“China Giving Loans to Pakistan Under CPEC, It’s Not a Giveaway”

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The money being poured in the 62 billion-dollar China Pakistan Economic Corridor (CPEC) is “a loan not a giveaway from China” to Pakistan.

“It is a loan to Pakistan and Pakistan is using it to increase its infrastructure and address its energy issues. This is something that is (also) misunderstood abroad that China is somehow giving money to Pakistan. It isn’t the case,” said Mr Bruno Olierhoek, the president of the Overseas Investors Chamber of Commerce and Industry (OICCI) that represents nearly 200 foreign companies operating in Pakistan, in an interview with Dawn.

He said the CPEC would create opportunities for everyone and it is a misperception that it is only for China. “But still it is early days. Investment (in power and transport schemes) is done mostly by Chinese (state) companies but like I said when you have infrastructure in place it opens opportunities for other (private) investors as well.”

“Of course Chinese are negotiating good deals for their (state) companies. So Pakistan should make sure these investments are used in its best interest,” he added.

The OICCI Chief said the money being poured in the power and transport infrastructure under the CPEC initiative will improve Pakistan’s competitiveness internationally and link it with more countries than it is doing business with at present. That will create a huge space for foreign direct investment in the country’s export industries.

“To encourage exports you have to be competitive internationally. Many factors play a role. The government is working a lot on that. (Energy and transport projects under) CPEC will make Pakistan’s exports more competitive.”

“Availability of energy and infrastructure upgrade will make it viable for others (foreign investors) to invest in new export opportunities. It will help create more export-oriented companies — also (to export goods) to china.

“Empty containers returning to China don’t make sense. The whole objective of CPEC is to not just create a road from China, but to improve competitiveness of the country and connect it with more countries than it is doing business with today. It is because of this possibility that CPEC is a game changer.”

But Mr Olierhoek cautioned that availability of energy and infrastructure upgrade wouldn’t automatically attract foreign private investment. “CPEC is good news (for Pakistan) but the government should also work hard on dismantling other barriers keeping foreign investors at bay.

“For example, perception on Pakistan tends to be more negative than the reality on ground. People overseas are still scared because of the perceived law and order situation although it is a different story once they are in the country.”

On Foreign direct investment, Mr Olierhoek sought to dispel the impression that foreign firms operating in Pakistan aren’t investing in new Greenfield projects and pointed out that OICCI members had reinvested $2.2 billion from their profits in 2016, which was roughly the same as $2.6bn received by the country as FDI (including Chinese investment on CPEC related projects).

“The foreign companies already operating in Pakistan have positive sentiment and are investing here for the future. The size of reinvestment shows that we believe in Pakistan.

“Of course part of our reinvestment is for maintenance and small upgrades. But some of the money has also gone into new projects. OICCI member firms represent 14 different businesses sectors and they have invested in new projects across those sectors of the economy.”

He said foreign direct investment flowing into Pakistan was less 1pc of its GDP, lower than other regional countries like India and Bangladesh and required to be raised to at least 3pc of GDP.

(The report originally appeared in Dawn)

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