Monday, May 22, 2017

Campaign of Fear, Uncertainty and Doubt (FUD) About CPEC

An unrelenting campaign of fear, uncertainty and doubt (FUD) about China-Pakistan Economic Corridor (CPEC) has been unleashed in the media in recent weeks. This strategy harkens back to the aggressive marketing techniques used by the American computer giant IBM in the 1970s to fight competition. As in IBM's case, the greatest fear of the perpetrators of FUD is that CPEC will succeed and lift Pakistan up along with rising China.

Fear, Uncertainty and Doubt (FUD):

A definition of FUD that captures its essence is offered by Roger Irwin as follows: "Unable to respond with hard facts, scare-mongering is used via 'gossip channels' to cast a shadow of doubt over the competitors offerings and make people think twice before using it".

A number of articles in western and Indian media have attempted to use FUD against China-Pakistan Economic Corridor. Some Pakistani journalists and commentators, some unwittingly, have also joined in the campaign.   As expected, these detractors ignore volumes of data and evidence that clearly contradict their claims.

Part of the motivation of those engaged in FUD against CPEC appears to be to check China's rise and Pakistan's rise with its friend and neighbor to the north. Their aim is to preserve and protect the current world order created by the Western Powers led by the United States at the end of the second world war.

Growing Infrastructure Gap:

Development of physical infrastructure, including electricity and gas infrastructure, is essential for economic and social development of a country such as Pakistan. China-Pakistan Economic Corridor financing needs to be seen in the context of the large and growing infrastructure gap in Asia that threatens social and economic progress.

 Rich countries generally raise funds for infrastructure projects by selling bonds while most developing countries rely on loans from international financial institutions such as the World Bank and the Asian Development Bank to finance infrastructure projects.

The infrastructure financing needs of the developing countries far exceed the capacity of the World Bank and the regional development banks such as ADB to fund such projects. A recent report by the Asian Development Bank warned that there is currently $1.7 trillion infrastructure gap that threatens growth in Asia. The 45 countries surveyed in the ADB report, which covers 2016-2030, are forecast to need investment of $26 trillion over 15 years to maintain growth, cut poverty and deal with climate change.

Chinese CPEC Loans to Pakistan:

About 80% of the $55 billion of the Chinese money for CPEC is private investment while the rest is composed of soft loans to the government, according to Shanghai Business Review.

The Chinese soft loans for CPEC infrastructure projects carry an interest rate of just 1.6%, far lower than similar loans offered by the World Bank at rates of 3.8% or higher.

Chinese companies investing in Pakistan are getting loans from China's ExIm Bank at concessional rates and from China Development Bank at commercial rates. These loans will be repaid by the Chinese companies from their income from these investments, not by Pakistani taxpayers.

Rising Confidence in Pakistan:

Pakistani economy is already beginning to reap the benefits of the current and expected investments as seen in the 5.2% GDP growth in the current fiscal year, the highest in 9 years.

The World Bank's Pakistan Development Update of May 2017 says that "Pakistan’s economy continues to grow strongly, emerging as one of the top performers in South Asia".

Rapidly expanding middle class and rising demand for consumer durables like vehicles and home appliances attest to the positive impact of CPEC. Consumer confidence in Pakistan has reached its highest level since 2008, according to Nielsen.

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%.

US News Ranks Pakistan Among World's 20 Most Powerful Nations

Countering FUD:

Pakistani government should respond to the FUD campaign against CPEC by countering it with facts and data and increasing transparency in how CPEC projects are being financed, contracted and managed. It is particularly important in a low-trust society like Pakistan's where people can be easily persuaded to believe the worst about their leaders and institutions. 


An unrelenting campaign of fear, uncertainty and doubt (FUD) about China-Pakistan Economic Corridor (CPEC) has been unleashed in the media in recent weeks. This strategy harkens back to the aggressive marketing techniques used by the American computer giant IBM in the 1970s to fight competition. Part of the motivation of those engaged in FUD against CPEC appears to be to check China's rise and Pakistan's rise with its friend and neighbor to the north. As in IBM's case, the greatest fear of the perpetrators of FUD is that CPEC will succeed and lift Pakistan up along with rising China.  Their aim is to preserve and protect the current world order created by the Western Powers led by the United States at the end of the second world war.   Pakistani government should respond to the FUD campaign against CPEC by countering it with facts and data and increasing transparency in how CPEC projects are being financed, contracted and managed. 

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Riaz Haq said...

#Pakistan presents new $50 billion #development-heavy #budget for FY 2017-18 - ABC News - via @ABC

Pakistan's Finance Minister Ishaq Dar Friday presented a $50 billion development heavy budget that also promised a seven percent increase in military spending, a growth rate of near 6 per cent and an appeasement for farmers who protested ahead of the budget announcement, clashing with police who used tear gas to disperse them.

The budget offered Pakistan's farmers $6.8 billion in loans, as well as fuel and electricity subsidies.

In poor Pakistan the budget promised $1.15 billion in subsidies, mostly to reduce electricity and fuel costs. In his speech to Parliament Dar said the annual per capita income in Pakistan had increased from $1,334 to $1,629 over the last four years of Prime Minister Nawaz Sharif's government. Tax collection which is notoriously low in Pakistan also increased nearly 80 percent in the same period, he said.

In addition to a seven percent increase in military spending, Pakistan's budget also gave every soldier a 10 percent salary hike for fighting terror. The defense budget was set at $9 billion compared to $8.4 billion last year.

Pakistan's defense budget is not open for debate by Parliament nor does it generally include pensions paid to military personnel. The cost of their pensions comes out of the current budget.

Pakistan has been in a protracted war against terrorists with most battles waged in the tribal regions that border Afghanistan.

Friday's budget was seen as business friendly, offering a 30 percent tax cut to the corporate sector. It also exempts industries from the country-wide rolling power cuts that afflict Pakistanis on a daily basis.

Of the $20 billion plus development budget, Dar said $1.8 billion will go toward financing projects linked to its multi-billion dollar China-Pakistan Economic Corridor scheme that includes a vast array of joint ventures including roads and power plants.

Opposition politicians slammed the budget, with Asad Umar of the Tehreek-e-Insaf (Movement for Justice) party saying it takes from the poor to give to the rich.

"Money is being snatched from the pockets of the poor and middle classes to enhance the wealth of the unproductive elite," Umar said in a statement.

In a country with a literacy rate of 69.5 per cent among men and 45.8 among women, according to the latest CIA country report, the education budget was set at $887 million, considerably less than the sums allocated for defense and development.

The health sector in Pakistan, often bemoaned by many Pakistanis as inadequate, was allocated $126 million according to the figures released by the government.

Pakistan's protesting famers timed their protest hours before Dar presented the budget for the next fiscal year before lawmakers on Friday.

Pakistani TV channels broadcast footage showing riot police dragging farmers away from the scene, as well as protesters throwing stones at the police.

uzair said...

This is a setting of numbers to help Nawaz Sharif election I think.

Gamer said...

1.So you think that DAWN Leaks 2 is crap?....

2.We are committing ourselves for buying electricity at higher rates from coal for 30 years. I know, expensive electricity vs no electricity. But still dont you think rates/unit bodering 9cents are too high?

Would love to see your answers.

Riaz Haq said...

Gamer: "So you think that DAWN Leaks 2 is crap?..."

I don't know if it's all crap. What I do know is that no country in this day and age can move forward without significant investments in energy and infrastructure which is what CPEC is all about. Two-thirds of it power and 1/3rd is roads/rails/ports etc.

Gamer: " But still dont you think rates/unit bodering 9cents are too high?"

The electricity rates in Pakistan are going down as they are elsewhere in the world. Coal is a local resource in Pakistan and it does not have to be imported. It's highly under-utilized right now.

Rashid Gul said...

Electricity is not provided to textile mills still and no export market goods so many are becoming closed. Manufacturing is going down everyday only who have own generators are surviving. How can economy grow with textiles closing and low exports? Lot of of money borrowing is taking place that Pakistan can not pay. Thank you

Riaz Haq said...

OBOR will spur growth in Asia, says UN official

A statement by the (Indian) Ministry of External Affairs (MEA) last week had said the OBOR would create “unsustainable debt burden for communities”. However, Sebastian Vergara, Economic Affairs Officer at the United Nations’ Department of Social and Economic Affairs (DESA), says the project would benefit Asia, in an interview with National Herald.

However, achieving productivity growth must be a government policy priority if India wants to continue to grow above 7%. India must encourage public private partnership (PPP) projects in key sectors, especially infrastructure. Business structural reforms should be vigorously pursued. The health of the public banking sector is a big worry for India, and the government needs to tackle the level of debt with sound policies.

Riaz Haq said...

Cambodia, Sri Lanka and the China debt trap

Sri Lanka’s growing economic engagement with China has also generated concern among scholars and policymakers. One side of the argument posits that China has made a positive contribution to the economic growth of Sri Lanka. China has provided Sri Lanka with over US$5 billion between 1971 and 2012. Most of this has gone into infrastructure development, with China investing US$1 billion into a deep-water port at Hambantota and billions into the Mattala Airport, a new railway and the Colombo Port City Project.

As a small country emerging from civil war, infrastructure is crucial in facilitating Sri Lanka’s trade and foreign investment sectors. The World Bank forecasts that Sri Lanka’s GDP growth is likely to grow from 3.9 per cent in 2016 to around 5 per cent in 2017.

Yet opponents see flaws in the China–Sri Lanka bilateral relationship. First, Sri Lanka has borrowed billions of dollars from China in order to build domestic infrastructure. Sri Lanka’s estimated national debt is US$64.9 billion, of which US$8 billion is owed to China. This can be attributed to the high interest rate on Chinese loans. For the Hambantota Port project, Sri Lanka borrowed US$301 million from China with an interest rate of 6.3 per cent, while the interest rates on soft loans from the World Bank and the Asian Development Bank (ADB) are only 0.25–3 per cent. Sri Lanka is very deep in a debt crisis or ‘debt trap’ as some scholars describe it.

Second, Sri Lanka is currently unable to pay off its debt to China because of its slow economic growth. To resolve its debt crisis, the Sri Lankan government has agreed to convert its debt into equity. But the recent Sri Lankan decision allowing Chinese firms 80 per cent of the total share and a 99 year lease of Hambantota port caused public outrage and violent protests in Sri Lanka. In addition, Chinese firms have been given operating and managing control of Mattala Airport, built by Chinese loans of US$300–400 million, because the Sri Lankan government is unable to bear the annual expenses of US$100–200 million.

According to Brookings Institute visiting fellow Kadira Pethiyagoda, having access to the Hambantota port and Mattala airport provides Beijing with a strategic military position in the event of an Indian Ocean conflict and is also key for its ‘Belt and Road’ initiative. The growing Chinese influence may also compel Sri Lanka to support China’s position on the South China Sea dispute and ‘One China’ policy.

Riaz Haq said...

Moody's: Pakistan shows strong growth and reduction in fiscal deficits

New York, May 07, 2017 -- Strong growth performance, fiscal deficit reduction and improved inflation dynamics underpin the Government of Pakistan's B3 rating with a stable outlook, says Moody's Investors Service.

At the same time, credit challenges include a relatively high general government debt burden, weak physical and social infrastructure, a fragile external payments position, and high political risk. In particular, the government's very narrow revenue base weighs on debt affordability. Meanwhile, exports and remittance inflows have slowed and capital goods imports have risen, resulting in renewed pressure on the external account.

Moody's conclusions are contained in its annual credit analysis of Pakistan, "Government of Pakistan -- B3 Stable". The analytical factors that are used in its Sovereign Bond Rating Methodology are: economic strength, which is assessed as "moderate"; institutional strength "very low (+)"; fiscal strength "very low (-)"; and susceptibility to event risk "high".

Moody's notes that prospects for growth have improved following Pakistan's successful completion of its three-year Extended Fund Facility (EFF) program with the International Monetary Fund (IMF) in September 2016 and the launch of the China-Pakistan Economic Corridor (CPEC) project in 2015.

Moody's notes that the implementation of the CPEC project has the potential to transform the Pakistani economy by relieving infrastructure bottlenecks, and stimulating both foreign and domestic investment. However, headwinds to further fiscal consolidation and renewed pressure on the external account present downside risks to the rating.

"Since 2013, implementation of economic reforms and increased foreign investment flows have contributed to macroeconomic stability and higher GDP growth. However, government debt remains elevated and pressure on the external account continues. " said William Foster, a Vice President and Senior Credit Officer at Moody's.

The stable outlook represents balanced upside and downside risks to the sovereign credit profile. Support from multilateral and bilateral lenders has bolstered Pakistan's foreign currency reserves and fostered progress on economic reforms. Meanwhile, implementation of the CPEC project has the potential to transform the Pakistani economy by relieving infrastructure bottlenecks, and stimulating both foreign and domestic investment. However, headwinds to further fiscal consolidation and renewed pressure on the external account present downside risks to the rating.

Upward triggers to the rating would stem from sustained progress in structural reforms that would significantly reduce infrastructure impediments and supply-side bottlenecks. This would improve Pakistan's investment environment and eventually aid a shift to a sustained higher growth trajectory. A fundamental strengthening in the external liquidity position and meaningful reduction in the government deficit and debt burden would also be credit positive.

Conversely, Moody's would view a stalling of the government's post-IMF program economic reform agenda, material widening of the fiscal deficit, a deterioration in the external payments position, withdrawal of multilateral and bilateral support, or a more unstable political environment as credit negative.

Riaz Haq said...

Why #India's zombie #debt imperils #Modi's plans? McKinsey: #Indian bank's bad #loans exceed #assets … via @bpolitics

The economy in India is growing faster than just about anywhere else. But there’s a threat to that expansion, one that the authorities are struggling to address: the mountain of bad debt at the nation’s banks. Those soured loans have contributed to a $191 billion pile of zombie debt that’s cast the future of some lenders in doubt and curbed investment by businesses. In the latest push for a solution, the central bank has been handed extra powers over lenders.

1. How big is the problem?

The amount of stressed assets at India’s state banks exceeds the value of the banks themselves, according to a McKinsey & Co. report. Provisions made for bad debt by all banks -- private and state -- undershoot by $93 billion the total of stressed assets (which mostly are bad loans and restructured loans). As McKinsey put it, “as these stressed assets continue to turn bad, the entire equity base of the banks could be at risk.”

2. How’s this impacting the economy?

Credit growth in Asia’s third-largest economy has dropped to a 25-year low. In other words, the quantity of new loans that over-leveraged businesses are willing to take and that under-provisioned banks are willing to give, is slowing. Investment by private companies actually started to shrink in the year through March and will, by the government’s estimate, contract by more than 7 percent this financial year. That’s threatening to derail Prime Minister Narendra Modi’s much-vaunted economic plans.

3. Why is India growing so fast then?

It’s true, India’s gross domestic product is forecast to expand about 7 percent this year, the fastest rate among the world’s major economies. (Although some question the numbers.) Unlike in the U.S., where the pre-financial crisis boom was fueled by housing, India was plowing its money into productive assets such as power plants. That’s allowed the $2 trillion economy to prosper even as the banking sector got bogged down. Extra government spending has also cushioned the impact of that declining private investment.

4. How did the debt problem arise?

Among the reasons for the surge in bad loans: a slump in commodity prices, a lack of appropriate legislation and regulation and a rapid buildup of excess capacity in industries such as telecoms and cement. Four industries account for nearly 80 percent of stressed assets: power, steel, textiles and engineering/procurement/construction. About 70 percent of the bad debt is held by state-owned lenders, the legacy of an investment spree that soured after the financial crisis.

Riaz Haq said...

Pakistanis among smartest people in the world, says Swedish investor

Swedish investor Mattias Martinsson said that Pakistanis are among the smartest people in the world while was speaking on Geo Pakistan early Saturday morning.

Pakistan’s specialty is its people. Many people want to work hard and get education. They will prove to be important assets for the country, he remarked.

His involvement in the Pakistan stock market bears testament to the foreign investors’ trust on the country’s market.

In 2011, when no one was willing to invest in Pakistani market it was Martinsson who established the country’s first foreign equity fund.

No investor was willing to invest in the equity fund, but Martinson and his partner invested a million dollars into it. Today, the fund is worth $100 million.

He remarked that he has been working with Pakistan stock market since 2005. “It has impressed me a lot.”

“I think differently from the rest. Don’t pay attention to what the other investors are thinking. Pakistan is one of the most important markers,” he said.

Pakistan’s market has the potential to progress as much as Indian market. However, many investors are still tremble at the thought of investing in Pakistan. If they start investing then the equity fund would be worth a lot more, he added.

Riaz Haq said...

CPEC: calling the shots

By Yasir MasoodPublished: June 2, 2017

To counter the nefarious narratives of the critics against CPEC, let’s first understand that the inflow of the funds from China, now estimated to be $62 billion: (a) $36 billion as Chinese investment in power projects which will add up 7,000-11,000 MW to the national grid by 2018. This sum will have no direct financial implications on Pakistan’s external payment obligations and; (b) $26 billion in a Chinese government loan, dedicated to building infrastructure. Since the inflow of funds as loans and FDI has dissimilar financial implications; therefore, a separate evaluation is direly needed to compute some of the major benefits as under.

Pakistan’s economy has severely suffered because of the energy crisis over the last decade or so. A much-needed uptick in power generation under CPEC will help revitalise the worst-affected industrial sectors. And particularly the cotton textile production and apparel manufacturing, which are the country’s largest industries, accounting for about 66 per cent of the merchandise exports and almost 40 per cent of the employed labour force. It will also help rejuvenate the remotely located cottage industry, small size manufacturing, agriculture and mining industry businesses to become commercially viable and contribute its due share of the GDP, on the one hand, and create more job opportunities in the far-flung areas on the other.

It is a misgiving that the Chinese power companies would be availing higher tariff rates. The National Electric Power Regulatory Authority (Nepra) has not mentioned any such concessions or exemptions and has to act according to its jurisdiction to maintain uniformity. Similarly, other regulatory bodies will also look after the environmental hazards, avert abuse of dominant positions, ensure recovery of other levies, implementation of labour laws, and above all, the vibrant and robust courts can swiftly act to protect the constitutional rights of the general public as per laws of the land.

The second part, which will be an interest-bearing loan, that constitutes about 40 per cent of the total $62 billion chunk under the CPEC framework will not overburden Pakistan’s ballooning current and future foreign payment liabilities, as dreaded by some critics unfamiliar with repayment dynamics. Pakistan has been borrowing from the IMF at an interest rate ranging from 5 to 10 per cent just to avert the default on external payments in time. Whereas CPEC loan will be carrying an aggregate interest rate of not more than 1.9 per cent per annum and even below, repayable in a period stretched over 25-30 years and even more.

Reimbursement of the loan with markup, which is estimated to be around $1.5 billion per annum, will start in 2019 and after gradual increase would remain within the range of $4.5 to $5 billion even in the peak years. This additional burden on account of CPEC’s loan would be quite nominal when compared with its eventual upshots — briefly calculated below.

Pakistan’s existing transportation network is quite dilapidated and causing a huge loss of around 3.5 per cent of the country’s annual GDP as estimated by the government. According to the IMF, Pakistan’s total GDP in 2016 was around $285.153 billion of which 3.5 per cent amounts to $9.98 billion. Improvement in the transportation network under CPEC will considerably cut down such losses, thereby reducing Pakistan’s oil import bill and related transport equipment. Similarly, Pakistan’s national exchequer will be earning around $6 to $8 billion a year under toll tax revenue, etc.

Put together, the above two explained sources of income and savings alone will be substantially higher, when matched with the disbursement of loan and debt service liability to China and that too insignificantly spread over a period of 25-30 years and even more.

Riaz Haq said...

Keeping the lights on in Pakistan will drive growth, save lives by Afshin Molavi

Last week, Pakistan achieved a quiet milestone, returning to the prestigious MSCI Emerging Markets Index after losing its status in 2008. Joining 23 other countries on the index, from high-growth Asian economies to large Latin American and rising Eastern European ones, Pakistan has now returned to the “premier league” of emerging markets.

Long-term, this will mean a steady flow of global capital entering Pakistan’s equities markets. It will also offer a confidence boost for foreign investors. But Pakistanis can be forgiven if they are hardly in a mood to celebrate, as widespread electricity shortages wrack the country once again.

Peshawar residents face cuts of six to eight hours per day, and violent protests broke out in the northwest province of Khyber Pakhtunkhwa over the cuts, leaving at least two dead. Even the commercial metropolis of Karachi has not been spared, losing electricity in several parts of the city last week, prompting protests.

Electricity shortages are bad enough under normal circumstances, but during the holy month of Ramadan — when stomachs are growling, and the need for electricity to cook food ahead of the breaking of the fast becomes even more urgent — it becomes a combustible mix.

For Prime Minister Nawaz Sharif, the electricity shortages present a serious embarrassment for a leader who placed the issue at the center of his election campaign in 2013. Whether or not Pakistan can keep the lights on could determine his future as prime minister.

Enter China. One of the most impactful elements of the much-vaunted, multibillion-dollar China-Pakistan Economic Corridor (CPEC) will be Beijing’s investments in Pakistan energy projects. Last month, Pakistan inaugurated a Chinese-financed, coal-fired power plant in Punjab, completed after 22 months of work, while announcing the launch of a plant in electricity-starved Baluchistan province.

From wind and solar to coal and hydro, China’s energy projects across Pakistan are dizzying in scope and potentially transformative to the future of the South Asian country of some 200 million people. According to the CPEC website, there are at least 18 active projects in various stages of development.

As with all projects, some will materialize and be delivered on time, others will be delayed or fall off the map, but even if China delivers on half of the proposed projects, Pakistan’s future will be, well, brighter.

Numerous studies have demonstrated the direct causal link between access to energy and economic growth. Economists need not have spent so much time constructing graphs and testing the thesis. It is common sense. Imagine an industrial revolution without regular access to energy?

Pakistan has become something of a darling in the emerging-markets investment community of late. Pakistan’s Global X MSCI exchange traded index was up 18 percent over the past 12 months, though it took a sharp dive after officially entering the MSCI Index last week. It seems traders had been buying the rumor, so to speak, and sold the fact.

Over the past three years, Pakistan has issued a successful Eurobond as well as sukuk bonds, heavily oversubscribed by yield-hungry international investors betting on the Pakistan growth story. The World Bank projects a healthy 5.2 percent growth rate for 2017.

Moreover, consumer companies are harvesting growth by targeting the country’s rising middle class. Former governor of the State Bank of Pakistan, Ishrat Husain, told me that companies such as Nestle and Proctor & Gamble are seeing impressive 25-percent rates of return. Some investment strategists are even touting a new post-BRICs (Brazil, Russia, India and China) acronym: VARP (Vietnam, Argentina, Romania and Pakistan).

Riaz Haq said...

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

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.


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.

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.



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...

Multilateral Development Banking for this Century's Development Challenges: Five Recommendations to Shareholders of the Old and New Multilateral Development Banks

Nancy Birdsall and Scott Morris

The multilateral development banks (MDBs) emerged as one of the international community’s great success stories of the post–World War II era. Set up to address a market failure in long-term capital flows to post-conflict Europe and developing countries, they combined financial heft and technical knowledge for more than five decades to support their borrowing members’ investments in post-conflict reconstruction, growth stimulation, and poverty reduction.

However, the geo-economic landscape has changed dramatically in this century, and with it the demands and needs of the developing world. Developing countries now make up half of the global economy. The capital market failure that originally motivated the MDBs is less acute. Almost all developing countries now rely primarily on domestic resources to manage public investment, and some of the poorest countries can borrow abroad on their own. Similarly, growth and the globalization of professional expertise on development practice have eroded whatever near-monopoly of advisory services the MDBs once had.

At the same time, new challenges call for global collective action and financing of the sort the MDBs are well suited to provide but have been handicapped in doing so effectively. The list goes beyond major financial shocks, where the IMF’s role is clear—ranging from climate change, pandemic risk, increasing resistance to antibiotics, and poor management of international migration flows and of displaced and refugee populations. Other areas include the cross-border security and spillovers associated with growing competition for water and other renewable natural resources, and, with climate change, an increase in the frequency and human costs of weather and other shocks in low-income countries that are poorly equipped to respond.

These new and urgent challenges—including a restart of the healthy rates of economic growth that are at the heart of the MDBs’ contribution to the globally agreed sustainable development goals—have in common disproportionate risks and benefits for the developing world, and a particular need to combine financing, technical and country expertise, and a coordinated international policy response. The MDBs may no longer hold a monopoly on financing, expertise, and coordination, but they remain uniquely suited to combine these assets to deal with new and diverse challenges. In short, if the MDBs no longer existed today, the international community would have to reinvent them.

We recommend that the shareholders of the seven major MDBs treat these global challenges not in the incremental and piecemeal manner that has become the habit of the last several decades, but instead as a system for the whole to be more effective than the sum of its parts. The system should hold in common the key principles of transparency, accountability, and sustainability. But specific roles and mandates across the MDBs should vary to recognize their inherent differences in comparative advantage, particularly between the World Bank and the regional MDBs.

Riaz Haq said...

By some measures, the MDBs today are not only existing
but thriving, with demand for their financing and services
growing. But this picture belies a critical need for reinvention
if they are to rise to meet today’s pressing challenges effectively.
In particular, the legacy MDBs—the World Bank, the InterAmerican
Development Bank (IADB), Asian Development
Bank (AsDB), African Development Bank (AfDB), and European
Bank for Reconstruction and Development (EBRD)—
have been slow to adjust to many of today’s realities, starting
with the increasing economic role and growing capability of
their borrowers. For example, their major shareholders have
agreed to only minimal adjustments in corporate governance
systems and leadership selection, creating tensions with major
borrowers who want more voice and influence over their policies
and operations. With age, MDBs have become bogged
down in bureaucracy, increasing delays and raising costs to
borrowers, particularly for major infrastructure projects. Perhaps
in frustration, China and other major borrowers have
taken leadership in creating two new MDBs focused heavily
on infrastructure: the Asian Infrastructure Investment Bank
(AIIB) and the New Development Bank (NDB).

Beyond business-as-usual on
concessional financing. Shareholders should commit to
maintain current levels of concessional support across all
MDBs, implying at least $25 billion in concessional lending
annually over the next decade (and possibly more given
the possible additional amounts the AIIB might provide on
concessional terms). As a growing number of countries graduate
from concessional assistance to non-concessional borrowing
and other forms of engagement with MDBs, this baseline
commitment should allow for increased support in the remaining
poor countries, and for allocation of concessional funding
to countries in crisis and to post-conflict reconstruction,
especially at the World Bank (see Recommendation 4). In
addition, given the expected concentration of poor countries
in Sub-Saharan Africa, there should be a shift in concessional \


Why the slowness to adapt? One reason is that age and
bureaucratic growth have taken their toll, particularly at the
World Bank, where political pressures and the close scrutiny
of NGOs have affected its operations by making traditional
donors very—and perhaps excessively—risk averse to stories
of corruption, waste, human rights abuses, and environmental
injustices.10,11 In response to these pressures, the legacy MDBs
have gradually become burdened with a proliferation of rules
and processes that are meant to eliminate corruption and
safeguard legitimate aims such as environmental and social
protection, but that often fail to do so effectively or to serve
the institutions’ broader development mission. The result is
widespread borrower frustration with the hassle factor that
increases the costs and delays of major infrastructure projects.
Another reason is that adjustments in the legacy MDBs’
governance have been modest, with the largely western donor
“creditors” dominating the official governance arrangements.
Slow adjustments in governance, especially at the World
Bank, have frustrated the political ambitions of emerging
markets to assume greater leadership at the global level—
through increased capital participation, voting power, and
influence on these and other operational issues that affect
them as borrowers.
The initiative of China and other emerging markets to set
up their own institutions—the AIIB and the NDB—reflects
these two factors.

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.
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.”

“The Chinese are winning the perceptions game, whatever the reality. That then leads to political outcomes, because people see the inevitability of China’s rise and China’s power,” said Ely Ratner of the Council on Foreign Relations, an independent U.S. think tank.
While Washington’s approach in Asia is military-led, Beijing is binding countries to its interests with economics, said Mr. Ratner.
At a Chinese celebration of its belt and road plan in Beijing in May, Matt Pottinger, senior director for East Asia at the National Security Council, welcomed the initiative but called for Beijing to “ensure that privately owned companies can bid in a fair process.”
That means that American businesses should be allowed to compete for contracts, U.S. officials said.
There is little sign of that in Pakistan. Islamabad chooses bidders from an all-Chinese short-list provided by Beijing. Pakistani officials say this is because Chinese companies bring their own financing.
The U.S. has asked to participate in the China-Pakistan Economic Corridor, but nothing has come of it, one of the American officials said.

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.
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.”


“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...

From Spectator Index:

Govt debt as share of GDP

Japan: 250%
India: 70%
Pakistan: 66%
Vietnam: 62%
China: 46%
Thailand: 41%
Iran: 35%
Indonesia: 28%
Saudi: 13%

Riaz Haq said...

Pakistan’s old economic vulnerabilities persist

Massive Chinese projects actually exacerbate some of them

On June 16th the IMF warned of re-emerging “vulnerabilities” in Pakistan’s economy. It praised GDP growth of above 5% a year, but noted missed fiscal targets and a ballooning current-account deficit. The fund’s own projections a year ago for the fiscal year ending this June underestimated this deficit by about half the final total of $9bn. And based on trends in early April it overestimated the fiscal-year-end foreign-exchange reserves by $3bn.

Independent economists point out that, many times before, collapse has come on the heels of an IMF programme’s conclusion. Sakib Sherani, a former government economist, says that to avoid “egg on its face” for cheerleading Pakistan’s economic recovery just months ago, the IMF is slowly changing its story. By the end of 2018, many predict, Pakistan will come begging again. The fund responds that it is “too early to speculate”.

Some of Pakistan’s faltering can be blamed on bad luck, such as a fall in remittances from workers in the Middle East. But mostly it was, as usual, bad policy. Like its predecessors, the PML-N has failed to enact the structural reforms needed to break Pakistan free of its cycle of crises. Barely any goals of the IMF’s programme were met. Bloated, underperforming or, in the case of Pakistan Steel Mills, closed-down publicly-owned enterprises drain millions from the government each month. “Circular” debt, caused by delayed payments along the electricity-generation chain, is swamping the energy sector once more.

Annual exports have declined by 20% in dollar terms since 2013, stymied by an overvalued currency. All this means the government is again borrowing hand over fistfrom local and foreign banks. In some cases the design of the IMF programme itself has added to Pakistan’s woes: by pushing for increased tax revenue above all else, it has allowed the government to clobber the poor with indirect taxes, milk the (few) direct taxpayers even further, and, as ever, ignore the wealthy elites.


The source of funds is changing even if government recklessness is not. China plans to invest $62bn in Pakistan for a range of projects, particularly power plants, around the 3,000km (1,875-mile) China Pakistan Economic Corridor (CPEC). That could lift Pakistan to more stable prosperity. But paying for the CPEC will not be easy. Unlike loans from the IMF or World Bank, some two-thirds of those taken out so far, for $28bn-worth of early projects, are on commercial terms, with interest high at around 7% a year. When these loans come due, argues Farooq Tirmizi, an emerging-markets analyst, Pakistan will need a bigger bail-out than ever before.

The IMF has concerns about the lack of transparency surrounding Pakistan’s CPEC debts and how it will repay them. Any future fund lending to the country may include conditions that sow discord between the country and its new patron. And with President Donald Trump in charge of America’s foreign policy, there is no guarantee that the old one, America, will prove as generous—in the event of a crisis—as it has in the past.

Riaz Haq said...

Here's another example of FUD against CPEC by Christine Fair:

Pakistan Can’t Afford China’s ‘Friendship’
Pakistan's elites think Chinese cash can save the country. They're wrong.

In recent months, the Chinese-Pakistan Economic Corridor (CPEC) has left Pakistanis emboldened, Indians angry, and U.S. analysts worried. Ostensibly, CPEC will connect Pakistan to China’s western Xinjiang province through the development of vast new transportation and energy infrastructure. The project is part of China’s much-hyped Belt and Road Initiative, a grand, increasingly vague geopolitical plan bridging Eurasia that China’s powerful President Xi Jinping has promoted heavily.

Pakistani and Chinese officials boast that CPEC will help address Pakistan’s electricity generation problem, bolster its road and rail networks, and shore up the economy through the construction of special economic zones. But these benefits are highly unlikely to materialize. The project is more inclined to leave Pakistan burdened with unserviceable debt while further exposing the fissures in its internal security.


Despite the bold claims made by China and Pakistan, there are many reasons to be dubious about the purported promises of CPEC. There’s already violence all along the corridor. The north-most part of CPEC is the Karakoram Highway (KKH), which gashes through the Karakoram Mountain Range to connect Kashgar in Xinjiang with Pakistan’s troubled province of Gilgit-Baltistan. Xinjiang is in the throes of a slow-burning insurgency by the Muslim Uighur minority against the Communist state. Gilgit-Baltistan, a Shiite-majority polity under the thumb of a Sunni-dominated Pakistan, is part of the above-noted contested territory of Jammu-Kashmir. Here, geology and weather further limit CPEC. The Karakoram Highway, a narrow road weaving through perilous mountains, can’t bear heavy traffic. Expanding the KKH will not be easy. Residents of Gilgit-Baltistan worry about the environmental costs in relation to the few benefits they will enjoy. There have been episodic protests, which the Pakistani government has ruthlessly put down. Meanwhile, Gwador is experiencing a prolonged drought, frustrating the project while the four extant desalination plants remain idle.

In the south, CPEC is anchored to the port at Gwador in Pakistan’s insurgency-riven Balochistan province. The local Baloch people deeply resent the plan because it will fundamentally change the demography of the area. Before the expansion of Gwadar, the population of the area was 70,000. If the project comes to full fruition the population would be closer to 2 million — most of whom would be non-Baloch. Many poor Baloch have already been displaced from the area. Since construction has begun, there have been numerous attacks against Chinese personnel, among other workers.

There’s also the stubborn problem of economic competitiveness. For CPEC to be more competitive than the North-South Corridor that is rooted to the Iranian port of Chabahar, Gwador needs to offer a safer and shorter route from the Arabian Sea to Central Asia. For that to happen, Gwador needs to be connected by road to the Afghan Ring Road in Afghanistan’s Kandahar province, which is under sustained attacks by the Afghan Taliban. Alternatively, a new route could connect Gwador with the border crossing at Torkham (near Peshawar) by traveling up Balochistan, with its own active ethnic insurgency, through or adjacent to Pakistan’s Federally Administered Tribal Areas, which is the epicenter of Islamist terrorism and insurgency throughout Pakistan. It takes great faith — or idiocy, or greed, or all of the above — to believe that this is possible.

Riaz Haq said...

Clearly, the so-called stakeholders that include the US, the EU, Russia, India and Japan seem either not to have understood the $4 trillion venture across 69 countries meant presumably to project China’s strategic vision for global peace, won through mutually beneficial economic cooperation or they are so fearful of being swamped by its success that they want to stop it before it takes off.

A study of the Silk Road Economic Belt by the Friedrich-Ebert-Stiftung (FES) and the Stockholm International Peace Research Institute (Sipri) has identified potential issues that may negate any benefits the initiative brings.

The study speculates that the Chinese will likely accept or reject projects based on whether they serve the needs of Chinese industry, rather than what they bring to the recipients.
It also suspects that political tensions between different countries may impede the smooth rollout of projects.

Local elites, the study further suspects, may corner the “spoils” from new projects, thereby exacerbating social tensions. It has also expressed fears that labour rights and environmental protection may not be given the attention they deserve.

Therefore, the study recommends that:

The EU put forward a joint consultative mechanism with China to ensure projects are implemented smoothly, by ensuring all stakeholders have a hand in planning and supervision. Official development assistance programmes in BRI recipient countries should, include assistance in project evaluation. Organisations such as the UNDP and the UN Economic and Social Commission (ESC) for Asia should advise recipient countries on the impact and viability of planned projects. BRI loans should not be allowed to breach the debt burden thresholds determined under the World Bank-IMF debt sustainability framework. And finally, the Belt and Road Initiative needs to attract private capital as there are around $8.5 trillion “sitting in cash, waiting for better investment opportunities”. Bringing in private capital would increase the scale of BRI, open it to non-Chinese companies and allow projects to be implemented more efficiently.

It was perhaps in this frame of mind that some of the delegates at the May Belt and Road Forum had called for a rules-based approach, sensitive to the developmental needs of recipient countries. The stakeholders such as the US, the EU, Russia, India and Japan, according to the study, need to coordinate among themselves and engage with China to promote more transparent partnerships.

Meanwhile, the China-Pakistan Economic Corridor (CPEC) continues to bug India. Out of fear of being overwhelmed socio-economically by China’s Road and Belt Initiative (RBI) India seems to have decided to create problems for the initiative. To start with it has decided not to attend any events connected with the BRI Forum.

What India is most worried about, however, is a collection of infrastructure projects under the label of CPEC, currently under construction throughout Pakistan. It traverses territory which India considers to be disputed. China officially claims not to take sides in the Kashmir dispute, but India believes it has done so by finalising CPEC with Pakistan and ignoring India’s position. As well as compromising India’s territorial integrity, CPEC, in India’s view, is raising other concerns about BRI projects.

India’s version on Gwadar port: the seaport has been leased to China until 2059. Chinese companies are operating the port, developing a 1,000-hectare Special Economic Zone nearby, and building an international airport with a Chinese grant of $230 million. These actions are certainly not driven by altruism. They reflect the strategic value to China of access to the Arabian Sea and proximity to energy-rich West Asia. It should be no surprise that Chinese naval submarines have been spotted in Gwadar.

Riaz Haq said...

SEZs ‘to turn Pakistan into engine of growth’

Federal Minister for Planning, Development and Reform Ahsan Iqbal assured that China-Pakistan Economic Corridor (CPEC) will not harm domestic industries and interests of the local business community.

Addressing a meeting, held to review the development status of Special Economic Zones (SEZ) under CPEC, Iqbal instructed federal and provincial authorities to keep the business community in the loop about latest developments and policies. He also assured of their inclusion in the consultative process for policy formulation to protect indigenous industries.

“Chinese investment will augment our industrial capacity through state-of-the-art technology and expertise transfers, which will increase our productivity,” he remarked while putting emphasis on formation of joint ventures between local and Chinese manufacturers through increased business collaboration.

The minister updated participants on the status of several energy and infrastructure-related projects, promising increased trade and industrialisation in Pakistan once they are completed.

Highlighting the importance of SEZs, Iqbal said that the next stage of CPEC encompasses massive production in these zones leading to higher output and exports.

“Development of SEZs will play an important role in the future of CPEC by converting Pakistan into an engine of growth,” he stated while instructing officials to prepare comprehensive strategy papers to attract investments.

He also stressed on the importance of taking advantage of the ‘window of opportunity’ created by unprecedented foreign [Chinese] investments in the country

“A paradigm shift is taking place as the world passes through a fourth industrial revolution where automation and robotics are replacing relatively expensive manual labour.”

Pakistan needs to take advantage of its cheaper labour to overcome the technology gap while maintaining production levels, added the minister.

“Provincial governments also need to take concrete steps in order to make SEZs a success,” he said, adding that the country needs a robust industrial base to ensure sustainable economic development and creation of employment opportunities in view of the ballooning labour force.

Representatives from provincial governments and federal territories including FATA and Gilgit-Baltistan gave detailed briefings on the status of SEZs in their areas during the meeting.

Riaz Haq said...

Denigrating CPEC
As the CPEC early harvest projects near fruition, detractors are stepping up their propaganda to denigrate the mega project

As the early harvest projects of CPEC near fruition, detractors are stepping up their propaganda to denigrate the mega project. Christine Fair, of the Foreign Policy magazine has jumped into the fray to disparage CPEC. Christine Fair is an associate professor at the Centre for Peace and Security Studies (CPASS), within Georgetown University’s Edmund A. Walsh School of Foreign Service. Author of the 2014 book Fighting to the End: The Pakistan Army’s Way of War has been criticized for her hawkish rhetoric, riddled with factual inaccuracies, lack of objectivity, and being selectively biased viewpoints. Her pro-drone stance has been denounced, and called "surprisingly weak" by Brookings Institution senior fellow Shadi Hamid. Journalist Glenn Greenwald dismissed Fair’s arguments as "rank propaganda", arguing there is "mountains of evidence" showing drones are counterproductive, pointing to mass civilian casualties and independent studies. Fair’s journalistic sources have been questioned for their credibility and she has been accused of having a conflict of interest due to her past work with U.S. government think tanks, as well the CIA. She has also been rebuked for comments on social media perceived as provocative, such as suggesting burning down Pakistan’s embassy in Afghanistan or asking India to "squash Pakistan militarily, diplomatically, politically and economically." She has been accused of double standards, partisanship towards India, and has been criticized for her contacts with dissident leaders from Balochistan; a link which "raises serious questions if her interest in Pakistan is merely academic."

China constructed the Karakoram Highway across Gilgit Baltistan in 1974. For forty years, the Indian government found no cause for concern, but is now suddenly raising alarm bells with the advent of CPEC
In her latest Op-Ed titled ‘Pakistan can’t afford China’s friendship’ carried by Foreign Policy issue of July 3, 2017, Ms Fair plays to the Indian gallery by claiming that Pakistan has been emboldened by the CPEC to take on India.

Firstly, she conveniently remains oblivious to the fact that India has upped the ante in Occupied Kashmir by killing more than 200 Kashmiri youth and blinding 3,500 children by firing pellet guns at their eyes. To hide its own atrocities against the hapless Kashmiris, India is incessantly violating the ceasefire agreement across the LOC and killing innocent civilians besides staging fake encounters to malign Pakistan. Indian government has formally protested to the Chinese leadership that portions of CPEC traverse through Azad Jammu Kashmir and Gilgit Baltistan, which are disputed territory. Chinese government has responded that CPEC is an economic project and not a strategic one. Moreover, China has invited India to become a part of CPEC to benefit from the mega project as well as address its grievances or misgivings.

The fact is that China constructed the Karakoram Highway across Gilgit Baltistan in 1974. For forty years, the Indian government found no cause for concern, but is now suddenly raising alarm bells with the advent of CPEC.

Riaz Haq said...

#Pakistan Sees Bigger #LNG Profile; Imports to Surge From 4.5 Million Tons in 2016 to 30 Million Tons by 2022

Pakistan says it could become one of the world's top-five buyers of liquefied natural gas (LNG), with Petroleum Minister Shahid Abbasi predicting imports could jump more than fivefold as private companies build new LNG terminals.

Outlining Pakistan's ambitious plans - which, if fully implemented, could shake up the global LNG market - Abbasi told Reuters that imports could top 30 million tonnes by 2022, up from just 4.5 million tonnes currently.

Cheaper than fuel oil and cleaner burning than coal, LNG suits emerging economies seeking to bridge electricity shortfalls and support growth on tight budgets.

(For a graphic on LNG market share by region click

"Within five years, I don't see any reason why we should not be beyond 30 million tonnes (in annual LNG imports). We will be one of the top five markets in the world," Abbasi said.

That kind of jump would represent one of the fastest growth stories in the energy industry, comparable to what China has done in many commodities - but there are doubts whether Pakistan can achieve its ambitions, given the complexity and cost of expansion projects.

"It's always possible, but seems very difficult as they will need much more (regasification) capacity and downstream pipeline capacity," said Trevor Sikorski at Energy Aspects, a London-based industry market researcher. "There are infrastructural issues and financial issues."

"Still, it is one of the key LNG growth markets, and its demand will help tighten up the market that has threatened to lurch into over supply."

Abbasi said no one took Pakistan seriously after a decade of botched attempts to bring LNG to the country, but this has changed with the construction of new LNG terminals and gas plants. He said foreign suppliers are now arriving in Pakistan - where energy shortages have prompted Prime Minister Nawaz Sharif to promise he'll end the country's frequent blackouts.

"Before, we used to go out to talk to LNG suppliers. Now they're coming to us," Abbasi said.

"(LNG) is really what has saved the whole energy system. It has been a huge success in Pakistan and it will continue," he said after Sharif on Friday inaugurated a new Chinese-built LNG power plant that uses General Electric turbines.


Pakistan built its first LNG terminal in 2015 and, after some delays, a second terminal is due to come online in October, doubling annual import capacity to about 9 million tonnes.

A consortium of Exxon Mobil, Total, Mitsubishi, Qatar Petroleum and Norway's Hoegh is expected to decide by September whether to build a third LNG terminal for about $700 million, Abbasi said.

Pakistan has dropped plans to finance up to two more terminals, as private companies have said they would finance these themselves and use Pakistan's existing gas network to sell directly to consumers.

"That's been the real success and that's where the growth will come from," Abbasi said, adding that about 10 million homes are linked to gas connections in Pakistan - a nation of around 200 million.

"In the last four years, we would have added two million additional connections. We are really ramping that up."

If Pakistan achieves its ambitious development goals, it could significantly erode market oversupply, which has helped pull down Asian LNG spot prices by more than 70 percent since 2014 to around $5 per million British thermal units (mmBtu).

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

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...

CPEC outflows to peak at $4.5bn: IMF

In a detailed look at the China-Pakistan Economic Corridor (CPEC), the International Monetary Fund (IMF) cautions that corridor projects will generate outflows of as much as $4.5 billion by 2024, while the export benefits of the projects “will likely accrue gradually over time”. Filling the gap in between could pose a policy challenge.

“These considerations warrant policymakers’ attention to two priority areas in order to realise the transformational potential of Pakistan’s investment programme while maintaining external stability,” the IMF report says.

The first challenge is to ramp up export revenue and build foreign exchange buffers, which “will be important to cushion the period of increased BoP outflows”. Ramping up exports will require “improving competitiveness and the business climate” in order to realise the potential benefits from the increased energy supplies and transport infrastructure that the corridor projects will create.

The second big challenge is bringing “full cost recovery” in power distribution. “Routing the increased generation capacity through a loss-making distribution sector could result in faster accumulation of circular debt and fiscal costs, as well as undermine long-term financial sustainability of the new energy projects,” the report adds.

The report stops short of advocating a specific path for improving recoveries, but points towards greater private-sector participation in metering and recoveries while “maintaining a strong and enabling regulatory framework”. The language could be aimed at the government’s proposed reforms to the Nepra Act that seek to parcel out many of the powers the regulator currently enjoys to the federal and provincial governments and their departments.

The report also cautions against going too far down the road of granting incentives to certain categories of investor. It urges the government to “rationalise and limit tax incentives and exemptions [and] maintain uniformity of the tax regime with respect to all investments” and ensure that new external commitments are in line with expected balance of payments trends.

The report notes the positive impact that CPEC projects can have on Pakistan’s economy. It says the direct impact of corridor projects on GDP will go from $2bn in 2017 to $4bn by 2024. By that point in time, the indirect, second-round impacts could commence, which could be “significant” but “will depend on many other supportive factors.”

The report notes that the investments coming under the early-harvest scheme could close Pakistan’s power deficit as 8,600MW are envisaged to be commissioned under CPEC over the next seven to nine years, out of a total capacity expansion of 24,000MW currently in the investment plan. “[T]his expansion will help eliminate Pakistan’s deficit of about 6GW in 2016 to a surplus as early as end-2018.”

Riaz Haq said...

Cultural Caravan with 8 #Chinese & 8 #Pakistani artists to travel in 3 segments of #CPEC. #Culture #China #Pakistan

Chinese and Pakistani artists, eight from each country, will travel in a cultural caravan in three segments of the China Pakistan Economic Corridor (CPEC), each segment spanning a maximum of ten days’ duration.

“Creative Caravan of artists, musicians and film makers from China and Pakistan traversing the CPEC and documenting Art and Culture en-route,” said PNCA officials.

The Silk route has played a significant role in the culture and economy of the region through the history.

Its visionary transformation into CPEC will be seen as the most powerful engine of change, development, progress and economic turnaround for the entire region.

According to schedule the first segment will undertake the Western Passage covering route from Peshawar to Gwadar.

The second segment will take the Eastern Passage from Karachi to Islamabad while also taking detour between Eastern Western and Central Passages.

The third segment will cover Northern Passage starting from Kashgar and culminating at Islamabad.

Timings of the three segments of the caravan will be decided keeping climatic and other factors in mind.

The film makers will have all their equipment including editing systems with them so they can continue editing their films and also engage local talent in the process of filming and editing.

The painters and photographers will be encouraged to engage with local enthusiasts in creative processes by sharing their knowledge and skills with them and also letting them to take pictures and paint images.

The musicians will not only document local folk music but also perform at different places and interact with local musicians.

Riaz Haq said...

How Do Electric Utilities Make Money?

Public Utility Commissions (PUCs) or their equivalent in each state serve as a replacement for the competitive market. In exchange for granting the exclusive right to sell electricity in a given service territory, PUCs determine how much the utility is allowed to invest and in what, how much it can charge, and what its profit margin can be. This is called the “regulatory compact,” and it was first laid out in the Binghamton Bridge Supreme Court case of 1865. The court stated, “if you will embark, with your time, money, and skill, in an enterprise which will accommodate the public necessities, we will grant to you, for a limited time period or in perpetuity, privileges that will justify the expenditure of your money, and the employment of your time and skill.”

PUCs determine a utility’s total revenue requirement in what is known as a rate case. The revenue requirement represents the amount of money a utility must collect in order to cover its costs and make a reasonable profit. Individual utilities file rate cases, usually every few years, but sometimes less frequently. The PUC decides what the revenue requirement will be based on a number of factors, including the value of a utility’s assets, the cost of debt and equity financing, and operating and administrative expenses. The simplified formula looks like this:

Total Revenue Requirement = Rate Base × Allowed Rate of Return + Expenses

The "rate base” is the value of the company’s assets minus accumulated depreciation. The allowed rate of return (return on assets) drives a utility’s profitability. Expenses are simply passed through, including fuel in cases where regulated utilities own power plants. Historically, critics have said that so-called “rate of return regulation” does not properly motivate utilities to operate efficiently. By having a set rate of return, utilities essentially are incentivized to make unnecessary investments in order to increase their rate base and therefore, their profits – called the Averch-Johnson effect. They also have limited incentive to keep expenses in check if those costs are simply passed through to customers.

On the flip side, having a set rate of return ensures that utilities are able to raise sufficient capital to make improvements to their infrastructure and provide reliable service to all customers. Moreover, because this lowers the risk to investors, utilities have usually been able to secure a lower cost of capital than other businesses. The rate of return is a combination of the cost of paying back its debt holders with interest and the return utilities provide to their equity shareholders. Not surprisingly, the most controversial part of this formula is calculating the utility’s allowed return on equity (ROE) – this is the only portion of the revenue requirement that a utility ultimately keeps as profit.

Because utilities are regulated, their allowed ROE is set by PUCs. The average ROE across 93 industries and almost 8,000 firms for the US market is 14.49%. As one might expect, utility companies – with an average of 10.13% – are on the lower end of the spectrum because they are viewed as less risky investments.

Rate of return varies significantly from state to state, as each PUC has exclusive authority to regulate utility operations as they choose. In AEE’s Power Portal database, which tracks ROE for over 100 investor-owned utilities across the country, the highest allowed ROE belongs to Alabama Power Co., at 13.75% while the lowest belongs to United Illuminating Co. (CT) at 9.15%. Alabama Power has a significantly higher return on equity than any other utility, which has led critics to wonder whether the Alabama Public Service Commission is properly balancing the interests of consumers and shareholders.

Riaz Haq said...

#CPEC provides avenues for #Pakistan to get a big slice of $100 billion #China's food imports

The China-Pakistan Economic Corridor (CPEC) is a golden opportunity for overall development of this region and Pakistan should reorganise its agriculture sector to get a major slice of the $100 billion worth of agriculture produce imports by China, suggested Muhammad Mehmood, Punjab Agriculture Secretary.

Speaking at the launch of a study on “CPEC – Prospects & Challenges for Agriculture”, Mehmood pointed out that nearly one-fourth of the world’s population was living in China and most of its exports would be routed through Pakistan after the completion of CPEC. “Containers full of exportable surplus will be sent to various international markets, but on their return, these containers will be empty and we must capitalise on the opportunity to export our surplus agriculture produce to China,” he said.

Mehmood revealed that per capita income of China was increasing substantially, bringing a visible change in people’s lifestyle and food habits there. “Like other affluent societies, they also prefer rich and costly food and fruits,” he said, adding Pakistan could get maximum benefit of the emerging change.

“We are concentrating on high-value crops and a 10-year programme has been evolved to develop one lakh acres of land in the Potohar region for planting grape and other high-value crops.”

Major Chinese importers will also be invited to utilise this land for growing high-value fruits in addition to developing the agriculture processing industry on modern scientific lines.

“Its trickle-down effect will provide an opportunity to our farmers to upgrade their technologies and develop agriculture as a profitable business by shunning centuries-old practices,” Mehmood said.

He told the audience that foreign consultants had been engaged to analyse why Pakistan had not been able to get its due share in Chinese imports despite its friendly relations and close proximity.

He suggested that Pakistan should renegotiate the bilateral trade agreement and a meeting was expected in the current or next month. After that, “we would be in a position to decide which strategy is suitable for Pakistan to enhance its share in Chinese imports.”

Responding to a question about a research project on the China-Pakistan agricultural technical cooperation, the agriculture secretary insisted that the Punjab Agriculture Research Board was extending liberal grants to the viable projects planned by the public and private sectors.

“Initially, Rs259 million had been allocated for this purpose. The funding was immediately increased to Rs750 million and it would be further enhanced to Rs3 billion in the next three years,” he said.

He asked the Faisalabad Chamber of Commerce and Industry president to send the project to the research board where a group of experts would review its viability and approve the requisite grant.

Riaz Haq said...

Banyan: Massive #Chinese investment is a boon for #Pakistan. #CPEC #China … via @TheEconomist

Never has Pakistan been so wooed. The original promised dowry, of $46bn in Chinese grants and soft loans for infrastructure projects, has only grown, to $62bn. This munificence is dubbed the China-Pakistan Economic Corridor (CPEC), launched amid fanfare in 2015, on a visit to Pakistan by President Xi Jinping.

Most of the money is earmarked for power plants to improve Pakistan’s notoriously unreliable electricity supply. The rest is going on roads, railways, dams, industrial zones, agricultural enterprises, warehousing, pipelines and a deepwater port in the coastal settlement of Gwadar. Some of the promised money is bound not to materialise, and the claim by the interior minister, Ahsan Iqbal, of “benchmarking” Singapore and Hong Kong when turning remote, dusty Gwadar into a container-shipping hub speaks more of hope than experience. Yet over $14bn has already been spent. CPEC is very different from earlier schemes, when co-operation was promised only to run into the sands.

For Pakistan, the scale of ambition is unprecedented—a “game- and fate-changer” as overwrought locals put it. If CPEC gets electricity and goods flowing efficiently, then growth could jump by over two percentage points a year, by one estimate. Better yet, CPEC could shift the national narrative—too often dominated by coups, extremists and a chippy kind of nationalism—towards economic construction.

What is in it for China is often misunderstood, especially by Sinophobes in Delhi, Tokyo and Washington. They make much of the “corridor” in the plan, concluding that China’s chief aim is to gain access to the Indian Ocean, the better to encircle India. In fact, argues Andrew Small of the German Marshall Fund, an American think-tank, improving transport links through the mountainous neck of land that joins Pakistan to Xinjiang province in China’s far west is one of CPEC’s lesser aims. Yes, Gwadar, as a port on the Indian Ocean, interests the Chinese navy, but would have done so regardless of CPEC. Most of CPEC’s investments are aimed at improving Pakistan’s domestic economy.

China does have strategic motives, of course. A more dynamic Pakistan would certainly act as a counterbalance to the deepening security relationship between India and America, which also provides military aid to Pakistan. Then there is Islamist militancy, which spills back into Xinjiang; development might, as Li Keqiang, China’s prime minister, put it, “wean the populace from fundamentalism”. China needs new markets for its products, as well as new terrain for infrastructure and industrial projects. Most importantly, CPEC has become the main plank of Mr Xi’s ambitious “belt-and-road” initiative, whereby improved infrastructure will help to strengthen economic ties and thus spread China’s influence through Asia and beyond. As Mr Small points out, CPEC has to be seen to work for the broader scheme to seem both credible and appealing.

Even if CPEC is not the neo-imperialist exercise its critics make it out to be, it still has its flaws. The IMF warns that Pakistan may struggle to repay China’s loans, which could in turn prompt a balance-of-payments crisis. Pakistan’s central bankers have in the past deplored a lack of transparency surrounding CPEC contracts; suspicion abounds that Pakistani taxpayers have been shortchanged. And security is a problem. Just one example is the new Chinese-funded road to Gwadar, which runs through an area long gripped by insurgency in the remote, backward province of Balochistan. Mr Iqbal argues that the road and the development it is bringing will help extinguish the conflict. It might equally pour fuel on it, if locals feel excluded.

Riaz Haq said...

Chinese perceptions of CPEC

The Chinese have voiced concerns regarding negative CPEC talk, security and red tape.

Under its One Belt One Road Initiative announced in 2013, China is planning to invest more than $1 trillion in 60 countries all over the world to establish six different corridors. The receptivity in other countries to this proposal has been anything but enthusiastic; however, some Chinese friends are puzzled by the sceptical and negative reactions from certain quarters in Pakistan expressed in the media, particularly on social media. This comes to them as a surprise because of the long uninterrupted record of strong bilateral relations between the two countries that were not even affected by changes in political leadership in either country. CPEC is the first project of its kind to foster economic cooperation on a massive scale for building large infrastructural projects in Pakistan.

Although realising that there are some external forces hostile to this initiative, Chinese analysts and participants are concerned about what they see as the misrepresentation of facts by many Pakistanis. It is not obvious to them as to what purpose is served by raising doubts and fears about CPEC in the minds of the Pakistani population. The aspersions being cast on the motives of the Chinese, such as the analogy with the East India Company or Pakistan becoming a satellite of China, are very unnerving: external detractors of CPEC pick up these reports and after bundling them as ‘risks’ of CPEC to Pakistan, disseminate them widely.

The Chinese argue that the IPPs have been a policy instrument for investment in Pakistan’s energy sector for a very long time. When the country was facing serious energy shortages no one else came to Pakistan’s rescue and invested in the sector. Now that China has come forward with a planned investment of $35 billion or 70 per cent of the total CPEC allocation under the same policy, questions are being raised.

Had it involved extraction of natural resources from Pakistan for the benefit of the Chinese, this criticism would have been justifiable. On the contrary, the benefits of this investment would be exclusively appropriated by Pakistan’s industries and households that would no longer face load-shedding while the country would record a 2pc annual rise in GDP growth.

Chinese state-owned companies, designated by the Chinese government based on their expertise and experience, are executing the projects with loans provided by government-owned banks on concessional terms both in tenor and pricing. In several projects, Chinese and Pakistani companies have entered into joint ventures. The repatriation of profits and debt-servicing in foreign exchange arising out of these obligations would become possible after an increase in the volume of exports as a result of the Chinese-Pakistani joint ventures relocating their industries to the Gwadar Free Economic Zone and the nine industrial zones to be established under CPEC.

In the opinion of some, the negative feelings can have unintended adverse consequences for the personal security of Chinese nationals working on these projects, particularly in some sensitive areas of Balochistan. Some elements unhappy with the Pakistani state and government and possibly acting at the behest of foreign powers hostile to CPEC appear to have created conditions in which the murders and kidnappings of Chinese nationals that were almost non-existent have begun to take place. Our interlocutors were grateful for the new division being raised by the Pakistan Army for protection of the Chinese; but the security risk is raising premiums for relocation to some of the vulnerable areas.

Riaz Haq said...

Value Added Sector Helps #Pakistan’s #Exports Upsurge. Textiles up 11.8%, non-textiles up 23.5% - … via @pakwired

According to a recent report by the Pakistan Bureau of Statistics (PBS), Pakistan’s exports have shown a positive trend backed by rising exports via the value added sector. The growth pattern has been observed during the first two months of the current fiscal year 2017-18. The upward trend in the value added sector has given a significant boost to cummulative export numbers as the New Year kicked off.

Total exports during the two month period, July-August, increased to $3.49 billion as compared to $3.12 billion showing a growth of 11.8%. While the increase in non-textile goods has been registered at 23.5% reaching $1.31 billion during July-August 2017-18 versus $1.06 billion during the same period last year.


Readymade garments have given a major upward push to the overall exports pie increasing by 15.65% on a yearly basis reaching $418.63 million during July-August period. Garments in general have also surged by 16.4% showing volume based growth.

Another integral value-added product, knitwear managed to go up by 7.53% to reach $439 million during July-August. The volume based increase of knitwear exports was 8.23%. Additionally, bed wear exports grew by 8% amounting to $384.32 million while its quantity wise growth stood at 8.79%. Furthermore, the value based growth of towel exports showed 0.67% rise while its volume based growth was registered at 0.03%.

Conversely, the picture has not been equally nice for the intermediate goods like cotton yarn, as their exports slumped by 4% (value) and by 3.3% (volume). Deteriorating demand of cotton yarn and fabric from China is considered a crucial reason for their low sales. Another slump has been seen in the exports of cotton cloth, down by 7.8% in terms of value and quantity. Exports of raw cotton have also seen a downward trend with 14.7% in value and 14.15% in volume during July-August 2017-18.

A major blow has emanated from exports of non-value added products such as cotton carded, which dropped by a whopping 100% in value and volume. In addition, exports of tents and canvas declined by 22% in terms of value. On the other hand, exports of yarn slumped by 0.2% in value but increased in terms of volume.

Quick Read: When will Pakistani companies really value their human resource?


From the non-textile related goods, rice exports grew by a significant 40% during the two months. Basmati and other types of rice exports took a major leap.

From the food category, a major jump was seen in exports of wheat, sugar, fruits during the given period. Crude petroleum and petroleum naphtha registered a growth of 100% and 404% accordingly. Nonetheless, exports of sports goods and carpets saw a downward trend.

Value added leather products increased by 5.8% which was witnessing continuous slump during the last two years. Footwear showed a feeble growth of 0.1% during July-August 2017-18. Furthermore, surgical and engineering goods managed to rise by 26% and 23% respectively.

Riaz Haq said...

#Pakistan exported #food commodities worth $500m in July-Aug 2017. #exports #rice #wheat #fish #sugar

The country earned US$ 512.3 million by exporting different food commodities during the first two months of the current financial year as compared the earnings of the corresponding period of last year.

During the period from July to August 2017, food group exports from the country increased by 30.6 percent as compared the exports of the same period of last year.

According to the data of Pakistan Bureau of Statistics, since the last two months exports of rice grew by 40 percent as around 428,993 metric tons of rice worth US$ 223.97 million were exported.

The rice exports, during first two months of last financial year, were recorded at 3810,861 metric tons, which were worth US$ 159.54 million, it added.

Meanwhile, the exports of basmati rice grew by 10.35 percent and about 59,433 metric tons of basmati rice, worth US$ 62.741 million, were exported as compared the exports of 59,192 metric tons, valuing US$ 56.857 million, in the same period, last year.

The exports of rice other than basmati also witnessed an increase of 58.98 percent, around 369.580 metric tons of rice costing US$ 161.198 million exported as compared to the exports of 251,669 metric tons worth US$ 102.888 million last year.

From July-August, 2017-18, fruit and vegetable exports increased by 8.74 percent and reached at 56,280 metric tons worth of US$ 20.58 million against the exports of 73,751 metric tons of US$ 18.88 million of the same period last year, it added.

The other commodities which witnessed an increase in their exports during the period under review include fish and fish production, which increased by 19.63 percent, wheat and sugar increased by 100 percent respectively.

It may be recalled here that imports of the food commodities into the country also witnessed an increase of 27.18 percent and about US$ 1.123 billion was spent on the import of different food items to fulfill the domestic requirements.

Riaz Haq said...

Pakistan targets import curbs to ward off currency crisis

Abbasi to impose fresh curbs on luxuries in effort to avoid devaluing rupee

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Pakistan plans to tighten curbs on luxury imports to ward off a foreign currency crisis without devaluing the rupee, Shahid Khaqan Abbasi, the prime minister, has said.

Mr Abbasi said he would rather place further controls on imports in an effort to preserve fast-dwindling foreign reserves than allow the rupee to fall against other currencies.

Some experts believe Pakistan will have to request another bailout from the International Monetary Fund within a year.

In March, the Pakistani government made it harder to import non-essential items such as vehicles, mobile phones, cigarettes and jewellery by insisting buyers put down 100 per cent of the cash upfront.

The measure drew criticism that it would encourage people to trade instead on the black market. The IMF said it had been told by Pakistani officials that the restrictions would be removed within a year but Mr Abbasi told the FT his government was planning to impose more.

“We can put regulatory duties on certain items, especially luxury finished goods, that’s possible,” he said. “We probably will do more of that, yes definitely, to discourage imports.

“Currency devaluation is not on the table, it’s not. A lot of people thought it was . . . [but] it is important to have stability for the rupee,” said Mr Abbasi.

Pakistan is running out of foreign currency as exports and payments from Pakistanis abroad fall while imports rise.

The central bank had $14.3bn of foreign reserves as of September 15, according to the most recent data — enough to cover exports for about three months. That is down from a high of $18.9bn last October.

Pakistan has been importing more than it exports for some time, but the problem has been exacerbated by having to buy Chinese supplies for projects as part of the $55bn China-Pakistan Economic Corridor.

While the scheme is aimed at improving Pakistan’s energy supply and transport networks, many economists believe that in the short term it will push Islamabad back towards the IMF.

“We will have to go back to the IMF any time now,” said Muhammad Zubair Khan, a former commerce minister who worked at the IMF for more than a decade. “The current situation is not sustainable.”

Sakib Sherani, a former economic adviser to the government, warned: “From a balance of payments crisis, we will have a full-blown macroeconomic crisis, where private sector sentiment is hit, growth stalls, inflation is high, and the central bank has to act.”

As well as restricting imports, the country has also borrowed money at short notice from various international lenders to pay off its debts. In 2016 and early 2017, Pakistan borrowed $1.2bn from state-backed Chinese banks.

Many economists believe the only long-term way out of the crunch is to allow the rupee to fall, encouraging exports and discouraging imports.

But doing so has become politically sensitive, with ministers insisting on a strong currency while central bankers warning of the likely consequences.

In July, the rupee suddenly fell 3 per cent, having traded in a narrow band since 2015. Central bank officials said they had backed away from shoring up the currency, but the move drew an angry response from the government, which stepped in to boost its value again before replacing the acting governor.

Riaz Haq said...

Bank of #China (BoC) is 2nd Chinese bank to open in #Pakistan after Industrial and Commercial Bank of China (ICBC)

The Industrial and Commercial Bank of China (ICBC) has already opened two of its branches in Karachi and Islamabad and is providing various services, including corporate finance, investment banking, foreign deposits, project loans, and working capital loans.

The Bank of China (BoC) became operational in Pakistan as it inaugurated its first branch in Karachi on Tuesday.

Emphasising that it was "a great honour" for the bank to be launched in Pakistan, BoC Chairman Chen Siqing noted that the Karachi branch was its first in South Asia.

The Dawn quoted him as saying that the bank would strengthen the "brotherly relations" between the two countries in the financial sector.

Siqing also highlighted that the bank could help Pakistan effectively reap the benefits of Beijing's economic prosperity.

Welcoming the bank to Pakistan, State Bank of Pakistan (SBP) Governor Tariq Bajwa, said that the increased diversity of foreign banks would increase the country's economic resilience.

He also expressed hope that Pakistan would learn from BoC's expertise in the small and medium enterprises sector.

Speaking during the launch, Acting Chinese Ambassador to Pakistan Zhao Lijian said that the opening of the bank "marked the confidence of the Chinese corporate sector in Pakistan's economic situation."

President Mamnoon Hussain, who was also present on the occasion, expressed confidence that the newly-launched bank will help accelerate infrastructure development and overall economic growth of the country.

He termed the BoC's arrival to Pakistan a "memorable event in the everlasting friendship between Pakistan and China".

President Hussain assured the BoC of the continued support of the government and State Bank of Pakistan in expanding its operations in the country.

The BOC was allowed to commence banking business in Pakistan on September 19 this year.

This is the second Chinese bank which has been allowed to operate in Pakistan. The State Bank of Pakistan had issued a license to BoC in May 2017.

The Industrial and Commercial Bank of China (ICBC) has already opened two of its branches in Karachi and Islamabad and is providing various services, including corporate finance, investment banking, foreign deposits, project loans, and working capital loans.

Riaz Haq said...

#Pakistan to issue Islamic & conventional #bonds to borrow $2 billion to bolster reserves amid widening deficits

Pakistan has picked arrangers for a potential $2bn debt sale planned for later this year, according to two people familiar with the deal, in a bid to bolster falling reserves as the economy faces increased signs of stress ahead of elections next year.
South Asia’s second-largest economy is planning to offer Shariah-complaint and conventional bonds depending on market conditions, the people said, asking not to be identified because the information is private.
The sale would come as Pakistan’s finances are starting to show strain. The nation’s foreign-exchange reserves have fallen 15% to $19.8bn this year as its traditional exports, such as textiles, dwindle and imports rise. The World Bank estimates that $17bn of external financing is needed in the next financial year for Pakistan to bridge its rising debt payments and current account deficit, the lender said last month.
Pakistan is planning to raise $1bn from a sukuk offering, and has mandated Citigroup, Standard Chartered, Deutsche Bank, Dubai Islamic Bank and Noor Bank to manage the sale and has picked Citigroup, Standard Chartered, Deutsche Bank and Industrial & Commercial Bank of China for a potential conventional bond offering of an equal amount, the people said.
The country’s finance secretary, Shahid Mahmood, said in August that an assessment was being made to issue either sukuk or bond of about $1bn by the second quarter of this fiscal year starting in June. That comes as Pakistan’s current account deficit is expected to widen to 5.7% of gross domestic product, from a deficit of 4.4% in 2016, according to the International Monetary Fund.
Pakistan’s finance ministry didn’t immediately respond to requests for comment.
National elections are expected to be held in the first week of August 2018, with the ruling party under pressure as its leader, former prime minister Nawaz Sharif, was barred from office by the Supreme Court in July following an investigation into his family’s finances. Sharif, along with Finance Minister Ishaq Dar, now face criminal charges and both deny any wrong-doing.

Riaz Haq said...


With nearly identical oppositional language now emanating from official and semi-official corridors in India and the United States, a bilateral consensus appears to be emerging.

Given New Delhi’s aspirations to become a great power, its reluctance to embrace projects that seem to advantage Beijing is understandable. But India’s strategic community — as well as U.S. analysts and policymakers influenced by New Delhi’s discourse — ought to revisit some of their complaints about the Belt and Road Initiative and the “closely related” China-Pakistan Economic Corridor (CPEC), as they largely do not hold up to scrutiny. These contentions revolve around a misplaced belief that China’s underlying goals are to exclusively dictate connectivity, deploy a strategic project disguised as an economic one, and redraw India’s borders. In fact, both the Belt and Road Initiative and CPEC are massive connectivity initiatives with a clear economic logic. Far from a coherent effort to establish China’s strategic dominance over its neighbors, the projects are in fact aimed at fueling the next generation of growth both in China and throughout the Eurasian and Indian Ocean regions.

Contention 1: China Is Dictating Connectivity

Along with Mattis, officials in New Delhi have argued that Beijing is aiming to dictate connectivity or impose on other countries a physical dependence on China-bound logistics networks for trade.

These claims wrongly presume a level of coherence to the Belt and Road Inititative as a business model or grand strategy. China-based or Chinese state-owned enterprises are investing in ports and special economic zones in relatively close proximity to one another: Abu Dhabi, Colombo, Duqm, Gwadar, Hambantota, and Karachi. With different project sponsors — the Duqm project in Oman, for instance, is led by companies based in the Ningxia Hui Autonomous Region — it’s unclear how these ports will compete with or complement one another. Rather than a grand strategic plan, the Belt and Road is perhaps better viewed as a series of asymmetrical parts — projects in dozens of countries that may or may not fit together a decade or two from now. As Alexander Gabuev at the Carnegie Moscow Center notes, the initiative “has become so inflated, that it’s no longer helpful in understanding anything about China’s relationship with the outside world.”

Perceptions of Belt and Road as a hegemonic venture also stem in part from its original name: the One Belt, One Road initiative. But Beijing dropped the word “one” from the initiative’s name in 2016 in response to these criticisms, renaming it simply the Belt and Road Initiative. While the change could be symbolic, it does suggest that Beijing is responsive to criticism and its approach toward the initiative can be influenced by external criticism. China is also careful to describe the Belt and Road as an “initiative” and not a “strategy” to emphasize that its objectives are economic, not military.

Riaz Haq said...


But neither Belt and Road nor CPEC is a strategic ploy masquerading as investments, as some allege. CPEC specifically has a real and powerful economic logic for Pakistan, China, and even India. The corridor does offer China some indirect strategic benefits — it consolidates Beijing’s alliance with Islamabad and reduces its dependence on the Malacca chokepoint. But CPEC is ultimately about economics. It not only raises the potential for cross-border Sino-Pak trade, it also enhances Pakistan’s ability to trade with the outside world beyond China. Most of the nodes that constitute the project’s road network bolster Pakistan’s domestic connectivity and with the outside world.

In fact, the aforementioned Karachi-Lahore Motorway resembles India’s own planned Delhi-Mumbai Industrial Corridor and runs parallel to it. Much like the Indian highway, the Karachi-Lahore Motorway cuts transport time between Pakistan’s two largest cities. There are also planned industrial zones along the route. And the Karachi-Lahore Motorway will be complemented by upgrades to Pakistan’s main rail line.

Not only do the two highways run parallel to one another, CPEC can potentially fill the gaps in between. For example, with the completion of the Karachi-Lahore Motorway in 2020, Karachi could be the fastest route to sea by road for traders in Amritsar in India’s Punjab state. Additionally, with the completion of the Karakoram Highway realignment, traders in northwestern India may also be able to access western China’s markets more readily through Pakistan, potentially reducing the trade deficit with China that India routinely complains about. While India often thinks of Pakistan as an overland trade route to Afghanistan, there is also potential for India-China transit trade through Pakistan.

Indian commentators, such as Singh, also describe the Gwadar port as a strategic project that is not economically viable. But in fact, that is a more accurate description of India’s Chabahar port project. Gwadar may be able to absorb some of China’s transshipment with the Persian Gulf and East Africa and host industries like mineral processing and petrochemicals. Meanwhile, Chabahar is oriented around Afghanistan, a narco-state whose documented economy has grown at an annual average 1.65% over the past four years, according to the World Bank. India has used Chabahar to send food aid to Afghanistan to bypass the Pakistan transit route and replace Pakistan as Afghanistan’s primary source of imported wheat. But the fact that Indian wheat had to be sent to Afghanistan fully subsidized indicates that the prospects for Chabahar-based Afghanistan trade are dim.

Riaz Haq said...


Others in this series have noted the need for more pragmatic realism in Pakistan’s foreign policy, but India too would benefit from a dose of realism about the gap between it and China and what it gains from absolute opposition to the Belt and Road Initiative. In terms of physical infrastructure, India is in many ways better positioned to be a beneficiary of multilateral support than a leader or lender. Its road infrastructure is at least a decade behind China’s. It needs Chinese, Japanese, and South Korean expertise in developing and financing road and high-speed railway networks. India, whose productivity pales in comparison to other large economies, also lacks the ability to build the successful industrial zones that are generally paired with thriving ports.

But India, along with Japan and South Korea, can compete with China on electric power projects and, perhaps down the road, on metro rail transport projects. India and Japan have had success in outcompeting China in Bangladesh’s power sector.

In a previous contribution to this series, Daniel Markey noted that “China’s deeper involvement in Southern Asia is stirring competitive Indian tendencies rather than cooperative ones.” A decade from now, India will have to assess what it has gained in opposing the Belt and Road Initiative and instead spending hundreds of millions of dollars on connectivity with countries like Afghanistan (assuming New Delhi fulfills its pledges on Chabahar). India may find itself to be the odd man out.

India’s interests and regional stability will be better served by a greater effort to look for economic convergences with China and Pakistan. That does not mean India should return to its pre-1962 war naivete and call for Sino-Indian brotherhood (Hindi-Chini Bhai Bhai). The two countries are and remain strategic competitors. But strategic competition has not inhibited trade between the two Asian giants, which grew from $2 billion to $70 billion from 2000 to 2014. India ought to view Chinese investments in Pakistan with similar pragmatism. And to unleash the region’s economic potential, New Delhi should engage Islamabad in dialogue to find pathways toward de-escalation in Afghanistan and Pakistani Balochistan, where India and Pakistan are engaged in shadow wars. By 2019, when the general elections in Afghanistan, India, and Pakistan are complete, deescalation can perhaps yield to a composite bilateral dialogue on resolving outstanding issues — including Kashmir — allowing South Asia’s two largest economies to redevote energy toward regional economic cooperation.

Riaz Haq said...

‘Constructive cooperation’
By M Ziauddin Published: January 13, 2018

Without disagreeing with the main argument by President Trump for suspending security assistance to Pakistan, The New York Times editorial on January 6th had come up with a sane suggestion that the president “…marshal other diplomatic tools, to see if more constructive cooperation with Pakistan is possible.” Stressing the point further, the editorial made an even saner and timely proposal that the president “harness his new friendship with the leaders of Saudi Arabia and United Arab Emirates to shut down Haqqani and other Taliban fund-raising efforts in the Persian Gulf.”

The argument that the bulk of funding that the Haqqanis and other Taliban factions have been receiving all these years is coming from Saudi Arabia and the UAE has never been in doubt. The regional currency market operators have been processing these transactions like normal business for ages without batting an eye.

During Pakistan’s ‘lost decade’ of the 1990s the real rulers of the day had used these funds to finance their military operations as well as their efforts at governance. These flows have continued even after 9/11 but this time these funds have been going straight to the Afghan Taliban, including Haqqanis fleeing to safe sanctuaries in Pakistan in the aftermath of second Afghan war which is now in its 17th year.


So, if the US wants to see a quick end to the Haqqanis and other Taliban factions using Pakistani soil to launch their murderous operations inside Afghanistan, it will have to persuade Saudi Arabia and the UAE to effectively move against these fund raisers in their respective countries and forcibly turn off the clandestine tap that is sustaining the firepower of Haqqanis.


And those in the US who believe Pakistan has effectively bribed the international community with the spectre that any instability could result in terrorists getting their hands on Pakistani nuclear technology, fissile materials, or a weapon are totally off the mark as well. It is not Pakistan but these misguided US political pundits who have cultivated a global fear that Pakistan is too dangerous to fail.

Indeed, even a complete stoppage of the US aid most of which has come in the form of grant or at concessional rates would not hurt the country’s economy seriously because the US has been siphoning back 99 cents from each of its aid dollar in the shape of consultancy fees, shipping charges and transfer pricing resorted to while importing goods and services from the US as per conditions hidden in the fine print of the aid agreements. So, the Chinese loans if not any more beneficial for Pakistan than the US grants, would not be any less beneficial as well.

Of course, Pakistan would be seriously hurt if the multilateral aid agencies under the influence of the US were to stop offering the country a helping hand in times of economic crises which we experience on a regular basis.

Riaz Haq said...

CERC Sets ₹3.48/kWh as the National Average Power Purchase Cost for Open Access in India

The Central Electricity Regulatory Commission (CERC) has set the national average power purchase cost (APPC) at ₹3.48 (~$0.0542)/kWh, barring a few states for open access. According to CERC the APPC will apply during the financial year (FY) 2017-18 and until further orders for deviation settlement with respect to open access.

Regional entities selling open access (large power consumers of 1 MW or more purchasing power in the open market) wind or solar power under REC framework and captive power projects that do not have a power purchase agreement will use APPC for settlement.

The new national APPC is ₹0.08 (~$0.0013) higher than the national APPC for FY 2016-17, which was ₹3.40 (~$0.0529)/kWh. The updated APPC will not apply to the states of Tamil Nadu, Tripura, Delhi, Jharkhand, Gujarat, Maharashtra, Assam, Kerala, and Rajasthan.

The total power purchase cost considered when computing the APPC excluded both transmission charges and the cost of generation or procurement from renewable energy sources. The national APPC for FY 2017-18 was determined by computing the average APPC for all states and union territories (UTs) weighted by the volume of the conventional power purchased by the respective state/UT.

In cases where multiple utilities operate in a single state, the state’s average power purchase cost was weighted by the total power for respective utilities to compute APPC for the entire state.

In its order, the CERC stated that since the state electricity regulatory commissions (SERCs) for a few states/UTs have not issued APPC orders or tariff orders in past financial years, the new APPC will not apply to those states.

Meanwhile, the APPC determined in FY 2014-15 will apply in Tamil Nadu and Tripura and the APPC determined in the FY 2015-16 tariff order will apply in Delhi and Jharkhand. The CERC added that the APPC applicable for Rajasthan distribution companies will be ₹3.4266 (~$0.0534)/kWh, in step with a new tariff order issued by the Rajasthan Electricity Regulatory Commission (RERC).

In the states of Gujarat, Maharashtra, Assam, and Kerala, the tariff order for FY 2016-17 will be applied as the APPC.

The CERC invited comments from stakeholders on the national APPC determination but received none.

Riaz Haq said...

This year's downturn in India followed the country's first reverse auction in February, which saw tariffs crashing to INR 3.42/kWh ($0.052/kWh). In comparison, feed-in-tariffs across the states at the time were INR 4-6/kWh ($0.06-$0.09/kWh).

The fallout was swift, with nearly all states discouraging or stopping feed-in-tariff (FIT)-based purchasing. Industry experts saw the low tariff as an anomaly, despite the second wind auction pushing prices down even further to INR 2.64/kWh ($0.04/kWh).

The government is planning additional auctions — for as much as 6GW in the next four months. However, wind-power developers and manufacturers are having to cope with the impacts of the sudden downturn.

Perhaps most notably affected was Siemens Gamesa Renewable Energy (SGRE), which has struggled over the past nine months, blamed, in part, on the market downturn. Prior to the merger between the two major European OEMs, Gamesa was the leading manufacturer in India.

Riaz Haq said...

Who’s Afraid of China

Ishrat Husain is a former dean and director of IBA and a former governor of the State Bank of Pakistan.

The foremost singular contribution that has already made a significant and visible difference is the addition of 10,000MW to the generation capacity in Pakistan, in a span of four years. It has overcome chronic energy shortages, altered the fuel mix, and substituted plants with 61 per cent efficiency factor in place of those operating at 28 per cent, bringing down the cost to consumers. Electricity outages had cost the economy about 1.5 to 2 percentage points of the Gross Domestic Product (GDP). Export orders were cancelled and the buyers walked out of Pakistan as their traditional suppliers could not fulfil the orders on time, due to energy shortages. The value of exports took a dip, precipitating a balance of payments crisis. As new hydel, renewable, coal-based projects come on board, there will be a corresponding shrinking of imports of furnace oil and diesel.

The associated risk of an additional supply of power is that unless we restructure or privatise the distribution companies, or make the power distribution sector competitive, the circular debt would keep on rising. Distribution losses and non-recovery of dues have put enormous pressure on public finances, and the subsidies on this account may escalate if institutional reforms are not undertaken.

The second area that would benefit Pakistan is the construction of highways and the railway line linking Gwadar with Kashgar and the mass transit systems within big cities. The rehabilitation and upgrading of the main railway line with high speed trains, would relieve businesses of the high cost of domestic transportation of goods to and from Karachi (at present, the bulk of the freight is carried by a trucking fleet). The inner city mass transit systems in Lahore, Peshawar, Karachi and Quetta, would provide safe and affordable public transport to the citizens, who face inconvenience and spend a lot of time and money in commuting to work. The reduced travel time and saving in transportation expenses would increase their productivity and also augment the purchasing power of the lower income and the lower middle-income group.

The western route would open up backward districts in Balochistan and southern Khyber-Pakhtunkhwa (KP) and integrate them with the national markets. The communities living along the route would be able to produce and sell the output from their mining, livestock and poultry, horticulture and fisheries, to a much larger segment of consumers. Their transportation costs would become considerably lower, the proportion of perishables and waste would go down, cool chains and warehousing would become available and processing would become possible in the adjoining industrial zones. Access to a large trucking fleet and containers, with greater frequency and reduced turnaround, time may help in the scaling-up of operations. The fibre optic network would allow the citizens of these deprived districts access to the latest 3G and 4G broadband Internet connections.

Riaz Haq said...

#China’s #loans to #Pakistan should drive #economic development, boost its #manufacturing, #exports and #debt repayment ability. #CPEC - Global Times

Pakistan expects to obtain $1 billion to $2 billion of fresh Chinese loans to help it avoid a balance-of-payments crisis, Reuters reported. Some observers hope China's economic assistance will help the country avoid having to go to the IMF for a bailout, but the key issue is the sustainability of China's financial help.

China will not be stingy in offering help to Pakistan to strengthen its infrastructure, but China's bank loan is a market-driven commercial decision in line with international practices. The main point is Pakistan's debt repayment ability.

China-based financial organizations stick to a principle of not imposing additional political conditions when providing loans to other countries, distinguishing them from most Western financial institutions like the IMF.

This might be one reason why Chinese loans are welcomed in Pakistan. China is likely to continue to finance new projects in the country but will also assess their debt repayment ability to avert the risk of bad debt. After all, Chinese loans to Pakistan are not a gift.

The multi-billion dollar China-Pakistan Economic Corridor (CPEC) has begun to bring tangible benefits to Pakistan's economy, which is likely to boost Pakistan's debt repayment ability. It's possible that we're entering a virtuous cycle in which Chinese loans promote the development of the CPEC, and this then improves Pakistan's debt repayment ability. However, the South Asian country may need to propel economic reforms to ensure the effectiveness of the loans and allow the local economy to benefit more from CPEC projects.

It is hoped that people will learn a lesson from the IMF's operations. In 2013, the IMF approved a loan plan for Pakistan to support its program to stabilize and rebuild the economy, but the multilateral lender failed to strictly monitor the use of the loans, and in the end they did little for Pakistan's economic development.

Now Pakistan's economy is on an upswing with the help of Chinese loans. Nadeem Javaid, who advises Prime Minister Nawaz Sharif's government and works closely on the CPEC program, was quoted by Reuters as saying last year that debt repayments and profit repatriation from CPEC projects will reach $1.5 billion to $1.9 billion in 2019, rising to $3 billion to $3.5 billion by the following year.

China is likely to strengthen economic collaboration with Pakistan under the CPEC program, in a bid to ensure the effectiveness of the loans. The key to stronger cooperation between the two countries lies in how to improve Pakistan's economic innovation capability and allow the country to develop its own capacity for long-term economic sustainability.

China's loans to Pakistan essentially aim to drive Pakistan's economic development, and thus the loans should be offered in a way that aligns with the local economy and helps restructure the South Asian economy and boost its manufacturing and exports.

Riaz Haq said...

Former 'Economic Hitman' Reveals to Sputnik How CIA, NSA Conceal Activities

Sputnik: Mr. Perkins, how did you know that your employer executed orders from the CIA and the
NSA? Was that a moment of truth?
John Perkins: I need to clarify – I never worked directly for intelligence agencies. As for the company I worked
for, I can say that we received orders from the World Bank or the US Agency for International Development
(USAID) or through the Treasury Department. We had an agreement on Saudi Arabia with the Treasury
So, my company received money from these institutions and, in my turn, I received a salary from the
company. We never had real contacts with the NSA and the CIA. All operations ran through some mediating
contracts, mediators and subcontractors, at least as far as I know.
My contacts with the NSA were rather mediated. The person who hired me at Chas T. Main was in the US
military reserve and, possibly, he had contacts with US intelligence. So, our contacts were not direct.
(Chas T. Main was an American consulting company headquartered in Boston. Perkins was a senior
economist and economic adviser there. His job was to arrange credits from the World Bank for developing
countries, making their governments dependent on American companies. In addition, loans were used
to pressure those governments toward American political and economic interests. Read more on the issue
in the rst
part of the interview with John Perkins.)
Sputnik: So, you didn’t meet CIA or NSA operatives as part of your work?
John Perkins: Maybe, I met some of them, but they didn’t identify themselves. It is normal for intelligence
agencies ocers.
They don’t have visiting cards and usually work under ocial
cover, including as diplomats,
trade representatives in embassies or employees in private companies. So, I never met a person who I knew
was a CIA or NSA agent, but I can suggest that there were some of them in my work.
Sputnik: What is the current role of intelligence agencies in the global economy?
John Perkins: The NSA, the CIA and other agencies often employ representatives of the economic world, just
like the NSA did to me. Why? This is the perfect cover. In other words, they employ business representatives
who secretly work for intelligence agencies.
I never got paid from the NSA or the CIA. I always got paid by my employer, Chas T. Main. In its turn, the
company received money from those agencies for certain infrastructure projects in undeveloped countries.
Thus, the government could always say it was not involved and was not aware of those activities while private
companies did the job.
Sputnik: Why did you quit?
John Perkins: In the rst
years, I thought that my job was a good business for all, including for developing
countries. We invested money there and those countries really developed, which was proved by statistic data.
But in course of time, I realized thatonly certain rich local families and American companies, including my
company, were getting benet
from those investments.
When a country, like Ecuador or Indonesia, received a loan there was a must that the money could be used
on infrastructure only with the participation of American companies, such as Halliburton and General Electric;
and local oligarchy was also involved.

Riaz Haq said...

Former 'Economic Hitman' Reveals to Sputnik How CIA, NSA Conceal Activities

Sputnik: What happened after you quit?
John Perkins: My former employer did their best to convince me to stay. But I nally
resigned and started
writing a book about what I did. I talked to other people in this business, so-called "jackals." They were called
when we, "economic hit men," failed to convince the government of a country to cooperate. "Jackals" used
coups, mutinies or even assassinations to topple governments that refused to cooperate.
After I quit, I received threats, including against my family and my daughter. I also received a quite tempting
from another consulting company, a rival of my former employer. They told me: "Accept our oer
don’t write the book." At the time, I felt some pressure and started writing other books. And many years later,
I wrote "The Confessions of an Economic Hit Man," my most famous book.
Sputnik: In the rst
part of our interview, you already said that you want to change the world. Please,
tell us what you are doing? What is the main goal of your organization Dream Change?
John Perkins: Dream Change is a non-commercial organization I co-founded. Our goal is to change the dream,
to change the paradigm of "predatory capitalism." Our goal is to change perception. We need to realize that
our reality is determined and formed by perception. … Everything exists because people perceive it in this
very particular way. When a lot of people have the same vision of one or another thing this begins
to inuence
the reality. My goal now is to change this vision.
We know that the world is in a deep crisis today. The world has been caught in the trap of the currently
economic and military systems that pose a threat to the whole planet. But the reason is that global
corporations that control the world ignore the negative consequences of their actions. I want to help change

Riaz Haq said...

22 projects worth $28.6 billion under implementation: Dr Shamshad
It is up to the new government after the elections to decide and sign agreements for long-term loan programmes, says finance minister

Minister for Planning Development and Reform Dr Shamshad Akhtar, while briefing media after the 55th progress review meeting on CPEC projects held here on Tuesday, said apart from the investment on energy and infrastructure projects $8.2 billion is also being invested in railways under which the mega project of ML-1 would be completed. The work on this important project will soon be started, she added.

According to her, numbers of projects initially approved to be completed under the CPEC were still undergoing design and feasibility studies. The major development was being witnessed at Gwadar where huge investment was being made on infrastructure development.

In reply to a query, she said fast-track work on industrial zones was much needed. Previously the industrial zones failed to give the desired results for several reasons, however, a better strategy was being followed through by the Board of Investments (BoI) to ensure the success of such zones in future.

Shamshad Akhtar said that some delay has occurred in the construction of Special Economic Zones (SEZs) in the country due to lack of experience in this sector. She said that China has experience in this sector and the world largest exporter would cooperate and help Pakistan in establishing SEZs. She added that work is underway on nine industrial zones.

In reply to a query regarding International Monetary Fund (IMF), the minister said that caretaker government would not take long-term decisions. It would follow all bilateral commitments made by the previous government with China, she said. She added that it is up to the new government after the election to make decisions and sign agreements for long-term programmes.

She said that there are some concessional loans, soft loans and grants as well as Pakistan’s own expenditures for CPEC projects. “It would not be appropriate for me to say something more about it,” she said.

She said on the request of Pakistan, China has assured to soon start work on new Gwadar International Airport as well as East Bay Expressway.

She further highlighted that Pakistan and China bilateral relations are time-tested, as we have a long history of cordial, friendly and strategic cooperation in all areas and domains. Friendship with China is the cornerstone of Pakistan’s foreign policy and strategic cooperative partnership is moving from strength to strength, she underscored.

Dr Shamshad reassured China of full cooperation and support in promoting unparalleled partnership under the CPEC and Belt and Road Initiative (BRI) framework.

She emphasized to further expedite work on projects at Gwadar and SEZs that are not only of vital importance in the portfolio of CPEC but for the local population as well. She was of the view that one of the main gains from CPEC is the trade and industry development and cooperation to ensure sustainable economic growth and shape new industry clusters as well as takes fruits of CPEC to lesser developed regions of Pakistan.

She pointed out that both countries need to aggressively pursue the mega initiative to shape a new international logistics network in the region and promote regional economic integration through international economic, trade and technological cooperation and people exchanges. She further said that the two countries will make full use of existing bilateral cooperation mechanisms to form synergy, give each other support and learn from each other to complement and fully display each other’s strengths.

Federal Minister Dr Shamshad further underlined to continue in this pursuit so that we can bring transformational changes in our approach towards ease of doing business which will be key to attracting foreign direct investment (FDI).

Riaz Haq said...

"According to data released by GOP, 42% of foreign debt of PAK is from multilateral financial institutions, 18% is from Paris Club. Chinese preferential loan only account for 10% of whole foreign debt.Who is real initiator for Debt crisis? What’s the conspiracy behind the article?"
Chinese Emb Pakistan added

This was a response to a Wall Street Journal story claiming " China’s Global Building Spree Runs Into Trouble in Pakistan"

"Three years into China’s program here, Pakistan is heading for a debt crisis, caused in part by a surge in Chinese loans and imports for projects like the Orange Line, which Pakistani officials say will require public subsidies to operate."

Riaz Haq said...

#Pakistan hits back at #US for what it says are attempts by the US to use the country’s impending economic crisis to drive a wedge between #Islamabad and #Beijing. #CPEC #China #IMF #economy

Pakistani officials have criticised what they say are attempts by the US to use the country’s impending economic crisis to drive a wedge between Islamabad and Beijing.

Officials in Islamabad have accused Washington of trying to strong-arm Pakistan into scaling back billions of dollars’ worth of Chinese investment in their country’s infrastructure as part of a potential bailout by the IMF.

One senior Pakistani government adviser told the Financial Times: “The US is trying to spoil China's biggest contribution to our future.”

Another added: “The Americans are trying very hard to put pressure on Pakistan because they have their own interests. But making it so hard for Pakistan to successfully negotiate a new program with the IMF makes no sense. Ultimately, Pakistan will search for other options if the road to the IMF is blocked.”

The Financial Times revealed this week that Pakistani officials had drawn up plans to ask the IMF for a $12bn bailout soon after Imran Khan comes to power as the country’s new prime minister. Pakistan is suffering an acute shortage of foreign reserves after years of high imports and low exports have taken their toll.

But even before Pakistan even makes a request, there are signs of resistance from the US, which is the IMF’s biggest shareholder.

Mike Pompeo, US secretary of state, on Monday warned the IMF not to grant a bailout to Pakistan that would compensate Chinese investors in Pakistani projects.

Mr Pompeo told CNBC: “We will be watching what the IMF does. There is no rationale for IMF tax dollars, and associated with that American dollars that are part of the IMF funding, for those to go to bail out Chinese bondholders or China itself.”

His remarks were echoed in a blog post published by Mark Sobel, a former US representative to the IMF. Mr Sobel said: “The fund needs to have at its fingertips comprehensive data on all China-Pakistan Economic Corridor lending [a showpiece Chinese infrastructure programme] — its terms, maturities, and parties involved. Chinese lending should be on realistic terms and consistent with Pakistan’s sustainability.”

He added: “Otherwise, China should reschedule or write down its loans, sharply reducing the value of its claims.”

Beijing is planning to invest about $60bn in its southern neighbour as part of a wider plan by President Xi Jinping to establish a new silk road of global trading routes. It has so far refused to publish any details of the terms of those loans however.

While Islamabad says the project will revolutionise Pakistan’s infrastructure, there are signs it is creating short-term economic problems, with loan repayments further depleting its foreign currency reserves.

Belt and Road, or debt trap?
Earlier this month, the Wall Street Journal revealed Pakistan had fallen behind on some of its payments, including plans to build new power plants.

Beijing has not yet commented on the potential terms of an IMF bailout for Pakistan. Geng Shuang, a spokesman for the Chinese foreign ministry, said when asked about how the fund would deal with Pakistan: “I believe they will handle it appropriately.”

But any demands by the US for China to publish the terms of its CPEC loans, as well as to scale back its investments and even write some down, could set up a bruising clash between Beijing and Washington. China is the second-biggest shareholder in the IMF, but does not have a veto on its board-level decisions.

For now, China is continuing to keep Pakistan afloat with short-term lending. According to local reports, Beijing has agreed to lend Islamabad a further $2bn since last week’s election, adding to the $5bn Pakistan borrowed from Chinese commercial banks in the previous financial year.

Riaz Haq said...

Tillman highlights successes of BRI, CPEC projects
Henry Tillman, in a comprehensive presentation made on the Belt and Road Initiative (BRI) and the China-Pakistan Economic Corridor (CPEC) at the Ministry of Foreign Affairs on Friday, outlined the impressive successes and milestones achieved by CPEC.

Tillman, Chairman and Chief Executive Officer, Grisons Peak Investment Bank, UK, is an authority on BRI & CPEC and other Chinese economic initiatives the world over, said a press release issued here. The event which was hosted by Foreign Minister Abdullah Hussain Haroon, was attended inter alia by Minister for Finance, Dr Shamshad Akhtar; Minister for Law and Justice Syed Ali Zafar, Ambassador of People's Republic of China to Pakistan, HE Yao Jing, CEOs of Chinese Companies and senior government officials. A large number of members of Islamabad's think tank community and academia also participated

In his remarks at the occasion, Foreign Minister Abdullah Hussain Haroon said that Pakistan-China relations were a shining example of win-win cooperation. He commended President Xi Jinping's visionary Belt and Road Initiative and CPEC as the flagship project of BRI. He stressed that CPEC had added a practical dimension to the strategic partnership between the two countries. Through its energy and infrastructure projects, CPEC has already started yielding dividends for Pakistan.

Agreeing with the Foreign Minister, Tillman highlighted the successes of BRI and CPEC projects and their economic impact. He said that CPEC was benefiting Pakistan in practical terms especially in the energy and infrastructure sectors. Several power projects had been completed and a number of roads had been built. Many projects in energy and infrastructure were in completion phases. CPEC would generate 800,000 jobs.

Tillman also highlighted the expected positive spillover impact of BRI and CPEC on FDI from other countries, as well as development of Pakistan's construction, manufacturing, tourism and e-commerce sectors. He focused on the tremendous opportunities to be made available through the Special Economic Zones, which were already attracting international interest and could act as catalysts for accelerated economic and industrial growth.

Appreciating the success of CPEC, Tillman opined that in comparison to other BRI corridors Pakistan had done well in fast tracking CPEC, due to which negativity about Pakistan was dissipating, many major companies were coming to Pakistan, revenue was being generated and new opportunities for investment were opening up.

President Xi Jinping had shown his full confidence in Pakistan by committing to invest more than US $ 60 billion through CPEC. He stressed that Pakistan had the gift of being ahead of everyone else involved in BRI. The event is part of Ministry of Foreign Affairs' ongoing efforts to highlight the positive impact of CPEC on Pakistan's economy and its importance for regional connectivity.-PR

Riaz Haq said...

#IMF Official: #CPEC #energy #infrastructure projects have helped #Pakistan deal with acute shortages of power. She said the #debt sustainability analysis showed that CPEC loans were manageable, but the country’s overall debt situation was not sustainable.

The International Monetary Fund (IMF) said on Monday that it had full access to borrowing and maturity terms of the China-Pakistan Economic Corridor (CPEC) projects and its loans were manageable.

Addressing Senior Journalists’ Forum at the National Press Club, IMF resident representative in Islamabad Teresa Daban Sanchez counted issues relating to the Financial Action Task Force (FATF), provincial spending behaviours and insufficient parliamentary strength of the government as key risks to its $6 billion 39-month bailout programme.

She said Pakistan had shared full details of CPEC loans with the IMF, adding that CPEC was mostly private sector investment in energy and infrastructure. In reply to a question, the IMF official said energy projects had no doubt helped the country deal with acute shortages of power and this was a very positive aspect. She said the debt sustainability analysis showed that CPEC loans were manageable, but the country’s overall debt situation was not sustainable.

Responding to a question, Ms Sanchez said fiscal consolidation and revenue mobilisation, market-based exchange rate and social sector protection were three basic pillars of the new IMF programme, adding that fiscal consolidation should be revenue-oriented to deal with the problems of fiscal deficit because the country had a very low tax-to-GDP ratio and needed to increase revenue which was being done through removing tax exemptions and privileges.

The IMF official said there was a strong need for greater coordination with the provinces to ensure that they spent less and provided budget surplus to the federal government. She said the IMF did not place any condition to bring changes in the National Finance Commission’s resource distribution formula, but it did get a commitment of fiscal federalism under a memorandum of understanding signed by the federal and provincial governments on revenue surplus and harmonisation of taxes for improved revenue collection.

Ms Sanchez said one of the most important pillars of the IMF programme was the market-based exchange rate, with the central bank in the background, to achieve price stability through forward looking actions to deal with inflation.

Speaking about key reforms in the programme, she enumerated implementation of financial management to instill fiscal discipline in the public sector, autonomy to the central bank, energy sector improvement, strengthening of anti-corruption agencies and compliance with the FATF.

Riaz Haq said...

#China-#Pakistan Economic Corridor #CPEC to be enhanced in 2nd phase. #Industrial development, #agriculture , #food security, #science and #technology , and #tourism will be major sectors in this phase, according to Gen Asim Saleem Bajwa. | The Star Online

The China-Pakistan Economic Corridor (CPEC) is making steady progress, and its scope will be further enhanced in the second phase, the chairman of the CPEC Authority in Pakistan said.

The industrial development, agriculture, food security, science and technology, and tourism will be the major sectors in the second phase of the multi-billion-dollar project, Chairman Asim Saleem Bajwa said in a tweet on Wednesday.

Many projects focusing on infrastructure and energy sectors in the first phase of CPEC have been completed and are already operational, and work on the second phase is underway.

Talking to Xinhua, Vaqar Ahmed, joint executive director at the Sustainable Development Policy Institute, an Islamabad-based think tank, said the foreign direct investment by Chinese companies in the special economic zones under CPEC, is expected to be the major contributor to the uplift of Pakistan's economy in the post COVID-19 scenario.

The process of formation of joint ventures between the private sectors of the both countries has already been initiated, and will get a further boost when things got back to normal after the disease is defeated.

Riaz Haq said...

ADB study stresses economic corridor development to transform Pakistan's economy

Explaining the rationale behind selecting the routes, the study said: "[They] offer real untapped economic potential with opportunities to diversify; good development synergy for linking production networks especially small and medium-sized enterprises with markets and other economic agents; close links to the CPEC (China-Pakistan Economic Corridor) and Carec (Central Asia Regional Economic Cooperation) routes; and favourable prospects for connecting and realising the economic potential of underdeveloped regions in Balochistan and Khyber Pakhtunkhwa."

Maximising CPEC benefits
The study also touched upon CPEC and said that it could pull off a number of economic objectives if it was implemented successfully.

However, it cautioned that CPEC alone could not improve the economy and would need to be supported by structural reforms to unleash its true potential.

The ADB report suggested four policy recommendations to fully benefit from CPEC.

Undertaking structural reforms to facilitate private sector development.
Broadening the tax base to make use of the country's tax revenue potential and improve fairness of tax collection.
Utilising transport infrastructure under CPEC to maximise investment return and turn it into a multilateral initiative.
Expediting development of nine special economic zones planned along CPEC routes.

Riaz Haq said...

ADB study stresses economic corridor development to transform Pakistan's economy

Pakistan has the potential of becoming a hub of economic activity for Central, South and West Asian countries if it follows the model of economic corridor development (ECD), the Asian Development Bank said in a study released on Wednesday.

The ADB study, titled "Economic Corridor Development in Pakistan: Concept, Framework, and Case Studies", examined how Pakistan could address economic challenges through ECD.

In the foreword, ADB Central and West Asia Department Director General Eugene Zhukov noted that Pakistan had not yet been able to attain a sustained growth path "to move beyond its historic lacklustre and stop-and-go pattern, characterised by 'booms and busts' every three to four years".

"Through market reforms, Pakistan needs to transform its economy into an export-led growth trajectory. In addition to improving the economy’s competitiveness and productivity with a vibrant private sector, it is critical to attracting domestic and foreign investments to support this transformation," he said.

The official went on to say that Pakistan had already adopted and implemented an ECD-focused strategy as part of its core development and growth framework.

"ECD can be one of the most credible ways to help the government achieve its socio-economic objectives of reaching the upper-middle-income status by 2025," Zhukov said.

However, he cautioned that private sector development and a fair and efficient tax system were also required for transforming the economy to export-led growth.

Defining ECD, the study said that it aimed to promote economic growth by connecting different economic agents along defined geographic areas.

When implemented successfully, ECD supports economies of scale and scope and induces economic transformation and diversification through foreign direct investment.

"By enhancing domestic connectivity and linking lagging regions [including secondary cities] with urban growth centres, ECD can help Pakistan become a hub of economic activity for Central, South, and West Asian countries," the study said.

It stated that the country could "revitalise" its economic growth through facilitating economic centres by bolstering them with an efficient transport network based on "robust infrastructure and supported by a business-enabling policy framework".

However, it pointed out that Pakistan currently lacked the administrative machinery for effectively managing ECD.

"Its complex tax administration and compliance requirements impede growth and expansion of private investment, project management and implementation are weak, and a coherent regulatory framework for land use and urban development is lacking."

The study proposed several recommendations which could enable Pakistan to tackle these challenges:

Empowering a central corridor planning and development agency to oversee the overall development and management of ECD.
Strengthening an overall policy framework for ECD, including streamlining policies for transport, logistics, public-private partnerships, land use, zoning regulations, business regulatory framework and taxation regimes.
Providing institutional support for skills development to align labour force skills with industry needs.
Link current industrial clusters and urban areas with new industrial hubs and urban centres through infrastructure networks.
Seeking ways to channel partial resources from overseas Pakistanis into profitable investment ventures to fund ECD-related projects.
The study also identified four routes that could be used for a pilot ECD programme: M4 Motorway linking Faisalabad and Multan, N70 (national highway) connecting Multan and Killa Saifullah, N50 (national highway) linking Dera Ismail Khan and Kachlak, and the Hazara Motorway (E35 Expressway) from Islamabad to Mansehra.

Riaz Haq said...

#China Agrees to rollover a whopping $4.2 billion in #Pakistan #debt. The request for rollover was reportedly made by Prime Minister #ImranKhanPTI during his meeting with #Chinese President #XiJinping last month at #WinterOlympics. #CPEC #economy #PTI

China on Wednesday acceded to Pakistan's request to rollover a whopping $4.2 billion debt repayment to provide a major relief for its all-weather ally, which is reeling under major economic crisis.

Chinese Foreign Minister Wang Yi in his meeting with Pakistan counterpart Shah Mehmood Qureshi on the sidelines of the 3rd meeting of the 'Foreign Ministers of Neighbouring Countries of Afghanistan' in China's eastern Anhui province has conveyed Beijing's decision to rollover the debt.

In a video message, Qureshi said Wang has conveyed China's decision to rollover Pakistan $4.2 billion to enable Islamabad to tide over the current economic crisis.
"I am immensely happy to share that the Chinese FM has given a nod of approval on the rollover of commercial loan as well," Qureshi was quoted as saying by Pakistan daily Dawn.

The USD 4.2 billion debt, which was maturing this week, has been rolled over providing major financial relief to Pakistan, the daily reported.

"The procedural formalities are being completed by relevant authorities. An announcement will be made as soon as they're sorted," Qureshi said.
The request for rollover was reportedly made by Pakistan Prime Minister Imran Khan during his meeting with Chinese President Xi Jinping here last month to attend the opening ceremony of the Beijing Winter Olympics.

Pakistan continues to undergo a huge economic crisis despite heavy investment by China in the $60 billion China Pakistan Economic Corridor (CPEC). In addition to Pakistan, Sri Lanka, a major recipient of Chinese loans and investments, too has asked China to reschedule its debt as it is going into a crippling financial crisis.

China is considering a fresh request from Sri Lanka for a loan of USD one billion and a credit line of USD 1.5 billion, Chinese Ambassador to Sri Lanka Qi Zhenhong told the media in Colombo last week. He, however, was silent about Sri Lankan President Gotabaya Rajapaksa's request for rescheduling of debt repayments.

Riaz Haq said...

#US led #G7 to raise $600 billion to counter #China's #Belt-#Road that involves #infrastructure development in over 100 countries. #Biden, other G7 leaders relaunch newly renamed "Partnership for Global Infrastructure and Investment". #CPEC #Pakistan

Group of Seven leaders on Sunday pledged to raise $600 billion in private and public funds over five years to finance needed infrastructure in developing countries and counter China's older, multitrillion-dollar Belt and Road project.

U.S. President Joe Biden and other G7 leaders relaunched the newly renamed "Partnership for Global Infrastructure and Investment," at their annual gathering being held this year at Schloss Elmau in southern Germany.

Biden said the United States would mobilize $200 billion in grants, federal funds and private investment over five years to support projects in low- and middle-income countries that help tackle climate change as well as improve global health, gender equity and digital infrastructure.

"I want to be clear. This isn't aid or charity. It's an investment that will deliver returns for everyone," Biden said, adding that it would allow countries to "see the concrete benefits of partnering with democracies."

Biden said hundreds of billions of additional dollars could come from multilateral development banks, development finance institutions, sovereign wealth funds and others.

Europe will mobilize 300 billion euros for the initiative over the same period to build up a sustainable alternative to China's Belt and Road Initiative scheme, which Chinese President Xi Jinping launched in 2013, European Commission President Ursula von der Leyen told the gathering.

The leaders of Italy, Canada and Japan also spoke about their plans, some of which have already been announced separately. French President Emmanuel Macron and British Prime Minister Boris Johnson were not present, but their countries are also participating.

China's investment scheme involves development and programs in over 100 countries aimed at creating a modern version of the ancient Silk Road trade route from Asia to Europe.

White House officials said the plan has provided little tangible benefit for many developing countries.

Biden highlighted several flagship projects, including a $2 billion solar development project in Angola with support from the Commerce Department, the U.S. Export-Import Bank, U.S. firm AfricaGlobal Schaffer, and U.S. project developer Sun Africa.

Together with G7 members and the EU, Washington will also provide $3.3 million in technical assistance to Institut Pasteur de Dakar in Senegal as it develops an industrial-scale flexible multi-vaccine manufacturing facility in that country that can eventually produce COVID-19 and other vaccines, a project that also involves the EU.

The U.S. Agency for International Development (USAID) will also commit up to $50 million over five years to the World Bank’s global Childcare Incentive Fund.

Friederike Roder, vice president of the non-profit group Global Citizen, said the pledges of investment could be "a good start" toward greater engagement by G7 countries in developing nations and could underpin stronger global growth for all.

G7 countries on average provide only 0.32% of their gross national income, less than half of the 0.7% promised, in development assistance, she said.

"But without developing countries, there will be no sustainable recovery of the world economy," she said.

Riaz Haq said...

CPEC Results According to Wang Wenbin of China

Bilal I Gilani
CPEC projects are creating 192,000 jobs, generating 6,000MW of power, building 510 km (316 miles) of highways, and expanding the national transmission network by 886 km (550 miles),” Foreign Ministry spokesman Wang Wenbin told reporters in Beijing."

Associated Press of Pakistan: On July 5, Prime Minister Shahbaz Sharif while addressing a ceremony to mark a decade of signing of the China-Pakistan Economic Corridor (CPEC), said that CPEC has been playing a key role in transforming Pakistan’s economic landscape. He also said that the mega project helped Pakistan progress in the region and beyond. What is your response?

Wang Wenbin: The China-Pakistan Economic Corridor (CPEC) is a signature project of China-Pakistan cooperation in the new era, and an important project under the Belt and Road Initiative. This year marks the 10th anniversary of the launch of CPEC. After ten years of development, a “1+4” cooperation layout has been formed, with the CPEC at the center and Gwadar Port, transport infrastructure, energy and industrial cooperation being the four key areas. Projects under CPEC are flourishing all across Pakistan, attracting USD 25.4 billion of direct investment, creating 192,000 jobs, producing 6,000 megawatts of electric power, building 510 kilometers of highways and adding 886 kilometers to the core national transmission network. CPEC has made tangible contribution to the national development of Pakistan and connectivity in the region. China and Pakistan have also explored new areas for cooperation under the framework of CPEC, creating new highlights in cooperation on agriculture, science and technology, telecommunication and people’s wellbeing.

China stands ready to work with Pakistan to build on the past achievements and follow the guidance of the important common understandings between the leaders of the two countries on promoting high-quality development of CPEC to boost the development of China and Pakistan and the region and bring more benefits to the people of all countries.

Riaz Haq said...

The mega undertaking (China-Pakistan Economic Corridor or CPEC) has created nearly 200,000 direct local jobs, built more than 1,400 kilometers (870 miles) of highways and roads, and added 8,000 megawatts of electricity to the national grid, ending years of blackouts caused by power outages in the country of 230 million people.

Chinese Foreign Ministry spokesman Wang Wenbin told reporters in Beijing earlier this month that CPEC projects "are flourishing all across Pakistan," making a "tangible contribution" to the national development of the country and to regional connectivity.

But critics say many projects have suffered delays, including several much-touted industrial zones that were supposed to help Pakistan enhance its exports to earn much-needed foreign exchange.

The country's declining dollar reserves have prevented Islamabad from paying Chinese power producers, leading to strains in many ties.

Pakistan owes more than $1.26 billion (350 billion rupees) to Chinese power plants. The amount keeps growing, and China has been reluctant to defer or restructure the payment and CPEC debts. All the Chinese loans – both government and commercial banks – makeup nearly 30% of Islamabad's external debt.

Some critics blame CPEC investments for contributing to Pakistan's economic troubles. The government fended off the risk of an imminent default by securing a short-term $3 billion International Monetary Fund bailout agreement this month.

Security threats to its citizens and interests in Pakistan have also been a cause of concern for China. Militant attacks have killed several Chinese nationals in recent years, prompting Beijing to press Islamabad to ensure security measures for CPEC projects.

Diplomatic sources told VOA that China has lately directed its diplomats and citizens working on CPEC programs to strictly limit their movements and avoid visiting certain Pakistani cities for security reasons.

"They [Chinese] believe this security issue is becoming an impediment in taking CPEC forward," Senator Mushahid Hussain, the chairman of the defense committee of the upper house of the Pakistani parliament, told VOA in an interview earlier this month.

"Recurring expressions of concern about the safety and security of Chinese citizens and investors in Pakistan by top Chinese leaders indicate that Pakistan's promises of 'foolproof security' for Chinese working in Pakistan have yet to be fulfilled," said Hussain, who represents Prime Minister Shehbaz Sharif's ruling party in the Senate.