Growth of Pak-China Special Economic Zones

Haier-Ruba joint venture in Pakistan has announced plans to start manufacturing laptops and smartphones in Lahore this year, according to the JV chairman Shah Faisal Afridi. The Haier-Ruba group is one of the largest manufacturers of polyester yarn and home appliances in the country.



“We are not relying on importing mobile phones from China but our focus is the transfer of technology in the country so that we could manufacture our own product here. We have already started an assembly line for the laptops in Pakistan”,  Afridi said in an interview with More magazine.

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

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

Haier entered the Pakistan market in February 2001 by jointly establishing a facility with Pakistan-based Panapak Electronic Company to produce Haier air conditioners.  The Group opened Haier (Pakistan) Industrial Park in Lahore in April 2001. In 2004, Haier was the first foreign brand home appliance manufacturer in Pakistan to obtain the ISO9001:2000 Certification, according to Andrew Delios, the author of "International Business: An Asia Pacific Perspective".

After 13 years in Pakistan, Haier has become the second most popular home appliance brand in the country. Haier Pakistan has maintained the highest market share for air-conditioners and washing machines for several years while Haier  refrigerators curently enjoy the second highest market share. According to a Millward Brown survey in 2013, Haier has achieved 94% brand awareness, the second highest in the country.

Haier has 8 industrial complexes, two of which are foreign--one in the United States, and one in Pakistan,  according to  Xiaofei Li, the author of "China's Outward Foreign Investment: A Political Perspective". In these Special Economic Zones, Haier does localization to suit the needs of the consumers.  For Pakistani market, Haier especially designed a washer that can hold 15 long gowns at one time. There are many more such Special Economic Zones envisaged as part of the CPEC (China-Pakistan Economic Corridor).  It will be essentially an industrial corridor spanning almost the entire length of the country from the Arabia sea coast to the Karakorams where it enters China via the Karakoram Highway (KKH), the word's highest paved road.

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.

Pak-China Industrial Corridor Source: Wall Street Journal


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.

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.

The CPEC will not be just an economic or industrial corridor; it'll also be a strategic corridor for both China and Pakistan in countering the growing US-India alliance and Obama's Asia Pivot both of which are seen as a threat to the regional stability of South Asia.

Clearly, China-Pakistan ties have now become much more strategic than the US-Pakistan ties, particularly since 2011 because, as American Journalist Mark Mazzetti of New York Times put it, the  Obama administration's heavy handed policies "turned Pakistan against the United States". A similar view is offered by a former State Department official Vali Nasr in his book "The Dispensable Nation".


Here's a video about Haier laptop assembly in Pakistan:

https://youtu.be/K2H9BC1G3J8?list=PLZIgsmZfIYkq3VjROsXyBMkEmEuul2uLL




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Comments

Riaz Haq said…
The regional security in South Asia and the adjacent regions to the west and north are on the cusp of a profound transformation. Broadly, there are three vectors involved here.

One, Iran’s integration with the international community as a ‘normal country’, a process that has already begun; two, the historic entente between Russia and China which has consolidated almost immeasurably in the past one year period since the New Cold War tendencies began appearing; and, three, a largely-unnoticed but extremely significant shift in the foreign-policy priorities of Pakistan, a genuinely ‘pivotal’ state in the politics of South Asia, given its highly strategic geographic location in the South Asian region, from where it impacts regional security in Central Asia and West Asia.

The state visit by the Chinese President Xi Jinping to Pakistan on Monday in many ways brings together the three vectors. The visit is, on the face of it, a bilateral event of historic significance to the long-standing ties between the two relationship, which from all accounts can be expected to add much strategic content to the relationship and elevate it to an altogether qualitatively new level.

However, China is also playing the long game insofar as Beijing is actually beginning the implementation of its “One Belt, One Road” initiative, which is a global project in character and scope and all but prefaces China’s inexorable rise on the world stage as a superpower.

It is extraordinary that China is committing such massive investment in excess 40 billion dollars in a single country, undeterred by the perception in the western financial circles that Pakistan is a “failing state” and a revolving door of international terrorism.

In the eighties or nineties, this would have lent itself to interpretation as “India-centric” and as a diabolical move by the Chinese policymakers to strengthen Pakistan’s capacity to challenge India, a common foe. But that is no more the case today. The impulses driving the Chinese policies toward Pakistan today are to be found elsewhere.

First and foremost, Pakistan’s stability has come to be a matter of serious concern from the perspective of China’s internal security needs, which is attributable not only to the spurt in terrorist activities in Xinjiang by groups that are to be traced to the Af-Pak region, but also out of China’s emergent concerns as a stakeholder in regional stability that is an imperative need to advance its regional and global policies (politico-military, economic and cultural) more optimally.

The dramatic shift in the Chinese thinking apropos of the issues of terrorism in South Asia and Beijing’s unmistakable empathy with India’s concerns as a victim of terrorism testify to this. A leading Indian daily brought this home today reporting from Beijing an extraordinary statement attributed to the head of the Chinese foreign ministry think-tank Institute of South and Southeast Asian and Oceanic Studies, Hu Shisheng that China finds itself “awkward diplomatically” to have taken a “neutral stand” on the terrorist attack on Mumbai in November 2011.

Hu said, “India’s concerns over terrorism will be addressed in a more constructive way. China also suffered due to terrorism.” He said China has suffered from U.S. double standards on terrorism and should not behave in a similar fashion.

---
Without doubt, Pakistan (along with Central Asia and Iran) becomes a gateway for China to the world market and it is crucial for Beijing that Washington’s ability to block this gateway is “zero”. Pakistan is actually the single most critical gateway for China in the emergent paradigm. Arguably, that alone could explain the extraordinary extent to which China is making the stabilization of Pakistan a real-time dimension to its own national policies of development.



http://atimes.com/2015/04/pakistan-china-iran-and-the-remaking-of-regional-security/
Riaz Haq said…
LAHORE: The Pakistani society is quickly adapting to technological change. Be it the spectrum auction that marked the arrival of 3G, 4G services or wireless appliances making their way into the mainstream, Pakistanis are slowly coming of age. Similarly, awareness among people of electronic appliances has also increased the demand of these products.

This trend has been taken into account by businesses as an opportunity to invest in the Pakistani market and derive high rewards.

Haier-Ruba group is a company that has shown an exponential growth rate since its inception in the country. The group deals in many businesses ranging from polyester yarn, electronic appliances, power generation, real estate and automobile business.

Recently, its primary achievement can be attributed to the successful development of the Haier-Ruba Economic Zone (HREZ) with the support of Chinese authorities.



The HREZ is located near Lahore and is spread at 300 acres, but it is looking to expand especially after the China-Pakistan Economic Corridor (CPEC) breakthrough.

Haier-Ruba President and CEO Faisal Shah Afridi said the company is looking to buy more land, increase investments and target a wider market .

“We need more land around the motorway and are willing to buy 3,000-5,000 acres of land at market price,” Afridi said.

The HREZ is a part of the CPEC and Afridi expressed hope that this will prove to be a gateway for other Chinese industrialists to venture into Pakistan.

Afridi said that Haier-Ruba also plans to establish regional zones in Pakistan.

“Currently, under HREZ, we are have undertaken 11 projects, the annual turnover of these is $800 million,” said Afridi. “We are planning to invest another $1.5 billion in the next five years for our future ventures.”

The background

Ruba Group’s partnership with Haier dates back to 2001 when a company was established through a joint venture.

After the initial success and rising demand of electronic appliances, Haier Pakistan was set up in 2006, to further diversify its product line with another investment of $0.5 million kicking in later. Currently, the company boasts of annual turnover of Rs46 billion.

http://tribune.com.pk/story/883770/joint-ventures-haier-ruba-plans-expansion-investment-of-1-5b/
Riaz Haq said…
#Pakistan is "the only all-weather strategic partner" of #China - Global Times. #CPEC

http://www.globaltimes.cn/content/960904.shtml#.VoKzAasXjJs.twitter …


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…
It's official: #GE Appliances now belongs to #China's #Haier http://cnet.co/1PeSkl1 via @CNET

http://www.cnet.com/news/its-official-ge-appliances-belongs-to-haier/

After six months and $5.6 billion, the appliance division of General Electric officially belongs to Chinese manufacturer Haier, the companies said at a press conference Monday.

Haier's purchase of GE's Louisville, Kentucky-based appliance division is an assertive attempt to build a stronger presence in the US appliance market. Haier, which is based in Qingdao, China, is the world's leading appliance manufacturer, but the company only holds 1.1 percent of the US appliance market (US customers might be familiar with the brand's refrigerators, air conditioners or rolling R2D2 mini-fridge). Meanwhile, GE Appliances claims nearly 14 percent of the same market.

For many US shoppers, the GE brand is synonymous with household appliances like refrigerators and ovens. But the multibillion-dollar sale to Haier gives GE the chance to rid itself of those consumer-facing appliances to focus on more lucrative industrial manufacturing (think jet engines, industrial power systems and locomotives).

In the short term, people won't see much of a change as a result of the acquisition, said Chip Blankenship, president and CEO of GE Appliances. The GE name will still appear on appliances, and customers will still receive the same support.

"We'd like (customers) to be confident that we stand behind our products as we always have," Blankenship said.

GE Appliances stated in a news release the sale will generate an after-tax gain of approximately $0.20 per share, but the company expects restructuring to offset those gains. When asked about potential layoffs of GE Appliances employees, Blankenship said, "we don't anticipate any change."


There's been talk of GE selling its appliance division for at least eight years. Sweden-based Electrolux came close to buying GE Appliances for $3.3 billion in 2014, but the US Department of Justice objected to the deal last year on the grounds that a merger of two leading manufacturers of cooktops, ranges and wall ovens would reduce competition and options for consumers. GE quickly rebounded with the announcement that it would sell to Haier in January.

Haier was initially set to buy GE Appliances for $5.4 billion, but the price increased by about $200 million because of "increased working capital in the business," according to GE. GE Appliances currently has 12,000 employees that produce appliances out of Louisville and facilities in Indiana, Alabama, Georgia and Tennessee.

Riaz Haq said…
#Turkey's Arcelik to acquire #Pakistan #Karachi-based appliance maker Dawlance for $258 millionNikkei Asian Review

http://asia.nikkei.com/Business/Companies/Turkey-s-Arcelik-to-acquire-Pakistani-appliance-maker


Earlier this year, Arcelik was outbid for General Electric's appliance business by Chinese heavyweight Haier. Later, another Chinese company, Midea Group, beat Arcelik in the race for Toshiba's home appliance business.

On Thursday, Arcelik announced that it has signed an agreement to acquire Dawlance, Pakistan's market-leading home appliance company. The $258 million deal is expected to receive regulatory approval and close by the end of the year.

The acquisition will provide Arcelik a foothold in the world's sixth-most populous country, which is expected to grow around 5% a year for the next three years.

It is also expected to give Arcelik's Asia-Pacific growth strategy another boost, following the company's recent $100 million investment in a Thai refrigerator plant.

Privately owned Dawlance was founded in 1980 in Karachi, where it has two manufacturing sites. It has another site in Hyderabad. Its workforce, which is also spread through its distribution, sales and service networks, is 3,000 strong.

It is Pakistan's leading refrigerator and microwave brand, No. 2 air conditioners and No. 3 in the laundry category. Dawlance in 2015 reported $221 million in revenue and $45 million in EBITDA (earnings before interest, taxes, depreciation and amortization).

"Arcelik's recent investments in Thailand and Pakistan [are expected to provide] a strong platform for growth in Southeast Asia," CEO Hakan Bulgurlu said, adding that European markets have reached a "saturation point for white goods" and are beset by "long-term economic malaise."

He continued: "Economic growth in Pakistan is leading to more disposable income and purchasing power whilst technological advances are making white goods more efficient and more affordable. Pakistan's rapid urbanization and social development is seeing the emergence of more single-family dwellings, creating more demand for consumer appliances."

The CEO also vowed to strengthen Dawlance's product offerings and brand position.

Arcelik is owned by Koc Holding, Turkey's largest industrial conglomerate, which is also active in energy, finance, consumer durables and auto manufacturing.

Arcelik had $5.2 billion in turnover last year. It leads Turkey's white goods and consumer electronics markets. With global brands like Beko and Grundig, Arcelik products are sold in 133 countries. Before the Dawlance deal, Arcelik had 10 brands under its umbrella and had become known for its aggressive acquisition strategy across Europe, Africa and Asia.

Arcelik is Europe's third largest white goods producer.

With its $324 million acquisition of South Africa's Defy Appliances in 2011, it became Africa's largest white goods maker.

Arcelik's total workforce after the Dawlance deal will reach to 30,000 across 18 manufacturing facilities, including those in Turkey, Romania, Russia, China, South Africa and Thailand.
Riaz Haq said…
Chinese investors are contemplating to build a chemical and automobile city in Gwadar under the umbrella of #CPEC

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

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

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

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

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

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


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

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

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

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

https://tribune.com.pk/story/1510133/china-signs-mous-worth-375m-investment-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

http://nation.com.pk/business/18-Oct-2017/pakistan-china-to-fast-track-industrial-coop-under-cpec

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 https://asia.nikkei.com/Spotlight/Belt-and-Road/Pakistan-asks-China-to-diversify-investments-PM-adviser-says

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 plan $1 billion #investment in #Pakistan's #automotive, #textile, #agriculture, information #technology and #telecom sectors. #CPEC https://www.thenews.com.pk/print/497017-chinese-businesses-plan-1-billion-investment-in-cpec-projects

Chinese businessmen on Thursday expressed desire to invest around one billion dollars in Pakistan as China’s funded economic corridor projects entered into their second phase with focus on industrial and agriculture cooperation and Gwadar development. The 50-member business delegation apprised Minister for Planning, Development and Reform Khusro Bakhtyar of its investment plan during a meeting. They are keen to invest in various sectors, including automotive, textile, agriculture-related, information technology and telecom industries. Bakhtyar said the ministry of planning would facilitate investment to further the economic cooperation between the two countries.


“The government is focusing on promoting export-led industry and import substitution for sustained economic growth,” an official statement quoted the planning minister as saying. “China can help increase Pakistan’s exports by relocating export-oriented industries and initiating joint ventures in various fields. This will boost industrial cooperation besides strengthening bilateral economic partnership between the two countries.”

China initiated $62 billion worth of infrastructure and energy projects in Pakistan as part of its Belt and Road Initiative.

The minister said the country offers liberal investment policies to attract foreign investment in different areas. “Private sector of both the countries should forge partnerships for mutual economic benefit of the two countries,” he said. “There are investment opportunities in various sectors such as maritime, iron and steel, petrochemical, agro-based industries, tourism, energy, minerals and mines and textiles.”

Bakhtyar further said establishment of industrial zones has the potential to revive the country’s industrial sector. “It will also create job opportunities besides developing local industries.”

Pan Guangfeng, head of the Chinese delegation acknowledged the significance of Pakistan’s strategic location and the immense investment opportunities in the country. Guangfeng said the city of Chongqing is side by side with One-Belt-One-Road and a centre of heavy industrial activity in central China, especially the automotive and electronics industries of the region along with 37 industrial parks. The delegation head said the investors could raise $300 to 500 million for special economic zone (SEZ) infrastructure development with an umbrella investment of $1 billion in several sectors. He hoped that Chinese investment in Pakistan would help to create 500,000 direct jobs for local youths in addition to transfer technology and raise industries’ tech standards in Pakistan.

Members of the visiting delegation, comprising of chief executives and general managers of businesses from the City of Chongqing, have experience in developing economic zones and expressed their intention to facilitate in the development of SEZs. They highlighted the potential role of Belt and Road Initiative in contributing to the economic and social development of Pakistan and further explored the avenues of collaboration in technological innovation and up-gradation, job creation, ecommerce, and development of human resource capabilities through industrial cooperation between China and Pakistan.
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 https://www.business-standard.com/article/pti-stories/chinese-businesses-pledges-usd-5-bn-investment-in-pakistan-in-next-five-years-119071201256_1.html#.XSkTS6IVh9Y.twitter

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…
New #industrial city near #Faisalabad in #Pakistan to create 300,000 jobs & attract Rs400 billion #investment in #automobiles, #textiles, #engineering, #pharmaceuticals, #food processing, #chemicals, #construction materials, #FGCG and packaging sectors.
https://www.khaleejtimes.com/international/pakistan/300000-jobs-to-be-created-for-pakistanis

The project will attract a huge investment in automobiles, value-added textiles, engineering and pharmaceuticals.
Prime Minister Imran Khan on Friday, January 3, performed the groundbreaking of the Allama Iqbal Industrial City in Faisalabad which is being established under China-Pakistan Economic Corridor and expected to create around 300,000 jobs and attract Rs400 billion investment.

During a day-long visit here, the prime minister performed the groundbreaking of the mega project by unveiling a plaque and also planted a sapling at the project site as part of his 10-Billion Tree Tsunami.

The prime minister was briefed about the significance of the project which is expected to create 300,000 jobs during the next five years.

The project will attract approximately Rs400 billion investment in automobiles, value-added textiles, engineering, pharmaceuticals, food processing, chemicals, construction materials, FGCG and packaging sectors. It will contribute to the country's GDP, increase the exports of the country and would also encourage the import substitution.

In total, nine special economic zones had been planned under the China-Pakistan Economic Corridor (CPEC) Industrial Cooperation Framework.

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

https://www.brecorder.com/news/40153174

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
@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

https://twitter.com/razak_dawood/status/1491324260455190528?s=21


Abdul Razak Dawood
@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

@investinpak

@mincompk

@aliya_hamza

@MAzfarAhsan
#China #Pakistan
@CPEC_Official

https://twitter.com/razak_dawood/status/1491324262359367680?s=20&t=YJ8CVsNeC58lFPWj4WYuRA

Riaz Haq said…
Muneeb Sikander
@MuneebASikander
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


https://twitter.com/MuneebASikander/status/1572606162939289601?s=20&t=hDUZH4AawwsjZEdasU77jw

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

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,

https://www.stlouisfed.org/publications/regional-economist/second-quarter-2021/how-jump-start-industrialization-sub-saharan-africa

https://twitter.com/MuneebASikander/status/1572606221076819970?s=20&t=hDUZH4AawwsjZEdasU77jw
Riaz Haq said…
How to Jump-Start Industrialization in Sub-Saharan Africa
May 27, 2021
By Yi Wen , Iris Arbogast

https://www.stlouisfed.org/publications/regional-economist/second-quarter-2021/how-jump-start-industrialization-sub-saharan-africa

KEY TAKEAWAYS
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

https://www.stlouisfed.org/publications/regional-economist/second-quarter-2021/how-jump-start-industrialization-sub-saharan-africa


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…
CPEC special economic zones to generate huge job opportunities in Pakistan: official

https://english.news.cn/20221215/e0172b03c8b5487d806730149fd7b5fb/c.html

Four special economic zones (SEZs) being set up under the framework of the China-Pakistan Economic Corridor (CPEC) are likely to generate about 575,000 direct and over 1 million indirect jobs in Pakistan, a senior official said on Thursday.

The economic zones being established in the country's Khyber Pakhtunkhwa (KP), Punjab, Sindh and Balochistan provinces would bring about immense opportunities for Pakistani people in job and business sectors, Chairman of Special Economic Zones Authority S.M. Naveed said.

"We have conducted a study to assess job opportunities in four out of nine SEZs, including KP's Rashakai, Sindh's Dhabeji, Punjab's Allama Iqbal and Balochistan's Bostan, to find out potential jobs and industries in the SEZs," the official said, adding that the SEZs offer employment in different fields for which the local youth would be trained before the initiation of the industrial phase.

The trained and skilled labor and engineers would not only get good jobs in the economic zones but also enable Chinese and local companies to recruit skilled professionals from local areas, he added.

The potential industries being set up in the CPEC special economic zones include food processing, cooking oil, ceramics, gems and jewelry, marble, minerals, agriculture machinery, iron and steel, motorbike assembling, electrical appliances and automobiles.

Launched in 2013, CPEC is a corridor linking Pakistan's Gwadar Port with Kashgar in northwest China's Xinjiang Uygur Autonomous Region, which highlights energy, transport and industrial cooperation. ■
Riaz Haq said…
KP takes lead by completing first CPEC originated project

https://dailytimes.com.pk/1114618/kp-takes-lead-by-completing-first-cpec-originated-project/

Khyber Pakhtunkhwa Economic Zones Development and Management Company (KP-EZDMC), a public sector company of the KP government, has taken the lead by completing the first phase of the China-Pakistan Economic Corridor (CPEC) flag-bearer Rashakai Special Economic Zone (SEZ), at District Nowshera.


Talking to APP here Sunday, the Chief Executive Officer (CEO) Javed Iqbal Khattak said that the completion of the first phase of the Rashakai SEZ comprising three phases and covering an area of 247 acres, was due in December 2023, but due to better teamwork and coordination with China Road and Bridge Company (CRBC,) it had been completed six months prior of its specified time period. The Rashakai SEZ is the first completed project initiated under CPEC in Pakistan. This marvelous performance shown by a public sector company of Khyber Pakhtunkhwa has given an edge to the province over other provinces of the country.

So far, an investment to the tone of Rs.85 billion has already been made in the zone and besides, Chinese several domestic big industrial groups are also investing in it, he said. The investors are going to set up units for manufacturing Active Pharmaceutical Ingredients (APIs) a raw material for the pharmaceutical industrial units while another investor has also shown interest in establishing a vaccine manufacturing unit in the zone while Pakistan Oxygen, a largest oxygen manufacturing unit has already invested in the Zone.

The current innovative management of company has initiated construction work on 9 new economic zones including two special economic zones of Hattar and Rashakai. 90 percent infrastructure development work at Hattar Special Economic Zone has been completed and now colonization is also in progress in the facility. During the current management, the total assets of the company by the end of the year 2022 have increased to Rs.15.8 billion as compared to Rs.13 billion in 2021.


Riaz Haq said…
Haier revolutionizes cooling solutions with launch of Pakistan's first Solar Hybrid Air Conditioner


https://en.dailypakistan.com.pk/28-Aug-2023/haier-revolutionizes-cooling-solutions-with-launch-of-pakistan-s-first-solar-hybrid-air-conditioner

Haier is proud to unveil an unprecedented leap in the realm of cooling solutions with the introduction of Pakistan's very first solar hybrid air conditioner. This groundbreaking innovation marks a monumental shift towards sustainable and energy-efficient living, setting new standards in the industry. The launch of the solar hybrid air conditioner underscores Haier's dedication to shaping a brighter future for generations to come.

The Haier solar hybrid air conditioner is a groundbreaking marvel that operates entirely on solar power during daylight hours, eliminating the need for any intermediary devices such as inverters, batteries, UPS, or converters. By seamlessly integrating four 540W solar panels and establishing a direct connection to the outdoor unit, the AC functions autonomously, setting an industry precedent. This marks a historic milestone in Pakistan, where an air conditioner operates directly on solar power without any supplementary support.

For the very first time, consumers can embrace cooling technology that not only cools their spaces but also ensures zero electricity bills during daylight hours. Never before in Pakistan has an air conditioner operated directly on solar power without any intermediate support. This innovative approach significantly minimizes the concerns related to electricity costs and additional equipment expenses. As daylight graces the solar panels, the AC operates exclusively on solar energy, providing cooling comfort without the burden of utility bills. The system seamlessly switches to the grid only in case of cloudy weather, mimicking the hybrid concept found in modern-day hybrid cars. Additionally, the same holds true for nighttime operations.

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