Saturday, September 15, 2018

US-China Competition in Pakistan; CPEC's Future; RIP Kulsoom Nawaz

Are the United States and China really vying for influence in Pakistan as the American business publication Wall Street Journal claims? What is the big prize at stake? Does Pakistan hold the key to who wins the competition to claim the top spot as a global superpower?

How will the US-China competition affect Pakistan? Will Pakistan get IMF bailout or Chinese bailout? Will CPEC development slow down or accelerate? Will China invest in export oriented industries in Pakistan and buy more Pakistani products? How will PTI government led by Prime Minister Imran Khan handling the situation? Will they play their cards well to get maximum benefits for Pakistan?

What is the impact of Begum Kulsoom Nawaz's passing on Nawaz Sharif family? Is it more than a family's tragedy? What does it mean for Pakistani politics and Nawaz Sharif's future?

Viewpoint From Overseas host Misbah Azam discusses these questions with panelists Sabahat Ashraf (iFaqeer) and Riaz Haq (www.riazhaq.com)

https://youtu.be/BQTixVzfmiE




Related Links:

Haq's Musings

South Asia Investor Review

Can Pakistan Avoid Recurring Balance of Payment Crisis?

Pakistan Economy Hobbled By Underinvestment

Pakistan's IT Exports Surging

China and US Battle For Influence in Pakistan

Pakistan-China-Russia Vs India-Japan-US

Chinese Yuan to Replace US $ as Reserve Currency?

Remittances From Overseas Pakistanis

Can Imran Khan Lead Pakistan to the Next Level?

China to Expand Manufacturing in Special Economic Zones

5 comments:

Riaz Haq said...

#Pakistan's army chief Gen Bajwa visits #Beijing after 'Silk Road' tension. He is most senior figure to visit staunch ally #China since the new government of Prime Minister Imran Khan took office in August. #CPEC #BRI https://www.reuters.com/article/us-pakistan-china-military/pakistans-army-chief-visits-beijing-after-silk-road-tension-idUSKCN1LW0PR

Pakistan has deepened ties with China in recent years as relations with the United States have frayed.

Bajwa may be hoping in Beijing to smooth out any Chinese alarm at comments last week by Pakistan’s commerce minister, Abdul Razak Dawood, who suggested suspending for a year projects in the China-Pakistan Economic Corridor (CPEC), the Pakistan leg of China’s Belt and Road Initiative that includes recreating the old Silk Road trading route.

Bajwa, the Chief of Army Staff (COAS), regularly holds meetings with world leaders due to the Pakistan armed forces’ outsize influence in the nuclear-armed nation, where the military controls security and dictates major foreign policy decisions.


“During the visit COAS will interact with various Chinese leaders including his counterpart,” Major General Asif Ghafoor, the military spokesman, tweeted late on Sunday.

Beijing has pledged to invest about $60 billion in Pakistan for infrastructure for the Belt and Road project.

Dawood, in an interview with the Financial Times, also suggested the CPEC contracts had been unfairly negotiated by the previous government and were too favorable to the Chinese. Later he said the comments were taken out of context, but did not dispute their veracity.

The critical comments were published just after China’s top diplomat, State Councillor and Foreign Minister Wang Yi, visited Pakistan and the two sides reaffirmed the mutual benefits of the Beijing-funded projects.

On Thursday, Pakistan’s government said it wanted CPEC to include more projects with a focus on socio-economic development, something which would align more with the populist agenda of Khan’s new administration.

Riaz Haq said...

Overseas Pakistanis sent home nearly $4 billion home in July and August, the first two months of FY 19.

https://dunyanews.tv/en/Business/456455-Pakistan-receives-$3.966bn-in-remittances-in-two-month

Riaz Haq said...

#ADB sees #Pakistan’s #economy slowing down in current fiscal year. #Manila-based lending agency forecasts #GDP growth rate to touch 4.8pc this year compared to 5.8pc in fiscal year ending in June 2018
https://www.dawn.com/news/1435256

Anticipating a one percentage point fall in the rate of growth and two percentage points rise in inflation during the current fiscal year, the Asian Development Bank has advised the newly elected government to address rising debt obligations, falling reserves and large twin deficits.

In its flagship Asian Development Outlook 2018 update, the Manila-based lending agency said the economy appeared slowing down and forecast GDP growth rate to touch 4.8 per cent this year, compared to 5.8pc in the fiscal year ending in June 2018.

It said Pakistan’s 5.8pc growth last fiscal was higher than the ADB forecast, but the outlook is clouded by a large budget deficit, a deteriorating current account deficit and falling foreign exchange reserves. “The growth forecast for Pakistan in 2019 is downgraded in light of a pressing need to deal with large budget and external imbalances,” it said.

Also, the ADB noted rate of inflation growing significantly to 6.5pc at the end of current fiscal against about 4.5pc last fiscal year.

The bank said Pakistan required mobilising substantial external financing to buy time for orderly reform to reduce the large external and domestic imbalances. Such resources can be acquired from bilateral and multilateral sources, the diaspora, or international capital markets. “The key challenges are to adopt the right reforms and achieve good outcomes to sustain public support,” the report noted.

The good thing is that Pakistan’s economy has time and again shown resilience and the capacity to bounce back, it said. Although formidable development challenges remain, the ADB expected the stability fostered by the smooth political transition and the new government’s strong commitment to focus on pockets of vulnerabilities and implement pro-job and socioeconomic development policies that will stimulate robust, sustainable growth in the years ahead, said ADB Country Director for Pakistan Xiaohong Yang.

The 4.8pc growth prospect is linked to success of the government in obtaining finance and on the strength of an improved security and energy supply, continued investment in the CPEC and other initiatives, and recognition of the need to rein in deficits. “Challenges to maintaining the growth momentum are tighter monetary and fiscal policies to contain domestic demand, currency depreciation, and tension in the global trade environment,” the ADB noted.

On the supply side, water shortages in some areas are likely to keep agricultural production below target in fiscal 2019. Growth in manufacturing and services will likely be affected by fiscal and monetary tightening. On top of dealing with macroeconomic imbalances, the new government faced long-delayed decisions on raising tariffs to contain rapidly rising and potentially disruptive inter-company arrears in the energy sector — so called “circular debt” that exceeds PRs1.4 trillion, or 5pc of GDP.

Average annual inflation is projected to reach 6.5pc in fiscal year 2019 because of currency depreciation and elevated international oil prices. Inflation accelerated sharply for both food and other purchases in the first two months current year to 5.8pc from 3.2pc a year earlier. The SBP increased the policy rate by 100 bps to reach to 7.5pc in July 2018 in an effort to contain the inflation pressure and is likely to continue further as part of its monetary tightening.

The new government needs to move swiftly to put in place its macroeconomic policies including fiscal, monetary, tax, and trade reform policies to promote financial stability and growth. Pakistan needs to institute mechanisms to increase competitiveness, attract private sector investments, and strengthen the ease of doing business as well as Pakistan’s position in the global value chain, the ADB said.

Riaz Haq said...

#Pakistan, #Russia ink deal for feasibility study on $10b offshore #gas pipeline.The China-Pakistan Economic Corridor (#CPEC) has now entered the industrialization phase and needs gas for duty and tax-free Special Economic Zones (#SEZs). https://tribune.com.pk/story/1812965/2-pakistan-russia-ink-deal-feasibility-study-10b-offshore-pipeline/

Pakistan and Russia signed a deal on Thursday for conducting feasibility study on a planned $10-billion offshore gas pipeline, an idea coined by Moscow to capture the energy market of Pakistan.
Ministry of Energy (Petroleum Division) Additional Secretary Sher Afgan and Deputy Energy Minister of Russia Anatoly Yanovsky signed a memorandum of understanding (MoU) for undertaking the study.

Inter State Gas Systems (ISGS) Managing Director Mobin Saulat was also present at the ceremony. On the occasion, the two sides expressed interest in enhancing bilateral relations in the energy sector.
ISGS – a state-owned Pakistani company established to handle gas import projects which is already working on schemes like the Turkmenistan-Afghanistan-Pakistan-India (Tapi) gas pipeline – has been designated by Pakistan for executing the pipeline project along with Russia’s energy giant Gazprom.

Gazprom will conduct the feasibility study and bear its expenses in order to assess economic viability and cost of the project.

The China-Pakistan Economic Corridor (CPEC) has now entered the industrialisation phase and needs gas for duty and tax-free Special Economic Zones (SEZs). The offshore gas pipeline will meet energy needs of the industries being set up in the SEZs along the CPEC route.

According to officials, the pipeline will connect Pakistan and Russia and act as an energy corridor between the two countries.

“Strategically, it is a very important project as the two countries will come closer to each other,” an official said. “At the same time, Pakistan will gain access to the Russian market in order to boost its overall exports which remained stagnant during five-year tenure of the PML-N government.”

Russia has nominated Public Joint Stock Company Gazprom for implementation of the project. Pakistan’s cabinet has permitted the company to conduct the feasibility study at its own cost and risk.

Separately, ISGS is working on the $10-billion Tapi gas pipeline which will connect South and Central Asia. Construction work on the scheme in Pakistan is planned to start in March 2019.

These projects are termed game changer for Pakistan as they will not only lead to regional connectivity, but will also meet growing energy needs of the country.

Owing to a long-running tussle with Europe and the US over the annexation of Ukrainian region of Crimea, Russia is looking for alternative markets and wants to capitalise on increasing energy demand in South Asia.

Riaz Haq said...

392 km #Sukkur-#Multan section of #Peshawar-#Karachi Motorway to open for traffic August 04, 2019. 69% of total work has been completed. #Pakistan #CPEC #China https://pakobserver.net/multan-sukkur-motorway-project-to-be-completed-before-time/ via @pakobserver

The 392-kilometer Sukkur-Multan section of Peshawar-Karachi Motorway is likely to be opened for traffic by May next year, two months ahead of the given schedule of August 04, 2019, General Manager of the project, Arbab Ali said. ‘At present 69 percent of total work has been completed, out of which 392 kilometer roadbed and culvert passage, and other structures are about to be competed (99%). Up to now, all the bridges are near completion, and asphalt pavement works are advancing at full speed, and the building construction and ancillary works also being implemented actively,’ he said while talking to a group of media in Multan.
He said this section was part of the mega China Pakistan Economic Corridor (CPEC) project. He informed that on May 26 this year, a 33 km section (Multan-Shujaabad) in the north end of the project was inaugurated by then Prime Minister Shahid Khaqan Abbasi, however it could not be opened to traffic due to incomplete work of the section. ‘This section will be opened to traffic by March next year’. Pakistan’s PKM project starts from Karachi via Hyderabad, Sukkur, Multan, Islamabad, Lahore and other cities ends in Peshawar with a total length of 1,152 kilometers.
Sukkur-Multan has a design speed of 120 km per hour, and it is a two-way six-lane road with a contractual value of USD 2.889 billion (excluding $180 million tax exemption). The Export-Import Bank of China provides loan support, and China State Construction Company Limited (CSCEC) is responsible for construction on Engineering Procurement Construction (EPC) basis. With a contract period of 36 months (including design period of four months), the project officially started on August 5, 2016.
Meanwhile CEO of CSEC Mr Zong informed that majority of the investment by China was based on soft loan (with a markup rate of only 2.2%) while the rest was based on commercial loans. He said that in this project, a total of 101 bridges, 1503 structures, 11 interchanges, six service areas, five rest areas, and 22 toll plazas will be constructed. ‘The whole project is divided into seven sections, each of which is about 54-59 kilometers long and all seven sections are constructed simultaneously,’.—APP