Govt, Pak companies face big challenge: Al Kazim Mansoor
Soilmat Chief talks about reasons why Pak companies fail to reap benefits from CPEC
There are two views in Pakistan in the backdrop of the China Pakistan Economic Corridor (CPEC). First, Pakistani industry will be devastated by this initiative, second, CPEC would not affect us at all. I do not agree with both the views as they are two extremes, says Al Kazim Mansoor, the Chief Executive of Soilmat Engineers while talking to Engineering Review.
Pakistan has never seen such magnitude of development which is being witnessed under the CPEC, he believes.
Initially, the impact did not appear as our companies which work under the guidelines of the PEC and PEPRA met the criteria—the work experience and financial stability—set for comparatively low-cost projects.The issue surfaced when big projects like Sukkur-Multan Motorway started coming, he said. Let’s suppose they cost Rs100 billion and Chinese companies are to pass on works worth Rs.30 billion to Pakistani companies provided they meet the criteria in terms of their work experience and financial strength. Unfortunately, Pakistani companies fail to meet the standards which were fit for them in smaller projects. Now, the Chinese companies seek permission for giving such contracts to others.
This is a crux of the issue, he believes.
“This is an issue which, at least at the time, the government even do not know how to resolve.”
The question is how come big names like FWO and NLC also cannot meet the standards for acquiring huge projects under the CPEC?
Al Kazim guesses they may be exhausted as they are doing many projects like Karachi-Hyderabad Motorway, Karachi-Thatta National Highway and other full sections of roads.
He said there was yet another aspect as well. The Chinese are not westerners which give contracts to local companies as they find local companies cheaper. For instance, he said his company (Soilmat) worked on Reko Dik Project for which just 10 – 15 people arrived in Pakistan. They got the work done from them (Soilmat) and hired a foreign company for vetting their report. In contrast, the Chinese do it themselves. They pay $700 to $1000 to a fresh engineer who is equal to fresh Pakistani engineer thus the Chinese engineer is cheaper for them. In sum, Pakistanis may not have benefited much from them.
Moreover, purchases is also an issue. The Chinese companies have benefit of exemptions on import duties in Pakistan. They win projects because they bid the lowest rates as Pakistani companies cannot compete because of high taxation on purchases of material. This is a jolt to Pakistani industry.
Citing an under-construction building in Karachi as an example, he said: our developers also find Chinese companies cheaper and also better in building and material quality so they get attracted to them. Therefore, this question is not so easy to respond.
How to resolve it then? Is making consortium a way out if Pakistan companies do not meet standards for subcontracting?
“We are actually a hasty nation. We have to push things hurriedly. We do many things keeping elections in mind and it all becomes political too. There is no culture of thought process in the country. Like, Pakistan is going for the privatization of its airports—a decision which neighboring India took ten years back when Manmohan Sindh was the Prime Minister. They looked at all the aspects of the decision and implemented it. Here we are in hurry. It harms the country.
Yet another example is the projects launched by Mustafa Kamal in Karachi. They were done in a hurry and thus compromised quality. It also happened in Lahore but they now have expertise. Still the projects done in haste are faulty. When asked if the Chinese companies will bring workers from their country also? It seems so, he replied. Their eye is on benefits. I believe there will be some projects here on which Chinese laborers shall work.
On perception that there are a few companies in Lahore which get the lion’s share, Al Kazim said it was difficult to comment. Normally, the companies earn a lot of confidence of their client and consultant. They work together. Everything is open and every company is active. Thus, it is not possible to hide it if someone is denied. Relationships do work but still hoodwinking is not possible when there are many institutions involved.
