Matrix Report
CPEC is presently surrounded by plenty of speculation, most of it motivated and born out of ignorance. It is currently in talks because of the “slow progress”, “Chinese displeasure , if not annoyance”, “Chinese refusal to fund new projects” , “Pakistan’s unhappiness with Chinese companies” inter alia.
This gossip often gives way to fake news or half-baked analysis, often ignorant of the real nature of the Sino-Pak relations that are certainly not hostage to a project or two. What does Pakistan need to do to stem the flow of such fake news or skewed analysis which vitiate the air for both countries?
If both Pakistan and China really desire to optimally utilize available resources and secure progressive investments from China, it shall have to adopt a different, proactive approach:
Pakistan and China should establish a macro-level accountable advisory council for steering CPEC which should also act as a forum to create understanding from top to bottom on the issues accompanying CPEC because investors always invest for competitive returns, seeing negative returns. Why should they pledge funds and render their profits hostage to circular debt?
Developing sustainable Business to Business (B2B) level policy requires investments in new areas: Tourism, Science and Technology, Agriculture, and Information Technology clubbed with focus on developing two-way contacts of private businesses for maintaining a sustainable supply chain for exporting agricultural, dairy, and other products to China.
Additionally, Regionally Competitive Incentives need to be formulated for those investors who are willing to establish industries in the Special Economic Zones with a “Plug and Play” environment. It also requires to resolve payments and cash-flow problems of the projects associated with CPEC including road, electricity and Gwadar Port projects because if these are solved then it will revive the trust on SINOSURE (Chinese State-owned insurance company) leading to improved confidence of greenfield investors and early authorization of pipeline projects. To boost confidence of new investors, formulation of technology transfer (ToT) and profit repatriation strategies must be accredited by a renowned international third party.
Should establish a single legally empowered body which must have powers and mandate to resolve all inter-ministerial and inter-provincial coordination, taxes, regulatory issues at a single point and stop branches with legally empowered provincial offices that can stipulate inter-provincial facilitation and approvals efficiently. Federal and provincial governments have established various empowered investment facilitation centers with no effectiveness, these all should be merged in one empowered governing body.
Moreover, there should be a realistic focus on structural reforms in energy sector with the adoption of emerging technologies i.e. Smart Micro and Macro Grid Systems, Automatic Metering Interface (AMI), and Low Transmission and Distribution Losses HVDC Lines etc. Pakistani and Chinese governments should focus on early resolution of the availability of water, gas, and electricity for Gwadar City, Gwadar Port and Gwadar Free Trade Zone. Early development of efficient and state of the art physical trade facilitation centers should be ensured at Gwadar Port, Khunjerab (Sost Dry Port), Qasim Port, and Karachi PortReal engagement of Afghanistan and Central Asian States markets, and link them with Chinese global value chains as a transit bridge for trading.
In a nutshell, Pakistan must take immediate measures to resolve these issues because foreign inflows in the form of FDIs are critically important for Pakistan’s economy in these turbulent times.
If Pakistan desires more FDIs it first needs to settle outstanding financial bottlenecks with the current investors. This will help in alleviating apprehensions and thus send positive signals to insurance agencies and lenders from China as well as elsewhere.
Trail of history and prevailing circumstances are clearly indicating that the Chinese investors will be investing in Pakistan in near future ONLY if Pakistan is able to provide an end to end conducive investment environment. The investors, otherwise, might land in special economic zones of other regional hubs such e.g. Myanmar, Ethiopia, Cambodia, and Iran.
We have heard too much rhetoric on the “game-changing” CPEC from our Pakistani pontificators. Their Chinese counterparts want them to walk the talk and match the Chinese speed and expectation with prompt action on ground.
