Speaking at seminar on Belt and Road Initiative in the University of Peshawar, Chinese Ambassador Yao Jing attempted to clarify the wrong impression that China wants to capture and control the consumers’ market in Pakistan under the umbrella of China-Pakistan Economic Corridor (CPEC). The envoy alleged that Western media is targeting the project and described the investment in Pakistan mutually beneficial for both countries.
It is not the western media alone which discuss various aspects of the agreements made under CPEC framework by the previous PML-N government as these agreements, particularly the ones in power sector have been discussed threadbare in the national media by the experts including a former member of Planning Commission. They questioned the inflated capital expenditure of both thermal and hydel power projects and power tariff of 8.5 cents per unit in a country which is badly trapped in the circular debt which has swollen to Rs. 1.20 trillion. The coal power tariff above 5cents per unit is not justifiable.
The trade bodies have remained critical of the terms of free trade agreement (FTA) with China and the expressed the fear the concessions granted in the agreement will convert Pakistan from a producing country into a trading nation. The point of view of business leaders was supported by the Prime Minster’s Advisor on commerce the other day in Karachi. The zero import duty concession on 35 percent tariff lines have flooded the domestic market with a large variety of cheap good and led to closure of a number of industries which were not competitive. It also led to trade deficit of $ 12 billion plus in the external balance. To meet balance of payment obligations short term loans with interest rate of five percent have been obtained from friendly countries to relieve the pressure on depleting foreign exchange reserves. China was pressing hard for this concession on 75 percent tariff lines when final touches were given to the FTA Phase II early last year. The signing of the agreement was postponed under the pressure of opposition parties, particularly PTI which demanded to put the draft agreement before parliament. In retaliation to the postponement of signing of FTA phase II, China withheld digital exchange of trade data. Pakistani custom authorities alleged that Chinese exporters indulge in under-invoicing that deprive the country of custom duty worth billion of rupees.
The Prime Minster has priortised four key areas of CPEC and he is anxious to perform the ground breaking ceremonies of four special economic zones (SEZs), one in Khyber Pukhtunkhwa, two in Punjab and one in Sindh. The broad parameters of joint ventures between Pakistani and Chinese entrepreneurs have not been made clear neither by the previous government nor by the present one. Chairman State Engineering Corporation in his visit of Islamabad Chamber of Commerce and Industry had cautioned the entrepreneurs to move towards the induction and application of 5th generation technologies if they want to enter into joint ventures in the SEZs.
A policy of skill development of Pakistani workforce has not been put in place, enabling them to successfully avail job opportunities in the high-tech industries to be set up in these zones. Conducive environment for skill development and research does not exist in institutions of engineering sciences and technology. Same is the case with the institutions of agriculture and pure sciences. A useful organision of Research and Development Pakistan Council of Industrial and Scientific Research (PCSIR) had been established early 1960s. But it has become redundant by not utilizing the capabilities of its scientists and engineers and available technical infrastructure. Chinese investment will be beneficial only when China extends its assistance in skill development. These zones will house plastic and steel industries in addition to other industries. Environmental issues can be addressed with the enforcement environment protection laws.