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CPEC and industry relocation

Should we expect any Chinese industry to relocate to Pakistan under the China-Pakistan Economic Corridor (CPEC)? And if it happens, which industries are likely to benefit from such relocation?

Before we answer this question, it is important to understand why companies relocate. An industry would relocate to another city or country if such relocation entails a significant regulatory, locational or cost advantage. The locational advantages include reduced transportation time due to proximity to raw materials or market, market size or even better living conditions at the destination. The cost advantages, on the other hand, include lower input costs, better employees or overall lower cost of doing business, whereas the regulatory advantages may cover tax breaks, policy incentives, less stringent controls, etc.

Let’s first discuss the location advantages. While CPEC will greatly reduce the travel time from western China to the Indian Ocean, the shorter distances are mostly relevant for only those Chinese enterprises which are located in the three western provinces of Xinjiang, Tibet and Qinghai and are exporting to the Middle East and North Africa. For others, using the sea route through eastern ports or the overland route to Europe would make more sense. Moreover, except Xinjiang with exports of more than $13 billion, exports from other two provinces are almost negligible.

But Pakistan itself is a very lucrative market with a growing middle class. The huge potential of the local market has generated significant Chinese interest in household appliances and automotive sectors. In fact, this interest predates CPEC and included investments by Haier, Gree and Changhong.

It is, therefore, likely that this sector is going to see much more Chinese investment in the next few years. Early interest and pipeline of potential investments by Changan Automobile Limited to assemble and sell its cars in Pakistan, Jinbei Auto to build a completely knocked down assembly and joint ventures by LIFAN and Beijing Automobile Works further validate this notion.

Similarly, the locational advantages also support the case for agri business and food processing industry which can form another potential candidate for Chinese investment to serve the local industry as well to target the massive Chinese food market.

Coming to the cost advantages, the garments and textile industry seems to be a good choice for relocation. China is already facing a surge in production costs, owing to appreciation of its currency, inflation, higher cost of raw materials, etc. Moreover, as Chinese labour is graduating from low-paying to high-paying jobs, along with introduction of improved labour laws, the labour costs are also rising sharply. The average labour cost of an operational hour in the coastal and inland regions of China is thrice the cost in Vietnam and Pakistan and six times that of Bangladesh.

These pressures are compelling Chinese manufacturers to look elsewhere to relocate. For now the Chinese focus seems to be on Vietnam, Myanmar, Cambodia, Indonesia and Bangladesh. But there is room for Pakistan to join the race as well.

Lastly come the regulatory factors. The sunset industries in China are being pushed out due to overcapacity, rising production costs and environmental factors. These include copper and aluminum smelting, cement, papermaking, textiles, iron and steel, light engineering and low-end motors and machines. While smelting would need abundant availability of inexpensive energy, some of the other sunset industries can very well be relocated to Pakistan.

No wonder that the initial parleys with China and the earlier version of the long-term plan mentioned textiles and garments, agri businesses, food processing, mining, cement, light industrial products and transportation machinery and household appliances as sectors that could potentially benefit from CPEC.

The focus for Chinese industry relocation is, therefore, quite clear and makes much commercial sense. Now it’s for our policymakers and industry to make it happen. 

Published in The Express Tribune, May 21st, 2019.

Author: Hasaan Khawar

Qureshi says CPEC will be completed at all costs

ISLAMABAD: Foreign Minister Shah Mahmood Qureshi said on Monday that whole nation is in favour of China-Pakistan Economic Corridor (CPEC) project and it would be completed just like the nuclear programme.

Qureshi, while speaking on the floor of the National Assembly, said that no objections are being raised on CPEC project and the whole nation is united on it.

The foreign minister praised efforts of security forces by taking timely action against terrorists to establish peace across the country.

Qureshi said that the project will increase opportunities for regional connectivity and bring prosperity to the region.

“Enemies cannot see us being a developed and prosper country. However, we will complete the China-Pakistan Economic Corridor (CPEC) just like our nuclear programme.”

He said, “the powers, which are willing to destabilise Pakistan, use facilitators [to carry out terrorist activities. I want to give a clear message to the enemies that the whole nation and parliament is united on CPEC. I want to give a message that we have complete our nuclear programme despite hurdles and Insha-Allah we will not let our enemies become successful [in their conspiracies against Pakistan].”

Qureshi further said, “Overall three bills are presented for South Punjab. Pakistan Tehreek-e-Insaf (PTI) is with its promise to give its due right to South Punjab. I want to invite opposition for bringing a joint bill after making a committee on South Punjab.”

Earlier on Sunday, the foreign minister had said some forces wanted to destabilise Pakistan and harm the China Pakistan Economic Corridor project.

“Foes of Pakistan cannot see the CPEC making progress, offering greater connectivity and commercial activities to the region,” Shah Mehmood Qureshi said while talking to journalists in Multan.

Referring to the Gwadar terrorist attack, he said Pakistan would not blame any country without proper investigation.

To a question, the federal minister said the Pakistan Air Force would respond befittingly in case of any misadventure by India.

Talking about the International Monetary Fund (IMF) agreement, he said the nation would have to think that why Pakistan had to approach the IMF.

“When the Pakistan Tehreek-e-Insaf (PTI) government came into power, it came to know how much Pakistan’s trade deficit was. We had a total difference of Rs19 billion in imports and exports. There was no investment in the country and circumstances were growing worse,” he said.

FM Qureshi said the PTI government made efforts to control the situation. The trade deficit had increased enormously, he added. He said the government was trying to bring as many people in the tax net as possible.

Date: 14/5/2019

Source: Pakistan Today 

Minister sets timelines to resolve pending issues of CPEC

Minister for Planning, Development and Reform Makhdum Khusro Bakhtyar has said that the incumbent Government was committed to accelerate the implementation of China Pakistan Economic Corridor (CPEC) projects and set timelines for authorities concerned for resolving all the pending issues related to the projects.

The Minister expressed these views while chairing the progress review meeting on CPEC here on Friday.

Chinese ambassador Yao Jing, PD CPEC Hassan Daud and senior officials from both sides were also present in the meeting.

During the meeting, projects of Orange Line, Eastbay Expressway, 300 MW coal based power plant at Gawadr and Kohala Hydropower were deliberated upon.

Each project was discussed and scrutinized in detail and majority of the issues were resolved instantly.

For remaining pending issues, the Minister directed the authorities concerned to resolve them within strict timelines and progress be reported on monthly basis.

Talking about Eastbay Expressway, the Minister said that the demand of local fishermen at Gwadar has been accepted and all efforts will be made to ensure timely completion of this project of national importance.

The Minister said that the Government was committed to development of Gwadar adding that provision of electricity and clean drinking water to Gwadar was top most priority and all efforts will be made to expedite the start of 300 MW coal based power plant.

Khusro Bakhtyar noted that CPEC was progressing in the right direction and the present government has expanded its scope in consultation with Chinese Government to focus on industrialization, agriculture cooperation and socio-economic development.

The Chinese ambassador appreciated the commitment of Government of Pakistan for resolving all pending issues and fast tracking the CPEC projects.

He also appreciated the new issue based progress review mechanism for effective scrutiny and monitoring of progress on CPEC projects.

Date: May 13, 2019

Source: Dunya News

Iran keen to join CPEC projects

ISLAMABAD   –  Terming the China Pakistan Economic Corridor (CPEC) a game changer for the entire region, Iran has shown interest in playing its role in the corridor project.

Iran has also offered Pakistan for joint endeavours regarding the offshore exploration of oil and gas.

This was said by Iran’s Ambassador to Pakistan Mehdi Honarodoost in a meeting with Nadeem Babar, Special Advisor to Prime Minister on Petroleum (SAPM).

During the meeting, Nadeem Babar said that there will be collaboration to curb smuggling of petroleum products at the Pakistan-Iran border.

Nadeem Babar pointed towards commonality between both the countries regarding faith, linguistic and antiquity and added that Pakistan and Iran should improve their commercial cooperation.

Iranian Ambassador Mehdi Honarodoost said that CPEC is a game changer for the entire region and Iran can play its role in CPEC.

He also said that Pakistan and Iran may have launch joint endeavours regarding the offshore exploration of oil and gas.

Source: The Nation

Date: May 9, 2019

BRI transforming world economic order

This Thursday and Friday, Beijing is hosting a second international forum on the Belt and Road Initiative, and it won’t be a small deal. The four weeks preceding this event have seen a surge of nations and institutions joining the BRI framework, beginning with Italy’s memorandum of understanding in March as the first member of the Group of Seven nations to join, followed soon thereafter by Luxembourg and Switzerland.

Weeks later, China won another victory by consolidating billions of dollars’ worth of infrastructure deals with the 16+1 Central and Eastern European Nations that have signed on to the BRI. This particular forum was especially important as it saw Greece join the alliance, changing the name to the 17+1 group. Greece’s official participation in this bloc extended the group beyond its nominal “central and eastern” geographical limits, and the importance of Greece – whose Port of Piraeus and emerging rail infrastructure funded by China – provide a key bridge in the Maritime New Silk Road to Europe.

If that wasn’t enough, China participated in the April 9-10 International Arctic Forum in Russia where the first treaty was signed between Moscow and Beijing on scientific cooperation in the Arctic, and sweeping agreements were made around Chinese-Russian infrastructure development on a policy that has become known as the “Polar Silk Road” – again extending the limits of the BRI beyond its “east-west framework.” Just as the Arctic conference was ending, an unprecedented Canadian Arctic Policy Report was publicized calling for a transformation of Canada’s Arctic doctrine toward a pro-development orientation in response to the “changing geopolitical rules” initiated by Russia and China

While China and Russia consolidated the BRI-Eurasian Economic Union treaty in June 2018, a major leap was announced toward the finalization of a China-Eurasian Economic Partnership, with the Chinese Commerce Ministry’s deputy director of Eurasian affairs, Wang Kaixuan, stating on April 19:

“Now it has to be endorsed by the specialized agencies. China has already completed its internal procedures. We are now waiting for our Russian counterparts, after that we can immediately start the negotiations. I believe that will happen soon.”

From April 15-16, China initiated a sweeping array of treaties with Arab countries during the second Arab Forum on Reform and Development under the heading Build the Belt and Road, Share Development and Prosperity.” The Arab nations already have more than US$200 billion worth of annual trade with China and 18 Arab countries have signed MOUs with the BRI.

China’s capacity to bring long term infrastructure to nations torn by Western-funded wars and regime change is seen as a vital stabilizing influence not only to alleviate poverty and de-radicalize but also to provide a framework for genuine independence from Western intrigues. Commenting on the forum, the president of Lebanon stated, “The Arab countries have huge markets. We regard China as a good friend and are willing to further consolidate the relationship with China. We would like to draw the experience from China’s reform and development so as to benefit our people and seek our opportunities for development.”

Rather than embrace this new potential, Western “old paradigm” forces representing the entrenched deep state have screamed and hollered against the dangers of China and Russia threatening our democratic way of life.” Exemplifying this outlook was The Washington Post’s April 20 feature article “How Washington can beat China’s global influence campaign,” calling for an “alternative to the BRI” controlled by the Western elite. This plan is entirely absurd, since America has not only permitted its own infrastructure and productive powers to rot for 50 years, but has created no relevant infrastructure that has benefited nations abroad during that same time frame. All that has been created under decades of lending by the International Monetary Fund and World Bank that has meant debt slavery, impoverishment, and a $700 billion derivatives bubble that is ripe to explode.

Although great efforts were made over two years by the Five Eyes/Mueller-led witch hunt to destroy the potential alliance US President Donald Trump was proposing to form with Russia and China, the now published Mueller report turned out to be little more than a goose egg, failing to  prove any of the claims of Russian collusion. Jumping off that victory, Trump called loudly on April 5 for a conversion of vast military expenditures that only risk World War III toward a program of long-term investments among Russia, China and the US:

“Between Russia, China and us, we’re all making hundreds of billions of dollars’ worth of weapons, including nuclear, which is ridiculous.… I think it’s much better if we all got together and didn’t make these weapons … those three countries I think can come together and stop the spending and spend on things that are more productive toward long-term peace.”

Going into this week’s BRI Forum (titled “Belt and Road Cooperation: Shaping a Brighter Shared Future”), 5,000 participants, including 37 heads of state and 100 heads of organizations, will discuss the mega-projects that will give vitality to the coming century with the Chinese leadership and business community. There is no doubt that the collapse of the trans-Atlantic banking system will be on everyone’s mind as opportunities to tie our destiny to long-term projects that benefit all nations will be presented as open offers for all to join. Will the West follow Italy’s and Greece’s lead by joining the BRI, or continue to party like it’s 2008?

Source: Asia Times

Date: April 25, 2019

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Obortunity and National Defence University (NDU) join hands to present the first International CPEC Workshop (ICPECW), spanning Beijing, Islamabad and Gwadar

Islamabad: With the upcoming completion of Phase 1 of the China-Pakistan Economic Corridor (CPEC) by end 2019, Phase 2 “Industrial Cooperation” is picking up speed. It is powered by rapidly developing public and private Special Economic Zones (SEZs), industrial relocation from China, attracting FDI into Pakistan, and growing opportunities for trade through new products and markets.

Obortunity, Pakistan’s premier CPEC-focused firm, and National Defence University (NDU) are organizing an International CPEC Workshop (ICPECW), a 2.5 weeks international learning and networking platform on CPEC, spanning Beijing, Islamabad and Gwadar. ICPECW will be held in Beijing, Islamabad and Gwadar from 17th April – 3rd May 2019.

ICPECW will bring participants up-to-speed on the key areas and challenges of CPEC and the Belt and Road Initiative (BRI), to the point where they can conceive and implement solutions. Participants will build a network of key public and private sector individuals, in China and Pakistan. They will see for themselves where CPEC stands and where it is headed. And they will be able to rapidly formulate and implement their own strategy of benefiting from CPEC, a unique economic opportunity for Pakistan and the region.

To ensure the success of Phase 2 of CPEC, intense involvement of the private sector is required, and ICPECW promises to herald this new era. Government to government collaboration conceived CPEC, and with the private sector as a partner, built the foundations focusing on transport infrastructure, Gwadar Port and electricity generation. Now, “industrial cooperation” depends on the successful development and population of Special Economic Zones (SEZs), significant industrial relocation from China and accelerated industrialization.

In addition, the PTI government wishes to include technologically empowered and corporate agriculture; the social sector and media and telecommunications in CPEC. For these transformations to succeed, a leading role for the private sector, academia and civil society is needed. ICPECW provides an opportunity to facilitate this change of focus, besides serving as a timely crash-course on CPEC for those players who had earlier stood on the sidelines, and now wish to get significantly involved.

The organizers of ICPECW would like it to be a landmark recurring annual event which the CPEC community looks forward to. The diverse scope, extensive networking opportunities and rigorous brainstorming planned indicate that an established branded CPEC event is in the making.

More Information:

ICPECW is a joint initiative by Obortunity, Pakistan’s premier CPEC-focused firm, and National Defence University, an apex institute on national security, international relations and defence. For more information, please email us at icpecw@obortunity.org or cpecw@ndu.edu.pk; or call  Mr Maaz Qureshi, Director Operations, Obortunity Consulting +923339628605.

Important Links:

ICPECW Complete Information: https://obortunity.org/cpec-events/icpecw/

ICPECW Informational Flyer: https://ndu.edu.pk/temp/issra/ICPECW/cpec.jpg

ICPECW Application Form: https://ndu.edu.pk/temp/issra/ICPECW/ICPECW-Application-Form.pdf

ICPECW Scope Document: https://ndu.edu.pk/temp/issra/ICPECW/ICPECW-scope.pdf

CPEC China’s vote of confidence in Pakistan, says Mushahid

LONDON: Chairman of Senate Committee on Foreign Affairs Mushahid Hussain Sayed has said China-Pakistan Economic Corridor (CPEC) is China’s vote of confidence in Pakistan and its promising future.

Mushahid Hussain was speaking to students at the School of Oriental and African Studies at a seminar organised by Abdurrehman Chinoy, Co-President of Queen’s Mary Pakistan Students Society. Senator Anwarul Haq Kakar also spoke on the occasion.

Mushahid Hussain said China posed confidence in Pakistan and invested billions when no other country was ready to look at Pakistan and many countries were calling Pakistan a write-off case. “Today, things have changed and the naysayers are nowhere around. Now the talk has shifted to Pakistan’s legitimate position as a global and international player,” he said.

The PML-N senator said that Chinese investment has brought many advantages to the South Asian country. He said that during the 2013 election campaign energy and terrorism were the main issues, but these issues were not mentioned at all during the 2018 elections as both issues have been resolved successfully through a resilient fight.

“We need regional economic cooperation. Balance of power has shifted from the west to the east, 21st century is indeed the Asian century. The CPEC has resulted into geo-economic concept of cooperation. A dead port like Gwadar has been turned into a vibrant trade port and 1 million tons were lifted last year. The CPEC is important piece of China’s Road and Belt Initiative (RBI) and Gwadar is at its centre. Pakistan is a land blessed with talent and nature has endowed beauty and resources to Pakistan,” he said.

The former journalist turned politician and international relations expert said that there is glimmer of hope of peace in Afghanistan as talks between Taliban and other stakeholders are progressing.

“These talks are vindication of what Pakistan has been saying for almost two decades that there is no military solution to Afghan conflict and dialogue of all stake holders is the only viable way forward,” he said.

Mushahid said that India has always tried to cast Pakistan in bad light and has shown intolerance for no reason. He recalled how India called Pakistan’s atomic bomb the “Islamic bomb” to create doubts about it in the west. Mushahid, who was Pakistan’s spokesman when Pakistan went nuclear, said that Nawaz Sharif resisted international pressure and decided to go ahead with the nuclear blast.

Senator Kakar spoke about Balochistan and said that CPEC would pave way for foreign investment and help Pakistan develop into one of the greatest economies of the world. He said Balochistan is the future of Pakistan and region as it offers a lot in terms of natural resources and connectivity to the region.

Kakar told the audience that India has confessed publicly that it’s involved in acts of terrorism against Pakistan, especially inside Balochistan and its populace. “India’s serving naval commander and RAW agent Kulbhashan Jadhav was arrested from our territory red handed. Narendra Modi on India’s Republic Day vowed to support dissidents and secessionists. It was a confession statement coming from India of its involvement in terrorism against the sovereign state of Pakistan. The US secretary of state also confirmed that India is interfering in internal matters of Pakistan. Everyone knows about India’s involvement but due to size of Indian economy the world is silent,” said Senator Kakar.

Abdurrehman Chinoy, who organised the event under the banner of Chinoy Group, said the security situation of Pakistan has greatly improved and now unanimous efforts should be made in coming up with a strategy that focuses on reducing the issues faced by foreign investors. He called on the PTI govt to focus on the “ease of doing business”. Chinoy further said that on issues like CPEC and Kashmir, the whole nation stands united.

Source: The News

Date: 2/8/2019

Author: Murtaza Ali Shah

CPEC in Gwadar to bring prosperity: PM

ISLAMABAD: Prime Minister Imran Khan on Wednesday said the construction of China Pakistan Economic Corridor (CPEC) and the process of development in Gwadar would create numerous socio-economic opportunities for the people of Balochistan.

He said uplift of the people of Balochistan, specially the technical training of youth, was the foremost priority of the government, adding technical colleges were being opened in Balochistan for skill training of youth in the province.

The prime minister expressed these views while talking to Members of the National Assembly belonging to the Balochistan National Party (BAP) here. Minister for Defence Production Zubaida Jalal, MNAs Sardar Muhammad Israr Tareen, Khalid Hussain Magsi, Ahsanullah Reki and Robina Irfan were present in the meeting, which was also attended by Special Assistant to PM Naeem-ul-Haq, Spokesman to PM Nadeem Afzal Chan, Malik Amir Dogar and Arshad Dad.

During the meeting views were exchanged on the matters relating to problems faced by the people of Balochistan. The prime minister said the federal government was fully cognizant of the problem of scarcity of water, especially potable water, in Balochistan and was in touch with the chief minister to address the issue.

He said there was a need to focus on the utilisation of solar energy to meet energy requirements in the province. Zubaida Jalal apprised the prime minister of the problems of fishermen about the passage way linked with construction of Eastbay Expressway and asked for expansion of the passage way.

The prime minister directed to take measures for resolving the issue. Prime Minister Imran Khan Wednesday said the strengthening of local government system and implementation of finance award was vital to check discrimination of development work in different areas of provinces and ensure the provision of appropriate resources to less developed areas.

He added that there was a strong need to focus on solid waste management in the provinces, especially waste to energy. The prime minister expressed these views while talking to PTI Members of National Assembly from Hazara Division here.

Minister for Energy Umar Ayub Khan, Prince Nawaz Alai, Saleh Muhammad, Ali Khan Jadoon and Uzma Riaz were present in the meeting, which was also attended by Special Assistant to PM Naeem-ul-Haq, Spokesman to PM Nadeem Afzal Chan, Malik Amir Dogar and Arshad Dad.

The premier said with Khyber Pakhtunkhwa having a lot of potential in tourism, the promotion of tourism in the province over the last three years also pushed for reduction in poverty. He said that measures were being taken to exploit and promote the potential of tourism, which would bring further prosperity in the province.

The prime minister, however, maintained that while promoting tourism, it would be specially ensured that local population got maximum business opportunities. During the meeting, the MNAs apprised the prime minister of the problems faced by the people of their respective constituencies.

The authorities concerned apprised Prime Minister Imran Khan that a comprehensive business plan for the Pakistan International Airlines (PIA) would be ready by March end.

A detailed briefing was given to the prime minister during a meeting attended by Minister for Aviation Muhammad Mian Soomro, Minister for Finance Asad Umar and PIA Chief Executive Officer Air Marshal Arshad Mahmood, the PM Office Media Wing in a press release said.

During the meeting, the prime minister said privatisation of PIA was not a part of the Pakistan Tehreek-e-Insaf’s manifesto, but the government was bringing reforms in the PIA to save it from recurring losses by turning it into a profit-earning entity.

The PIA CEO informed the prime minister about the progress on the steps taken for the revival of national flag carrier. A detailed briefing was also given with regard to the steps being taken for turning the PIA into a profit generating organization and removal of the corrupt elements.

The Aviation Division secretary briefed the prime minister about the new aviation policy. The prime minister directed that people should be regularly kept informed about the steps being taken for improving the PIA’s affairs.

Date 2 / 7 /2019

Source: The News

CPEC phase-I to be completed by Oct this year: envoy

ABBOTTABAD: China Pakistan Economic Corridor (CPEC) phase-I would be completed by October this year, said Ambassador of China to Pakistan Yao Jing while talking to media after Chinese New Year celebrations.

He said that he enjoyed celebrating Chinese New Year in Abbottabad, terming the city “a gateway to CPEC”.

He said CPEC played a vital role in Pak-China relations and “we would expand the scope of the corridor” which would enhance cooperation between two friendly countries.

Ambassador Yao Jing maintained that China would continue its support for the development of education sector in Pakistan. He said that China Pakistan relations were exemplary in the world and the friendship would continue unabated.

Earlier, on his arrival at Pak-China Public School, Abbottabad, KP Assembly Speaker Mushtaq Ahmed Ghani welcomed the ambassador and a cake cutting ceremony was held to mark the new Chinese calendar year.

Source: Profit Pakistan

Date: 5/2/2019

 

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New Pakistani visa regime indicative of an open, confident, and secure Pakistan: Chinese ambassador

Source: China Daily

Date: 31/1/2019

The new visa regime announced by the Government of Pakistan is indicative of an open, confident and secure Pakistan. H.E Mr. Yao Jing, the Ambassador of China to Pakistan said this in a meeting with Chaudhry Fawad Hussain, Federal Minister for Information and Broadcasting here today.

“We are happy to see that Pakistan Tehrik-e-Insaf’s Government is guiding strong bilateral relations between the two countries in a positive direction’’, he said.

The ambassador also appreciated the personal efforts of Information Minister in promoting culture and films to project the positive image of Pakistan.

The ambassador of China said this year China would allow screening of selected Pakistani feature films in Chinese cinemas, which would promote people to people contact between the two countries.

The information minister highly appreciated the endeavor and informed the ambassador that Pakistan is participating in 9th International Beijing Film Festival. The minister said it was high time to broaden the cooperation between the two countries by exchanging information and co-producing feature films.

Ch. Fawad Hussain, also sought China’s assistance in establishing a technical media institute as part of the Media University, the government envisages to establish soon.

The ambassador informed the minister that under the next phase of CPEC both China and Pakistan would focus on joint ventures in special economic zones and social sector projects including health, education, water resources, and poverty alleviation.

While emphasizing the significance of transfer of technology, the minister reiterated that government accords importance to local production of goods with a view to boost indigenous industry particularly in field of media.