China-Pakistan Industrial Corridor Will Boost FDI and Exports

Industrial parks and special economic zones are part of the China-Pakistan Economic Corridor memoranda of understanding recently agreed between the leaders of the two countries. The key pre-requisites for  the establishment of these zones are resolution of the energy crisis and building of a competitive infrastructure in Pakistan.

Energy and Infrastructure:

The first phase of the economic corridor is focused on $45.6 billion worth of energy and infrastructure projects. China's state-owed banks will finance Chinese companies to fund, build and operate $45.6 billion worth of energy and infrastructure projects in Pakistan over the next six years, according to Reuters. Major Chinese companies investing in Pakistan's energy sector will include China's Three Gorges Corp which built the world's biggest hydro power project, and China Power International Development Ltd.

Under the agreement signed by Chinese and Pakistani leaders at a Beijing summit recently, $15.5 billion worth of coalwind, solar and hydro energy projects will come online by 2017 and add 10,400 megawatts of energy to the national grid.  An additional 6,120 megawatts will be added to the national grid at a cost of $18.2 billion by 2021.

The transport and communication infrastructure—roads, railways, cable, and oil and gas pipelines—will stretch 2,700 kilometers from Gwadar on the Arabian Sea to the Khunjerab Pass at the China-Pakistan border in the Karakorams.

Starting in 2015, the Chinese companies will invest an average of over $7 billion a year until 2021, a figure exceeding the previous record of $5.5 billion foreign direct investment in 2007 in Pakistan.

Special Economic Zones:

Beyond the initial phase, there are plans to establish special economic zones in the Corridor where Chinese companies will locate factories. Extensive manufacturing collaboration between the two neighbors will include a wide range of products from cheap toys and textiles to consumer electronics and supersonic fighter planes.

The basic idea of an industrial corridor is to develop a sound industrial base, served by competitive infrastructure as a prerequisite for attracting investments into export oriented industries and manufacturing. Such industries have helped a succession of countries like Indonesia, Japan, Hong Kong,  Malaysia, South Korea, Taiwan, China and now even Vietnam rise from low-cost manufacturing base to more advanced, high-end exports.  As a country's labour gets too expensive to be used to produce low-value products, some poorer country takes over and starts the climb to prosperity.

Once completed, the Pak-China industrial corridor with a sound industrial base and competitive infrastructure combined with low labor costs is expected to draw growing FDI from manufacturers in many other countries looking for a low-cost location to build products for exports to rich OECD nations.

Key Challenges:

While the commitment is there on both sides to make the corridor a reality, there are many challenges that need to be overcome. The key ones are  maintaining security and political stability, ensuring transparency, good governance and quality of execution. These challenges are not unsurmountable but overcoming them does require serious effort on the part of both sides but particularly on the Pakistani side. Let's hope Pakistani leaders are up to these challenges.


Pak-China economic corridor is a very ambitious effort by the two countries that will lead to greater investment and rapid industrialization of Pakistan. Successful implementation of it will be a game-changer for the people of Pakistan in terms of new economic opportunities leading to higher incomes and significant improvements in the living standards for ordinary Pakistanis. It will be in the best interest of all of them to  set their differences aside and work for its successful implementation.

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Riaz Haq said…
ADB provides loan to Pakistan to improve power transmission
Dec 12,2014
ISLAMABAD, Dec. 12 (Xinhua) -- The Asian Development Bank (ADB) and Pakistan signed a 248-million-dollar loan agreement Friday to upgrade the country's power transmission operation and management in a bid to boost energy security, officials said.

The loan, which is the fourth under ADB's multitranche financing facility for the Power Transmission Enhancement Investment Program, will fund 10 subprojects, the ADB said.

They include providing upgrading systems to evacuate power generated from new thermal, wind and hydro power plants and to reduce power losses, and measures to strengthen network safety and security requirements.

This is the final tranche of the 800-million-dollar financing facility which was originally approved in December 2006. The state- owned National Transmission and Dispatch Company will continue as the executing and implementing agency for the program.

The infrastructure to be built or upgraded includes 281 kilometers of 500-kilovolt (kV) transmission lines from the Muzaffargarh grid station in eastern Punjab province, four new 220- kV grid stations, and an extension of 500-kV grid stations at Jamshoro in southern Sindh province and Gujranwala in Punjab.

Mohammad Saleem Sethi, secretary of economic affairs division for the Government of Pakistan and Werner E. Liepach, ADB's country director for Pakistan signed the loan agreement.

"Expanding and upgrading the transmission backbone will provide reliable and high-quality energy supplies to meet increasing demand from industrial, commercial, agricultural, and domestic customers," said Liepach. "It will support the government's strategy to provide people with better access to affordable electricity."
Riaz Haq said…
MOSCOW, December 10. /TASS/. Russian Technologies State Corporation’s representative Andrey Korobov and Pakistan’s Prime Minister Mian Muhammad Nawaz Sharif had a meeting on Tuesday, Pakistan’s information department reported.
At the meeting, which took place in London, Pakistan’s prime minister said his government initiated energy projects to overcome the energy crisis.
The information department does not publish details about projects, but a source close to the Russian corporation told TASS the Russian and Pakistani sides already had several meetings, including in London and in Moscow. The Russian-Pakistani intergovernmental commission in early December agreed on implementation of infrastructure projects in Pakistan’s oil and gas sector.
The source said the Russian corporation had signed a preliminary agreement with Pakistan’s state-run Inter State Gas Systems on implementation of several projects in the oil and gas sector.
“Next year already, the Russian company will begin projects on construction of oil and gas infrastructures, which are strategic for Pakistan,” the source added.
Riaz Haq said…
Yet misgivings also abound, as Andrew Small, an Asia expert at the German Marshall Fund of the United States, points out in an impressive account of a little-understood friendship. China is growing increasingly squeamish about the dangers of having Islamist extremists just across the border. Chinese engineers working on aid projects in Pakistan have been killed by Pakistani extremists. In 2007 Chinese massage-parlour employees were held hostage by militants in Islamabad. The authorities in the capital do not do enough, the Chinese complain, to destroy Pakistani havens of the East Turkestan Islamic Movement, a Muslim separatist group drawn from the Uighur ethnic minority who live in China’s western Xinjiang region.

“China has a good understanding of almost everything in Pakistan, political, security or economic, that might affect the bilateral relationship, but there is one piece they just don’t get: Islam,” Mr Small quotes a Pakistani China specialist as saying. It was especially embarrassing to Pakistan that on the day the retiring head of the army, Ashfaq Parvez Kayani, paid his last visit to China in October 2013 a car with three Uighurs and packed with explosives burst into flames in Tiananmen Square. “The most damning narrative would be hard to shake off—that a Pakistan-based Uighur separatist group masterminded a successful suicide attack in the most visible location in China during the valedictory visit of Pakistan’s army chief,” Mr Small writes.

Still, if there were recriminations they were not made public. Indeed, as Mr Small argues, China’s ties with Pakistan, which were established during Mao’s rule and are based on shared hostility towards India, thrive on many common interests. A long history of secret deals between their two armies—overrides the problems with Islamic extremism.

Six years of research have enabled Mr Small to produce a detailed account of decades of close dealings between the two countries. In that time he won the confidence of many sources in the Chinese army, military intelligence and the security services. Their officials are as tight-lipped as the Pakistanis are garrulous. Yet he managed to loosen them up, at least enough.

Mr Small describes a friendship that is more enduring and has far better prospects than Pakistan’s up-and-down connection with America. The high points of that relationship—as when Pakistan facilitated the groundbreaking visit of Henry Kissinger to China in 1971 which led in turn to Richard Nixon’s historic trip to Beijing and later during the Soviet invasion of Afghanistan—have long since passed.

China helped Pakistan acquire the nuclear bomb, and is Pakistan’s biggest supplier of military equipment. Now it is building two sizeable civilian nuclear reactors that should help ease the country’s chronic energy shortfall. As China expands its reach throughout Asia, Pakistan has become central to its plans for a network of ports, pipelines, roads and railways that will bring oil and gas from the Middle East. The Chinese government is offering tens of billions of dollars for Pakistani projects, Mr Small says. As America’s influence recedes, China is stepping in, though officials will doubtless keep a wary eye on Pakistan’s nuclear weapons.

Part of China’s justification for spending so much is to bring stability to Pakistan, an argument that the Obama administration has also used, though with little success. Mr Small seems to think the Chinese will have better luck. He may be too optimistic about their ability to achieve much, but given the feckless Pakistani governance that he so ably describes, he has every right at least to hope the Chinese will help restore some order to the chaos.
Riaz Haq said…
Minister for Planning Development and Reforms Ahsan Iqbal Friday ruled out any plan to change the design of Pakistan-China Economic Corridor – a project symbolising new vision of Pak-China economic partnership.

“The Pak-China economic corridor is not a game changer but a fate changer for Pakistan and for the prosperity of three billion people of the region,” Ahsan Iqbal said addressing a press conference on Friday.

“Pakistan-China economic corridor is imperative for regional trade integration and to enhance economic activities in the country,” he remarked. Ahsan resolved that the mega project was aimed at uniting all federating units including the remote areas of Balochistan, Khyber Pakhtunkhwa, Punjab, Sindh, Azad Jammu Kashmir (AJK) and Gilgit Baltistan Region.

He added that a transit trade between Pakistan and China would be started from Gwadar, adding that backward areas of Balochistan would especially benefit from the economic corridor project.

The minister said that energy and infrastructure was more important for economic development of any country, and: “our government was working on strategic road map and formulated the vision 2025 to enhance infrastructure and energy projects with the cooperation of friendly China.”

The economic corridor and connected energy projects with a total investment of $45 billion during the next five years was a glaring example of the close friendship between the Pakistan and China.

He added that Pak-China energy corridor also included the project of generating 16,000 MW electricity to benefit the industrial zones and domestic consumers in the country.

The economic corridor would give Pakistan a pivot in the region boosting trade and commerce links with the regional economies, said Ahsan Iqbal. The 2,100-kilometer corridor would include special economic zones, a railways system and a model city, airport as well as a free port at Gwadar, he said.

The government, he said, was planning to establish a state-of-the-art industrial zone in Gwadar which would be a core feature of Pakistan-China trade corridor. The economic corridor considered the multiple route for the connectivity of urban and remote rural population of the country to provide equal development opportunities to the people.

The corridor, he said, was a landmark project which would connect Pakistan’s deep sea Gwadar port with China’s Xinjiang region bordering Gilgit Baltistan, an area full of natural resources.

Both Pakistan and China have launched a number of mega projects under the umbrella of economic corridor in several fields like energy, infrastructure and connectivity which would revitalise Pakistan’s economy.

To provide greater connectivity to Gwadar Port, he said, “Various initiatives have been taken as Gwadar can act as a hub for trade between Pakistan, China, Central Asia, Gulf Region and Afghanistan”, he added.

He said the Gwadar port had the potential to become the most convenient, economic and popular access route for Central Asian commerce and as an energy corridor. Ahsan Iqbal said Pakistan had important geo-economic and geo-strategic position to connect the whole region and convert it as trade hub for the entire region.

He regretted that again some quarters propagated against the Pak-China economic corridor that too when the Chinese president was expected to visit Pakistan.

He added that earlier the Chinese president’s visit was cancelled because of different rumours spread during the PTI-PAT sit-in at D-Chowk.

Ahsan Iqbal said the government had taken necessary steps to enhance economic and trade ties with all regional and other countries including the United States, China and Afghanistan in order to maintain peace and prosperity in the country and the region.
Riaz Haq said…
APC rejects changes in Pak-China Economic Corridor (PCEC) route -

The All Parties Conference (APC) here on Tuesday rejected the proposed changes in the Pakistan-China economic corridor route from Khyber Pakhtunkhwa to Punjab and asked the Pakistan Muslim League-Nawaz (PML-N) led-federal government to rollback its decision in this regard. The APC was held under Awami National Party (ANP) in Islamabad. Leader of the opposition in the national assembly, Syed Khursheed Ahmed Shah Asfandyar Wali Khan, vice chairman Pakistan Tehreek-e-Insaf (PTI) Shah Mehmood Qureshi, Mehmood Khan Achakzai, Aftab Ahmed Khan Sherpao and other leaders participated in the conference. ANP chief Asfandyar Wali Khan has said that changes in the trade corridor will increase sense of deprivation among the people in Khyber Pakhtunkhwa, FATA and Balochistan. He said that it is not only trade route but many other development projects are also related with this. The ANP chief said that the corridor can play major role in curbing the menace of terrorism. He said that if the government is serious to strengthen Pakistan, they needed to strengthen provinces. He asked the government not to reverse the mistakes committed in the past. Asfandyar Wali said that following the terrorists brutal attack on Army Public School (APS) in Peshawar the whole nation united. He said that all the political parties supported Prime Minister Nawaz Sharif in war against terrorism. It is mentioning here that the proposed change in the route of Pakistan-China Economic Corridor drew stiff resistance from political parties despite its immense economic potential The 45 billion US dollars Pakistan-China Economic Corridor (PCEC) is believed to be the game changer for the region. It will connect Gwadar with Kashgar town in the autonomous Xinxiang region in China through highways, railroads and pipelines of gas and oil, boosting the economy in all the towns that would become part of this mega economic project. The PCEC is likely to serve as gateway for trade between China and the Middle East and Africa. The project is to cut a 12,000-kilometre route between Middle East and Chinese ports. The two countries, Pakistan and China, have already signed agreements for constructing an international airport at Gwadar, upgrading a section of 1,300-kilometre Karakorum Highway and laying a fibre-optic cable from the Chinese border to Rawalpindi. In November last year, Chinese government announced financing companies to build energy and infrastructure projects worth $45.6 billion under the PCEC. The project has hit controversy after major political parties in Khyber Pakhtunkhwa and Balochistan launched protests against the change in the original route, which is believed to deprive a major portion of Khyber Pakhtunkhwa, Balochistan and Fata of an opportunity of development, business and jobs. Major political parties in Khyber Pakhtunkhwa and Balochistan are still opposed to any change in the route of the Pakistan-China Economic Corridor. The opposition parties have expressed anger over change in the route in the Upper House by staging walkouts twice in a single session. The Khyber Pakhtunkhwa Assembly unanimously rejected any change in the route by the federal government. The Awami National Party has also written a letter to the Chinese envoy to Pakistan, seeking a meeting to discuss how the change in the route is to affect the two already backward provinces and Fata. -

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Riaz Haq said…
The gesture of a few senators follows China and Pakistan’s decision to re-route the Corridor mostly through Punjab – Nawaz Sharif’s home province – and thus avoiding some of the country’s most restive areas in both Khyber-Pakhtunkhwa and Balochistan – where the Gwadar port is.

The decision to re-route the Corridor signals that security is the main obstacle to the realization of the project. Chinese ambassadors in Pakistan have repeatedly stressed the need for Pakistan to guarantee the safety of Chinese workers in the country, while the difficulties of conducting business in Pakistan has brought to the cancellation of several contracts, and to the delayed completion of many other projects. Perhaps the most notorious incident involving Chinese citizens in Pakistan is the 2007 kidnapping which led to the Lal Masjid (the Red Mosque) conflict. A year before, in 2006, three Chinese engineers were killed by in an attack claimed by the Baluchistan Liberation Army in Hub, a town west of Karachi. Since then regular incidents have threatened the good relations between the two countries, and led to numerous apologies and promises by the Pakistani authorities to their Chinese counterparts. Many have started to question the feasibility of the China-Pakistan Economic Corridor as well, often highlighting the troubles in managing the already built Gwadar port.

Political instability in Pakistan is another major concern for the realization of such mega-projects. In September Chinese President Xi Jinping’s visit to Pakistan was cancelled in light of the ongoing protests in Islamabad led by Imran Khan’s Tehrik-e-Insaf (PTI) and Pakistan Awami Tehrik (PAT). Officially postponed, the visit has not been rescheduled yet, while recently Pakistan Minister for Railways suggested that Prime Minister Nawaz Sharif could visit China in November to urge investments in infrastructure development programmes, thus highlighting once again how unbalanced this relation is.

China is also concerned with potential Islamist spill-over in its Muslim province of Xinjiang. Although, since the early 2000s, Beijing continuously evoked the Pakistan-based East Turkestan Islamic Movement (ETIM) – which was listed as a terrorist organization by the United Nations in 2002 – as responsible for most incidents in Xinjiang, it remains to a certain extent still unclear whether such organization effectively exists. In fact, despite a Uyghur population of about 3,000, Pakistan seems largely unmoved by the East Turkestan cause, and the number and capability of Uyghur militants in Pakistan remain very limited. Although, at least in public, China has refrained from openly blaming Pakistan for Xinjiang’s escalating violence, it seems inevitable that those events have an impact of the two countries’ relations, and thus on China’s willingness to invest in Pakistan.

The recent protests, moreover, come from senators from the provinces of Khyber-Pakhtunkhwa and Balochistan. If the situation in Khyber-Pakhtunkhwa is relatively well known, China has several reasons to worry about Balochi groups, thus far some of the keenest opponents to Chinese investments – which in Balochistan are concentrated particularly in mineral resources. In most cases those groups do not seem to oppose Chinese companies per se, but rather intend to use them as a threat to force Pakistan’s central government to deal with their requests. Many Baloch nationalists are also afraid that projects such as the Gwadar port might represent an effort to drown out their call for independence. For Beijing, on the other hand, the major concerns lie with Pakistan’s apparent incapacity to limit the capacity of Baloch insurgents to attack its interests in the region, thus jeopardizing future projects and investments.

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Riaz Haq said…
Express Tribune Op Ed by Pervez Tahir:

Traditionally, the Chinese side stays clear of Pakistan’s internal political controversies. Its interest in the project is, however, obvious. It extends its economic outreach in general and opens up laggard western regions to the world. The equity argument to bring these regions on a par with others ends at Khunjerab. Beyond Khunjerab, hard economics takes over. As the principal investor, the Chinese side would look for the quickest and the most cost-effective route to Gwadar. It is also necessary to make this sleepy port functional. Security costs may also have been factored in. As a recipient with minimal choices, this is what the government seems to be doing by filling the gaps in the Havelian-Islamabad-Lahore-Multan-Sukkur-Ratodero-Khuzdar-Gwadar route. Four ‘early harvest’ projects — land acquisition and shifting of utilities for the Karachi-Lahore motorway, construction of the Lahore-Abdul Hakim-Khanewal section, construction of the Multan-Sukkur section and construction of the Raikot-Havelian-Islamabad section — were included in the Public Sector Development Programme of 2014-15. The last two are largely financed by Chinese credit. Earlier this month, a delegation visited China to fast-track these projects.

No one knows which was the original route. The opposition claims that it passed through southern K-P, Zhob and Quetta. This is the shortest but the costliest route in terms of time and money. What was the opposition doing when the projects related to the eastern route were made part of the development budget? Waking up to the change now rather than debating it in the budget session reflects politicians proverbial lack of interest in economic matters. This late realisation and insistence on the most difficult route might endanger the entire Pakistan-China Economic Corridor project, which includes a focus on energy and economic zones and not just transit trade. In terms of cost, economic advantage and future opportunities, the middle ground is occupied by the route connecting Abbottabad, Mianwali, D I Khan, D G Khan, Ratodero, Khuzdar, Turbat and Gwadar. The route fulfils the original dream of the Indus Highway as an alternative artery. It connects the backward districts of all the provinces and is linked to Fata, Quetta and Zhob. Proximity to Central Asia, Afghanistan and Iran brings the concept of the economic corridor into full bloom. The time to exploit the full potential of Gwadar will also be reduced.
When all but one opposition party meets, as is being reported in the press, the one deemed to promote the cause of just one province, it is hoped that the development of Pakistan will be the main consideration. The current focus of the government on completing the eastern route may make immediate economic sense, but its long-term potential is limited. The Chinese fully understand that the opening up of new areas pushes the frontiers of economic opportunity further, while diminishing returns set in quickly from investment in relatively developed areas. So the equity argument does not end at the Chinese border. It extends to Pakistan also but without sacrificing the economic advantage. There could be no better Marshall plan than this connectivity.
Riaz Haq said…
Even though the project had not yet got off the ground, the China-Pakistan Economic Corridor, Moody’s Investor Services – one of the three largest credit rating agencies in the world – has described the project as a ‘credit positive’ for the country, implying that the economic growth generated will eventually help the government’s finances.
“The government’s support for the implementation of the so-called China-Pakistan Economic Corridor (CPEC) is credit positive for Pakistan because it will spur investment activity, boost bilateral trade flows and help ease the country’s growing energy shortages,” Moody’s said in a note issued to clients on Monday, according to a report in the International Business Times.
The $46-billion project would create a 2,000-kilometre road and rail link from China’s western hinterlands to the Gwadar Port, creating a network of infrastructure in Khyber-Pakhtunkhwa and Balochistan to match the one originally built by the British (and expanded by successive Pakistani governments) in Punjab and Sindh.
Moody’s has the lowest rating for Pakistan, at Caa1, just two grades above default. The rating implies that Pakistan is dependent on favourable economic conditions to be able to pay its obligations. Standard & Poor’s – a rival credit rating agency – has a rating of B, two notches above the Moody’s rating. Fitch, the third credit rating agency, does not have a current credit rating for Pakistan. Both Standard & Poor’s and Moody’s have a stable outlook for Pakistan.
The influx of investment into Pakistan is what prompted Moody’s to view the economic corridor as a positive from a credit perspective. The credit rating agency uses several macroeconomic indicators to determine its rating for Pakistan’s government, including investment as a percentage of the total size of the economy.
Pakistan’s investment-to-GDP ratio is 14.6%, far lower than the median of 22.9% for countries with a B-rating, said Moody’s.
Another reason Moody’s believes this project will be positive for Pakistan is their belief that Islamabad will be able to get Beijing to finance several energy projects throughout the country that would reduce the cost of power generation, ultimately lowering the need for electricity subsidies – a key burden on the federal budget – and improving economic growth, which would in turn increase tax revenues for the government. Those two effects combined could substantially reduce the budget deficit.
The rating agency acknowledged that much of the project’s key benefits would not materialise until 2017, but stated that it believes at least some of the benefits from the economic corridor would likely begin accruing even before then.
While China is Pakistan’s largest trading partner, foreign investment from China has historically been relatively low. Over the past decade, more than a quarter of the $30 billion in foreign investment into Pakistan has come from the United States, with China’s investment being among the lowest from larger economies. However, over the last year, China was Pakistan’s largest foreign investor.
The project has run into some snags in the Senate, with lawmakers from Khyber-Pakhtunkhwa and Balochistan alleging that the Nawaz administration is redirecting the route of the corridor to pass through Punjab and Sindh rather than their provinces. In addition, Beijing has balked at funding projects that are not directly related to connecting its economically deprived western regions to Gwadar Port.
Riaz Haq said…
Chairman China’s Three Gorges (CTG) Corporation Chun Lu has planned to invest $10 billion in Pakistan initially that will ultimately jack up its investment up to a whopping $100 billion on long-term basis with focus on the energy sector.

The Chairman, CTG Board of Directors, Chun Lu, leading a nine-member delegation had a meeting with the Finance Minister, Senator Ishaq Dar, here on Tuesday and disclosed its plan of investment. A four-member IFC team also attended the meeting.

During discussion, Chun Lu said the CTG had plans to invest 10 billion dollars in Pakistan, ultimately taking up the investment to 100 billion dollars in the long run with focus on the energy sector.

He said the CTG had entered into collaboration with the IFC forming CSAIL (China Three Gorges South Asia Investment Limited) and both of them would undertake energy projects in Pakistan. The CTG chairman said they already had undertaken investment in projects which would generate 3,000MW electricity, and had plans for further such ventures in collaboration with the Pakistani side. He also evinced keen interest in investing in the ongoing projects.

Finance Minister Ishaq Dar welcomed the investment plans of CTG and their collaboration with the IFC for projects in Pakistan. He said the government attached due importance to its ties with China and wished this strong relationship could be translated into a robust economic partnership.

He said CTG’s 100 billion dollar investment plan would greatly add to realisation of this objective.Both the sides agreed to form their respective teams to discuss modalities for CTG’s investment ventures in Pakistan. The finance minister nominated senior officials from the Ministry of Finance, Ministry of Water & Power and the FBR for detailed discourse with the CTG team. He said all possible cooperation and facilitation would be offered to the CTG for investment in Pakistan.$10-bn-in-Pakistan
Riaz Haq said…
Beijing’s focus and commitment to the PCEC is also manifest in the recent visit to Islamabad of a high profile Chinese expert group on long-term planning of the PCEC. Led by Hu Dongsheng, deputy director general of the China Development Bank, the 19-member group held extensive discussions on the project. Both sides emphasised the need to speed up the process of drafting the PCEC long-term plan, which includes not only roads but a lot of social infrastructure in Balochistan and other areas aligned with the corridor. If realised, the PCEC will not only benefit Pakistan in terms of improvement of its economy and security condition, but also contribute to regional peace, stability and prosperity.
The Gwadar-Kashghar route was originally planned to run through Bisima, Khuzdar, Kalat and Quetta onto Zhob, D I Khan, Hassan Abdal and onwards to Kashghar but it has been changed to Bisima, Ratodero and towards Punjab, which means bypassing the Baloch and Pakhtun areas. That is why there were recent protests in the Senate by members from Khyber- Pashtunkhwa (K-P), Fata and Balochistan. According to the new plan, the corridor route turns from Havelian towards the east and links up with the Islamabad-Lahore Motorway, to include Punjab. From here, the corridor is linked to the Lahore-Karachi Motorway and then to Gwadar. Officials at the Planning Commission argue that the completion of infrastructure in K-P and Balochistan will take a few years and thus it was imperative to utilise the existing infrastructure. This was done, insist officials, to accommodate Chinese concerns rooted in the security condition in K-P and Balochistan.
Apparently, the federal government altered the PCEC route and made it longer by 300 kilometres, without taking the Pakhtun and Baloch stakeholders into confidence. This is yet another example of the surreptitious and the high-handed approach towards the smaller provinces. The reaction from within the two provinces was natural and requires attention by the federal government.
As this bickering simmers in Pakistan, the Chinese leadership is worrying about future developments. President Xi is expected to visit Islamabad soon and will hopefully provide a fresh impetus to the PCEC-related projects, which Beijing firmly remains committed to. Chinese officials say the corridor project is not just meant for one region, but for the economic development of the whole of Pakistan. Chinese diplomats in Islamabad are both enthusiastic as well as concerned about the controversy surrounding the corridor. There will be quite a spectacle if protestors from Balochistan and K-P greeted President Xi, said an official. Why can’t Pakistani leaders sit together and flesh out the issues in an amicable and transparent way, wondered another visitor from Beijing. While there may have been complex internal security challenges as well as Chinese concerns that might have prompted changes in the corridor route but why was this done in such a controversial manner? Pakistan needs unity, transparent political conduct and a people-focused commitment like never before.
Riaz Haq said…
From India's Economic Times:
Silk Road projects could benefit India: CII official

BEIJING: The Silk Road projects announced by Chinese President Xi Jinping could benefit India's infrastructure development, a Confederation of Indian Industry board member said today.

"I am not aware of how it politically affects India but it makes sense from business and economic sense as it aimed to improve infrastructure and connectivity," said Shekhar Datta, Board member of the governing council of the Confederation of Indian Industry ( CII).

While India has its own ini ..

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Riaz Haq said…
Year of friendship: ‘#China helping #Pakistan overcome energy shortage’ #loadshedding …

Speaking about a number of ongoing power projects set up by China in Pakistan, Chinese Ambassador Sun Weidong said that the country was ready to support its neighbour overcome the energy crisis.

He was speaking at a seminar on “21st Century Maritime Silk Road and China-Pakistan Economic Corridor (CPEC),” on the sidelines of the opening session of the Pakistan-China Business Forum, here at the Comsats Institute of Information Technology (CIIT).

The ambassador said that after their completion the energy projects would inject 10,000MW electricity in Pakistan’s power sector.

The envoy said that cooperation between the two countries would continue in other areas such as infrastructure, transport, education and poverty alleviation too.

He said that the friendship between the countries was based on the ideas of peaceful coexistence, mutual understanding and a focus on development.

The ambassador invited Pakistani businessmen to explore opportunities in China.

He termed 2015 as the year of friendship and exchange of delegations between the two countries.

Weidong said that the two countries were committed to pushing bilateral relations to a new level.

Earlier, while addressing the inaugural ceremony, Federal Minister for Science and Technology Tanveer Hussian stressed on devising national strategies for human resource development and promotion of science and technology.

Federation of Pakistan Chamber of Commerce and Industry (FPCCI) President Mian Muhammad Idrees said that the forum provided businessmen from the two countries the opportunity to improve bilateral trade relations.

The Board of Investment (BOI) Secretary, Iftikhar Hussain Babar invited Chinese investors to invest in various sectors including energy and infrastructure in Pakistan. He said that the $45 billion China-Pakistan Economic Corridor (CPEC) was a great gift from China.

CIIT Rector Dr Junaid Zaidi said that the university had introduced an academia-driven model of business cooperation by conducting the forum.

On Sunday, a number of activities including panel discussions, seminars and workshops were held at the venue.

MoUs were signed between business conglomerates from China and CIIT for development of a “Commodity Exhibition and Trade Centre” in Islamabad.
Riaz Haq said…
Recent pictures of the Chinese President Xi Jinping's aircraft being escorted by eight made-in-China Pakistani JF-17 Thunder fighter jets as it entered the Pakistani airspace reflect the expanding relationship of the two countries. On his two-day visit to Islamabad in April, Xi committed $46 billion of investments in Pakistan. This is roughly three times the foreign direct investment Pakistan has received in the last decade. This is also more than the $31 billion Pakistan got in US aid since 2002, according to the US-based Congressional Research Service. Clearly, Xi's visit has larger geopolitical ramifications. And for India, it could be a cause for concern.
The investment would go into building the China-Pakistan Economic Corridor. This would include a road connecting Gwadar port in Balochistan with Kashgar in Xinjiang province of China via Pakistan-occupied Kashmir. The 3,000-km corridor would have industrial parks and 10.4 GW of power projects worth $15.5 billion. China is already upgrading the 1,300-km Karakoram Highway despite Indian opposition. The highway, being built by state-owned China Road & Bridge Corporation, is expected to be ready by September this year. China's help in developing infrastructure in the disputed part of Kashmir is seen as its support to Pakistan's claim on this region.

Another reason to worry for India is that China has the rights to operate the Gwadar port, which increases Beijing's influence in the Arabian Sea. The new road and the Gwadar port would help China boost trade with Europe, West Asia and Africa. This will also give China easier access to West Asian oil, especially from Iran. China is one of the biggest consumers of Iranian oil and this route would help it transport oil before it completes a pipeline from Gwadar to Kashgar. Beijing is also helping Islamabad complete the Iran-Pakistan gas pipeline at a cost of $2 billion.
The growing engagement between China and Pakistan may prove to be a stumbling block for India's ambitious plans to boost ties with Afghanistan and Iran. India had committed $100 million to develop the Chabahar port in Iran, but the project is stuck. The port is important for India to access Afghanistan by bypassing Pakistan. Islamabad has already rejected New Delhi's proposal on the SAARC motor vehicle pact that would have allowed seamless transit to vehicles from South Asian countries. Pakistan's refusal makes it impossible for Indian transporters to use the land route to Afghanistan. Prime Minister Narendra Modi, on April 28, told the visiting Afghan President Ashraf Ghani that India was ready to receive Afghan trucks at the Integrated Check Post at Attari, on the India-Pakistan border. But that won't be enough.
Meanwhile, the infrastructure projects Chinese companies are executing in Pakistan will allow free movement to vehicles of the two countries. And while China's relations with India are also improving - Xi visited India in September last year and Modi is heading to China in May - New Delhi will still be wary of Beijing's growing clout in the region.
Riaz Haq said…
China-Punjab Economic Corridor? by Adnan Amir

Out of the $28 billion worth projects, Punjab gets $11 billion, Khyber Pakhtunkhwa (KP) $2.5 billion and Balochistan gets nothing. That’s right, not a single penny out of $28 billion would be spent in Balochistan which is the most backward province in Pakistan. Sindh would get $9 billion from these projects; however the major chunk of that amount would be for the Lahore-Karachi Motorway, a project meant for Lahore. There is no justifiable reason whatsoever which can be floated to defend this unjust division of projects among the four federating units of Pakistan.

During the agreement signing ceremony that took place in Prime Minister House on April 20, only the Punjab Chief Minister was present. The other three chief ministers were not invited. It’s not just about invitations, no person from Balochistan and KP was chosen for the workgroups that finalized the details of CPEC with Chinese officials. It would not be an exaggeration to say that Prime Minister Nawaz Sharif and his brother Shehbaz Sharif orchestrated the show only to benefit their support base in Punjab.

This deal that was supposed to bring prosperity to Pakistan has become controversial from the outset. The KP Chief Minister, Pervez Khattak has openly criticized the federal government for preferring Punjab over other provinces. The legislators of Balochistan Assembly dubbed the agreements between Pakistan and China as between Lahore and Beijing. Shah Mahmood Qureshi, Vice president of PTI, who also belongs from Punjab, has criticized the federal government for its Punjab-centric approach in distribution of CPEC projects.

The route of CPEC rail and road link was the first thing that triggered the controversy. The original route of CPEC would pass from the center of the country. It would start from Gwadar-Ratodero-Dear Allah Yar-Dera Ghazi Khan-D.I Khan-Hassanabdal and all the way to Kashghar. PML-N government has created confusion over the original route. They have come up with a mindboggling concoction that the CPEC would not be one road but a network of roads. That’s wildly untrue because as per the original plan, there would be one main route, ranging from 2 to 6 lanes. During the agreement signing ceremony, the government of Pakistan agreed with China on the eastern route that would take the Gwadar-Ratodero-Sukkur-Lahore-Islamabad-Abbotabad route. Clearly this route is meant to benefit Lahore at the expense of two backward provinces of Pakistan, Balochistan and KP.

Coming to the inaugurated projects, Lahore already has a Metro Bus service, but the government of Pakistan is establishing an Orange Line Mass Rail transit system in the city. China would provide $1.6 billion for this project. A branch of Industrial and Commercial Bank of China would be established in Lahore. And where would the China Cultural Centre be established? No prizes for guessing. Would it not be fair if these projects were divided equally among all four provincial capitals? I guess it would not be acceptable to the Punjab centric agenda of PML-N.

Protests have already erupted against what is being termed as China-Punjab economic corridor. Right and left wing parties in both KP and Balochistan are on the same page on this issue, which is a rare occurrence. Federal Minister Ahsan Iqbal has already given his verdict on the protestors and he is in the process of distributing certificates of treachery. He said, “Hidden hands, some politicians, and also India are trying to make the multi-billion dollar framework [CPEC] controversial.” According to the criteria set forth by Mr. Ahsan Iqbal, this article must also be the work of hidden hands to sabotage the interests of Pakistan. Fortunately, for PML-N government, a draconian cybercrime bill is in the pipeline that would be used to crush any dissent to anti-federation policies of their government on internet.
Riaz Haq said…
Chinese Ambassador Sun Weidong said that Pakistan and China would make greater efforts to develop the Karakorum Highway (KKH) Phase II (Takot to Havelian section), Gwadar Port Eastbay Expressway, New Gwadar International Airport, Karachi-Lahore Motorway (Multan-Sukkur section) and other priority cooperation and energy projects.
Ambassador Weidong said that the outcome in terms of MoUs signed during this visit is encouraging, but the more important part is to implement these agreements and deliver results. Action speaks louder than words, he said, adding the China Pakistan Economic Corridor (CPEC) is a historical opportunity for bilateral cooperation and future development. He said there is a lot of potential to further develop bilateral relations and opportunities always belong to those with vision and action.

He said the Chinese government would continue to encourage Chinese enterprises to invest in Pakistan in support of Pakistan’s economic and social development. China’s support for Pakistan is sincere, down-to-earth and mutually beneficial. Recalling that the year 2015 is the Year of China-Pakistan Friendly Exchanges, he said both the countries will arrange various activities to promote broad exchanges in culture, education, local administration, youth, think tanks and media.

The ambassador said that China has set up a cultural centre in Islamabad to encourage mutual learning and exchanges in the fields of culture and art. In next five years, he added, China will provide 2,000 training opportunities for Pakistan and train 1,000 Chinese language teachers for Pakistan, to support Pakistan in strengthening human resource development and language teaching.

The two countries, he emphasised, should continue with youth and media exchange visits. “We will translate and publish more quality publications from each other. We will hold a photo exhibition on China-Pakistan friendship history. We will also organise receptions for Pakistani friends from all circles in order to reunite with old friends while making new friends,” he added.

Weidong said that President Xi’s recent visit has been quite fruitful with regard to CPEC. It will cover all the provinces of Pakistan, benefit all Pakistani people, create new job opportunities and help upgrade the overall economic strength of Pakistan. China, he further said, has decided to provide free assistance to support FATA reconstruction and related livelihood projects. He said that China would also provide assistance to promote Gwadar community welfare. These measures will effectively promote economic development in the mid-western part of Pakistan and improve people’s livelihood. It is hoped that a good use would be made of the Chinese assistance so as to produce positive results as soon as possible, he added.

During President Xi’s visit, he said, both sides agreed to formulate the 1+4 cooperation structure ie to take CPEC at the centre and take Gwadar Port, energy, transport infrastructure and industrial cooperation as the four keys. Both sides agreed to increase the bilateral trade volume to $20 billion within the next 3 years, he added. The Silk Road Fund will collaborate with a Chinese company to invest in the clean energy projects such as Karot Hydropower Station. This is the first investment project of the Silk Road Fund since its establishment.

That ambassador said that China also announced to provide assistance for reconstruction activities and well-being projects in FATA so as to improve the people’s livelihood. Both countries have also decided to establish China-Pakistan Joint Research Centre for Small Hydropower, Joint Cotton Bio-Tech Laboratory and Joint Marine Research Centre. CCTV News and documentary channels will be broadcast in Pakistan soon, he said. Three pairs of cities between the two countries have established sister-city relations.
Riaz Haq said…
Pakistan government is not offering any sovereign guarantees for projects being built by Chinese companies on build-operate-transfer (BOT) basis which is the bulk of the the $45 billion CPEC investments. These projects are being financed by three Chinese banks as explained by Financial Times below:

Financial Times on China Investment in Pakistan:

The details emerged as President Xi Jinping began a visit to Pakistan bearing promises of more than $45bn in infrastructure investment.
It follows Beijing’s diplomatic success in securing the support of 50 countries for the China-led Asia Infrastructure Investment Bank, despite US objections.
Extra financing for infrastructure could help support China’s weakening economy and the majority of foreign construction projects will most likely be undertaken by Chinese companies.
Increased foreign currency lending would likely also help China boost financial returns on its forex reserves, which are now mainly invested in low-yielding US treasuries.
China’s three state-owned non-commercial lenders — China Development Bank, Export-Import Bank of China, and Agricultural Development Bank of China — are collectively known as “policy banks” because they are explicitly devoted to financing infrastructure and other policy priorities within China and abroad.
Respected financial magazine Caixin reported on its website on Monday that the cabinet’s plan involves the central bank injecting $32bn in forex reserves into CDB and an additional $30bn into Ex-Im Bank. The capital injections will come in the form of entrusted loans that convert to equity, the magazine reported. The Ministry of Finance will inject a further unspecified amount directly into Agricultural Development Bank.
“For CDB and Ex-Im Bank to support ‘One Belt, One Road’ they need a source of stable foreign-exchange funding,” Caixin quoted a senior CDB source as saying.
China’s boost to its export credit agency stands in stark contrast to the US where the US Export-Import Bank is fighting for survival amid a push by some Republicans to shut it down once funding runs out in June.
GE’s top international executive warned at the weekend that the closure of the US Ex-Im Bank would add to sense that Washington was stepping back from international economic leadership.
China’s forex reserves stood at $3.7tn by the end of March, according to official data.

China Development Bank has provided funding for many of the country’s most ambitious financial diplomacy initiatives, including loans-for-oil to Russia, Brazil and Venezuela. Both CDB and Ex-Im Bank also provide trade credit to support Chinese exports.
Earlier this month China’s cabinet approved a plan to reform the three policy lenders but provided few details. For years the government has said it intends to transform the institutions into commercial entities, but progress has been slow.
The policy banks do not take deposits and fund themselves mainly by selling bonds that carry an explicit sovereign guarantee. The banks sell both renminbi bonds within China and USD bonds in the offshore market.
Experts have warned that the banks are undercapitalised. The Ministry of Finance and China Investment Corporation each own 50 per cent stakes in CDB, but the bank has not received a capital injection since 2008.
The Financial Times reported last year that CDB had asked several foreign clients to delay drawing down lines of credit previously offered, apparently due to funding strains.
CDB’s capital adequacy ratio stood at 11.28 per cent at the end of 2013, according to the bank’s most recent annual report. That compares to 13.18 per cent for China’s banking system as a whole at the end of 2014.
Riaz Haq said…
For industrial cooperation, the two countries China and Pakistan) are planning industrial parks (along CPEC). According to local media, the Pakistani government has proposed 29 industrial parks and 21 mineral economic processing zones in all four provinces. A joint working group would decide and identify the industrial parks, said Pakistani Minister for Planning, Development and Reform Ahsan Iqbal, who hailed the CPEC as a "game changer" and a once-in-a- lifetime opportunity for Pakistan.


Last month Pakistan's Chief of Army Staff Gen. Raheel Sharif inspected the under-construction road network as part of the CPEC. According to the army, 502 km out of the 870-km road network linking the Gwadar Port with the rest of the country have been completed by Frontier Works Origination (FWO). During the inspection, the army chief also vowed that the CPEC "will be built at all costs."

The Gwadar Port started its long-awaited operations on May 11 as the first private container vessel docked at the deep-sea port. Local fish was exported to the international market through containerized shipment. Speaking at the commencement ceremony, Pakistani Ports and Shipping Minister Kamran Michael said a new dimension was added to the history of the Gwadar Port.

For industrial cooperation, the two countries are planning industrial parks. According to local media, the Pakistani government has proposed 29 industrial parks and 21 mineral economic processing zones in all four provinces. A joint working group would decide and identify the industrial parks, said Pakistani Minister for Planning, Development and Reform Ahsan Iqbal, who hailed the CPEC as a "game changer" and a once-in-a- lifetime opportunity for Pakistan.

The Pakistani government has shown strong willingness to push forward the construction of the CPEC. During a high-level meeting held in Islamabad on July 27 to review the pace of work on CPEC projects, Prime Minister Sharif directed that projects under the CPEC be put on fast-track through mobilization of resources and completion of financial and technical formalities.

His endorsement for the projects is also shared by Pakistani President Mamnoon Hussain, who said in his message on the country' s 69th Independence Day on Aug. 14 that the CPEC "will lead to economic revival in Pakistan."
Riaz Haq said…
#UK rolls out red carpet welcome for #China's Xi. Hoping for Billions in Investment Including Nuclear Power Plant

What does #China own in the #UK? #Pakistan 10th largest recipient of #Chinese investment ($24 billion) since 2005 …

China may be the world's second-largest economy behind the US, but it has more money in the bank than any other country.
Indeed three of the world's 10 biggest sovereign wealth funds are Chinese, together holding more than $1.5tn (£988bn) in assets.
And despite the slowdown in the Chinese economy in the past five years, the government has been putting this money to good use, particularly so since it recovered from the global economic slowdown sparked by 2008's financial crisis.
In fact, overseas investments have grown from $20bn in 2005 to $171bn last year. And, as the chart below shows, the UK is one of China's favourite places to invest.

In the first half of this year, Chinese investment in the UK fell sharply - just $1.8bn compared with more than $8bn in the whole of 2014.
But this figure is likely to be boosted significantly this week with the announcement of a number of deals while President Xi Jinping and his delegation visit Britain. Backing for a new nuclear power plant at Hinkley Point in Somerset could well be announced, while a separate deal for another nuclear plant at Bradwell in Essex has also been mooted.
If these and other deals like them don't come off, then the UK could well slip behind Italy - which has seen huge inflows of Chinese cash in the past two years - as China's favoured European investment destination.

Almost half of all China's global investments have been in the energy sector, many of them designed specifically to provide power for the Chinese. While the country's overall population may not grow significantly beyond its current 1.4 billion, an explosion in the middle class as wealth increases will see demand for energy rocket.
And as China develops technologies to satisfy this demand, it will become increasingly keen to export them. This is precisely why China is so keen to showcase its nuclear technologies in the UK.
But energy has not been China's primary interest in the UK. In fact, property investments far outweigh those in energy. The motivation here is far more straightforward - profit. The Chinese simply see UK commercial property as a good bet. Unsurprisingly, this is also the main motivation behind the huge sums of money China has pumped into the UK's financial sector.
Riaz Haq said…
#China to support #Pakistan to ensure security of new economic zone, says Chinese general. #CPEC … via @SCMP_News

Beijing will back Pakistan to ensure the security of a new economic corridor granting access to the port of Gwadar that aims to create direct links between China and the Arabian Sea, a top general has pledged.

Central Military Commission vice-chairman Fan Changlong told Pakistan's army head Raheel Sharif on Thursday that Beijing looked forward to close cooperation "to ensure proper management and security of CPEC", according to a Pakistani military statement.

The China-Pakistan Economic Corridor is an ambitious US$46 billion project giving Beijing greater access to the Middle East, Africa and Europe through Pakistan, via a highway to Gwadar port on the Arabian Sea.

Fan's visit, the first by a Chinese general of his seniority in more than a decade, came two days after Pakistan handed hundreds of hectares of land over to China for the development of a free-trade zone in Gwadar as part of the project.

The development is part of China's ambition to expand its trade and transport footprint across Central and South Asia while countering American and Indian influence. India has expressed wariness about the project in the past, though analysts recently said concerns would arise only if there were "defence-related matters".

Fan, who headed a high-level military delegation, on Thursday met Sharif at the Pakistani army headquarters in Rawalpindi to discuss "matters of mutual interest, regional security, steps for regional stability and enhanced bilateral defence collaboration", the statement said.

Fan said China "deeply appreciates" Pakistan's efforts to eliminate militancy, particularly by the East Turkestan Islamic Movement, which Beijing says is active in the Xinjiang region, which borders Pakistan.

Xinjiang - the homeland of China's 10 million Uygurs, a mostly Muslim ethnic minority - is sporadically hit by deadly violence. Beijing has claimed that militants from the movement are hiding in Pakistan, a claim that has been supported by local security sources.

"China values the efforts of Pakistan Army in fighting ETIM," Fan said, adding that China and Pakistan were "best iron brothers, good friends and strategic partners".

Fan also met Prime Minister Nawaz Sharif in Islamabad on Thursday, with Sharif lauding Islamabad's friendship with Beijing as a "cornerstone" of its foreign policy.

The government of Baluchistan province - Pakistan's poorest - handed over about 280 hectares of a 923-hectare swathe of tax-exempt land in Gwadar on Wednesday. Beijing will develop that land under a 43-year lease.

The rest of the land would be handed over under the agreement with the public China Overseas Port Holding Company "soon", senior Pakistani government officials said.
Riaz Haq said…
The #China-#Pakistan corridor: A fate-changer? #CPEC … via @YahooNews

By Anatol Lieven:

These projects, if realised - and this is a very big if - have the potential to bring in tens or even hundreds of billions of dollars in additional investments. They could restore Pakistan's economic growth of the early 1960s, which led economists at the time to predict that the country would be one of the future leading economic powers of Asia.
This dream was lost when Pakistan recklessly attacked India over the Kashmir dispute in 1965, and Zulfiqar Ali Bhutto subsequently abandoned free market policies in favour of a horribly corrupt and badly managed populism.
China certainly does not favour either international terrorism or a new security crisis in South Asia. Ideally, therefore, future Indian leaders might come to see an Indian interest in seeking reconciliation with Pakistan so as to link up with the Chinese corridor and open land routes for India to the Middle East and Europe.
This would require, among other things, serious work on a consensus between Delhi, Islamabad, Beijing and Washington on how to seek a peace settlement in Afghanistan.
Rampant problems
The biggest obstacles to China's plans lie not in strategic threats but in the corruption, dysfunction and incompetence of Pakistan's governing structures, and the culture of patronage which dominates Pakistani politics.
Thus in the area of transport, Pakistan railways are a shambles compared with those of India, though the two countries inherited the same systems at independence. Pakistan International Airlines has been in crisis for years, above all because - as with state-owned banks and industries - politicians (and generals when in power) have used it as a source of patronage and stuffed it with their relatives and supporters. This has led to the grotesque figure of 776 PIA employees per aircraft, one of the highest rates in the world.
Pakistan needs a huge outside investment in infrastructure in part because of its own chronic inability to raise taxes. At barely 10 percent of GDP, Pakistan's tax-collection rates are among the lowest in Asia. Pakistan suffers chronic electricity shortages in part because it cannot get the population to pay its electricity bills.
It does not have to be this way. Under President Ayub Khan in the late 1950s and early 1960s, a combination of a relatively honest, dynamic and far-sighted administration with plentiful US aid (above all for infrastructure, as with China's plans) and sound international advice led to Pakistan achieving some of the highest rates of economic growth in the world.
If Chinese money and Chinese influence can return Pakistan to those rates of growth, then this will not only help to stabilise Pakistan and create a barrier to violence there. It will also mark China's arrival as a truly great - and positive - force on the world stage.
Riaz Haq said…
New #railway tracks to be laid from Kotri to Attock in #Pakistan under #CPEC- …

Some 1,254 kilometres of railway track from Kotri to Attock City via Dadu, Larkana, Jacobabad, DG Khan, Bhakkar, Kundian will also be upgraded.
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Islamabad: Pakistan has planned a major installation and upgradation of railway tracks under the China-Pakistan Economic Corridor, Radio Pakistan reported on Sunday.

Under the plan, new railway tracks will be laid from Gwadar to Quetta and Jacobabad via Besima.

Five hundred and sixty kilometres of track will be laid from Bostan to Kotla Jam on main line-II via Zhob and Dera Ismail Khan, while 682km of track will be laid from Havelian to Khunjrab, the state-run broadcaster's website said.

Upgradation of 1,872km of railway track from Karachi to Peshawar via Kotri, Multan, Lahore, and Rawalpindi (including Taxila-Havelian) - along with dualisation of track from Shahdara to Peshawar - will also be carried out.

Some 1,254 kilometres of railway track from Kotri to Attock City via Dadu, Larkana, Jacobabad, DG Khan, Bhakkar, Kundian will also be upgraded.

Further, the government on Saturday gave its final go-ahead to four mega projects, including two road construction schemes under the China-Pakistan Economic Corridor (CPEC) at a revised cost of Rs862 billion - Rs214 billion or one-third higher than original estimates.

The Executive Committee of National Economic Council (Ecnec) approved the 969-megawatt Neelum Jhelum Hydropower project as well as CPEC's 118-kilometre-long Havelian-Thakot and 392-km Sukkur-Multan sections of roads. It also approved the National Highway N-70 East-West Road Improvement Project.
Riaz Haq said…
#China, #Pakistan ink $2 billion deal to build massive #coal power plant in Sindh - The Economic Times #CPEC #Energy …
BEIJING: China and Pakistan today signed a $2 billion agreement to jointly build a massive coal- fired power station in Pakistan's southern Sindh province.

The project will cost in excess R$2 billion, including the exploitation of a 3.8-million-tonne coal mine and the construction of a 660,000-kilowatt power station near the mine, China's state-run Xinhua news agency reported.

China will contribute USD 800 million to the financing, while the Pakistani partners will provide $500 million, mainly through China Development Bank and Habib Bank.

The project is expected to be completed by the end of 2017, and it will be the first such project in the China- Pakistan Economic Corridor.

The corridor will be a 3,000-kms long network of roads, railways and energy infrastructure between the ports of Gwadar in Pakistan and Kashgar in China's Xinjiang.

It was established to help lift Pakistan out of its economic slumber and boost growth for the Chinese ..
Riaz Haq said…
#Pakistan is "the only all-weather strategic partner" of #China - Global Times. #CPEC …

In April when President Xi Jinping visited Pakistan, China and Pakistan elevated the bilateral relations to "all-weather strategic cooperation partners." China has established partnerships with a lot of countries in the world, but Pakistan is the only one that is called an "all-weather strategic cooperation partner."

For countries with different social systems and ideologies that want to collaborate with each other, the China-Pakistan relationship has become a model to follow. This type of relationship is not based on common values and systems, but on same or similar strategic and security interests. Today common security concerns still exist, and some new concerns like global terrorism and maritime security have arisen for both sides in recent years.

Since the beginning of the 21st century, the basis of China-Pakistan cooperation has expanded. The "One Belt, One Road" initiative and China-Pakistan Economic Corridor has enlarged bilateral strategic and cooperative partnership to a more comprehensive framework.

Before, the basis of the all-weather partnership mainly included political, strategic and security cooperation, now the closer economic ties have become a part of this basis, which makes two countries form a "community of shared destiny." The two sides not only have common economic interest and common security concerns, but also share the dream of national peace, stability, and prosperity. "Shared destiny" is the solid foundation for our cooperation in international affairs.

China-Pakistan international cooperation has some key features as follows: First, China and Pakistan respect principles, value friendship, and "share weal and woe." When dealing with international affairs, both sides take the Five Principles of Peaceful Coexistence as the basic principle; when facing international affairs, both sides advocate justice and fairness, protect the common interests of developing countries, and have the courage to speak up.

In addition, China-Pakistan cooperation is always based on close communication and coordination, deep understanding of the other side's situation and interest, and full consideration of the other side's feeling. Pakistan always gives China full support on the Taiwan, Tibet, Xinjiang, and South China Sea issues. China is also a strong supporter of the independence, sovereignty, territorial integrity, and national dignity of Pakistan.

In 1972, the People's Republic of China used its veto power for the first time to support Pakistan at the UN Security Council by refusing to admit Bangladesh, the former East Pakistan, to the UN. After 1989, every time when China was blamed by the US and other Western countries at the UN Commission on Human Rights, Pakistan was always the first one to stand up and speak for China.

China and Pakistan conform to trends of the times, expand scope of cooperation, and jointly resolve challenges. After the Cold War, especially in the 21st century, the world has seen a trend toward peace, development, and cooperation.

Apart from traditional security issues, more and more non-traditional challenges arise. As a result, China-Pakistan cooperation has expanded from political and security fields to economy and trade, climate change, food and energy security. China takes the interests of Pakistan and other developing countries into careful consideration when it negotiates with Western countries.
Riaz Haq said…
#China #Pakistan Economic Corridor: 27 sites identified for Special Economic Zones (SEZs)| Business Recorder. #CPEC …
The federal government has identified as many as 27 sites in provinces, Islamabad Capital Territory (ICT) and Gilgit-Baltistan for setting up of Special Economic Zones (SEZs) under the China Pakistan Economic Corridor (CPEC), it is learnt. Sources in the Finance Division and the Planning Commission told Business Recorder that provincial governments have also been requested to allocate land for sites of SEZs.

The federal government has identified seven sites in Balochistan for the establishment of SEZs. The sites identified in Balochistan for industrial estates are as follows: (i) Gwadar with 3,000 acres for mines, minerals, food processing, agriculture and livestock, (ii) industrial estate at Lasbela (1,290 acres, iron steel, hardware, paper industry, pharmaceuticals), (iii) industrial and trading estate at Turbat (1,000 acres, manufacturing), (iv) Dera Murad Jamali with 50 acres, (v) Winder Industrial and Trading Estate, (vi) mini industrial estate Khuzdar (50 acres) and (vii) Bolan Industrial Estate (1,000 acres). The government has identified three sites in Sindh to set up Special Economic Zones, which include Chinese industrial zone near Karachi (2,000 acres, Exclusive Chinese Industrial Estate), Textile City at Port Qasim, Karachi with (1,250 acres) and Marble City at Karachi with (300 acres).

As per official documents, eight sites in Khyber Pakhtunkhawa province have also been identified for special economic zones. They include, marble and granite based industrial estate at Mansehra (80 acres, mining), industrial estate Nowshera (1000 acres, manufacturing), expansion of Industrial Estate Hatter (424 acres, manufacturing), industrial estate at Chitral (80 acres, food processing) as well as Industrial Estate Ghazi (90 acres, manufacturing) and industrial estate Dera Ismail Khan (188 acres, manufacturing).

Industrial estate at border of Kohat and Karak and industrial and economic zone at Bannu (400 acre) in KP have also been identified as sites for SEZ under CPEC. The government has identified seven sites for special industrial zones in Punjab. These included Multan Industrial Estate phase-II (80 acres), Rahim Yar Khan Industrial Estate (450 acres), Bhalwal Industrial Estate (400 acres), DG Khan Industrial Estate (3815 acres), Mianwali Industrial Estate (600 acres), Rawalpindi Industrial Estate (200 acres) and Pind Dadan Khan Industrial City (10000 acres) for agri, textile, food processing, livestock, manufacturing & energy).

Additionally, the existing under-development sites would also be included in SEZs for the CPEC. One site for special economic zones in Gilgit-Baltistan Moqpondass (2,000 kanal, mining & food processing) and one for Islamabad Capital Territory has also been identified under the CPEC.
Riaz Haq said…
Chinese-backed coal excavation and power plants will displace thousands of people and deplete groundwater in Thar, a region ravaged by drought.

The Thar desert in Sindh province contains 175 billion tonnes of lignite coal – one of the largest untapped coal deposits in the world. It is also one of the most populated deserts in the world – home to world heritages sites and endangered species. Most of the 1.6 million people who live in the Thar desert region live in poverty and are highly vulnerable to extreme weather events. Twenty five percent of people live within the proposed coal development area. They thought they would benefit, but that has not been the case.


It was only in 2015 that work began on the fields, when the Thar coal project was included as part of a string of energy and infrastructure deals signed under the USD 46 billion China-Pakistan Economic Corridor. These agreements included eight coal-fired power plants and a 3,000-kilometre network of roads, railways and pipelines to transport oil and gas from Gwadar Port on the Arabian sea to Kashgar, in the northwestern Chinese province of Xinjiang.

In December 2015, China approved a USD 1.2 billion investment for surface mining of Thar coal and the establishment of 660 MW power projects. The deposits are divided into 12 blocks, each containing 2 billion tonnes of coal. In the first phase the Sindh provincial government has allocated block II to Sindh Engro Coal Mining Company (SECMC) to excavate 1.57 billion tonnes of coal and build a 660 megawatt power plant. The plant is expected to send power to the Pakistani national grid by June 2019 and will later be expanded to produce 1,320 MW of power.

A state-owned Chinese company, the China Machinery & Engineering Corporation, is providing the machinery and technical support for the excavation of coal and building and running the power plant. The local company will provide human resources, management and be responsible for the distribution of power. SECMC say the project has created 200 technical jobs and 1,600 menial positions. But locals have been protesting that the company has not even given them the menial jobs. Around 300 Chinese, including the engineers, miners and experts are also working on the site.


The Chinese team have started excavating the first pit. In the first phase SECMC will relocate five villages, which are located in block II, including Thario Halepoto village.

SECMC has started paying villagers for their homes and agricultural land. SECMC’s chief executive officer, Shamsuddin Ahmed Shaikh, claims that his company will do all they can to help the villagers.

“We will construct model towns with all basic facilities including schools, healthcare, drinking water and filter plants and also allocate land for livestock grazing,” he told

He said that the company is paying villagers above market prices for their land – PKR 185,000 (USD 1,900) per acre. However locals say this price does not take into account its high environmental value and they do not want to be relocated to the new towns, the exact location of which is yet to be decided.


A SECMC official said that the company will plant 10 trees for every tree cut. So far the company has planted 12,000 trees in an 18 acre area called the Green Park and more trees will be planted in next two years.


SECMC’s Shaikh rejected such claims saying his company would only use 1,400 acres for two reservoirs to store the water extracted during excavation. “It will be natural underground saline water, not toxic or poisonous in any way and it will not affect any village,” he claimed.

Riaz Haq said…
Thar Revisited:

Last week I had the chance to visit Thar again after more than a decade. While it remains an extremely poor and least developed region of the province of Sindh, I was struck by a few changes that have the potential of transforming the region into a vibrant economic player. Water is the most basic need in a desert. Last time round, I observed that Thardeep, a rural support organisation that has worked in the area since the early nineties, had achieved some success in improving provision and quality of drinking water in selected areas. Traditional birth attendants, some dispensaries and a few “barefoot” doctors was all that it could manage in the field of health. It also ran a number of schools. Linkages between craftswomen and middlemen from the market were few and far between. Government presence was minimal. The district hospital in Mithi was a mess. Roads were almost nonexistent.

Fast forward to August 2016. The road from Karachi to Thatta is a shame and Thatta to Thar via Badin is tolerable. Enter Thar and it is a different world. The main road here is probably the best highway of Sindh. It leads to coal mining areas, power stations and the gasification plant. Coal mining is a joint venture of the Government of Sindh and ENGRO, subcontracted further to a concern named Bilal. There is no knowing whether usable coal will eventually be available to the power plant being constructed next door. The coal gasification plant is no more than a monument to our atomic veteran.

The impact of the road, augmented by mobile connectivity, is multidimensional. Walking long distances has given way to motorbikes and overloaded buses have taken the place of kekras, the rickety shuttle truck-bus of the World War II vintage. Children suffering from malnutrition and other ailments are reported directly to the media as well as the hospital in Mithi on mobile phones. The high numbers of the suffering children had always existed; only the media was late in discovering these cases. The media attention did bring politicians and bureaucrats to the region, facilitated of course by the road. The hospital in Mithi is now much better staffed and well-stocked with medicines. It is now a thriving town with a good number of schools and a college. Even an English-medium private school was in evidence. A sub-campus of a university is also coming up. Locals complained about the lack of girls schools, especially at the post-primary level. This is a sign of growing awareness. There was also frustration that the locals are not given the party tickets for the National and Provincial assembly seats. Mobile connectivity and the road have linked the famous craftswomen of Thar with the main markets much more effectively. At a community meeting in Islam Kot, women were quoting prices that broadly corresponded with the prices charged in Karachi’s Zeb un Nisa Street.

Another change is the large number of government buildings, most of them left incomplete. Many that are completed, are uninhabited. Those complete and inhabited are poorly maintained. The tourist complex built at the legendary Marvi well is a case in point. A beautiful tourist complex in Nagar Parkar, designed by friend Arif Hasan, funded by Sindh’s Planning and Development Department and managed by Thardeep is another case in point.

At the end of the day, there may or may not be good quality coal or power, but the very presence of the road is rapidly opening up the area. As for power, the people are beginning to learn that the best off-grid solution is the sun that shines over Thar most of the time. I, though, had the good fortune of witnessing rains and greenery in a desert — an exhilarating experience.
Riaz Haq said…
#Chinese enterprise to boost green, sustainable energy development in #Pakistan under #CPEC - Global Times

China will help boost green, low-carbon and sustainable energy development to address power shortage in Pakistan, vowed a Chinese entrepreneur on Monday on the occasion as the two-day China-Pakistan Economic Corridor (CPEC) Summit and Expo are being held in Islamabad.

"This is one of our core concepts when we implement the out-going strategy. We share our advancing technologies and experiments with the countries we invested in," Yan Zhiyong, chairman of the Power Construction Corporation of China, or Power China, told Xinhua on Monday.

"We are not coming only for big projects, we are here to help countries, such as Pakistan, to plan and design their future energy development blueprints so as to address problems they are facing and to bring them into realities," said Yan, who is fighting for a responsible image for Chinese enterprises that increasingly engaged in world arena.

Many China-involved projects overseas are questioned by western countries over ecological issues. However, for his part, Yan said all the projects by Power China will abide by local standards if the countries have higher environmental protection clauses than that of China, while, if their standards are less strict, it will follow as same as China's regulation.

The eye-catching Port Qasim coal-fired power project in Karachi in southern Pakistan is one of the best examples of Yan's concepts. The project adopts a costly method to lower the temperature of the seawater used to cool the generating units so as to prevent from heating up water temperature around the coast.

Abiding by local and World Bank's environmental protection regulations, the Qasim power plant, with a total installed capacity of 1,320 megawatt, will provide 9,000 gigawatt hour power to meet Karachi's electricity shortage in the southern Asia country.

Meanwhile, the Qasim project will also create over 3,000 jobs for the Pakistani people directly and will increase 500 jobs or training positions for locals every year after its operation.

Yan said that it is very important to train more local people to be qualified to operate the power plant and other utilities invested or constructed by Power China. "It's just like the proverb which says give a man a fish, he eats for a day. Teach him to fish, he will never go hungry."

The chairman also suggested the Pakistani government to develop hydropower and wind power as the country obtains abundant water-power and wind-power resources.

"On one hand, utilizing local power resources will decrease energy import costs so as to lower energy prices domestically. That will benefit the people here. On the other hand, it will ensure Pakistan's energy security by depending on its own resources," according to Yan, adding that "we must put a country's demands into our consideration when we are going to launch a project."

Yan said the CPEC is a part of Chinas Belt and Road Initiative which aims at optimizing regional resources and enhancing connectivity between involving countries so as to achieve the goal of common development, and Power China has the ability to fulfill its role in helping Pakistan shake off energy shortage.

Earlier the day, addressing the inaugural session of the CPEC summit, Pakistani Prime Minister Nawaz Sharif said that the CPEC would not only serve as a game-changer for Pakistan, but a fate-changer for entire region by helping it get rid of economic deprivation and attain peace and prosperity.

"The CPEC is a new concept of diplomacy based on shared goals of prosperity for Pakistan and the region, and a project to eliminate poverty, unemployment and underdevelopment. It will not only improve Pakistan's own infrastructure but will also provide it the much needed know-how, knowledge and expertise in new technologies," said the prime minister.

Riaz Haq said…
Published: 27 Jun 2016
Pakistan Vision 2025 seeks to enhance the national transportation infrastructure by establishing an efficient and integrated transportation and logistics system. Establishing industrial parks and developing SEZs along the China–Pakistan Economic Corridor (CPEC) will strengthen the transportation network and logistics infrastructure. Road freight transportation contributed over 90% of the goods transported by land. Rail freight is likely to gain share due to modernization and expansion. High priority is given to road network development. Private sector participation in logistics infrastructure development is likely to gain momentum, and transportation and warehousing are likely to lead logistics industry growth during 2016–2020.

The potential opportunities in the logistics industry in Pakistan, is estimated at approximately US $ 30.77 billion in 2015. Key targets set in the national development initiatives for the transportation sector include reduction in transportation costs, effective connectivity between rural areas and urban centres, inter-provincial high-speed connectivity. Also high priority is given for the development of integrated road/rail networks between economic hubs (including air, sea and dry ports) and high capacity transportation corridors connecting with major regional trading partners

Up-gradation of all major airports to trans-shipment hubs, development of cargo villages, modernization of rail transport, E-commerce, CPEC related investments in industrial centres and Special Economic Zones (SEZs) will serve as primary macro drivers for logistics sector growth. CPEC related projects intend to upgrade and modernize road transport and related logistics infrastructure such as logistics park and establishment of cargo villages at major airports. Hence, high priority is given for road network development; private sector participation in logistics infrastructure development is likely to gain momentum.

Storage and Warehousing demand from CPEC related industrial corridors are likely to derive increased storage and warehousing requirements including cold chain logistics, establishment of Cargo Villages Ports will facilitate goods traffic to central Asian countries and evolve as a major transhipment hub in the region.

Freight forwarding opportunities expected to increase due to increasing trade activities through Karachi and Port Qasim. Trade reforms expected to increase volume of trade with increase in inter and intra-regional trade. Development of new port at Gwadar generates demand for warehousing, special economic zone, road and railway infrastructure network. As the connectivity and linkage improves, this port will emerge as one of the major transhipment hub in the region - transhipment goods to China, Central Asian countries

Energy and Transportation sectors are expected to see high growth due to increased investment relating to CPEC and National Transportation Plans between 2016 and 2020. This is expected to growth of transportation and warehousing segments between 2016 and 2020.
Riaz Haq said…
Excerpts of Deloitte & Touche report on CPEC:

It is estimated that if all the planned projects are implemented, the value of those projects would exceed all
foreign direct investment in Pakistan since 1970 and would be equivalent to 17% of Pakistan's 2015 gross
domestic product. It is further estimated the CPEC project will create some 700,000 direct jobs during the
period 2015–2030 and add up to 2.5 percentage points to the country's growth rate.

The CPEC will open doors to immense economic opportunities not only to Pakistan but will physically connect
China to its markets in Asia, Europe and beyond. Almost 80% of the China’s oil is currently transported from
Strait of Malacca to Shanghai, (distance is almost 16,000 km and takes 2-3 months), with Gwadar becoming
operational, the distance would reduce to less than 5,000 km. If all goes well and on schedule, of the 21
agreements on energy– including gas, coal and solar energy– 14 will be able to provide up to 10,400
megawatts (MW) of energy by March 2018. According to China Daily, these projects would provide up to
16,400 MW of energy altogether.
As part of infrastructure projects worth approximately $11 billion, and 1,100 kilometer long motorway will be
constructed between the cities of Karachi and Lahore,2 while the Karakoram Highway between Rawalpindi and
the Chinese border will be completely reconstructed and overhauled. The Karachi–Peshawar main railway
line will also be upgraded to allow for train travel at up to 160 kilometers per hour by December 2019.3
Pakistan's railway network will also be extended to eventually connect to China's Southern Xinjiang
Railway in Kashgar.4 A network of pipelines to transport liquefied natural gas and oil will also be laid as part of
the project, including a $2.5 billion pipeline between Gwadar and Nawabshah to transport gas from Iran.5
Oil from the Middle East could be offloaded at Gwadar and transported to China through the corridor, cutting
the current 12,000 km journey to 2,395 km. It will act as a bridge for the new Maritime Silk Route that
envisages linking 3 billion people in Asia, Africa and Europe, part of a trans-Eurasian project. When fully
operational, Gwadar will promote the economic development of Pakistan and become a gateway for Central
Asian countries, including Afghanistan, Uzbekistan, linking Sri Lanka, Iran and Xinjiang to undertake marine
Over $33 billion worth of energy infrastructure will be constructed by private consortia to help alleviate
Pakistan's chronic energy shortages,7 which regularly amount to over 4,500MW,8 and have shed an estimated
2-2.5% off Pakistan's annual GDP.9With approximately $33 billion expected to be invested in energy sector
projects, power generation assumes an important role in the CPEC project. Over 10,400MW of energy
generating capacity is to be developed between 2018 and 2020 as part of the corridor's fast-tracked "Early
Harvest" projects.10

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

Chinese investors are contemplating to build a chemical and automobile city in Gwadar under the umbrella of the China-Pakistan Economic Corridor (CPEC).

According to a private news channel, sources linked to CPEC project stated that the Chinese authorities have already initiated paperwork on said projects, which reflects their seriousness.

Analysts have advised owners of local automobile industry to start joint ventures with Chinese as this would help in transfer of technology as well as boost the local industry. Earlier, China announced to set up a steel factory under CPEC apart from various other projects.

China is developing the Gwadar port as a strategic and commercial hub under its ‘One-Belt One-Road’ initiative that promises shared regional prosperity. CPEC is one of many arteries of the ‘One-Belt One-Road’

In 2013, Pakistan handed over the Gwadar port to the Chinese company by annulling a deal with a Singapore company that could not develop the port after taking over in 2007. The ECC further approved amendments in the Gwadar Port Concession Agreement for operating and developing the Gwadar port and free zone.

On October 31, hundreds of Chinese trucks loaded with goods rolled into the Sost dry port in Gilgit-Baltistan as a multibillion-dollar project between Pakistan and China formally became operational.

The corridor is about 3,000-kilometre long consisting of highways, railways and pipelines that will connect China’s Xinjiang province to the rest of the world through Gwadar port.
Riaz Haq said…
Exclusive: CPEC master plan revealed

For industry, the plan trifurcates the country into three zones: western and northwestern, central and southern. Each zone is marked to receive specific industries in designated industrial parks, of which only a few are actually mentioned.

The western and northwestern zone, covering most of Balochistan and KP province, is marked for mineral extraction, with potential in chrome ore, “gold reserves hold a considerable potential, but are still at the exploration stage”, and diamonds. One big mineral product that the plan discusses is marble. Already, China is Pakistan’s largest buyer of processed marble, at almost 80,000 tons per year. The plan looks to set up 12 marble and granite processing sites in locations ranging from Gilgit and Kohistan in the north, to Khuzdar in the south.

“There is a plan to build a pilot safe city in Peshawar, which faces a fairly severe security situation in northwestern Pakistan”.

The central zone is marked for textiles, household appliances and cement. Four separate locations are pointed out for future cement clusters: Daudkhel, Khushab, Esakhel and Mianwali. The case of cement is interesting, because the plan notes that Pakistan is surplus in cement capacity, then goes on to say that “in the future, there is a larger space of cooperation for China to invest in the cement process transformation”.

For the southern zone, the plan recommends that “Pakistan develop petrochemical, iron and steel, harbor industry, engineering machinery, trade processing and auto and auto parts (assembly)” due to the proximity of Karachi and its ports. This is the only part in the report where the auto industry is mentioned in any substantive way, which is a little surprising because the industry is one of the fastest growing in the country. The silence could be due to lack of interest on the part of the Chinese to acquire stakes, or to diplomatic prudence since the sector is, at the moment, entirely dominated by Japanese companies (Toyota, Honda and Suzuki).
Riaz Haq said…
China signs MoUs worth $375m for investment in readymade garments sector in Pakistan

Chinese companies from different cities and provinces have expressed their interest in relocating their textile, garment and accessory production units to Punjab, with an expected investment of at least $25 million estimated for each unit.

This was stated by Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) Central Chairman Ijaz Khokhar at the three-day 18th International Textile Asia Exhibition. Besides marking the participation of over 500 foreign delegates, the exhibition also witnessed signing of MoUs worth $375 million for investment in Pakistan through joint ventures with local companies

Speaking on the occasion, Khokhar said that foreign companies are also committed to transfer their technologies, besides buying back Pakistani products after value-addition here, which would enhance export and lower Pakistan’s trade deficit with China.

Quoting the Chinese, he said, “We will make joint ventures with local companies from Gujranwala, Lahore, Sialkot and Faisalabad, and provide training to engineers from these cities and buy back products to export to China.”

The event was jointly organised by PRGMEA and Ecommerce Gateway Pakistan, who also signed an agreement to continue to jointly conduct this mega textile event in the future on an annual basis.

The PRGMEA chairman announced this on the last day of the exhibition. In his concluding remarks, he said that around 52,000 trade visitors registered their presence in the textile fair in three days.

Also present on the occasion, PRGMEA Vice Chairman Jawwad Chaudhry said that machinery and equipment displayed at the exhibition were of immense use to manufacturers producing value-added products for increasing volume of exports.

He hoped that local businessmen would benefit from this technology by adding value to their products.

He said that the Textile Asia Expo also featured businessmen to businessmen (B2B) meetings, a lot of important industry-related presentations and seminars on textile sector.

Chaudhry observed that the entire chain of the local textile sector was invited to attend the country’s largest textile show. The exhibiting countries included Austria, China, Czech Republic, France, Germany, India, Italy, Korea, Taiwan, Turkey, UK and USA among others.

Ecommerce Gateway Pakistan CEO Dr Khurshid Nizam said that such textile machinery fairs in Pakistan would increase productivity, resulting into better competitiveness.

Chinese textile units interested in relocating to Pakistan

The exhibition is aimed at focusing the Punjab potential of textile and garment machinery, accessories, raw material supplies, chemicals and allied services under one roof, as around 80% of textile industry is located in this province, Nizam added.

The exhibition also provided an effective platform for joint ventures and collaborations to the textile sector’s SMEs, he remarked.

The CEO observed that the three-day mega fair provided the local small textile industry a good opportunity where more than 315 international brands from around 27 countries displayed their products in more than 515 stalls.

Riaz Haq said…
#Pakistan, #China to fast track #industrial cooperation under #CPEC. #SEZ #economy #Manufacturing

Pakistan and China have agreed to fast track the industrial cooperation under China Pakistan Economic Corridor (CPEC) to accrue maximum benefits of this important phase and ensure win-win situation for both countries.

This was decided in the first meeting of Joint Expert Working Group (JEWG) on industrial cooperation, held on Tuesday in Islamabad. The Pakistan side was led by Board of Investment (BoI) Secretary Azher Ali Chaudhry and the Chinese delegation was led by China International Engineering Consulting Corporation Director Du Zhenli.

On the occasion, the BoI secretary said that the main gain from the CPEC is the industrial cooperation which will not only provide a win-win situation for both countries but will ensure sustainability of this multi-billion dollar project. He said that the Chinese experience regarding establishment of industrial parks will be instrumental for Pakistan by using it as a tool for economic and social development of the country.

Zhenli, head of the Chinese delegation, mentioned that the entire visit remained highly productive and would go a long way to frame the future plans of industrial development in Pakistan. Both sides had a detailed discussion on relocation of industry from China, incentive package for relocation of industry, opportunities available under export promotion zones, identification of industry to be parked in special economic zones (SEZs), terms of engagements (ToE) for establishment of SEZs and upgradation of human resource development through promotion of technical education.

Both sides agreed to ensure finalisation of feasibilities and other codal formalities of prioritised SEZs before 7th Joint Cooperation Committee (JCC) meeting, expected to be held by the end of this year. The Chinese side expressed their satisfaction over the incentive package announced by Pakistani side and informed that a number of Chinese developers and enterprises are willing to invest in these SEZs.

Both sides agreed that SEZs under CPEC are open for all foreign and local Pakistani investors. Chinese developers and enterprises could enter into joint ventures with local developers and investors to ensure successful cooperation in this important sector of CPEC. Pakistani side shared a proposal to upgrade skill development in Pakistan in line with needs of CPEC which includes transformation of National Training Bureau (NTB) into state-of-the-art institute of technical and vocational training centre in federal capital for producing skilled workforce for CPEC projects, establishment of joint China Pak Training Institutes in the main cities falling under CPEC routes such as Gilgit, Abbottabad, Islamabad, DI Khan and Quetta as well as establishment of Public centres for a vocational training at Islamabad for imparting training to the youth and instructors on the “model of public centre” for vocational training, Tianjin. It was decided that the proposal would be further discussed in detail on the forum of JWG on industry cooperation likely to be held next month.

The Chinese Expert Group is on its eight-day visit to Pakistan to ensure transfer of knowledge and share Chinese experience in development of industrial sector with Pakistani officials, members of academia and business community. Besides conducting three training workshops in Karachi, Lahore and Islamabad, the group visited SEZs sites in Sindh, Punjab and Khyber Pakhtunkhwa.
Riaz Haq said…
#Pakistan asks #China to diversify #investments, PM adviser Razzak Dawood says. Country wants more #Chinese money in #agriculture, #industrialization and #education. #CPEC

So far, most CPEC projects have focused on power and infrastructure. But Dawood said the country has actually canceled some power projects due to them being "too large and unnecessary."

"Now, we are saying, 'No thank you.' Pakistan is asking China to look at industrialization, agriculture and education in line with the CPEC," he explained.

He said Pakistan have to diversify CPEC projects. After being criticized about its loan shark-like tactics related to the Belt and Road Initiative, China has been reconsidering its approach. An expert in Chinese politics pointed out, "Now the Chinese leadership is reviewing CPEC by mobilizing their research institutes. They are paying much more attention to the situations in recipient countries and their sentiment toward China."

Pakistan is going through hard times. The country has suffered a severe financial crunch due to huge expenditures on infrastructure, especially in the power sector, and too many imports of electrical equipment, steel products and other necessities related to the CPEC. As a result, its current-account deficit has skyrocketed and foreign reserves have dropped to their lowest level in four years.

In its latest outlook, the International Monetary Fund sees Pakistan's economic growth slowing to 4% in 2019. But Finance Minister Asad Umar recently pointed out that the economy is already on the road to recovery.

Dawood explained that Umar is not talking about growth rate, but about stabilizing the economy. "We will go through a period of lower growth for one or two years, then our economy will pick up," Dawood said.

Now, both domestic industrialists and foreign investors are closely watching the country's negotiations with the IMF over an $8 billion bailout package.

Dawood stressed, however, that Pakistan is not relying solely on the IMF. "We are approaching friendly countries, that is, Saudi Arabia, the United Arab Emirates and China, " he said. Pakistan has already confirmed receiving aid packages from Saudi Arabia and UAE.

According to Dawood, Pakistan "will make necessary arrangements" to overcome its current difficulties.

The country is also trying to meet the IMF's call for tax reform. Dawood noted Pakistan has introduced a reform package that includes simplification of tax layers and the rebalancing of direct and indirect taxes. "The informal sector does not pay tax, so widening the tax net is important," he said.

This autumn, the country launched the "Make in Pakistan" initiative to boost exports, cut the trade deficit and develop the country's skills. "We are giving incentives again to manufacturing in Pakistan. We also reduced custom duties, and are talking a lot to get market access to China, Indonesia, Malaysia and so on," he said.
Pakistan is pinning its export hopes on manufactured goods like motorcycles, tractors, refrigerators, washing machines and transformers. It also hopes to tap into the global demand for information technology products and workers. "We have around 35,000 technical graduates every year," Dawood pointed out. "We know competition is very tough, but now Pakistan is exporting $3 billion of IT services and software annually."

Regarding foreign investment in Pakistan, Dawood gave some examples. "Unilever, Coca-Cola, Telenor and Suzuki Motor have made investments. Now, Exxon Mobile has re-established its office in Pakistan after more than 20 years, and announced a $250 million investment."
Riaz Haq said…
#Chinese businesses pledges US$ 5 billion #investment in #Pakistan in next 5 years in sectors including #construction, #machinery, glass, #automobile, electrical, $power, #transportation, information #technology and #telecom among others. #CPEC #China

Over 55 executives and CEOs of leading Chinese companies on Friday called on Pakistan Prime Minister Imran Khan and pledged to invest USD 5 billion in the cash-strapped nation over the next five years, according to an official statement.

The visiting Chinese business delegation represented various sectors including construction, machinery, glass, automobile, electrical, power, transportation, information technology and technological research among others.

"Chinese business executives expressed confidence in the business friendly policies of the government and committed to invest USD 5 billion over a period of five years in various small and medium size industrial sectors," the statement said.

Pakistan has so far received billions in financial aid packages from friendly countries like Saudi Arabia, China and the UAE during the current fiscal year.

During the meeting, Khan welcomed the Chinese delegation and stated that China has always been a trusted partner of Pakistan.

The sagacity, wisdom and vision of the Chinese leadership for peace & development, good governance and poverty alleviation is highly impressive and worth emulating, said Khan.

He added that the interest of Chinese companies towards investment and relocating business and industrial units to Pakistan reflected the trust of the Chinese side in the growing economy of Pakistan.

He said the Chinese side have a strong desire to translate Pak-China equation into a win-win economic partnership.

Our Government is facilitating investors and reducing impediments in ease of doing business'. Partnership with Chinese companies and their investment will reap multiple benefits for both the countries including employment generation, transfer of technology and economic growth," he said.

Talking about China-Pakistan Economic Corridor (CPEC), Khan reiterated that ambitious project will prove to be a game-changer with respect to enhancing trade activities and further cementing Pak-China relations.

The CPEC, which connects Gwadar Port in Balochistan with China's Xinjiang province, is the flagship project of Chinese President Xi Jinping's ambitious Belt and Road Initiative (BRI).

"Fast-track implementation of the CPEC projects is our priority for which a special unit is overseeing implementation of various projects in Planning Division," he said.

China's Ambassador Yao Jing said that Chinese investors have observed fundamental improvement of policies and facilitation of foreign investors in Pakistan.

"Chinese government will extend all possible support towards realising the vision of a strong, stable and prosperous Naya Pakistan, Yao said.

Riaz Haq said…
#Pakistan sees #FTA with #China, Belt and Road as path to recovery. #CPEC has entered a new phase, focusing not only on #energy and #infrastructure but also #industrialization and #socioeconomic development, and #modernization of #agriculture and #tourism

On Jan. 1, the second phase of the Pakistan-China free trade agreement kicked-off. According to the minister, the first phase "resulted in a huge trade deficit in Pakistan," but the country recognized the need to correct the problem. "Under [the second phase], we can export 313 new items -- especially textile, surgical instruments, sportswear and agricultural products -- to China with zero duties."

Pakistan expects the new phase of the FTA will increase exports by $500 million to $600 million.

The 38-year-old minister noted other bright spots in the economy, saying that "tax revenues in July-November 2019 rose 17% from last year," driving down the current-account deficit by 73% in the same period.

Continuing on the upbeat note, Azhar said that Pakistan rose in the World Bank's Ease of Doing Business ranking to 108th, up 28 places from last year. He also pointed out that foreign portfolio investment has returned after three years, and that the benchmark stock index Karachi Stock Exchange 100, rallied 11,000 points in five months, hitting the 40,000 mark.

Furthermore, ratings agency Moody's upgraded Pakistan's outlook in December 2019 from Negative to Stable, based on a positive evaluation of policy changes and improvement in the country's balance of payments.

"The Pakistani economy has been stabilizing since last year," Azhar said. "Once we've completed stabilization, then we'll shift gears and enter a higher growth phase from [fiscal 2021]. I think we're out of the economic crisis."

Regarding GDP growth next year, the minister said it "depends on whether inflation and interest rates come down, but it will be certainly higher than the current fiscal year."

However, Pakistan is not yet out of the woods. Retail inflation in November was 12.7%. In addition, due to servicing a $6 billion bailout package from the IMF, the country had to hike gas and power tariffs. Inflationary pressure remains high.

"Most of the inflation is in food, and is seasonal. 20% to 25% of our economy is based on agriculture," Azhar explained, adding that suspending trade with India affected food prices. To reverse the trend, the minister stated that "our cabinet is already considering to lift the import embargo on medicines and essential items from India."

Pakistan also needs to increase tax revenues, partly by improving domestic tax collection. "Despite [declining] imports, tax collection is rising," he said. "If you look at domestic tax collection, it's growing at close to 25% to 30%."

The minister added that the government is becoming more aggressive in its approach. "We're using the latest technologies to track the flow of money and [guarding against] smuggling."

Pakistan's industry lobbies are chiming in with more demands for business-friendly policies to promote investment. They also want custom duties lowered and more government incentives. Last December, import duties on cotton were slashed to help the country's textile industry. In addition, Azhar has promised to increase lending to small and medium-sized enterprises, which contribute almost 40% to Pakistan's GDP.
Riaz Haq said…
#China Radio on #CPEC: Improvements in #energy & #transportation infrastructure have laid the foundation for the #industrial development of #Pakistan. The next phase of the CPEC project focuses on industrial cooperation. #industries #Manufacturing

The projects implemented under the China-Pakistan Economic Corridor (CPEC), a flagship project of the Belt and Road Initiative, will not only benefit certain areas but also development in Pakistan, commented China Radio International (CRI) Urdu on Sunday.

“The way in which the CPEC projects have been implemented over the past five years and the results that have emerged show that the purpose of building up CPEC is not to benefit certain areas, but to promote development in Pakistan,” the CRI Urdu said of the progress made in the construction of CPEC projects.

The Urdu service stated that the infrastructure, construction of industries and the elimination of energy shortages will provide an environment for Pakistan according to its resources, which will also benefit the people of Pakistan and guarantee a bright future.

The Orange Line Metro train in Lahore is the first electric public transport project, the introduction of which not only increased travel facilities for the people but also created new jobs.

In the past five years, CPEC projects have created 55,000 direct jobs in the road infrastructure sector, of which 48,000 have been created specifically for local Pakistanis.

According to a spokesman for the Chinese Ministry of Foreign Affairs, major projects with a direct investment of US $25 billion have been completed since the inception of CPEC. The projects completed under it are are part of The Belt and Road Initiative.

As for the shipping of cargo, the trade began at the Gwadar port during the first six months of this year, through which up to 20,000 tons of goods were shipped to Afghanistan; the initiative also created jobs in the shipping sector. There was no doubt that these projects entailed infrastructure as well as energy supply, and job opportunities, the CRI maintained.

According to the proposed two-gap model of economist Hollis B Channery, developing countries should introduce foreign investment and stimulate exports to boost their national economies. In this regard, CPEC has played an important role in the development of Pakistan.

The initiative has also addressed the issue of limited investment potential, insufficient foreign exchange savings and deficits in Pakistan, and has provided excellent quality for Pakistan’s economic growth.

Pakistan’s GDP growth rate is significant and it has created 70,000 jobs in Pakistan, the China-based Urdu service added.

Since its inception, CPEC has considered the elimination of energy shortages in Pakistan as an important sector for construction. Over a period of five years, energy projects under the CPEC framework added 3,340 MW of electricity to Pakistan in early April 2019, accounting for 11% of the installed capacity in the country.

The shortage of electricity has been significantly reduced and in addition to power generation projects, China has built the Matiari-Lahore (an 878 km long, 660 kV) HVDC transmission line project in Pakistan – the second HVDC transmission line in the world to extend the life of the country's power grid.

The construction of the corridor is progressing rapidly, significantly reducing Pakistan's energy problem in the process. Improvement in the transportation infrastructure has laid the foundation for the industrial development of Pakistan. The next phase of the project focuses on industrial cooperation.

Given the pace of the projects, their completion and results, it can be said that CPEC is undoubtedly a new impetus for the sustainable development of Pakistan, the CRI added.

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.

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Riaz Haq said…
Pakistan, China agreement on industrial cooperation a breakthrough: Dawood

The advisor added that the agreement will augment the process of B2B [Business to Business] collaboration and matchmaking. “[It would] pave the way for industrial relocation from China and export-led growth with numerous direct/indirect benefits to the economy,” he said.

“I congratulate BOI for this landmark achievement,” said Dawood.

The CPEC Joint Working Group (JWG) on Industrial Cooperation was established in 2016 and an MoU was signed between the parties in 2018. With the passage of time and as the CPEC entered its second phase, the need for a comprehensive Framework Agreement became imperative.

CCoCPEC to fine-tune PM’s China agenda

Both sides reached a consensus on the elevation of the MoU into a Framework Agreement in 2020.

The agreement reaffirms prioritised development and operations of the nine CPEC SEZs, with primary focus on the early completion of Rashakai SEZ in KP, Allama Iqbal Industrial City in Punjab, Dhabeji SEZ in Sindh, and Bostan SEZ in Balochistan.

For colonisation of these SEZs, the business-to-business matchmaking mechanism of Pakistani and Chinese enterprises has also been emphasised, which will proliferate the people-to-people and institution-to-institution linkages.


Abdul Razak Dawood
Signing of Framework Agreement on Industrial Cooperation between 🇵🇰Pakistan & 🇨🇳 China is a breakthrough for CPEC Phase II and a significant outcome of the PM’s visit to China. The agreement will augment the process of B2B collaboration and matchmaking 1/2

Abdul Razak Dawood
and pave the way for industrial relocation from China and export-led growth with numerous direct/indirect benefits to the economy. I congratulate BOI for this landmark achievement. 2/2




#China #Pakistan

Riaz Haq said…
Pakistan light oil pipeline project undertaken by CPP completed

FAISALABAD, Jun. 13 (Gwadar Pro) –Recently, the MFM MoGas Project – (MFM MP) Phase-II (TS-3 & TS-4), constructed by China Petroleum Pipeline Engineering Co., Ltd. (CPP) was officially completed and successfully passed the owner's inspection.

“Since we officially entered the Pakistani market in July 2014 and registered the Pakistan Branch of China Petroleum Pipeline Engineering Co., Ltd. in October 2017, we have completed a total of 9 projects here. Beyond all question, the light oil pipeline project means another challenge for us," said Wang Desheng from the TS-3 & TS-4 EPC Project Department in an exclusive interview with Gwadar Pro.

“Our owner, Pak–Arab Refinery Limited (PARCO), operates a pipeline transportation system of more than 2,000 kilometers, from Karachi in the south to Lahore in the north, which can be described as the main artery that helps Pakistan’s north-south energy transmission. In recent years, demand for motor gasoline has grown rapidly in north and central Pakistan, so the PARCO started planning to use the same pipeline to transport gasoline to alleviate the shortage in the region, thereby stabilizing its market share in north-central Pakistan,” Wang told Gwadar Pro, “therefore, Mahmood Kot-Faisalabad-Machike (MFM) Pipeline Phase II Reconstruction and Expansion Project came into being, which also included our project.”

The TS-3 and TS-4 stations are located in Faisalabad and Sheikhupura, Punjab, respectively. The former includes a single gasoline storage tank (42 meters in diameter, 12.6 meters in height, and a tank capacity of 15,000 cubic meters), a fire water storage tank (15.24 meters in diameter, 13.1 meters in height and a tank capacity of 2200 cubic meters), etc. The latter includes 2 single gasoline storage tanks (42 meters in diameter, 12.6 meters in height and a tank capacity of 15,000 cubic meters), a fire water storage tank (18.2 meters in diameter, 14.63 meters in height and a tank capacity of 3500 cubic meters) and related supporting facilities.

According to Wang, their project has always adhered to the strictest engineering quality standards since the start of construction in November 2017 until the owner issued the completion certificate recently. “During the construction period of several years, our team overcame challenges such as local climate, customs differences, project safety, and successfully overcame the huge difficulties brought by the COVID-19 epidemic, and the project proceeded smoothly. It can be said that the owner's affirmation means our success,” Wang emphasized.

Besides, as for employment, the project also created a series of jobs to local technical talents. The reporter learned that during the peak construction period, the total number of people on site reached nearly 400. The project department recruited a group of skilled and experienced Pakistani engineers, and the person in charge of HSE also provided training on epidemic prevention and various rules and regulations.

In Wang’s view, there are huge opportunities for cooperation between CPP and Pakistani companies in the oil and gas industry, which has a considerable market in Pakistan. At present, the CPP has established good cooperative relations with major oil and gas industry owners such as SSGC, SNGPL, PARCO, ISGS, OGDCL, etc. in Pakistan, and has won a good reputation locally. “In the future, we will always pay attention to local policy trends and seize the opportunity to promote the comprehensive development of large-scale oil and gas projects in the China-Pakistan Economic Corridor. China-Pak friendship Zindabad!”
Riaz Haq said…
Muneeb Sikander
1/2 Pak Flood hit rural economy

Work produces things of value and transforms physical world in ways to make life better and survival possible.

But without organised and purposeful productive action, i.e., work, not possible for most people asis at the base of economic order


2/2 Flood hit rural areas

Agrarian to agriculture/livestock based or limited workshop industry. Limited Agri TFP + 15.4 million at poverty risk

1. Need for agri TFP improvement
2., Need to diversify economic base by Proto-industrialization,
Riaz Haq said…
Riaz Haq has left a new comment on your post "Growth of Pak-China Special Economic Zones ":

How to Jump-Start Industrialization in Sub-Saharan Africa
May 27, 2021
By Yi Wen , Iris Arbogast

Most sub-Saharan nations have such low per capita incomes that it would take decades of double-digit growth to attain U.S. living standards.
Nations that industrialize successfully often begin with small-scale efforts and progress to mass-producing heavy industrial goods.
African countries could follow this development pattern with government-provided infrastructure and other support.

When considering income disparities across nations, the differences often can be striking, particularly for nations in the sub-Saharan region of Africa. Per capita income in many poor countries like these is 30 to 50 times smaller than in the U.S. In sub-Saharan Africa, 38 of 48 countries had gross national income (GNI) per capita levels below $2,300 in 2019, while GNI per capita was $65,850 in the U.S., according to data from the World Bank’s World Development Indicators database.

Generations of economists have studied economic development and given policy suggestions to officials in poor countries in Africa and elsewhere, but the disparities remain. To catch up to U.S. living standards, they would need to grow at about 11% per year for 40 to 50 years—an almost impossible standard that only China has come close to achieving in recent history.

The New Stage Theory of Development
The commonality between successful Asian countries’ industrialization (such as China’s rapid rise in the past 40 years) and successful European nations’ industrialization (such as the British Industrial Revolution in the 18th* and 19th centuries) is that these economies all went through three key stages during their industrialization, according to the New Stage Theory of Development (NST):1

Proto-industrialization, which features massive numbers of workshops in rural areas with small-scale production of basic consumer goods for long-distance trade
A first industrial revolution, which features mass production of labor-intensive, light consumer goods for domestic and international markets
A second industrial revolution, which features mass production of capital-intensive, heavy industrial goods
The first stage is very important but has been largely ignored by development economists. During this initial stage, rural farmers or poor households in urban areas use their free time to manufacture simple products and engage in long-distance trade. This raises their income and nurtures the formation of an increasingly unified market and primitive production networks, while developing entrepreneurship and labor skills. 2

During the second stage, large-scale factory systems become prevalent for light industries such as textiles, processed food, toys and furniture. This mass-production stage is labor-intensive, export oriented and benefits from poor countries’ comparative advantage in cheap labor. Mass production in the second stage is profitable only because proto-industrialization has created a large enough market and distribution networks for consumer goods.

Finally, the expansion of light industry in the second stage facilitates the formation of a large enough market for heavy industrial goods—such as means of transportation, energy, steel and heavy equipment. This is not only because the income of workers needs to be high enough to purchase big-ticket items such as automobiles, but because mass production of heavy industrial goods is profitable only after the second stage creates a mass-production chain to support their demand. 3

Riaz Haq said…
How to Jump-Start Industrialization in Sub-Saharan Africa
May 27, 2021
By Yi Wen , Iris Arbogast

In some newly emerging Asian economies, such as Vietnam and Bangladesh, about 30% of rural households were participating in nonfarm wage employment in the early- to mid-2000s (29% in 2002 in Vietnam and 35% in 2005 in Bangladesh). Rates of nonfarm wage employment in poor African countries, such as Ethiopia, Ghana, Malawi and Nigeria, remain between 5% and 18%.

In 2019, the GNI per capita in Bangladesh and Vietnam was $1,940 and $2,590, respectively. GNI per capita was $850 in Ethiopia, $2,220 in Ghana, $380 in Malawi and $2,030 in Nigeria. Although GNI per capita in Nigeria and Ghana is relatively high for the region, these economies are more dependent on income from oil and other natural resources than Bangladesh and Vietnam, according to data from the World Bank’s Development Indicators.

On the other hand, when China engaged in full-fledged proto-industrialization in the 1980s and kick-started its first industrial revolution around the early 1990s, the number of village workers as a fraction of the total rural labor force increased greatly. These workers went from 9% of the labor force in 1978 to 23% by 1988, and then increased to 30% by 2000.5
The Chinese experience in recent decades and the British industrial revolution in the 17th and 18th centuries imply that proto-industries must reach 40% to 50% of total agricultural value added—or about 25% to 30% of total rural labor force in their employment share—to spark a full-fledged first industrial revolution, or to render mass production of light consumer goods profitable and internationally competitive. 6
Based on this criterion, Vietnam and Bangladesh should possess the market conditions for supporting mass-production technologies in light industries like textiles. Indeed, these two countries are currently the largest clothing exporters after China, according to data from the World Trade Organization. But countries such as Ethiopia, Ghana, Malawi and Nigeria do not appear ready to support mass-production technologies in light industries, since their textile and clothing exports are very low.

Policy Implications for Africa
Based on the New Stage Theory of Development, we have a few policy suggestions for countries where rural manufacturing is not yet prevalent. Policymakers should provide every means possible to enhance proto-industrialization, which will help their countries embark on a healthy path of economic development.

The goal is to absorb as many rural households as possible into small-scale manufacturing workshops to increase their income and create a primitive supply chain and a disciplined labor force. This is one of the critical steps for nurturing a mass market to support full-fledged mass-production in light industries.

Governments should provide the necessary infrastructure and social capital to allow farmers to organize themselves into firms and send their goods to distant markets. Part of the income earned could be used to support government initiatives such as building local roads and canals, which reduce transportation costs and are a better use of resources than large projects like high-speed trains—which are better suited to the second industrial revolution stage.

Successfully creating proto-industrial supply chains, commercial distribution networks and competition between proto-industrial firms would eventually help give rise to large firms that mass produce light industrial goods such as textiles. A nation can also be more likely to attract large foreign firms that outsource their labor-intensive manufacturing industries by using subsidization policies such as providing ports, roads and free land as incentives.

* This article has been updated to correct the start of British industrialization.
Riaz Haq said…
ADB CAREC Energy Report

Electricity Generation
Pakistan’s electricity sector has a total installed capacity of 34.5 GW, with thermal generation dominating
the power mix, having a share of 66% (National Transmission and Despatch Company 2020). Gas-fired
plants are the main source of power, having an installed capacity of almost 9.3 GW, while oil-fired power
plants have 6.5 GW installed capacity and coal-fired plants have 4.6 GW. Since the regulatory framework
allowed independent power producers to develop generation projects, multiple new thermal power
plants were constructed. As the country’s oil and natural gas reserves are diminishing, further growth in
alternative energy sources is needed.
Historically, hydropower was one of the main sources of electricity generation in Pakistan. The total
hydropower resource potential is estimated at 60 GW (Faizi 2020). However, with the expansion of
thermal power, its share in electricity has declined significantly and currently holds a 29% share of total
installed capacity. The country has 30 hydropower plants in operation, with a total installed capacity
of 9.9 GW, including 17 categorized as major hydropower and 13 as small hydropower units operating
mainly as a run-of-river units. The three main projects are Tarbela Dam (4.8 GW installed capacity),
Ghazi–Barotha (1.4 GW), and Mangla Dam (1.1 GW). Tarbela and Mangla dams, commissioned in the
1970s, are considered the main contributors to hydropower generation. To enhance the quality and
reliability of supply, Mangla Dam is planned for refurbishment, and Tarbela Dam for extension.
Pakistan’s first nuclear power plant, Karachi Nuclear Power Plant (KANUPP), began operations in 1970,
with a capacity of 100 megawatts (MW). Since then, nuclear power generation has experienced active
growth, and current capacity is 2.5 GW. Cross-country cooperation is a cornerstone of Pakistan’s strategy
to reach its goal of 8,800 MW of nuclear installed capacity by 2030. Currently, one new reactor of
1,100 MW is being built.
The country’s renewable energy potential has been realized to only a limited extent. The theoretical
potential of total wind energy is estimated at 340 GW, with the southern wind corridors being the most
auspicious—the Gharo–Keti Bandar wind corridor has over 50 GW of potential alone. However, only
around 1.1 GW of wind energy capacity is currently in operation. Likewise, solar power has tremendous
potential—as high as 2,900 GW, only about 0.4 GW of which is installed as of 2021. Although projects such
as the Quaid-e-Azam Solar Park (0.4 GW capacity) were successfully implemented, the lack of political
commitment, land availability, and the lower performance of outdated PV plants installed earlier are among
the reasons for limited development of renewable energy. Additional potential solutions include offshore
wind, floating solar PV in existing hydropower reservoirs, and wind farms near hydropower plants with
integration into existing grid infrastructure.

Power generation during fiscal year 2020 reached 121,691 GWh: 32% by hydroelectric plants, 57% by
thermal plants, 8% by nuclear plants, and 3% by renewable energy power plants.
Transmission and Distribution
Pakistan’s power T&D system is suffering from significant energy losses and disruptions. In 2020, 19.8%
of energy was lost during its transmission, distribution, and delivery to end consumers. Among the
10 distribution companies, losses vary greatly from 9% to 39% (NEPRA 2020). On average, the country
experienced 81 interruptions (system average interruption frequency index) lasting nearly 5,300 minutes
(system average interruption duration index) in 2020. The poor performance can be attributed to a
variety of factors, including poor technical conditions, insufficient collection rate of accounts receivable,
and issues with circular debt present in the country.
Pakistan had 7,470 kilometers (km) of 500 kilovolts (kV) and 11,281 km of 220 kV T&D lines in 2020.
Riaz Haq said…
ADB CAREC Energy Report

Transmission and Distribution
Pakistan’s power T&D system is suffering from significant energy losses and disruptions. In 2020, 19.8%
of energy was lost during its transmission, distribution, and delivery to end consumers. Among the
10 distribution companies, losses vary greatly from 9% to 39% (NEPRA 2020). On average, the country
experienced 81 interruptions (system average interruption frequency index) lasting nearly 5,300 minutes
(system average interruption duration index) in 2020. The poor performance can be attributed to a
variety of factors, including poor technical conditions, insufficient collection rate of accounts receivable,
and issues with circular debt present in the country.
Pakistan had 7,470 kilometers (km) of 500 kilovolts (kV) and 11,281 km of 220 kV T&D lines in 2020.
Distribution companies are responsible for T&D activities below 132 kV. Importantly, only 74% of Pakistan’s
population is connected to the power grid. With high electricity losses and frequent outages, Pakistan is
planning to introduce advanced grid management infrastructure and metering. Advanced conductors and
other smart grid upgrades could help reduce T&D losses.
There are two operators in Pakistan’s natural gas T&D system: Sui Northern Gas Pipelines Limited
(SNGPL), covering the central and northern regions of the country; and Sui Southern Gas Company
Limited (SSGCL), covering the southern regions. Total grid losses accounted for nearly 17% by SSGCL and
11% by SNGPL in 2020. According to estimates, average leakage rate is 4.9 leaks per km for SSGCL, and
2.2 leaks per km for SNGPL (for comparison, this value equals 0.2 in Germany and 0.4 in Massachusetts, on
average). The gas pipeline systems require a major overhaul and modernization to increase the efficiency
of transportation and to reduce leakages.
Riaz Haq said…
The federal government has decided to go ahead with the China Pakistan Economic Corridor (CPEC) amid the watchful eyes of international entities. The federal cabinet has approved the commencement of the second, and most important, phase of the CPEC project for industrial development of Pakistan.

According to reports, the industrial cooperation agreement between the two neighboring countries will be effective till 2025, with the possibility of further expansion. They elaborated that under the agreement, there will be capacity building and skill development of Pakistan’s CPEC workforce. The Ministry of External Affairs and Ministry of Law jointly endorsed the draft agreement, sources claimed.

To clarify, BoI is the lead agency of the Joint Working Group (JWG) on industrial cooperation under CPEC from the Pakistani side. On the other hand, the Chinese counterpart of the BoI is the National Development & Reform Commission (NDRC), China.

A framework agreement was also signed between both parties in 2022, which besides other matters of significance, also aims to foster skill development and capacity building of the local workforce. This shows the potential skilling and economic advancement that Pakistan anticipates would result from the current endeavor.

Here is what happened in the pursuance of the consensus reached in the Framework Agreement and the 10th JCC meeting of CPEC, held on 23rd September 2021, the NDRC– China has proposed that an MoC between BoI and the All-China Federation of Trade Unions (ACFTU) is likely to be signed, in order to strengthen workers’ exchange under CPEC Industrial Cooperation.

Sources further hinted that the proposed MoC envisages to conduct exchange programmes of Government officers and workforce associated with CPEC projects, through capacity building and skill development, Chinese language courses, and any other mutually agreed mechanism to promote people to people ties.

According to sources, BoI and ACFTU have reached consensus on the text of the draft MoC, which has been duly vetted by the Law Division, as well as been concurred by the Ministry of Foreign Affairs.

Based on the draft copy, available with Profit, of the MoC between the ACFTU of China and the BoI of Pakistan, there will be an agreement between the two entities to promote industrial cooperation, within the framework of the China-Pakistan Economic Corridor Industrial Cooperation (CPEC IC).

In the foreseeable future (2023-2025), and keeping in mind the COVID-19 pandemic, both sides will, on the basis of mutual consent, hold online workers symposiums at regular intervals, as well as, carry out relevant exchanges and cooperation. The online symposium will be designated for the workforces of both countries that are actively engaged in and contributing to the construction of CPEC. This will provide a platform to augment people to people exchanges through experience sharing and suggestions for the future development of CPEC.

Moreover, online seminars based on the Chinese’s successful experience in development for Special Economic Zones (SEZs) shall also be organized for the concerned stakeholders in Pakistan. Following the same timeline, in the next three years, both sides shall initiate an exchange programme by arranging activities in their respective countries to foster practical people to people and cultural exchanges on ground.

To provide first hand experience of the successful industrial models in China, the Chinese stakeholders shall facilitate the field visits of the concerned teams from Pakistan, including the Chinese SEZs, sources told Profit. Likewise, in order to mitigate the language barrier between the two countries’ workforces associated with CPEC, while promoting brotherly relations and cultural ties, both sides shall arrange exchange programmes by holding language learning courses in their respective countries.

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