Sena Lee
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QUETTA, Pakistan - China stepped up its presence in Pakistan this week with the opening on Monday of the Pak-China Investment Co Ltd (PCIC) in the business and financial hub of Karachi to be followed with the establishment of offices in northeastern Lahore, the second-largest city and capital of Punjab, on December 27. The move, aimed at boosting trade btween the two countries, comes amid continued concerns over the safety of Chinese workers in Pakistan.
PCIC, established under the Pak-China Five-Year Development Program, will serve as a window for the China Development Bank to evaluate joint ventures between the two countries. The bank, which operates under the State Council, or cabinet, is primarily responsible for funding large development projects.
The countries are seeking to triple bilateral trade to US$15 billion in the next five years from $4.2 billion in 2006 under a free-trade agreement signed just over 12 months ago. They recently signed agreements worth around $300 million under which Pakistani products would be exported to China, involving 15 Pakistani companies and covering goods such as cotton, chrome ore, leather and rapeseed meal.
The PCIC, established in July with paid-up capital of 4.25 billion rupees ($69 million) with the government in Islamabad a direct shareholder, will help Pakistan to secure Chinese investment in various sectors and help Pakistani exporters target openings in China, according to officials. The company will perform investment banking business on a commercial basis.
Among other goals, Pakistan, estimated to have more than 780 million tons of iron ore that contains 35% of iron, wants to import plant and machinery from China for ore exploration to make the most of its natural resources and build more steel capacity. The ore grade is similar to China-sourced ore, making Chinese machinery compatible with Pakistan's needs.
Chinese investment is also being sought across a range of manufacturing, from steel production, construction and earth-moving equipment to the auto sector. Potential joint venture targets include naphtha cracker, oil refining and hydropower projects, and coal mines. In agriculture, Islamabad has sought backing to set up cattle, dairy and poultry farms and animal and poultry feed manufacturing plants.
Pakistan is to establish separate industrial zones for Chinese investors in Lahore and Faisalabad, both in Punjab province. The provincial government is taking its own steps to welcome their northern neighbours, establishing a link with the chief minister's offices for the convenience of Chinese investors to ease hurdles and establish a favorable atmosphere.
The countries are boosting contacts as the 100 and more Chinese companies that already operate in Pakistan remain worried over the safety of the roughly 3,000 Chinese engineers, technicians and entrepreneurs working there.
In July, three Chinese were killed in Peshawar, northern Pakistan, while in February last year three engineers were gunned down with their Pakistani driver in southwest Balochistan province, where they were helping to construct the multimillion dollar Gwadar seaport, a joint venture by Pakistan and China. Another three had been killed in Gwadar in May 2004 by a car bomb. Groups in the area complain that they lack basic resources such as drinking water, according to reports.
Also in 2004, kidnappers abducted two Chinese engineers working on a dam construction project in South Waziristan province and threatened to kill them unless several al-Qaeda members held by Pakistan were released. One was freed, while one died in a rescue operation.
The poor law and order situation has persuaded some Chinese firms to limit their interest in Pakistan. Three oil and gas service companies including Great Wall, and BGP, a unit of state-owned CNPC, recently refused to sign new oil and gas-related contracts to conduct seismic surveys and to supply rigs for drilling in the country.
The free-trade agreement with Pakistan followed similar accords with the Association of Southeast Nations and Chile.
Asia Times Online :: South Asia news, business and economy from India and Pakistan
PCIC, established under the Pak-China Five-Year Development Program, will serve as a window for the China Development Bank to evaluate joint ventures between the two countries. The bank, which operates under the State Council, or cabinet, is primarily responsible for funding large development projects.
The countries are seeking to triple bilateral trade to US$15 billion in the next five years from $4.2 billion in 2006 under a free-trade agreement signed just over 12 months ago. They recently signed agreements worth around $300 million under which Pakistani products would be exported to China, involving 15 Pakistani companies and covering goods such as cotton, chrome ore, leather and rapeseed meal.
The PCIC, established in July with paid-up capital of 4.25 billion rupees ($69 million) with the government in Islamabad a direct shareholder, will help Pakistan to secure Chinese investment in various sectors and help Pakistani exporters target openings in China, according to officials. The company will perform investment banking business on a commercial basis.
Among other goals, Pakistan, estimated to have more than 780 million tons of iron ore that contains 35% of iron, wants to import plant and machinery from China for ore exploration to make the most of its natural resources and build more steel capacity. The ore grade is similar to China-sourced ore, making Chinese machinery compatible with Pakistan's needs.
Chinese investment is also being sought across a range of manufacturing, from steel production, construction and earth-moving equipment to the auto sector. Potential joint venture targets include naphtha cracker, oil refining and hydropower projects, and coal mines. In agriculture, Islamabad has sought backing to set up cattle, dairy and poultry farms and animal and poultry feed manufacturing plants.
Pakistan is to establish separate industrial zones for Chinese investors in Lahore and Faisalabad, both in Punjab province. The provincial government is taking its own steps to welcome their northern neighbours, establishing a link with the chief minister's offices for the convenience of Chinese investors to ease hurdles and establish a favorable atmosphere.
The countries are boosting contacts as the 100 and more Chinese companies that already operate in Pakistan remain worried over the safety of the roughly 3,000 Chinese engineers, technicians and entrepreneurs working there.
In July, three Chinese were killed in Peshawar, northern Pakistan, while in February last year three engineers were gunned down with their Pakistani driver in southwest Balochistan province, where they were helping to construct the multimillion dollar Gwadar seaport, a joint venture by Pakistan and China. Another three had been killed in Gwadar in May 2004 by a car bomb. Groups in the area complain that they lack basic resources such as drinking water, according to reports.
Also in 2004, kidnappers abducted two Chinese engineers working on a dam construction project in South Waziristan province and threatened to kill them unless several al-Qaeda members held by Pakistan were released. One was freed, while one died in a rescue operation.
The poor law and order situation has persuaded some Chinese firms to limit their interest in Pakistan. Three oil and gas service companies including Great Wall, and BGP, a unit of state-owned CNPC, recently refused to sign new oil and gas-related contracts to conduct seismic surveys and to supply rigs for drilling in the country.
The free-trade agreement with Pakistan followed similar accords with the Association of Southeast Nations and Chile.
Asia Times Online :: South Asia news, business and economy from India and Pakistan
