THE sense of thrill found in the PML-N hierarchy is missing, but Pakistan’s businesses view China’s promise of $46bn investment with a focus on building a China-Pakistan Economic Corridor as a potential game changer.
It considers the convergence of the country’s interests, prohibitively deficient in infrastructure, with those of China — which is keen to expand its economic footprint in South and central Asia— a big boon for ordinary and corporate citizens of the country.
Having being disillusioned in the past many times over tall talk about the economy, the business leaders wished China had transferred some token amount of the multi-billion pledge instantly for some doable projects to shore up investors confidence and generate an uptick in the market.
They saw the long-term nature of projects for the lack of an instant market response. But for a brief spurt in the capital market, the commodity and currency markets did not react to the deal.
The businessmen missed the inclusion of their class in the two days of festivities in Islamabad and found it rooted in the ruling party’s style of governance, and probably China’s preference for a singular state authority over multiple stakeholders.
The perception is strong that the PML-N likes to hold its cards close to its chest and detests the idea of sharing plans and policies with anyone but its inner team of confidantes. Businessmen believe this increases the party’s high level of alienation from the society.
Yes, it is great if Asia’s rising giant is willing to hold our hand, but there is no free lunch in business. The economic corridor will benefit Pakistan, but its value to China is probably yet to be understood — business leader Majyd Aziz
Many of them also expect political bickering on the issue of unilateral change in the China-Pakistan Economic Corridor’s (CPEC) earlier route, which can strain inter-provincial harmony that is necessary for the implementation of the mega project.
They fault smaller provinces, particularly Sindh, for not being able to negotiate a fair cut in the huge deal. They particularly mentioned the Karachi Circular Railway project, which have been sold to the Chinese had the PPP-led government done its homework and pursued it properly.
They want the government to share details of economic deals with the private sector, as it is not clear how the amount will be channelised and what exactly would be the combination of aid, loan and grant for project financing etc.
Senior business tycoons hammered upon the need for transparency and information sharing to ward off the risk of leakages leading to a situation where individuals and companies benefit at the cost of the country. They mentioned many instances of liberal resource inflows into the country that failed to create the desired impact.
Arshad Saeed Husain, president of the American Business Council, was optimistic. In an e-mailed response, he said: “Pakistan desperately requires investment in infrastructure and energy projects, so we view the announcement positively. A deteriorating infrastructure coupled with energy shortages and compounded by security concerns have kept investors at bay”.
“A renewed commitment to the CPEC bodes well for investors groups that are already in Pakistan as well as for investors looking to enter the country,” he added.
Muhammad Rafique Ibrahim, a leading textile tycoon, was also optimistic. “There are questions begging answers, but all in all China’s investment commitment is a sign of growing confidence in Pakistan. It might take some time before the gains become visible, but the bottom line is that Pakistan is not losing but gaining support,” he said over phone.
Majyd Aziz, who is active in multiple business forums, focused on Pakistan’s geographical advantage and the convergence of its interests with China’s. “Yes, it is great if Asia’s rising giant is willing to hold our hand, but there is no free lunch in business. The CPEC will benefit Pakistan, but its value to China is probably yet to be understood. A report suggests that savings on trade transit cost for China will compensate its investment cost in Pakistan within the first two years once the route becomes functional.”
Razzak Dewan, another leading businessman, was concerned about what he called an ‘invasion’ of Chinese goods eroding the country’s manufacturing base. “Infrastructure takes time to develop, but our immediate worry is dumping of goods by Chinese companies in Pakistan, driving people out of business. Something should be done to check the trend”.
Tariq Rafi, another reputed businessman, hinted at the tardiness of the Sindh government. “If Punjab can get money for the Orange Line from China, I am sure funding for the circular railway wouldn’t have been an issue had the Sindh government been persuasive.”
Saleem Mandviwala, a businessman-turned-politician from Sindh said the last PPP government had worked hard on cultivating relationships and generating a level of comfort between the two nations to draw them closer economically.
“The PML-N must control its temptation to go solo. It is imperative that the ruling party adopts an inclusive approach and lets other segments and parties participate in the planning and implementation of the CPEC,” he said.
During his two-day visit last week, China’s President Xi Jinping had signed multiple agreements amounting to an investment of $46bn — about three times the total foreign direct investment received by Pakistan in the last one decade.
According to details under the CPEC plan, the Chinese government and banks will lend to Chinese companies for investment in identified projects. About $15.5bn worth of coal, wind, solar and hydropower projects will come on-line by 2017 and add 10,400MW of electricity to Pakistan’s national grid. A $44m fiber-optic cable will also be built.
Published in Dawn, Economic & Business, April 27th, 2015