Asian.Century
ELITE MEMBER
- Joined
- Nov 1, 2010
- Messages
- 10,754
- Reaction score
- -2
- Country
- Location
CPEC Summit 2018, also read comments!
Both public and private sectors must take ownership of the opportunities.
THE economic relations between the two countries have been phenomenal, especially since the turn of the century. Early economic cooperation was based on political and security interests, like Karakoram Highway, nuclear capability, arms trade etc. Also, it was focussed on energy and mining, but there is now a need for diversification. Pakistan has to take advantage of China’s rise on the global scene. There is a tendency towards having even better economic relations based on market forces and there is a lot of under-exploited potential.
When it comes to win-win cooperation, of course there is a lot at stake for both countries. Pakistan’s interests lie in promoting growth, private sector investment, employment, exports, technology and transfer of skills as well as in the relocation of Chinese firms. China’s interests lie in overseas production bases, new export markets, energy cooperation, and its need for production capacity relocation.
A successful execution of CPEC will ensure economic progress and stability for both the countries, particularly along the border region.
The two countries signed the FTA in 2006 which came in to effect a year later. The FTAs play a major role in the general tendency of increasing trade. Surprisingly, the trade has been relatively low compared to the other neighbours (India, Vietnam, Philippines etc.). And there is a large and widening trade imbalance that needs to be worked on.
There has been a considerable increase in FDI since 2014 which is a positive sign for both China and Pakistan. The main FDI sectors by priority are: power, construction, financial services, and communication. There is, however, very little FDI in the light manufacturing sector.
The Belt and Road Initiative (BRI) is a $900 billion investment, with finance channels targeting green development. It connects more than 60 countries, 60pc of the global population, 30pc of global GDP, and 35pc of global trade.
CPEC, a central link of BRI, cuts 10,000 miles of shipping by sea, and connects ports from Shanghai to Africa and Europe through Gwadar.
PAKISTAN AND CPEC
If things work out smoothly, Pakistan could use the FDI in its power and transport infrastructure and then in the manufacturing sector with the experience of leveraging SEZs to unlock this trio’s potential for rapid gains in job-rich industrialisation. This can be done without unrealistic pre-requirements as the work to lay the foundations for industrialisation has already begun.
The potentials are outlined below along with policy options needed to convert them into actions. At regional level, Pakistan has been growing steadily in terms of GDP per capita since 2010, according to the World Bank. Investors are very keen to a growing economy. Consistent growth of purchasing power (GDP per capita) really matters for domestic consumption; therefore the growth rate must be maintained to catch up with competitors.
Pakistan is one of the world’s largest reservoirs of human capital and has a tremendous potential consumer base. In 2016, the country was home to 193,203,476 people, being the world’s 6th most populous country. World Economic Forum estimates that it will be among the top five populous countries in the world by 2060.
However, a large population is necessary but not sufficient to attract investors. The population has to be equipped with adequate skills to meet industrialisation needs. Effort is also needed to attract global buyers.
Thirdly, China and Pakistan have long hailed each other as “all-weather friends”, or “iron brothers” as close as “lips and teeth” in the words of The Economist. There is already solid trust between the two countries, but the Pakistani officials need to visit China more often to convince the private investors for investment opportunities in Pakistan.
The CPEC will improve road, air, sea, and energy infrastructure. It will ensure land, sea and air security. It will enhance trade and investment facilitation and will establish free trade areas that meet high standards, maintain closer economic ties, and deepen political trust. Also, it will enhance cultural exchanges and promote mutual understanding, peace, and friendship between the people of the two countries.
Having said that, the CPEC should not be considered just a ‘gift’ from China, but the Pakistani government should also establish an FDI Advisory Board that shall promote the new image of the country. This includes visiting China more often and ensuring that investors understand the opportunities and benefits available under the CPEC.
Besides, according to the State Bank of Pakistan in November 2017, the country received net FDI worth $207 million out of which $206 million came from China. Potential investors pay significant attention to first movers, other Chinese investors may follow and eventually stay in Pakistan if the government helps the pioneers to be successful.
In terms of binding constraints, a study case of Malaysia estimates that FDI can effectively contribute to growth if it is at least 3.14pc of GDP. Pakistan should be able to compete. This requires overcoming the binding constraints by addressing security issues and risks, hard infrastructure challenges, especially SEZ-specific constraints like energy, roads to SEZs etc. Soft infrastructure challenges include corruption, rule of the law, coordination among institutions, inadequate capacity and cultural biases. Absorption capacity can be adjusted by setting yearly realistic targets of FDI amount.
There are six steps to identify the right industries, as narrated by Prof. Justin Lin. They include identifying countries with consistent growth, with GDP per capita three times as Pakistan’s or was at the same level as Pakistan 30 years ago.
Next comes investigating the existing private investment in those target industries and encourage its development by leasing the market regulations. Attracting global investors into the target industries which lack existing domestic private investment is the third step, followed by paying attention to new enterprises and supporting innovation in the target industries.
Establishing and developing SEZs to eliminate entering barriers, attracting foreign investment, and encouraging industrial cluster. And, finally, providing policy incentives for the first movers, including tax reduction, foreign exchange access, etc.
THE WAY FORWARD
Development can start from ‘low-hanging fruit’ through SEZs. The government should attract first movers to invest and help the pioneers succeed.
CPEC should not be taken for granted. Proactive and systematic approach is needed for attracting investors, together with strong market factors.
Despite long-term and solid trust at the government level, more mutual dialogues and exchanges need to be enhanced in the private sector. Let the peoples get to understand each other.
CPEC and SEZs are open for all investors, including those from other countries beyond China.
The writer is a professor at the Institute of New Structural Economics (INSE), Peking University, China.
This article is part of the CPEC 2018 summit supplement. To read more from the supplement, visit thearchive.
Facebook Count
Twitter Share
57
COMMENTS (57) CLOSED
ZAKJUN 11, 2018 04:12PM
We are coming in a big way.
RECOMMEND17
IFTIKHAR HUSAINJUN 11, 2018 04:16PM
The professor has given solid advice now it is up to the government to act in the right way and make the best of the situation.
RECOMMEND41
HARMONY-1©JUN 11, 2018 04:21PM
"Both public and private sectors must take ownership of the opportunities."
Naturally. That's the way.
A clean leadership is needed to achieve that goal.
RECOMMEND31
ABCDJUN 11, 2018 04:40PM
I personally want to participate in CPEC. It is a game changer.
RECOMMEND15
AMIRJUN 11, 2018 04:53PM
What will happen if we decide to not pay your loans ? ...... As non of pakistan are aware of what really CPEC costed pakistan
RECOMMEND266
SIDDHAJUN 11, 2018 05:00PM
She said the right things; a lot needs to be done and it is not a gift.
RECOMMEND31
WAQARJUN 11, 2018 05:12PM
“It’s not a gift, Pakistan has to pay”that’s what she meant.
RECOMMEND360
SOCRATESJUN 11, 2018 05:33PM
You are right, Professor. However, the problem is that we take everything coming from China as a gift.
I am sure that Pakistan has not done its homework with regard to CPEC in a proper manner.
RECOMMEND98
QUABASALEEMJUN 11, 2018 06:24PM
Cpec is good to
RECOMMEND4
LOVE PAKISTANJUN 11, 2018 06:26PM
Business is never gifted. This is business and she hasn’t said anything unusual. We need to work hard to make it flourish.
RECOMMEND23
AHSAN GULJUN 11, 2018 06:38PM
Good informative article. Now it is up to people of Pakistan and leadership to make use of human capital. CPEC, is a great opportunity for our leaders to put our millions of people to work and move our country forward.
RECOMMEND11
PRATEIKJUN 11, 2018 06:48PM
Now the reality is setting in.
RECOMMEND79
BIG JOHNJUN 11, 2018 07:29PM
We will pay 10 percent down and the balance in one hundred years.
RECOMMEND16
AGHA MOBEENJUN 11, 2018 07:58PM
She is very much right in saying it's not a gift. Pakistani government have to act in way to avail this opportunity and consum it's unemployed youth in a big way as there would be a million jobs openings are coming. This single opportunity utilisation I'd a big way forward.
RECOMMEND6
WAJAHAT ALI KHANJUN 11, 2018 08:54PM
thats true.. its a big resposibility
RECOMMEND0
PRAPURJUN 11, 2018 09:24PM
This truth go a bite many common Pakistani through higher taxes and make people in power rich. Pakistan needs to increase tax base and bring all landlord under common income tax law, otherwise doomed as civil war can break outs.
RECOMMEND17
AZHARJUN 11, 2018 09:31PM
I agree with the professor Yu. Pakistan needs to do its homework to make CPEC a win-win situation for both countries. We have to be more productive. Why we are behind Vietnam and Philippines in terms of trade?
RECOMMEND14
BIPULJUN 11, 2018 09:40PM
Words will get tougher as the time progresses on loans.
RECOMMEND30
ZUBAIR AHMEDJUN 11, 2018 09:57PM
The progressive ideas given by Professor Jia Yu are not beneficial for the people of Balochistan province(where Gwadar Port is situated), they may benefit the people of Punjab province.
RECOMMEND38
SATYA JEETJUN 11, 2018 10:28PM
No Pakistani Politician, Bureaucrat, Journalist, Professor or General has ever given details of how Pakistan will repay CPEC loans, int6erest and guaranteed profit in dollars.... Already i US$ = 120 Pk Pupees
RECOMMEND29
BHARANI KOMANDURJUN 11, 2018 10:33PM
There are no Gifts in International Business. Pakistan now has to work really hard to promote Manufacturing and Logistics, and the rest will follow. Not to forget the huge loan to be repaid to China. It's like getting into a Premier Educational Institution - Entrance exam is the easiest part. People of Pakistan should make the best use of this opportunity to grow in the right direction.
RECOMMEND6
KAMALJUN 11, 2018 10:40PM
Yes professor we agree with you but the Pakistani politicians think that is a gift from China. Would you please try explaining to them? Thank you.
RECOMMEND17
SANDIPJUN 12, 2018 12:42AM
A very informative article. It is certainly not a gift and Pakistan must make sure to tighten the screws. I am very happy that Pakistan will pave their way to more development and giving benefits to their citizen. A robust Pakistani economy will benefit the whole South East Asia and give more stability to India as well. All the best for this initiative and may good things prevail.
RECOMMEND8
VIJAY B..JUN 12, 2018 01:25AM
Can you imagine making a huge investment (read $ 80 billion) all on borrowed money at usury interest rates, in a factory (read CPEC) with just one prospective customer (read China) with no idea or guarantee as to what the revenues are going to be? Any numbers in what the toll per mile will be on this toll road and what you hope to collect in tolls per day, month, or year, the cost of collecting, and whether Pakistan or China will be in charge of the toll booths,?
RECOMMEND49
M. ASGHARJUN 12, 2018 02:04AM
Concerning the CPEC project, Pakistan is not doing its due part in an accountable manner.
RECOMMEND1
PRO-PAKJUN 12, 2018 02:23AM
She is cent percent correct that Pakistan should not take it as granted. Our government should focus on capacity building so the people should reach to a competitive level.
RECOMMEND2
FAISALJUN 12, 2018 03:32AM
Can't see Pakistan re-paying debt. Loan was taken at such a high interest rate.
RECOMMEND40
HELLOWORLDJUN 12, 2018 06:30AM
Like I predicted before, China will economically suppress Pakistan and Pakistan will be left with no choice but to listen to them as Pakistan shares common interest with China (for now India). With increasing economic rise of India, China would want to keep good relations with India as seen after Dhokhlam issue.
India's clout in the world will keep on increasing as it's GDP grows. China would want (will ask Pakistan) to make its relationship with India better and in exchange India will not keep China on peripherals of it's non-aligned foreign policy as India sees herself a major power of earth (Lost to quite an extent in last 3 centuries).
Yesterday China wanted Pakistan to use SCO platform to coordinate better relations.
If anything, I think I am good with this relation. We don't want hot Asia and China knows it. Rest, time will tell.
RECOMMEND35
VIJAY B..JUN 12, 2018 07:11AM
Don't you all think that China may also be worried about getting repaid its $100 billion loan to Pakistan? You have to be extremely naive to think they do not have a Plan B.
RECOMMEND29
ANKIT SHAHJUN 12, 2018 08:34AM
She is right. Pakistanis can ask Sri lankans and maldivians how the gifts tasted as they lost key ports for 99 years to China as they denied repayments of loans.
RECOMMEND73
KAMRANJUN 12, 2018 08:40AM
She referred "both - the private and the public" needs to do their job!
I really wish to see the next govt. taking a stand in completing these projects on timely basis.
RECOMMEND1
KHANJUN 12, 2018 09:13AM
Key sentence "The CPEC should not be considered just a ‘gift’ from China" Correct and upfront statement. Government and people should get this in their heads.
RECOMMEND12
PAKISTANIJUN 12, 2018 10:17AM
It never was but tell that to NS and Ahsan Iqbal who were deliberately brainwashing the people!!
RECOMMEND4
SALEEM AWANJUN 12, 2018 10:17AM
Well, there are many misconceptions about CPEC. Some feel its like gift while other take it as pure loan which is ultimately going to become a burden on our nation.
I think CPEC is a golden opportunity, now it is up to us how we use it.
RECOMMEND2
ASIM KALEEMJUN 12, 2018 11:50AM
She's very right, we should thank China for their help in times when no other country in the world is ready to invest in Pakistan. You're right that CPEC shouldn't be taken as a gift and we won't, we will take benefit of the improved infrastructure and more development through industrialization and will try to return to our great friend China not only in monetary terms, but also in cultural and all other possible way. Thank you so much for helping us in our tough times.
RECOMMEND2
BABUJUN 12, 2018 01:18PM
It is not gift. It is and investment or Loan, for which China expects good returns and interest.
While it an opportunity for Pakistan, if not exploited properly then it may turn out to be economic fiasco and will decelerate Pakistan's already low growth rate.
RECOMMEND6
JAMSHED RABADIJUN 12, 2018 01:20PM
Nothing in life is for free. Pakistanis have to work hard as a nation and repay every Yuan taken as loan. But the big tax evaders need to caught and tax collected.
RECOMMEND4
SAGARJUN 12, 2018 03:34PM
No tolls, no taxes on Chinese, no exports....One simple question - how is Pakistan going to earn anything?
RECOMMEND23
SAMJUN 12, 2018 04:53PM
Pakistan has always placed all its faith in its physical location which the world needs and therefore nothing needs to be done except demand handouts. Furthermore, even these handouts end up in personal pockets or in needless arms and military expenses. What China is saying is " Change this mindset if you know what is good for you".
RECOMMEND19
BRMURRJUN 12, 2018 07:57PM
@iftikhar Husain
It is up to you! The kind of government you have is up to you, therefore you ARE the government! You’re only pointing your finger at yourself. When you’ve finally figured this out and take ownership of your problems, only then will positive change come to Pakistan.
RECOMMEND3
MAHMOODJUN 12, 2018 11:19PM
Wishing the best for all, economic history will tell its good or bad impacts on our country...
RECOMMEND0
JEYARAJ -JUN 12, 2018 11:26PM
Now cpce is ready. But where is the plan of industrialisation. With these kind of massive infrastructure the GDP should grow at great pace. Otherwise it will be an issue to repay and maintenance of the infra. To achive the high pace GDP growth there shold be a time tested visionary government in place. At the moment Pakistan is lacking that. It's going to be the big concern in the comming years.
RECOMMEND2
AKBARJUN 12, 2018 11:45PM
As an expat I will be investing in Pakistan
RECOMMEND1
BE HONESTJUN 13, 2018 08:49AM
It is very disappointing that Pakistan is lack of skilled labour. Our government failed miserably to establish vocational training institutes to produce skill labour. Both PML N and PPP have different objectives. Its time to think about country ant its people. The government should make more free zone industrial states and hire skilled people to give training to the labour.
RECOMMEND0
ANANDJUN 13, 2018 10:58AM
Nothing is sustainable in this world, the over ambitious & wrongly calculated CPEC will choke many economies. The BRI is started to be failing concept. Look at USA policies, a long treated granted policies to allies of is coming to sad end, no waiver or favour any more for any economies whoever wants to do business with USA. Think about it, how the future would be ? Is it a good idea for CHINA like country, who is heavily looking at prospering societies to sell their stuff? How long it can avoid the potential of India ? Where Pakistan would stand in the matter of larger volumes? Of course today’s opportunity will be tomorrow’s regret, and who’s gonna suffer from the heavy loss ? The common man, tax payers. World bank & India both right at this stage, CPEC is over calculated. Good luck
RECOMMEND4
RAVEENDRA NATHJUN 13, 2018 11:27AM
"China’s interests lie in overseas production bases, new export markets, energy cooperation, and its need for production capacity relocation." "CPEC, a central link of BRI, cuts 10,000 miles of shipping by sea, and connects ports from Shanghai to Africa and Europe through Gwadar." This sums-up Chinese interest. They want to relocate some old industries/plants to Pakistan and thereby using the old plants and produce and sell there and the main interest is to reduce the transit distance and time from China to African countries. Pakistan will have residual benefits, most probably.
RECOMMEND10
ANONYMOUSJUN 13, 2018 12:46PM
Unless Pakistan grows at the rate of 8%, it would be impossible for it to repay its loans(Chinese and others), so if there is no miracle in the coming years we would see Pakistan falling into major debt trap.
RECOMMEND12
DR BN ANANDJUN 13, 2018 02:13PM
Yes Sir, it has been amply made clear by the Professor that anything coming from China to Pakistan is neither a free gift nor free capital. The terms in CPEC have been kept under the carpet and a Pakistani considers China only a dear friend of all weather to give everything free May be the Professor wanted to clear this misconception of people of Pakistan.
RECOMMEND1
JOHNJUN 13, 2018 02:46PM
In short-"don't ask us free money".
RECOMMEND0
AJAY LADKANIJUN 13, 2018 04:19PM
CPEC cost has already increased atleast 20% more than this was initially proposed. What if Pakistan is not able to pay loan in the stipulated time to china? Will it go Hambantota port of Srilanka way when this was leased to China after SL failed to repay the loan. How many friends China have other than Pakistan and North Korea? Beware of China, she bites.
RECOMMEND0
BABUJUN 13, 2018 04:25PM
it is a loan.
RECOMMEND1
PROF RAMESH C MANGHIRMALANIJUN 13, 2018 11:39PM
Good wishes
RECOMMEND1
JALALUDDIN S. HUSSAINJUN 14, 2018 05:17AM
It is hoped that Pakistan government will give all necessary help to CPEC in the implementation of this ambitious programme. I wish all success to the program organizers.
RECOMMEND0
DYNAMITE-JUN 14, 2018 10:46AM
@ZAK - its not a gift, you have to pay back with interest.
RECOMMEND0
ANONYMOUSJUN 14, 2018 12:22PM
Pakistan could have been better off by just letting CPEC to be a road project. With CPEC just being a road project it could have earned say a billion dollor(or more) in profit in transit money without the risk of any losses whatsoever. This one billion dollor it could have invested wisely to build up its own manufacturing base or power plants or whatever. In the current case it has done something very different, which is to take loans(mostly) at very high interest rates for infra related projects, so now it would simply have to pay money to China without earning anything. Additionally, the projects in which the money has been invested are unlikely help it in improving on its exports.
RECOMMEND0
WASEEMJUN 14, 2018 12:36PM
Very sincere advise from Professor. Everyone should take ownership of CPEC. Can anybody tell me opportunities for IT sector in CPEC?
RECOMMEND0
MANOJJUN 14, 2018 03:32PM
@asim Kaleem Sir, it's not china's investment. Rather, it's Pakistan's investment with loan from China. now, it's Pakistan's headache to find ways & means to generate revenue and earn enough to pay interest and principal to China and also recover cost for self. China is in very happy situation by giving loan to Pakistan, assured of fixed interest earning and also earning huge margin on selling of material and services to Pakistan to construct CPEC. To summarise, China told Pakistan, to grow you need a road from China to Gwadar port, though you have unutilized capacity at Karachi port. Give us contract to construct road where in all manpower and material will be ours. Since, you donot have money to pay, we offer you loan with 8% interest per annum.
RECOMMEND3
Both public and private sectors must take ownership of the opportunities.
THE economic relations between the two countries have been phenomenal, especially since the turn of the century. Early economic cooperation was based on political and security interests, like Karakoram Highway, nuclear capability, arms trade etc. Also, it was focussed on energy and mining, but there is now a need for diversification. Pakistan has to take advantage of China’s rise on the global scene. There is a tendency towards having even better economic relations based on market forces and there is a lot of under-exploited potential.
When it comes to win-win cooperation, of course there is a lot at stake for both countries. Pakistan’s interests lie in promoting growth, private sector investment, employment, exports, technology and transfer of skills as well as in the relocation of Chinese firms. China’s interests lie in overseas production bases, new export markets, energy cooperation, and its need for production capacity relocation.
A successful execution of CPEC will ensure economic progress and stability for both the countries, particularly along the border region.
The two countries signed the FTA in 2006 which came in to effect a year later. The FTAs play a major role in the general tendency of increasing trade. Surprisingly, the trade has been relatively low compared to the other neighbours (India, Vietnam, Philippines etc.). And there is a large and widening trade imbalance that needs to be worked on.
There has been a considerable increase in FDI since 2014 which is a positive sign for both China and Pakistan. The main FDI sectors by priority are: power, construction, financial services, and communication. There is, however, very little FDI in the light manufacturing sector.
The Belt and Road Initiative (BRI) is a $900 billion investment, with finance channels targeting green development. It connects more than 60 countries, 60pc of the global population, 30pc of global GDP, and 35pc of global trade.
CPEC, a central link of BRI, cuts 10,000 miles of shipping by sea, and connects ports from Shanghai to Africa and Europe through Gwadar.
PAKISTAN AND CPEC
If things work out smoothly, Pakistan could use the FDI in its power and transport infrastructure and then in the manufacturing sector with the experience of leveraging SEZs to unlock this trio’s potential for rapid gains in job-rich industrialisation. This can be done without unrealistic pre-requirements as the work to lay the foundations for industrialisation has already begun.
The potentials are outlined below along with policy options needed to convert them into actions. At regional level, Pakistan has been growing steadily in terms of GDP per capita since 2010, according to the World Bank. Investors are very keen to a growing economy. Consistent growth of purchasing power (GDP per capita) really matters for domestic consumption; therefore the growth rate must be maintained to catch up with competitors.
Pakistan is one of the world’s largest reservoirs of human capital and has a tremendous potential consumer base. In 2016, the country was home to 193,203,476 people, being the world’s 6th most populous country. World Economic Forum estimates that it will be among the top five populous countries in the world by 2060.
However, a large population is necessary but not sufficient to attract investors. The population has to be equipped with adequate skills to meet industrialisation needs. Effort is also needed to attract global buyers.
Thirdly, China and Pakistan have long hailed each other as “all-weather friends”, or “iron brothers” as close as “lips and teeth” in the words of The Economist. There is already solid trust between the two countries, but the Pakistani officials need to visit China more often to convince the private investors for investment opportunities in Pakistan.
The CPEC will improve road, air, sea, and energy infrastructure. It will ensure land, sea and air security. It will enhance trade and investment facilitation and will establish free trade areas that meet high standards, maintain closer economic ties, and deepen political trust. Also, it will enhance cultural exchanges and promote mutual understanding, peace, and friendship between the people of the two countries.
Having said that, the CPEC should not be considered just a ‘gift’ from China, but the Pakistani government should also establish an FDI Advisory Board that shall promote the new image of the country. This includes visiting China more often and ensuring that investors understand the opportunities and benefits available under the CPEC.
Besides, according to the State Bank of Pakistan in November 2017, the country received net FDI worth $207 million out of which $206 million came from China. Potential investors pay significant attention to first movers, other Chinese investors may follow and eventually stay in Pakistan if the government helps the pioneers to be successful.
In terms of binding constraints, a study case of Malaysia estimates that FDI can effectively contribute to growth if it is at least 3.14pc of GDP. Pakistan should be able to compete. This requires overcoming the binding constraints by addressing security issues and risks, hard infrastructure challenges, especially SEZ-specific constraints like energy, roads to SEZs etc. Soft infrastructure challenges include corruption, rule of the law, coordination among institutions, inadequate capacity and cultural biases. Absorption capacity can be adjusted by setting yearly realistic targets of FDI amount.
There are six steps to identify the right industries, as narrated by Prof. Justin Lin. They include identifying countries with consistent growth, with GDP per capita three times as Pakistan’s or was at the same level as Pakistan 30 years ago.
Next comes investigating the existing private investment in those target industries and encourage its development by leasing the market regulations. Attracting global investors into the target industries which lack existing domestic private investment is the third step, followed by paying attention to new enterprises and supporting innovation in the target industries.
Establishing and developing SEZs to eliminate entering barriers, attracting foreign investment, and encouraging industrial cluster. And, finally, providing policy incentives for the first movers, including tax reduction, foreign exchange access, etc.
THE WAY FORWARD
Development can start from ‘low-hanging fruit’ through SEZs. The government should attract first movers to invest and help the pioneers succeed.
CPEC should not be taken for granted. Proactive and systematic approach is needed for attracting investors, together with strong market factors.
Despite long-term and solid trust at the government level, more mutual dialogues and exchanges need to be enhanced in the private sector. Let the peoples get to understand each other.
CPEC and SEZs are open for all investors, including those from other countries beyond China.
The writer is a professor at the Institute of New Structural Economics (INSE), Peking University, China.
This article is part of the CPEC 2018 summit supplement. To read more from the supplement, visit thearchive.
Facebook Count
Twitter Share
57
COMMENTS (57) CLOSED
ZAKJUN 11, 2018 04:12PM
We are coming in a big way.
RECOMMEND17
IFTIKHAR HUSAINJUN 11, 2018 04:16PM
The professor has given solid advice now it is up to the government to act in the right way and make the best of the situation.
RECOMMEND41
HARMONY-1©JUN 11, 2018 04:21PM
"Both public and private sectors must take ownership of the opportunities."
Naturally. That's the way.
A clean leadership is needed to achieve that goal.
RECOMMEND31
ABCDJUN 11, 2018 04:40PM
I personally want to participate in CPEC. It is a game changer.
RECOMMEND15
AMIRJUN 11, 2018 04:53PM
What will happen if we decide to not pay your loans ? ...... As non of pakistan are aware of what really CPEC costed pakistan
RECOMMEND266
SIDDHAJUN 11, 2018 05:00PM
She said the right things; a lot needs to be done and it is not a gift.
RECOMMEND31
WAQARJUN 11, 2018 05:12PM
“It’s not a gift, Pakistan has to pay”that’s what she meant.
RECOMMEND360
SOCRATESJUN 11, 2018 05:33PM
You are right, Professor. However, the problem is that we take everything coming from China as a gift.
I am sure that Pakistan has not done its homework with regard to CPEC in a proper manner.
RECOMMEND98
QUABASALEEMJUN 11, 2018 06:24PM
Cpec is good to
RECOMMEND4
LOVE PAKISTANJUN 11, 2018 06:26PM
Business is never gifted. This is business and she hasn’t said anything unusual. We need to work hard to make it flourish.
RECOMMEND23
AHSAN GULJUN 11, 2018 06:38PM
Good informative article. Now it is up to people of Pakistan and leadership to make use of human capital. CPEC, is a great opportunity for our leaders to put our millions of people to work and move our country forward.
RECOMMEND11
PRATEIKJUN 11, 2018 06:48PM
Now the reality is setting in.
RECOMMEND79
BIG JOHNJUN 11, 2018 07:29PM
We will pay 10 percent down and the balance in one hundred years.
RECOMMEND16
AGHA MOBEENJUN 11, 2018 07:58PM
She is very much right in saying it's not a gift. Pakistani government have to act in way to avail this opportunity and consum it's unemployed youth in a big way as there would be a million jobs openings are coming. This single opportunity utilisation I'd a big way forward.
RECOMMEND6
WAJAHAT ALI KHANJUN 11, 2018 08:54PM
thats true.. its a big resposibility
RECOMMEND0
PRAPURJUN 11, 2018 09:24PM
This truth go a bite many common Pakistani through higher taxes and make people in power rich. Pakistan needs to increase tax base and bring all landlord under common income tax law, otherwise doomed as civil war can break outs.
RECOMMEND17
AZHARJUN 11, 2018 09:31PM
I agree with the professor Yu. Pakistan needs to do its homework to make CPEC a win-win situation for both countries. We have to be more productive. Why we are behind Vietnam and Philippines in terms of trade?
RECOMMEND14
BIPULJUN 11, 2018 09:40PM
Words will get tougher as the time progresses on loans.
RECOMMEND30
ZUBAIR AHMEDJUN 11, 2018 09:57PM
The progressive ideas given by Professor Jia Yu are not beneficial for the people of Balochistan province(where Gwadar Port is situated), they may benefit the people of Punjab province.
RECOMMEND38
SATYA JEETJUN 11, 2018 10:28PM
No Pakistani Politician, Bureaucrat, Journalist, Professor or General has ever given details of how Pakistan will repay CPEC loans, int6erest and guaranteed profit in dollars.... Already i US$ = 120 Pk Pupees
RECOMMEND29
BHARANI KOMANDURJUN 11, 2018 10:33PM
There are no Gifts in International Business. Pakistan now has to work really hard to promote Manufacturing and Logistics, and the rest will follow. Not to forget the huge loan to be repaid to China. It's like getting into a Premier Educational Institution - Entrance exam is the easiest part. People of Pakistan should make the best use of this opportunity to grow in the right direction.
RECOMMEND6
KAMALJUN 11, 2018 10:40PM
Yes professor we agree with you but the Pakistani politicians think that is a gift from China. Would you please try explaining to them? Thank you.
RECOMMEND17
SANDIPJUN 12, 2018 12:42AM
A very informative article. It is certainly not a gift and Pakistan must make sure to tighten the screws. I am very happy that Pakistan will pave their way to more development and giving benefits to their citizen. A robust Pakistani economy will benefit the whole South East Asia and give more stability to India as well. All the best for this initiative and may good things prevail.
RECOMMEND8
VIJAY B..JUN 12, 2018 01:25AM
Can you imagine making a huge investment (read $ 80 billion) all on borrowed money at usury interest rates, in a factory (read CPEC) with just one prospective customer (read China) with no idea or guarantee as to what the revenues are going to be? Any numbers in what the toll per mile will be on this toll road and what you hope to collect in tolls per day, month, or year, the cost of collecting, and whether Pakistan or China will be in charge of the toll booths,?
RECOMMEND49
M. ASGHARJUN 12, 2018 02:04AM
Concerning the CPEC project, Pakistan is not doing its due part in an accountable manner.
RECOMMEND1
PRO-PAKJUN 12, 2018 02:23AM
She is cent percent correct that Pakistan should not take it as granted. Our government should focus on capacity building so the people should reach to a competitive level.
RECOMMEND2
FAISALJUN 12, 2018 03:32AM
Can't see Pakistan re-paying debt. Loan was taken at such a high interest rate.
RECOMMEND40
HELLOWORLDJUN 12, 2018 06:30AM
Like I predicted before, China will economically suppress Pakistan and Pakistan will be left with no choice but to listen to them as Pakistan shares common interest with China (for now India). With increasing economic rise of India, China would want to keep good relations with India as seen after Dhokhlam issue.
India's clout in the world will keep on increasing as it's GDP grows. China would want (will ask Pakistan) to make its relationship with India better and in exchange India will not keep China on peripherals of it's non-aligned foreign policy as India sees herself a major power of earth (Lost to quite an extent in last 3 centuries).
Yesterday China wanted Pakistan to use SCO platform to coordinate better relations.
If anything, I think I am good with this relation. We don't want hot Asia and China knows it. Rest, time will tell.
RECOMMEND35
VIJAY B..JUN 12, 2018 07:11AM
Don't you all think that China may also be worried about getting repaid its $100 billion loan to Pakistan? You have to be extremely naive to think they do not have a Plan B.
RECOMMEND29
ANKIT SHAHJUN 12, 2018 08:34AM
She is right. Pakistanis can ask Sri lankans and maldivians how the gifts tasted as they lost key ports for 99 years to China as they denied repayments of loans.
RECOMMEND73
KAMRANJUN 12, 2018 08:40AM
She referred "both - the private and the public" needs to do their job!
I really wish to see the next govt. taking a stand in completing these projects on timely basis.
RECOMMEND1
KHANJUN 12, 2018 09:13AM
Key sentence "The CPEC should not be considered just a ‘gift’ from China" Correct and upfront statement. Government and people should get this in their heads.
RECOMMEND12
PAKISTANIJUN 12, 2018 10:17AM
It never was but tell that to NS and Ahsan Iqbal who were deliberately brainwashing the people!!
RECOMMEND4
SALEEM AWANJUN 12, 2018 10:17AM
Well, there are many misconceptions about CPEC. Some feel its like gift while other take it as pure loan which is ultimately going to become a burden on our nation.
I think CPEC is a golden opportunity, now it is up to us how we use it.
RECOMMEND2
ASIM KALEEMJUN 12, 2018 11:50AM
She's very right, we should thank China for their help in times when no other country in the world is ready to invest in Pakistan. You're right that CPEC shouldn't be taken as a gift and we won't, we will take benefit of the improved infrastructure and more development through industrialization and will try to return to our great friend China not only in monetary terms, but also in cultural and all other possible way. Thank you so much for helping us in our tough times.
RECOMMEND2
BABUJUN 12, 2018 01:18PM
It is not gift. It is and investment or Loan, for which China expects good returns and interest.
While it an opportunity for Pakistan, if not exploited properly then it may turn out to be economic fiasco and will decelerate Pakistan's already low growth rate.
RECOMMEND6
JAMSHED RABADIJUN 12, 2018 01:20PM
Nothing in life is for free. Pakistanis have to work hard as a nation and repay every Yuan taken as loan. But the big tax evaders need to caught and tax collected.
RECOMMEND4
SAGARJUN 12, 2018 03:34PM
No tolls, no taxes on Chinese, no exports....One simple question - how is Pakistan going to earn anything?
RECOMMEND23
SAMJUN 12, 2018 04:53PM
Pakistan has always placed all its faith in its physical location which the world needs and therefore nothing needs to be done except demand handouts. Furthermore, even these handouts end up in personal pockets or in needless arms and military expenses. What China is saying is " Change this mindset if you know what is good for you".
RECOMMEND19
BRMURRJUN 12, 2018 07:57PM
@iftikhar Husain
It is up to you! The kind of government you have is up to you, therefore you ARE the government! You’re only pointing your finger at yourself. When you’ve finally figured this out and take ownership of your problems, only then will positive change come to Pakistan.
RECOMMEND3
MAHMOODJUN 12, 2018 11:19PM
Wishing the best for all, economic history will tell its good or bad impacts on our country...
RECOMMEND0
JEYARAJ -JUN 12, 2018 11:26PM
Now cpce is ready. But where is the plan of industrialisation. With these kind of massive infrastructure the GDP should grow at great pace. Otherwise it will be an issue to repay and maintenance of the infra. To achive the high pace GDP growth there shold be a time tested visionary government in place. At the moment Pakistan is lacking that. It's going to be the big concern in the comming years.
RECOMMEND2
AKBARJUN 12, 2018 11:45PM
As an expat I will be investing in Pakistan
RECOMMEND1
BE HONESTJUN 13, 2018 08:49AM
It is very disappointing that Pakistan is lack of skilled labour. Our government failed miserably to establish vocational training institutes to produce skill labour. Both PML N and PPP have different objectives. Its time to think about country ant its people. The government should make more free zone industrial states and hire skilled people to give training to the labour.
RECOMMEND0
ANANDJUN 13, 2018 10:58AM
Nothing is sustainable in this world, the over ambitious & wrongly calculated CPEC will choke many economies. The BRI is started to be failing concept. Look at USA policies, a long treated granted policies to allies of is coming to sad end, no waiver or favour any more for any economies whoever wants to do business with USA. Think about it, how the future would be ? Is it a good idea for CHINA like country, who is heavily looking at prospering societies to sell their stuff? How long it can avoid the potential of India ? Where Pakistan would stand in the matter of larger volumes? Of course today’s opportunity will be tomorrow’s regret, and who’s gonna suffer from the heavy loss ? The common man, tax payers. World bank & India both right at this stage, CPEC is over calculated. Good luck
RECOMMEND4
RAVEENDRA NATHJUN 13, 2018 11:27AM
"China’s interests lie in overseas production bases, new export markets, energy cooperation, and its need for production capacity relocation." "CPEC, a central link of BRI, cuts 10,000 miles of shipping by sea, and connects ports from Shanghai to Africa and Europe through Gwadar." This sums-up Chinese interest. They want to relocate some old industries/plants to Pakistan and thereby using the old plants and produce and sell there and the main interest is to reduce the transit distance and time from China to African countries. Pakistan will have residual benefits, most probably.
RECOMMEND10
ANONYMOUSJUN 13, 2018 12:46PM
Unless Pakistan grows at the rate of 8%, it would be impossible for it to repay its loans(Chinese and others), so if there is no miracle in the coming years we would see Pakistan falling into major debt trap.
RECOMMEND12
DR BN ANANDJUN 13, 2018 02:13PM
Yes Sir, it has been amply made clear by the Professor that anything coming from China to Pakistan is neither a free gift nor free capital. The terms in CPEC have been kept under the carpet and a Pakistani considers China only a dear friend of all weather to give everything free May be the Professor wanted to clear this misconception of people of Pakistan.
RECOMMEND1
JOHNJUN 13, 2018 02:46PM
In short-"don't ask us free money".
RECOMMEND0
AJAY LADKANIJUN 13, 2018 04:19PM
CPEC cost has already increased atleast 20% more than this was initially proposed. What if Pakistan is not able to pay loan in the stipulated time to china? Will it go Hambantota port of Srilanka way when this was leased to China after SL failed to repay the loan. How many friends China have other than Pakistan and North Korea? Beware of China, she bites.
RECOMMEND0
BABUJUN 13, 2018 04:25PM
it is a loan.
RECOMMEND1
PROF RAMESH C MANGHIRMALANIJUN 13, 2018 11:39PM
Good wishes
RECOMMEND1
JALALUDDIN S. HUSSAINJUN 14, 2018 05:17AM
It is hoped that Pakistan government will give all necessary help to CPEC in the implementation of this ambitious programme. I wish all success to the program organizers.
RECOMMEND0
DYNAMITE-JUN 14, 2018 10:46AM
@ZAK - its not a gift, you have to pay back with interest.
RECOMMEND0
ANONYMOUSJUN 14, 2018 12:22PM
Pakistan could have been better off by just letting CPEC to be a road project. With CPEC just being a road project it could have earned say a billion dollor(or more) in profit in transit money without the risk of any losses whatsoever. This one billion dollor it could have invested wisely to build up its own manufacturing base or power plants or whatever. In the current case it has done something very different, which is to take loans(mostly) at very high interest rates for infra related projects, so now it would simply have to pay money to China without earning anything. Additionally, the projects in which the money has been invested are unlikely help it in improving on its exports.
RECOMMEND0
WASEEMJUN 14, 2018 12:36PM
Very sincere advise from Professor. Everyone should take ownership of CPEC. Can anybody tell me opportunities for IT sector in CPEC?
RECOMMEND0
MANOJJUN 14, 2018 03:32PM
@asim Kaleem Sir, it's not china's investment. Rather, it's Pakistan's investment with loan from China. now, it's Pakistan's headache to find ways & means to generate revenue and earn enough to pay interest and principal to China and also recover cost for self. China is in very happy situation by giving loan to Pakistan, assured of fixed interest earning and also earning huge margin on selling of material and services to Pakistan to construct CPEC. To summarise, China told Pakistan, to grow you need a road from China to Gwadar port, though you have unutilized capacity at Karachi port. Give us contract to construct road where in all manpower and material will be ours. Since, you donot have money to pay, we offer you loan with 8% interest per annum.
RECOMMEND3
