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Pakistan sets up committee to review ML-I project

ISLAMABAD: 

Pakistan has set up an Implementation Committee for the multibillion dollar Mainline-I (ML-I) project of the China-Pakistan Economic Corridor (CPEC) to review the possibility of reducing its scope and cost from the existing $8.2 billion aimed at making it financially viable.

The decision was taken by Cabinet Committee on CPEC, on Wednesday, which was chaired by Federal Minister for Planning and Development Khusro Bakhtyar. It was decided to split the project into more than two phases and also drop some sections that were part of the original plan of constructing 1,872 kilometre long line of Pakistan Railways.

The original plan was to construct the road between Peshawar and Karachi in two phases. The project faces over three years of delay. The cabinet committee discussed the Pakistan Railways ML-1 project in detail, said Bakhtyar while speaking to media-persons after the meeting

“An implementation committee, headed by the railways minister was constituted to identify financial savings, phasing of the project, scope etc within two weeks in order to fast-track the project,” he added.  The minister said that the final decision would be made in light of the committee  recommendations.

According to the proposal, the project should be completed in more than two phases besides dropping some sections and reducing the scope of other sections. Due to change in scope, the phase-I of the project could cost around $2 billion as against Pakistan’s earlier estimate of $3.4 billion, according to the Ministry of Planning officials. The Chinese consultants calculated the cost of the first phase at $4.1 billion.

The ML-I project has a total length of 1,872 kilometres.

The previous Pakistan Muslim League-Nawaz (PML-N) government had decided to split the project into two due to its high cost and extensive work that requires refurbishment and expansion of the main railway line. The project’s initial cost of $8.2 billion was based on a joint feasibility study, which was not backed by a technical design study.

The cabinet committee also discussed the possibility of financing some parts of the ML-I from the Public Sector Development Programme to lower reliance on Chinese financing.

According to the framework agreement for the ML-I, China was supposed to provide 85% of the project cost as a concessionary loan. The project has been declared strategically important by both the countries.

Bakhtyar said that the proposal to construct the ML-I project on Build Operate Transfer model has been shelved and now it will be completed on governmentto-government basis, as per the framework agreement.

In order to address the issues of under development and deprivation in Balochistan, the cabinet committee also decided to initiate work on western route projects on a priority basis. The federal government would perform the ground-breaking ceremony of one western route road project this month, announced the minister. He did not disclose the name of the project.

The minister also announced that the groundbreaking ceremony of New Gwadar International Airport will finally be performed this month. The project that faces over a two-year delay will be completed with Chinese grant. The committee also decided to fast-track work on Gwadar power plant. The planning minister said that it was decided that the missing link of eastern corridor will also be completed by starting work on Sukkur Hyderabad Motorway.  The project will be completed on Build Operate Transfer model that will help save $2.5 billion,  said Bakhtyar.

The National Highway Authority will complete the design as well as feasibility of the project and award of the contract will be done in 2019, he added.

Bakhtyar said the cabinet committee also gave the final approval for CPEC Business Forum that will be chaired by the federal minister for planning and development.

The forum will comprise 21 members with representatives from government and private sectors. The cabinet committee has approved six priority sectors for availing $1 billion Chinese grant for social sector over a  period of three years, said Bakhtyar.

The minister said that agriculture, education, health, poverty alleviation, water supply and vocational training sectors have been finalised in consultation with the provincial governments. “The socio-economic development is very critical for equitable development and we would try to avail $500 million grant during the first year,” said the planning minister.

A memorandum of understanding on socio-economic development would be signed to ensure early implementation of the projects. The cabinet committee also approved cooperation areas in the agriculture sector days before a meeting of CPEC Joint Working Group on Agricultural meeting. Both the countries would find possibilities of co-branding and joint ventures in supply chains, said Bakhtyar.

The minister informed that a Chinese experts’ team visited Pakistan and different level of discussions were held at federation and provinces.

Bakhtyar said that no headways was achieved in industrial cooperation sector over the last five years; however, the present government prioritised this field by ensuring speedy implementation wherein concession agreement of Special Economic Zone at Rashakai, Khyber Pakhtunkhwa would be signed by March 25, while ground-breaking would be made in April.

Source: Express Tribune

Date: 13th March 2019

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Pak-China cooperation in agriculture to be extended under CPEC

ISLAMABAD: Pakistan and China have decided to expedite cooperation in the field of agriculture under China Pakistan Economic Corridor (CPEC) and an important meeting in this regard is expected to be held next month, an official in Ministry of Planning, Development, and Reform said.

The official said that the cooperation was being extended with a special focus on boosting cooperation in the areas of climate change, desertification control, desalination, water management, afforestation and ecological restoration, wetland protection and restoration, wildlife protection, forestry industry development, disaster management and risk reduction and other areas of mutual interest.

“A subgroup of CPEC agriculture sector has been elevated to a full-fledged joint working group and its meeting is planned to be held next month,” he added.

Meanwhile, he said that a team of Chinese Socio-Economic Development experts was visiting Pakistan in the last week of the current month to finalize the projects and their sites in already agreed six different areas under China Pakistan Economic Corridor (CPEC) including health, education, water supply, vocational training, poverty alleviation and agriculture.

To a question he said work on all the CPEC projects was going on in a smooth way none of the CPEC projects is facing delay; rather Pakistan and China are agreed on the future trajectory of the CPEC and timely completion of its on-going projects.

For future, he said joint efforts are underway, focusing on socio-economic development and accelerating cooperation in industrial development as well as agriculture.

The MoU on the formation of JWG on Socio-economic development and MoU on Poverty Reduction has been signed during the Prime Minister’s visit to China in November this year, the official added.

Recognizing the significance of Gwadar as an important node in cross-regional connectivity and the central pillar of CPEC, he said Pakistan and China have agreed to speed up the progress on the port and its auxiliary projects.

The groundbreaking of New Gwadar Airport, vocational institute and hospital are planned in the 1st quarter of this year.

Gwadar Master Plan is being prepared and it is in the final stages of formulation.

Huge investment is expected in the petrochemical sector at Gwadar, he said.

Besides, he said Pakistan and China have expedited the work on industrial cooperation under CPEC and the government has expedited development of economic zones by prioritizing Rashakai, Dhabajhi Faisalabad and ICT SEZs with a vision to make 2019 as a year of industrial development under CPEC.

Source: The News

Date: Feb 12, 2019

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CPEC projects: ECC agrees on speeding up work on two more SEZs

Source: Express Tribune

Date: 5th Feb, 2019

ISLAMABAD: 

The federal government on Monday decided to fast-track work on two more prioritised Special Economic Zones (SEZs) being set up under the China-Pakistan Economic Corridor (CPEC) and directed  ministries to resolve issues hampering progress on earlier three prioritised zones.

The Economic Coordination Committee (ECC) of the cabinet directed the Ministry of Energy to prepare a plan for the provision of 740 megawatts of electricity and 170 million cubic feet of gas per day (mmcfd) to the zones to be set up under CPEC. The work on CPEC SEZs has remained stalled due to delay in finalisation of their administrative structures, incentive packages and availability of utilities.

The ECC also decided to amend the SEZ Act to give more powers to the provinces for approval of these zones.

These decisions were taken on the basis of a presentation given by Board of Investment Chairman Haroon Sharif, who highlighted all the pending issues that delayed operationalisation of the second phase of CPEC. The ECC agreed with the Board of Investment (BOI) proposals to fast-track the zone approval process, which would curtail the application processing time from 90 days to 45 days, said Sharif after the ECC meeting.

He said the ECC also decided to include the Islamabad SEZ and Bostan SEZ, Balochistan, in the list of priority zones.

In May 2017, Pakistan had submitted a list of nine prioritised zones to China, which would be built under the CPEC framework. Of these, three zones – Faisalabad, Rashakai in Khyber-Pakhtunkhwa and Dhabeji in Sindh – had been prioritised for the first phase of implementation.

The Rashakai zone requires 210MW of electricity and 30 mmcfd of gas. The BOI had conditionally recommended SEZ status for the Rashakai zone in 2018 subject to the provision of no-objection certificate by the provincial environmental protection authority. The concession agreement for the zone has not yet been signed. The Faisalabad CPEC industrial zone requires 330MW of electricity and 125 mmcfd of gas. The provincial government has allocated funds for its development but the master plan will not be ready before June this year.

Similarly, the Dhabeji zone needs 200MW of electricity and 15 mmcfd of gas. Work on this zone is moving at a snail’s pace, although the provincial government expects to hold international competitive bidding for selecting a developer this month. The Ministry of Energy will share a plan with the ECC for the provision of electricity and gas to the existing and planned SEZs within 30 days, according to a statement issued by the finance ministry after the meeting. The SEZs have been planned as part of CPEC to attract investment from China through the relocation of sunset industries. But Pakistan has remained unable to cash in on the opportunity due to usual bureaucratic snags.

The BOI chairman highlighted the cost of land, provision of utilities, governance structures and freight and mark-up subsidies as obstacles to the development of prioritised SEZs. The issue of approval of a tax and subsidy incentive package remains pending before the federal cabinet for approval amid reluctance on the part of provinces to provide financing.

Finance Minister Asad Umar asked the provincial governments to provide land with the objective of industrialisation instead of using it as a tool to make quick money from real estate transactions.

The ECC directed that the BOI should make certain changes to the SEZ Act to make it more investor-friendly. After these amendments, the role of the federal government will be restricted to providing utilities only. After the amendments, the provinces will also not be required to file applications with the BOI for approval of the economic zones.

However, it will not be an easy task for the government to get the law amended due to the charged political atmosphere.

The ECC also directed the authorities to first fulfil requirements of the existing seven SEZs, which were being developed outside of the CPEC framework. Punjab government representatives raised the issue of lack of availability of utilities in the province, which were hampering development of industries. The ECC accorded approval for the provision of funds to the tune of Rs833 million to Pakistan Machine Tool Factory for the payment of employees’ salaries and retirement benefits.

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CPEC is about development, not property speculation

Source: Asia Times

Date: 29/1/2019

Author: Zamir Awan

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CPEC to bring prosperity, says PM Imran

Source: The Express Tribune

Date: 26/1/2019

Author: Mohammad Zafar

QUETTA.: 

Prime Minister Imran Khan has said the China-Pakistan Economic Corridor (CPEC) project will bring prosperity for the people of Balochistan, vowing mega-development project in the future.

Talking to Pakistan Tehreek-e-Insaf (PTI) Balochistan chapter President Sardar Yar Muhammad Rind in Islamabad on Friday, the prime minister said the PTI-led government will rectify the injustice committed with the resource-rich but impoverished province during previous regimes.

PM Imran said: “People of Balochistan are more patriotic as people of other provinces, without justice the country can’t be developed and our government is serious to develop Balochistan”.

In the meeting, the provincial political situation, Kachi Canal Project and the party’s affairs were discussed. The prime minister also lauded the performance of PTI’s provincial leadership

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Pakistan, China to observe 2019 as year of industrial cooperation, says Ambassador Yao Jing

Source: Pakistan Today

Date: 28/12019

Author: Mian Abrar

ISLAMABAD: Chinese Ambassador Mr Yao Jing has said China and Pakistan would observe the year 2019 as a year of industrial, socioeconomic and agriculture cooperation which would take the Sino-Pakistan friendship to the next level.

He expressed these views while addressing the participants of reception to commemorate the new Chinese lunar year hosted by Chinese embassy here to honour the services of Pakistan, China Alumni.

The Chinese ambassador said that both the countries would expedite projects by promoting joint ventures and export-led growth under CPEC this year.

Referring to the decisions taken at the Joint Working Group meeting, the ambassador said all deliverables were achieved at the meeting and the scope of the cooperation was expanded to new avenues.

He said that the MoU on Industrial Cooperation signed during 8th JCC provides a framework to promote communication across key industries such as textile, petrochemical and iron and steel, thereby encouraging Chinese investors to relocate and explore opportunities of investment in Pakistan.

He said that the Ministry of Interior has been doing wonders for the security of Chinese nationals working on the China, Pakistan Economic Corridor (CPEC).

Addressing on the occasion, Zamir Ahmed Awan said that there are 28,000 Pakistani students studying in China while 20,000 engineers have already graduated from various Chinese institutions.

“We need to involve our engineers graduated from China in CPEC projects. They better understand the cultural strengths and norms of both countries. They can better serve the CPEC projects. We will request the government of Pakistan to involve Pakistani scholars with CPEC projects,” he added.

Awan said it was a pity that there are almost negligible percentage of Chinese-Pakistani scholars working on CPEC projects. “We need to enhance the number of our scholars who have graduated from Chinese institutions. This would help take Sino-Pakistan cooperation to the next level,” he concluded.

On the occasion, various Chinese companies held several lucky draws and guests were given away gifts to make New Year celebrations memorable.

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China’s Belt and Road Initiative will add US$117 billion to global trade this year, a new study shows

Source: South China Morning Post

Date: 23/1/2019

Merchandise trade between China and the countries targeted by its “Belt and Road Initiative” is predicted to grow by US$117 billion this year, according to new analysis.

For China, this will mean US$56 billion in additional exports, while it will import an extra US$61 billion worth of goods from the 80 countries named in the Chinese government’s official manifesto, research from trade credit insurer Euler Hermes shows.

The report estimates that this will add 0.3 per cent to global trade and 0.1 per cent to global growth, at a time when fears are mounting about a slowdown across the world economy, but most notably in China.

The belt and road strategy is Chinese President Xi Jinping’s flagship investment programme that was launched in 2013, and aimed at building infrastructure in countries accounting for 68 per cent of the world’s population and 36 per cent of its gross domestic product (GDP).

Not all of the countries targeted have welcomed Beijing’s overtures; some have rejected investment, notably India and latterly Malaysia.

Others have yet to agree to any China-funded projects, such as South Korea, but have expressed interest in receiving investment through the belt and road plan.

However, Euler Hermes said that these nations will see higher trade volumes as a result of the initiative, even if they have yet to receive any direct investment from China.

Mahamoud Islam, senior economist at Euler Hermes in Hong Kong, said that this is because of the effect of better connectivity and infrastructure along the belt and road network, as well as better trade relations between China and target markets.

Given that a huge part of the belt and road plan is domestic, international companies could expect to benefit from infrastructural improvements in China too, Islam said.

“Other countries benefit from demand from China. You can argue about politics and the supply chain being controlled by China. But at the end of the day, this is bringing demand to markets that benefit from that demand.

“It improves competitiveness. That’s not surprising, you’re building railroads, ports and airports, connecting countries,” Islam said, adding that for China, the belt and road strategy was a way to push out excess capacity in industries such as coal and steel, to internationalise its companies and to help liberalise the yuan by lending in Chinese currency.

In 2018, the trade gains were estimated to be higher still, at US$158 billion, with South Korea, countries in Southeast Asia, India and Russia the greatest beneficiaries.

The belt and road plan has been billed as a means of improving trade and was roundly welcomed when it was started in 2013. Initially marketed as a revamp of the old Silk Road trade route connecting Eurasia, Euler Hermes estimates that it saw US$460 billion invested between 2013 and 2018.

The investment has continued this year. From January 2 to January 15, the value of new belt and road projects was US$4.5 billion, according to RWR Advisory Group, a Washington-based research house, with the highest proportion of this going to Sub-Saharan Africa.

The largest funding package, however, was in Pakistan, which received US$2.21 billion for the Mohmand dam project, to be built by a joint venture that includes China Gezhouba Group.

Pakistan’s strategic location has made it one of the primary targets of China’s belt and road spend and has been earmarked to receive more than US$60 billion in debt and equity investment.

At the centre of this is Gwadar, a port on the Arabian Sea, which is being turned into a transshipment hub by China, allowing its remote westerly regions to access the energy markets of the Middle East.

However, Pakistan is also one of the most controversial hubs on the network. Many analysts claim that its debt exposure to China is unsustainable.

Indeed, there has been a notable backlash against the initiative in recent months, with the Malaysian Prime Minister Mahathir Mohamad warning last year of a “new version of colonialism” stemming from China’s outbound lending.

A report last year from the Center for Global Development, an American think tank, implied that countries are concerned about being stuck in a debt trap, unable to repay loans and forced to cede assets such as commodities or infrastructure instead.

“The primary concern is that an US$8 trillion initiative will leave countries with ‘debt overhangs’ that will impede sound public investment and economic growth more generally,” the report read.

These fears were fanned by reports in December that Kenya may have to hand over control of its largest port of Mombasa, paid for by China, if it was unable to repay the debt. The claims were denied by the Kenyan President, Uhuru Kenyatta.

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Russia’s Interest In Pakistani Power Projects Could Portend CPEC Investments

Source: EurasiaFuture

Date: 17/1/2019

Author: Andrew Korybko

Reports are circulating in the Pakistani press that the Russian company is interested in several power projects in the country, which could pave the way for Moscow to unofficially invest in CPEC without angering its Indian partners.

Many Pakistanis are excited by the news that Russian company Inter RAO Engineer is interested in several power projects in the country, potentially willing to commit the whopping sum of $2 billion worth of investments if their counterparts are receptive. While nothing has been officially confirmed, these reports are plausible enough given the fast-moving rapprochement between Russia and Pakistan over the past couple of years, which aims to establish a strategic partnership that the author coined with the catchphrase of “Rusi-Pakistani Yaar Yaar”.

It evidently appears as though Russia is diversifying its outreaches with Pakistan from their former Afghan-related anti-terrorist centricity to a more robust partnership that’s now taking on important energy dimensions. It shouldn’t be forgotten that Russia already committed to building the North-South gas pipeline and signed a memorandum of understanding for constructing a $10 billion offshore one between Iran, Pakistan, and possibly even India too one day. In a sense, it can be said that Russia’s “traditional diplomacy” with Pakistan evolved to “military diplomacy” and now “energy diplomacy”.

Attention should be paid to the latest report’s claims about how Inter RAO Engineering is supposedly interested in the proposed Mohmand Dam along the Swat River in the former mountainous Afghan-bordering region of what used to be called the Federally Administered Tribal Areas (FATA) prior to its merger with Khyber-Pakhtunkhwa last year. This is highly symbolic because the words “FATA” and “Swat” remind many Westerners of the country’s War on Terror during the mid-2000s, so it says a lot about the overall sub-region’s newfound stability that Russia would consider investing there.

Importantly, $2 billion worth of potential investments in Pakistan’s power industry would signal that Russia wants to get in on the country’s CPEC-related Chinese-driven construction boom but is doing so without openly attaching itself to the CPEC “brand” out of concern for its Indian partner’s political sensitivities. New Delhi is dead-set against CPEC because of its stance that the series of megaprojects transit through territory that India claims as its own per its maximalist approach to the Kashmir Conflict, and the renaissance of relations between it and Russia would be ruined if Moscow invested in CPEC.

That explains why Russia might reportedly be considering investing in CPEC without formally doing so, following the strategy that the author previously suggested in his piece last summer about “Creative Non-CPEC Marketing Strategies For Pakistan”. So long as Russia abstains from officially endorsing CPEC and attaching its investments to that “brand”, then its relations with India won’t suffer no matter how many billions of dollars it eventually pours into Pakistani projects. With that being the case, the latest reports are an encouraging sign of Russian intent and could portend more unofficial CPEC investments.

DISCLAIMER: The author writes for this publication in a private capacity which is unrepresentative of anyone or any organization except for his own personal views. Nothing written by the author should ever be conflated with the editorial views or official positions of any other media outlet or institution.

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‘CPEC economic zones will help bridge trade deficit of $9b’

Source: The Express Tribune

Date: 20 -1- 2019

LAHORE: Planning and Development Minister Khusro Bakhtiar on Sunday said that Pakistan facing a trade deficit of $9 billion.

He said the deficit would reduce with the economic zones being set up after the China Pakistan Economic Corridor (CPEC) becomes operational.

The economic zones would help increase exports, which would in turn decrease the trade deficit, he said while talking to the media persons at the Press Information Department regional office

The minister maintained that 19 per cent reduction in the trade deficit was recorded last month because the volume of exports had jacked up and that of imports receded.

He said China and Pakistan would also start working jointly on the agriculture sector in next month.

China, he said, would also provide $1 billion grant to Pakistan in next three years, while around 100 Chinese investors would soon visit the country to explore investment opportunities in various sectors.

Khusro said Pakistan and China had signed a Memorandum of Understanding (MoU) on industrial cooperation on December 20, 2018.

The PTI-led government, he said, had decided to take CPEC into a new phase by widening its scope. Prime Minister Imran Khan’s visit to China was focused on strengthening of Pakistan’s economy, he added.

He told that the government was also taking effective measures to reduce the current account deficit, besides prioritising facilitation to the export-oriented industries.

The minister said initially the agriculture sector was not included in CPEC. However, the incumbent government convinced China to also extend its cooperation in the vital sector.

“China has a share of $7 billion in the global trade of agriculture and livestock, and $3 billion in fisheries, but Pakistan has none in the two sectors”, remarked Khusro.

Pakistan, with the cooperation of China, was working on elimination of poverty as latter had successfully pulled 700 million people out of poverty.

A pilot project on the Chinese pattern would be initiated, which definitely would help to reduce poverty substantially, he hoped.

To a question, he said Saudi Arabia and the United Arab Emirates had shown keen interest in the establishment of an oil city in Gwadar.

 

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Pakistan, China agree to make 2019 a year of economic cooperation under CPEC

Source: The News

Date: 15th Jan, 2019

ISLAMABAD: Chinese Ambassador in Islamabad Yao Jing called on Minister for Planning, Development and Reform Makhdum Khusro Bakhtyar on Tuesday.

During the meeting, matters of mutual interest including progress on China Pakistan Economic Corridor projects came under discussion.

Ambassador Yao Jing appreciated that 8th Joint Cooperation Committee (JCC) meeting held successfully in a cordial atmosphere where all deliverables were achieved and the scope of the cooperation was expanded to new avenues.

Both sides agreed to expedite work by promoting joint ventures and export led growth under CPEC by declaring 2019 as “year of industrial, socioeconomic and agriculture cooperation”.

Minister for Planning, Development & Reform, Makhdum Khusro Bakhtyar said that the MoU on Industrial Cooperation, signed during 8th JCC, provides a framework to promote communication on key industries such as textile, petro-chemical and iron & steel, encourages Chinese investors to relocate and explore opportunities of investment in Pakistan.

The minister highlighted that Pakistan can become an ideal destination for investment in different sectors. He said that Ministry of Planning would facilitate Chinese investors looking for opportunities under CPEC and create a pull effect.

He highlighted that government is working on policies that will improve ease of doing business in early time frame. Minister said that the first meeting of the JWG on Socio economic development was a major milestone and the action plan discussed therein will support uplift of less developed area.

Pakistan side has already forwarded invitation letter to China for visit of the expert team.

“Both side to work out for speedy implementation of initiatives in already identified six areas including agriculture, education, medical treatment, poverty alleviation, water supply and vocational training projects” he intimated.

The minister hoped that JWG on Agriculture meeting, scheduled for 15th February this year, would provide an opportunity to broaden CPEC Cooperation.

He emphasized that Chinese investors should explore investment opportunities in agriculture sector of Pakistan for input supplies as well as food production, processing, logistics, marketing and exports in a vertically integrated way on their own or in joint ventures (B2B) with Pakistani companies.

Both sides agreed to ensure that this year Gwadar Projects such as New International Airport, Hospital and Vocational Institutes will hit ground within three months as these projects are beneficial for the local population and will therefore gain the support and trust of the local population.

 Ambassador Yao Jing appreciated the efforts of Government of Pakistan for facilitating Chinese investors and informed that a large number of Chinese investors would visit Pakistan soon that would further strengthen the bonds of economic and bilateral cooperation.