this will be Pakistan’s first-ever private sector investment in mega projects in hydel resources as until now only Wapda led such projects. The most important development could be the Chinese undertaking of these projects as it has a vast experience for building such huge dams.

According to the sources, the CPEC and the North Indus River Cascade can be the biggest-ever Chinese investment in Pakistan.

In 2015, the owner of the world’s largest hydroelectric dam, China Three Gorges (CTG) Corporation, had expressed willingness to participate in a financing consortium to fund up to $50 billion of hydroelectric power projects in Pakistan.

Riaz Haq said...

Exclusive: CPEC master plan revealed

https://www.dawn.com/news/1333101

In any plan, the question of financial resources is always crucial. The long term plan drawn up by the China Development Bank is at its sharpest when discussing Pakistan’s financial sector, government debt market, depth of commercial banking and the overall health of the financial system. It is at its most unsentimental when drawing up the risks faced by long term investments in Pakistan’s economy.

The chief risk the plan identifies is politics and security. “There are various factors affecting Pakistani politics, such as competing parties, religion, tribes, terrorists, and Western intervention” the authors write. “The security situation is the worst in recent years”. The next big risk, surprisingly, is inflation, which the plan says has averaged 11.6 per cent over the past 6 years. “A high inflation rate means a rise of project-related costs and a decline in profits.”

Efforts will be made, says the plan, to furnish “free and low interest loans to Pakistan” once the costs of the corridor begin to come in. But this is no free ride, it emphasizes. “Pakistan’s federal and involved local governments should also bear part of the responsibility for financing through issuing sovereign guarantee bonds, meanwhile protecting and improving the proportion and scale of the government funds invested in corridor construction in the financial budget.”

It asks for financial guarantees “to provide credit enhancement support for the financing of major infrastructure projects, enhance the financing capacity, and protect the interests of creditors.” Relying on the assessments of the IMF, World Bank and the ADB, it notes that Pakistan’s economy cannot absorb FDI much above $2 billion per year without giving rise to stresses in its economy. “It is recommended that China’s maximum annual direct investment in Pakistan should be around US$1 billion.” Likewise, it concludes that Pakistan’s ceiling for preferential loans should be $1 billion, and for non preferential loans no more than $1.5 billion per year.

It advises its own enterprises to take precautions to protect their own investments. “International business cooperation with Pakistan should be conducted mainly with the government as a support, the banks as intermediary agents and enterprises as the mainstay.” Nor is the growing engagement some sort of brotherly involvement. “The cooperation with Pakistan in the monetary and financial areas aims to serve China’s diplomatic strategy.”

The other big risk the plan refers to is exchange rate risk, after noting the severe weakness in Pakistan’s ability to earn foreign exchange. To mitigate this, the plan proposes tripling the size of the swap mechanism between the RMB and the Pakistani rupee to 30 billion Yuan, diversifying power purchase payments beyond the dollar into RMB and rupee basket, tapping the Hong Kong market for RMB bonds, and diversifying enterprise loans from a wide array of sources. The growing role of the RMB in Pakistan’s economy is a clearly stated objective of the measures proposed.

Riaz Haq said...

Behind China’s $1 Trillion Plan to Shake Up the Economic Order

https://www.nytimes.com/2017/05/13/business/china-railway-one-belt-one-road-1-trillion-plan.html?_r=0

VANG VIENG, Laos — Along the jungle-covered mountains of Laos, squads of Chinese engineers are drilling hundreds of tunnels and bridges to support a 260-mile railway, a $6 billion project that will eventually connect eight Asian countries.

Chinese money is building power plants in Pakistan to address chronic electricity shortages, part of an expected $46 billion worth of investment.

Chinese planners are mapping out train lines from Budapest to Belgrade, Serbia, providing another artery for Chinese goods flowing into Europe through a Chinese-owned port in Greece.

The massive infrastructure projects, along with hundreds of others across Asia, Africa and Europe, form the backbone of China’s ambitious economic and geopolitical agenda. President Xi Jinping of China is literally and figuratively forging ties, creating new markets for the country’s construction companies and exporting its model of state-led development in a quest to create deep economic connections and strong diplomatic relationships.

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China is moving so fast and thinking so big that it is willing to make short-term missteps for what it calculates to be long-term gains. Even financially dubious projects in corruption-ridden countries like Pakistan and Kenya make sense for military and diplomatic reasons.

The United States and many of its major European and Asian allies have taken a cautious approach to the project, leery of bending to China’s strategic goals. Some, like Australia, have rebuffed Beijing’s requests to sign up for the plan. Despite projects on its turf, India is uneasy because Chinese-built roads will run through disputed territory in Pakistan-occupied Kashmir.


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The power plants in Pakistan, as well as upgrades to a major highway and a $1 billion port expansion, are a political bulwark. By prompting growth in Pakistan, China wants to blunt the spread of Pakistan’s terrorists across the border into the Xinjiang region, where a restive Muslim population of Uighurs resides. It has military benefits, providing China’s navy future access to a remote port at Gwadar managed by a state-backed Chinese company with a 40-year contract.

Many countries in the program have serious needs. The Asian Development Bank estimated that emerging Asian economies need $1.7 trillion per year in infrastructure to maintain growth, tackle poverty and respond to climate change.

Riaz Haq said...

China takes ‘project of the century’ to Pakistan
As part of its ‘One Belt, One Road’ project Beijing is pumping $55bn into its neighbour amid doubts over who really benefits

https://www.ft.com/content/05979e18-2fe4-11e7-9555-23ef563ecf9a


The leak of China’s original proposals for the CPEC agreement in the Pakistan newspaper Dawn this week heightened fears. The terms prioritise the industrial ambitions of the Xinjiang Production and Construction Corps, a quasi-
military organisation vital to Beijing’s oil and security policies which also dominates the agricultural economy of the frontier region of Xinjiang.

Comparing it with the trading organisation that paved the way for British rule in India, the head of a large investment company in Pakistan says: “We have to be careful if we don’t want this to turn into a repeat of the East India Company. If we squander it, it will.”

China wants to complete four main tasks via CPEC: expand the Gwadar port on Pakistan’s south coast, which it financed, built and owns, build a fleet of power plants, construct road and rail links and set up special economic zones where companies can enjoy tax breaks and other business incentives.

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In building infrastructure, Beijing is doing for Pakistan what Islamabad has been unable to do for itself, especially as far as power generation is concerned. Peak electricity demand in Pakistan is 6 gigawatts greater than it can generate — equivalent to about 12 medium-sized coal power plants. Blackouts in many parts of the country last for several hours a day.

To meet this shortfall China is expected to spend more than $35bn — about two-thirds of the entire CPEC budget — building or helping to construct 21 power plants, which will be mainly fuelled by coal. The combined 16GW of capacity that they could provide would repair Pakistan’s supply gap twice over.

The building work associated with CPEC has already boosted heavy industry in the country. Arif Habib, one of the country’s biggest business conglomerates, says it is trebling its cement production in anticipation of CPEC.

“China will expand the [economic] pie,” says Ahsan Iqbal, Pakistan’s planning minister. “This project will create new [domestic] demand.”


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“The risk is that down the line China will call the shots and that we will pay the price later,” says Syed Murad Ali Shah, the chief minister of Sindh, the province in which Karachi is located. “It is up to us.”

The Chinese plan, revealed by Dawn newspaper to have been delivered in December 2015, has only added to those concerns. It talks about thousands of acres of agricultural land leased out to Chinese enterprises to develop seed varieties and irrigation technology. It would install a full system of monitoring and surveillance in cities from Peshawar to Karachi, with 24-hour video recordings on roads. It would build a national network of fibre-optic cables to boost internet access.

Key to this is the XPCC. Under the plan the Han Chinese economic and paramilitary organisation is mandated to invest in Pakistan as a springboard for economic development around Kashgar, the heartland of 11m Turkic-speaking Muslims known as Uighurs.

Ministers in Islamabad say the document contains proposals originally drawn up by Beijing, but will not say how far the draft agreements, which are still being negotiated, differ from it.

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Whatever the concerns in Pakistan that Islamabad is ceding too much power to China, many in the business and political communities argue that the benefits from the infrastructure projects are well worth it.

“Pakistan requires money and money has no colour,” Kimihide Ando, head of Mitsubishi Corp in Pakistan, says.

Others argue that, following the problems with the free-trade agreement, Pakistan’s ministers will be more savvy this time. “The Chinese have taken us for a ride [before] but we have let them,” says Ehsan Malik, chief executive of the Pakistan Business Council. “Given we have made huge mistakes before, hopefully we will learn this time.”

Riaz Haq said...

Financing burden of CPEC
Ishrat Husain

https://www.dawn.com/news/1313992

The total committed amount under CPEC of $50 billion is divided into two broad categories: $35bn is allocated for energy projects while $15bn is for infrastructure, Gwadar development, industrial zones and mass transit schemes. The entire portfolio is to be completed by 2030.

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The entire energy portfolio will be executed in the IPP mode —as applied to all private power producers in the country. Foreign investors’ financing comes under foreign direct investment; they are guaranteed a 17pc rate of return in dollar terms on their equity (only the equity portion, and not the entire project cost). The loans would be taken by Chinese companies, mainly from the China Development Bank and China Exim Bank, against their own balance sheets. They would service the debt from their own earnings without any obligation on the part of the Pakistani government.

Import of equipment and services from China for the projects would be shown under the current account, while the corresponding financing item would be FDI brought in by the Chinese under the capital and finance account. Therefore, where the balance of payments is concerned, there will not be any future liabilities for Pakistan.

To the extent that local material and services are used, a portion of free foreign exchange from the FDI inflows would become available. (Project sponsors would get the equivalent in rupees). For example, a highly conservative estimate is that only one-fourth of the total project cost would be spent locally and the country would benefit from an inflow of $9bn over an eight-year period, augmenting the aggregate FDI by more than $1bn annually. This amount can be used to either finance the current account deficit or reduce external borrowing requirements. Inflows for infrastructure projects for local spending would be another $4bn over 15 years.

Taking a highly generous capital structure of 60:40 debt-to-equity ratio for energy projects, the total equity investment would be $14bn. Further, assuming the extreme case that the entire equity would be financed by Chinese companies (although this is not true in the case of Hubco and Engro projects, where equity and loans are being shared by both Pakistani and Chinese partner companies) the 17pc guaranteed return on these projects would entail annual payments of $2.4bn from the current account.

CPEC’s second component, ie infrastructure, is to be financed through government-to-government loans amounting to $15bn. As announced, these loans would be concessional with 2pc interest to be repaid over a 20- to 25-year period. This amount’s debt servicing would be the Pakistan government’s obligation. Debt-servicing payments would rise by $910 million annually on account of CPEC loans (assuming a 20-year tenor). Going by these calculations, we can surmise that the additional burden on the external account should not exceed $3.5bn annually on a staggered basis depending on the project completion schedule.

As a proportion of our total foreign exchange earnings of 2016, this amounts to 7pc. These calculations do not take into account the incremental gains from GDP growth that will rise because of investment in energy and infrastructure. As the loan amounts would be disbursed in the next 15 years and repayments would be staggered, the adding of the entire $15bn to the existing stock of external debt and liabilities is not an accurate representation. The more realistic approach would be a tapered schedule, with $2bn to $3bn getting disbursed in the earlier years and slowing down in the second half.

Riaz Haq said...

In Pakistan, China presses built-in advantage for 'Silk Road' contracts

https://www.reuters.com/article/us-china-silkroad-pakistan-insight-idUSKBN19503Y

By Drazen Jorgic | ISLAMABAD
Last year, Pakistan held informal talks with General Electric, Siemens and Switzerland's ABB to build the country's first high-voltage transmission line. Chinese power giant State Grid committed to building the $1.7 billion project in half the time of its European counterparts – and clinched the deal.

This is a familiar tale in Pakistan and many other countries.


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As China makes its "Belt and Road" initiative – a massive project to connect Asia with Africa and Europe through land and maritime routes – a policy priority for the next decade, Chinese companies are taking the lion's share of infrastructure projects across the region.

Just last year, Chinese firms won project contracts in Belt and Road countries worth $126 billion, state media reported.

In Pakistan, whose geographical position makes it central to Beijing's "Silk Road" plans, contracts have been awarded for projects worth more than $28 billion – all by Chinese companies working together with local firms. More than $20 billion in new investment is likely in the next few years, Pakistan's Planning Minister Ahsan Iqbal told Reuters this week.

Last month, Pakistan's government took out full-page newspaper advertisements on the first China-Pakistan project completed under the plan, a 1,300 mw coal plant that it said was constructed in 22 months, a record time for such a facility. The plant is owned by China's state-owned Huaneng Shandong and the Shandong Ruyi Science & Technology Group.

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But two officials at two Chinese state-owned banks that direct government funding, China Development Bank (CDB) and Export-Import Bank of China (EXIM), told Reuters that they have been instructed by the government to favor lending to Chinese firms for Silk Road projects.

The officials also said that the two banks prefer that companies working on infrastructure projects across the region import raw materials or purchase equipment from China.

There is some criticism in Pakistan that the awarding of the contracts to Chinese companies – while speeding up projects – is also costing the country more money.

In the transmission line project deal, for example, General Electric estimated it could make one key part of the line – the converter stations – for about 25 percent less than what State Grid was charging, according to a Pakistani government official and two power sources familiar with GE's projections. By awarding the contract to State Grid, Islamabad paid a higher price, they said.

An official at Nepra, Pakistan's independent energy regulator, said State Grid was also given a tax break not on offer to other investors.

Pakistani government officials declined to comment on tax issues regarding the deal.

China Electric Power Technologies Company Limited (CET), the State Grid subsidiary that will build the line, said the price it asked for was fair. "It's a very reasonable cost," said Fiaz Ahmad Chaudhry, managing director of Pakistan's National Transmission & Despatch Company (NTDC) referring to the overall State Grid contract.

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POWER LINES

The transmission line project was conceived as a government-to-government contract to build a 878-km (545-mile) connection between soon-to-built power plants near the coastal town of Matiari and Pakistan's industrial heartland by the eastern city of Lahore.

According to Pakistani officials, no formal competitive bidding was sought for the project, which was finally awarded in December last year.

Riaz Haq said...

China is staking a claim to supplanting the U.S. as a Pakistan’s most influential ally with tens of billions of dollars of investment, an embrace that promises Pakistan economic benefits and saddles it with debt—ensuring the relationship will last.

http://www.cetusnews.com/views/BklEbNyNXb?cat=news&title=China-Pushes-U.S.-Aside-in-Pakistan---
By
Saeed Shah



ISLAMABAD—Pakistan’s ruling power structure has long been summed up with the saying “Allah, Army and America.”
China is now staking a claim to supplanting the U.S. with tens of billions of dollars of investment, an embrace that promises Pakistan economic benefits and saddles it with debt—ensuring the relationship will last.
Chinese President Xi Jinping has made Pakistan his flagship partner in a program to spread Chinese-built infrastructure—and Beijing’s sway—across Asia and beyond. Pakistan has so far signed on to $55 billion in Chinese projects, many of them guaranteeing China a high return on its investments and granting tax breaks to Chinese companies.
Former President Barack Obama’s “Asia pivot” is giving way to Mr. Xi’s infrastructure juggernaut, in a model that could be replicated across the region.
“China came in when no one else was willing to invest,” said Commerce Minister Khurram Dastagir. The U.S. missed its chance, he said.

Beijing calls its program “One Belt One Road,” referring to the ancient sea and land Silk Road trade routes that China seeks to revive. Pakistan Prime Minister Nawaz Sharif inaugurated the program’s first big completed project here in late May, a Chinese-built, coal-fired power plant in his home province of Punjab.
China is building roads, railways, power plants and a port, and has lent Pakistan $2 billion in under two years to shore up its foreign-exchange reserves.
A promised $1 trillion Chinese splurge hasn’t yet materialized for many countries. But in Pakistan, $18 billion in projects are under construction in what is known as the China Pakistan Economic Corridor.
The centerpiece is Pakistan’s Arabian Sea port at Gwadar, under expansion and run by a Chinese company to enable trade in goods from China’s southwest.
Pakistan calculates that the Chinese investments will add 2 percentage points to growth in the next few years by providing infrastructure needed to kick-start industrialization.
President Donald Trump has abandoned what was viewed by the Obama administration as a counterbalance to China, a trade deal with nations in the region called Trans Pacific Partnership. An American official said civilian aid to Pakistan, a longtime ally, remained substantial but “getting our message out is a challenge.”

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“We want to move away from geopolitics, to geoeconomics, from fighting wars for others,” said Ahsan Iqbal, Pakistan’s planning minister, who oversees the Chinese investment. “Our vision is to place Pakistan as the hub of trade and commerce in this region.”
China’s expenditure isn’t aid. With transport projects, Pakistan incurs debt; power plants come with an obligation for Pakistan to purchase the electricity produced.
Tahir Mashhadi, a senator from the opposition Muttahida Qaumi Movement, compared China to the East India Company, the commercial enterprise that colonized India before the British government took over.
“Here’s the danger: the banks are Chinese. The money is Chinese. The expertise is Chinese. The management is Chinese. The profits are for China. The labor is Chinese,” said Mr. Mashhadi.
Nadeem Javaid, chief economist at Pakistan’s planning ministry, said Pakistan would be paying $5 billion a year to China by 2022, but that the debt should be easy to manage as Pakistani exports rise, electricity prices fall, and toll revenues are generated from trade from China to Gwadar.
“The fears,” he said, “are not genuine.”

Riaz Haq said...

Pakistani universities must capitalise on Chinese investment
The $50 billion China-Pakistan Economic Corridor is a huge opportunity to build academic capacity in Pakistan, say Abdur Rehman Cheema and Muhammad Haris

https://www.timeshighereducation.com/opinion/pakistani-universities-must-capitalise-on-chinese-investment#survey-answer

The China-Pakistan Economic Corridor (CPEC) unveiled by Chinese president Xi Jinping in 2013, is frequently referred to in Pakistan as a potential economic game changer. Now in its first phase of implementation, it will see the Chinese government pump more than $50 billion (£40 billion) into improving transport links and energy cooperation between China and Pakistan.

Hardly any attention has been paid, however, to how this opportunity might be leveraged to build the technological capacity of Pakistan’s universities. And, so far, academics have been conspicuous by their absence from those clamouring for a share of the pie.

There is no question that universities have a lot to offer in terms of economic development. Introduced in the late 1990s, the Triple Helix concept of university-industry-government relationships has transformed the social role of higher education in many developing countries, casting them as central to the transition to a knowledge-based society, whose policies all three players combine to shape. Although it is not easy to implement in countries that lack research universities or global businesses, studies suggest that the approach generally leads to greater scientific productivity, for instance.

Pakistani universities need to capitalise on China’s own desire to shift itself from a symbol of mass production to a knowledge-based economy. They need to align their strategies with Chinese companies’ existing strengths in information technology, railways, manufacturing and energy. And they need to approach both Chinese firms and the Pakistani government to identify the technical skills areas in which the demand for workers can be expected to rise, and implement new diplomas and short courses accordingly.

Networking is also an important tool that can help bring the spheres of government, industry and the academy together. Pakistan’s Higher Education Commission, which regulates all of its universities, should take the lead and help to start this conversation within universities and research centres, incentivising their interaction with existing firms, as well as establishing incubation facilities for new ones on university campuses, including granting them shared access to university facilities.

CPEC also offers an opportunity to address Pakistan’s rampant inequality. In the country’s poorest province, Balochistan, the federal government could help local politicians and tertiary education providers to set up inclusive business incubation centres charged with developing customised, socially useful entrepreneurial approaches. Drawing on the Chinese experience of poverty reduction, such measures could start to build skilled human resources able to contribute to local and national economic development.

For example, developing local expertise in processing copper – which is mined in Balochistan – could help Pakistan to save the cost of importing the metal after the ore is exported to China for refinement.

The Balochistani port of Gwadar, a gateway to the Middle-Eastern and African markets, is one of the nodes of CPEC and will be connected by new road and rail links to the far western Chinese city of Kashgar, in Xinjiang Province. This offers many business opportunities for Pakistani and international businesses, and local universities could both catalyse and benefit from this if they set up business research excellence centres aimed at helping to improve the quality of the goods and services to be exported.

Riaz Haq said...

#China plans $4 billion petrochemical complex near #Karachi in #Pakistan #CPEC

https://www.dawn.com/news/1351945

A Chinese proposal to set up a refinery along with a downstream petrochemical complex near Karachi is advancing steadily as requests for 500-1,000 acres has been submitted to the provincial governments of Sindh and Balochistan.

The estimated cost of the project is about $4 billion.

This was disclosed by Federation of Pakistan Chambers of Commerce and Industry (FPCCI) President Zubair M. Tufail after a meeting with the visiting Chinese delegation, led by Ms Li-Jial, Director Tianchen Engineering Corporation (TCC), at the Federation House on Wednesday.

Ms Li-Jial and Mr Tufail agreed in principle to establish and exchange investment missions to further enhance trade relations between the two countries.

The Chinese asked for land in Karachi since they found rents in Gwadar Free Zone to be too expensive, Mr Tufail told Dawn. “Port Qasim does not have enough space for a project of this size,” he said. “So they have asked for land a few kilometres away or in the Hub area, which falls in Balochistan

They will go with whichever provincial government best facilitates their interests, Mr Tufail added. “Any of the two provincial governments give better deal they would go for it and this would be a win-win situation for both the countries.”

Mr Tufail said both the provincial governments are interested in this project but would depend how they make a land deal with the Chinese investors.

The complex envisions a number of jetties, a refinery with 10 million tonnes per year capacity, as well as downstream processing facilities for naphtha and its component chemicals. “Currently we are importing $2bn worth of these chemicals from the Middle East” Mr Tufail said, adding that the complex could help reduce Pakistan’s external deficit.

Building of the complex will take four to five years, he said, “since they’re starting from scratch”.

Talks on the proposal have been under way for over a year now, but the proposal has begun to take shape more recently with the formal submission of a request for land.

Ms Li-Jial speaking on the occasion said that TCC would like to invest in Pakistan to enhance investment opportunities.

“Over the years, China had been extending cooperation in different sectors of the economy in Pakistan and lately there had been a sudden jump in these relations for the mutual benefit of both countries,” she added.

The FPCCI president said that Pakistan could benefit from the TCC’s vast experience in oil refinery, energy, chemical complexes and other projects and explore investment opportunities mutually beneficial to both the countries.