China wishes to shift industries to Pakistan: Iqbal

[pkd]

Pakistan and China are adding new infrastructure projects to the China-Pakistan Economic Corridor (CPEC) in a bid to connect underdeveloped areas with developed ones, said Federal Minister for Planning, Development and Reform Ahsan Iqbal.

He said this at the 5th Joint Coordination Committee (JCC) session of the CPEC on Thursday, where four memoranda of understanding were also signed.

Balochistan to sign economic zone deal with China: official

Iqbal spent a busy day in Karachi. He also visited the Karachi Press Club (KPC) later in the evening to brief media on the current developments on CPEC. Perhaps, the most interesting remark he made there was that the Chinese government has shown its desire to shift some Chinese industries to Pakistan.

“Due to the rising cost of production there, the Chinese government and its private sector want to shift some industries to Pakistan,” he said. “Chinese want to start joint ventures in Pakistan in sectors like engineering, light engineering, automobiles, textiles and cement.”

To realise new Chinese investment, Pakistan and China have constituted a working group to do joint feasibility studies. Pakistan will also setup 25 industrial zones in all the four provinces of the country, he added.

Manufacturers gear up for Chinese interest

The federal government is trying to improve social sector development along with energy, infrastructure and transport to link developed areas with less fortunate ones, he said.

Speaking about major infrastructure projects under CPEC, he said the Fifth JCC session has decided a complete overhauling of the main railway track from Peshawar to Karachi at an investment of $5 billion. It has been decided to first complete the Karachi-Hyderabad and Lahore-Multan railway routes in two-and-a-half years while the whole track will be renovated in five years. This will increase the speed of the trains from current 60-80 km to 140-160 km, he informed.

Minister emphasised that long term plan for the corridor should be developed in a comprehensive manner including utilisation of spatial planning, identifying the needs of improvement in various forms and means of communication, focusing on industrial and agricultural cooperation, which should be in the interest of both countries.

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“In the backdrop of our facilitation agreement, we had to jointly manage the completion of the project as per energy planning timelines. Necessary implementation steps and technical formalities have almost been completed.

It is essential that commercial contracts for the two big transport infrastructure early harvest projects, KKH Phase-II Thakot-Havelian section and KLM Multan-Sukhur section, are concluded at the earliest.

On Gwadar, the minister said it is the gateway of CPEC and we need to work together for implementation of identified initiatives.

The minister said that handling over of land for development of free zone has just taken place, which is a milestone in CPEC.

Officials of Chinese companies visit PSM

Request: Sindh CM weighs in

Meanwhile, Sindh Chief Minister Syed Qaim Ali Shah has asked the centre and the Chinese government to include the Hyderabad-Sukkur section of the motorway and Keti Bunder port in the CPEC.

Shah said the Hyderabad-Sukkur section was in a dilapidated condition, adding that Keti Bunder port could also play a major role in regional connectivity. “We request the federal government and Chinese authorities to look into the matter,” said the chief minister.

Published in The Express Tribune, November 13th, 2015.

 

[Passionaire]

I wish China set up Metro train industry in Pakistan. In this way, we will be able to make our own metro train

 

[RoadRunner401]

So, Chinese are going to set up industries we already possess. How exactly is that beneficial to us?

 

[Pakistani E]

So, Chinese are going to set up industries we already possess. How exactly is that beneficial to us?

Cheap Chinese Industries' produce means our guys are out of business. Unless of course this article is suggesting that the Chinese are setting up Industries in sectors that don't already exist in Pakistan. Who knows? I have found this whole CPEC business to be vague.

 

[RAMPAGE]

@Muhammad Omar

Yaar any news of M-5 motorway?

 

[Lurch Adams]

China is also setting up coal-powered power plants which they themselves are phasing out in 2020.

 

[Talwar e Pakistan]

Pak should be made a state of china. It will help us in getting rid of the corruption that riddles our society

Shutup.

 

[I S I]

So, Chinese are going to set up industries we already possess. How exactly is that beneficial to us?

Jobs

Same to you

Same to both of you.

 

[tsinga]

So, Chinese are going to set up industries we already possess. How exactly is that beneficial to us?

Cheap Chinese Industries' produce means our guys are out of business. Unless of course this article is suggesting that the Chinese are setting up Industries in sectors that don't already exist in Pakistan. Who knows? I have found this whole CPEC business to be vague.

Unless the Chinese form JV's with the private players of Pakistan which would boost efficiency of Pakistani players with infusion of tech and funds , instead of setting up their own companies subsidiaries which would kill off the local players.

Either of the two could happen.

 

[Kompromat]

China's textile industry alone is worth hundreds of billions of dollars. Pakistan must become the go to place for Chinese outsourcing.

 

[Bouncer]

Unless the Chinese form JV's with the private players of Pakistan which would boost efficiency of Pakistani players with infusion of tech and funds , instead of setting up their own companies subsidiaries which would kill off the local players.

Either of the two could happen.

They'll most probably start off with low tech and low skill industries like textiles, plastics etc. I fail to understand how you reached this conclusion that local players will be killed off. Export oriented industries will not be in conflict with the local players; they'll in fact enhance their chances and open up new markets for them. Once a buyer chooses Pakistan as his import point, he'll be interested in foreign as well as local companies. And jobs, transfer of technology (albeit low value) and best practices will be a given.

So a win-win for both local industry and the foreign investors. That's how it worked for the Chinese industry starting from the late 70's and that's how it is working out for India (at a much slower pace though).

 

[Skull and Bones]

If China is setting up Industries for the consumption of general Pakistani population, then that's a a bane for indigenous Pakistani industries.

 

[tsinga]

They'll most probably start off with low tech and low skill industries like textiles, plastics etc. I fail to understand how you reached this conclusion that local players will be killed off. Export oriented industries will not be in conflict with the local players; they'll in fact enhance their chances and open up new markets for them. Once a buyer chooses Pakistan as his import point, he'll be interested in foreign as well as local companies. And jobs, transfer of technology (albeit low value) and best practices will be a given.

So a win-win for both local industry and the foreign investors. That's how it worked for the Chinese industry starting from the late 70's and that's how it is working out for India (at a much slower pace though).

Textiles is now in the "law of diminishing returns" zone for everyone but Bangladesh in the near future. There is a reason why markets are steadily heading there.

5-7 years is all that other countries can sustain textiles business before their wages get too high.

That said, Chinese companies are entering Pakistan in all spheres right? What makes you think would they be only limited to export areas ? They can also go in for domestic market substitution ...Pakistan is after all a 180 million people market and an unlimited access to the market would be enticing for a lot of Chinese companies.

As I said, it can play out both ways. We can only wait and watch what eventually unfolds.


Oh and P.S: Our own exports are pathetic. We have not followed to the "export" route sadly. GoI is only now starting to take steps to make us a more export based economy. It is however really difficult now as the infrastructure is woefully inadequate for the current "time to market" requirements of most companies and the ease of business rules difficult.
One can only hope for the best here, though GoI's efforts are showing some glimmer of hope.

 

[Bouncer]

Textiles is now in the "law of diminishing returns" zone for everyone but Bangladesh in the near future. There is a reason why markets are steadily heading there.

5-7 years is all that other countries can sustain textiles business before their wages get too high.

It is, but this 5-7 years timeline is a bit short to digest unless you can share some source? Wages are rising but not that fast.

That said, Chinese companies are entering Pakistan in all spheres right? What makes you think would they be only limited to export areas ? They can also go in for domestic market substitution ...Pakistan is after all a 180 million people market and an unlimited access to the market would be enticing for a lot of Chinese companies.

That's right we are a huge market but our imports stand at around $40 Billion. This doesn't include the smuggling part, which in my illiterate guess has to in tens of billions. But you have to look at the sad state of our local industry. Most of electronics are imported, smuggled or just assembled here not manufactured (except for low tech parts). There is very some degree of localization in the bigger local companies like PEL, Dawlence etc. Secondly local companies have a relatively small market share in electronics and even in textiles there is a huge import segment (second hand plus new). In Automobiles, local companies are restricted to just parts manufacturing. Bigger assemblers are foreigners who remit their earnings anyways.

My point is that, at best the new entrants will reduce imports, but not actually dent the local companies share significantly. Or we could say that there is not much to destroy for the new entrants.

Oh and P.S: Our own exports are pathetic. We have not followed to the "export" route sadly. GoI is only now starting to take steps to make us a more export based economy. It is however really difficult now as the infrastructure is woefully inadequate for the current "time to market" requirements of most companies and the ease of business rules difficult.
One can only hope for the best here, though GoI's efforts are showing some glimmer of hope.

You are right about India's missed potential with all the red tape and our typical South Asian politics. Infrastructure in India (ports, roads) are no where near the level where they should be. But at least things are moving and moving at a good pace now.

 

[Muhammad Omar]

@Muhammad Omar

Yaar any news of M-5 motorway?

Prime Minister Muhammad Nawaz Sharif chaired a meeting to review the progress on the development of all infrastructure projects in Pakistan at PM House today.
Chairman NHA Mr. Shahid Ashraf Tarar gave a detailed briefing to the Prime Minister about the CPEC rout and the Western Corridor. The Prime Minister directed for early completion of Western Corridor and to start land acquisition for which the funds have already been allocated in PSDP budget.
The Prime Minister also directed staff of PM office to coordinate with KPK and Balochistan governments for fast tracking land acquisition process.
The Prime Minister said that Western Corridor was his commitment in APC to the Nation and it shall be honored.
The Prime Minister said that government has made unprecedented investment in infrastructure projects in Baluchistan as such, it is for the first time that 100 percent PSDP funds have been released by the federal government to Baluchistan.
The Prime Minister emphasized upon speedy development of the projects along with strict adherence to all the applicable procurement guidelines.
The Prime Minister said that the speedy implementation of the projects shall not compromise by the transparency standards. He added that the projects must be completed within stipulated time.
The Prime Minister was briefed that the feasibility designs and timeliness of the different packages of the projects like Burhan-DI Khan, DI Khan to Zhob, Zhob to Quetta etc.
The Prime Minister was briefed that financial closer of Lahore to Abdul Hakim Motorway and Zhob to Mushakot Motorway have been done and these projects are ready for the groundbreaking. The Prime Minister decided to do the ground breaking of these projects in November 2015.
The Prime Minister was briefed that work on Khanewal to Multan section of Motorway is complete and the project is ready for inauguration in November.The Prime Minister showed satisfaction on the progress of the development works and directed NHA to fulfill it's obligation towards to people of Pakistan with utmost commitment and by ensuring transparency and saving tax payer's money.
The meeting was also attended by other government officers.