Tag Archives: China-Pakistan Economic Corridor (CPEC)

Is CPEC also a game changer for Balochistan?

on 20/05/2017

By ABID MUSTIKHAN

A beautiful view from the Gwadar PC showing the arch of the East Bay of Gwadar to catch a photographer’s eye displays the contrast between the New Gwadar Port and the adjoining shanty town that has been there for centuries.

With my mother tongue as Balochi, I had an advantage to visit the fish harbour and speak to the fisher-folk to hear their views regarding the China-Pakistan Economic Corridor (CPEC), perhaps a game changer for the country.

The fishermen did not express much hope, but rather their concern was their rehabilitation at a new location after being uprooted from their present locality as the new location may lack the necessary infrastructure to maintain their livelihood from the fishing business that they only know.

A seminar organised by the Gwadar Chamber of Commerce was quite conspicuous with the presence of the minister for port and shipping and the federal planning minister. The port and shipping minister, a senator from Balochistan, surrendered the rostrum to the planning minister who spoke on the occasion.

Since the obsession of roads and motorways persists with the president of the Pakistan Muslim League-Nawaz, its party members and ministers profusely advocate the contention to toe the line of their leader. Most of the emphasis was on roads and motorways, but nothing was said about a plan or a road map of how to improve the livelihood of the population of Gwadar, or if there was any such plan in the offing.

Nonetheless, there was no mention of how Balochistan and its people would benefit from the fruits of CPEC. It was told that 35% of the funds would be earmarked for the power sector. Great, but most of the grids in Balochistan are already overloaded and even when the power is available (wishful thinking), there is no infrastructure to transmit it, how then will Balochistan benefit?

The Board of Investment of Balochistan has remained dormant since a controversial              appointment.

Lack of emphasis.
The seminar was an opportunity for the Gwadar Chamber to place before the federal minister justified demands not only for Gwadar, but also for Balochistan as a whole.
But the speeches ended with all praise and no emphasis on the important aspects that could bring a turnaround to the most dilapidated, largest and most backward province of the country.
Either out of selfishness, ignorance or incapacity or all three of these, the government of Balochistan and those at the helm of affairs lost this last opportunity from CPEC to bring in investment in the province to become a source of livelihood for its people.
Of the $46 billion funded by the Chinese government, only $7 billion is being invested in Balochistan in the following manner according to the information from the Planning Commission’s CPEC website.

  •  New Gwadar International Airport, which benefits mainly CPEC and partly Balochistan
  •  Gwadar-Turbat-Hoshab section of Gwadar-Rathodero Road (892 km), which is the need of CPEC
  •  Widening and improvement of N-85 Hoshab-Nag-Basima, Surab Road (459 km), which is the need of CPEC
  •  Water treatment, supply and distribution, which is the need of CPEC and partly locals
  •  Establishment of CPEC Support Unit for projects and activities in Gwadar Port Authority, which benefits CPEC
  •  Feasibility study for the construction of break waters, which is the need of CPEC and Gwadar Port
  •  Infrastructure development for EPZA and GIEDA, which benefits Gwadar Port
  •  Pak-China Technical and Vocational Institute at Gwadar, which benefits Balochistan
  •  Up-gradation of existing 50-bed hospital to 300 beds in Gwadar, which benefits Balochistan and locals
  •  Connecting Gwadar with Karachi by rail, which benefits only CPEC
  •  300MW coal-fired power plant at Gwadar, which gives no benefit to Balochistan that lacks infrastructure Following investment opportunities and development prospects are available in Balochistan, but these are being neglected or avoided.
  •  Mineral mapping of the province needs to be undertaken.
  •  There are seven wind corridors in Balochistan, which are at least 60% better than those of Gharo in Sindh, but none are being developed as wind farms. (Source: NASA Wind Map)
  •  Potential for solar energy throughout the northern belt of Balochistan from Taftan to Zhob. (Source: NASA Solar Map)
  •  Potential for geo-thermal energy near Naukundi. (Self-discovery)
  •  Potential for development of coastal fish wealth and support to the local fishermen within 750 km of the coastline to produce quality catch and quality fish for export.
  •  Potential for development of date farms and processing of date as syrup, etc in Makran.
  •  Potential for fruit canning and dehydrated agriculture products for the local and international markets.
  •  Mineral mining and value added upgrading of minerals for export.
  •  Roads from mines and agriculture farmlands linked with the main highways.
  •  Upgrading of existing grid stations in Balochistan. * Development and control of wildlife. * Subsidies and technical support to farmers for agriculture and livestock.
  •  And many more.Bestial bragging of the federal and provincial governments should stop forthwith. The provincial government of Balochistan should seek the help of experts from various universities of the province, who are restricted within the boundaries of their universities to hold seminars, etc, but their proposals and recommendations are dumped.
    It is surprising to note that the Chinese are more concerned than the federal or provincial governments.
    It is, therefore, an obligation of the federal government to revisit its plans and recommendations and for the Balochistan government to avail itself of this one-time opportunity from CPEC.
    Progress in Balochistan will only be seen if a major portion of CPEC funding was invested in the above projects to bring the province if not at par, but close to other provinces of the country in terms of development.
    (The writer is the former project director of Saindak Copper and Gold Project, Chagai, Balochistan)

 

China invites India to join OBOR Project

on 17/05/2017

China always puts Pakistan first is not true: Luo Zhaohui

China’s ambassador to India Luo Zhaohui called on India to join One-Belt-One-Road project assuring his neighbor that the China Pakistan Economic Corridor (CPEC) would not impinge on anyone’s sovereign rights. In his attempt to lure India, he also offered to change the name of the CPEC but later the official website of the embassy deleted the sentence believably to evade embarrassment.
The text of Mr. Luo’s remarks made to an Indian think-tank on 5th May at the United Services Institute said: Some people in the West misread China and tend to think that the `Dragon` and the `Elephant` are inevitable rivals, and that China would not like to see India developing. This conception is wrong. We hope to see India develop well and we are more than happy to help India develop to achieve common development.
Both the countries needed to properly manage their differences. As two large neighbors, it is natural that we have some differences. Even family members may have problems. There was a need to set a long-term vision for China-India relations,
he said suggesting they should:
First, start negotiations on a China-India `treaty of good neighborliness and friendly cooperation`.
Then restart negotiation on China India free trade agreement.
Third, strive for an early harvest on the border issue.
Fourth, actively explore the feasibility of aligning China’s `One-Belt-One-Road Initiative` (OBOR) and India’s `Act East Policy`.
The OBOR, he says is a major public product China has offered to the world. As close neighbors, China and India could be natural partners in connectivity and the OBOR. `Now the GDP of India is roughly that of China in 2004, some 13 years ago. China leads India by 13 years, mainly because we started reform and opening up 13 years earlier,
Mr. Luo said., India still has reservations over the OBOR, saying that the CPEC passes through Azad Jammu & Kashmir, raising sovereignty concerns. ’China has no intention to get involved in the sovereignty and territorial disputes between India and Pakistan. China supports the solution of the disputes through bilateral negotiations between the two countries. The CPEC is for promoting economic cooperation and connectivity. It has no connections to or impact on sovereignty issues, the envoy said. The perception that China was partial to Pakistan over others was erroneous. `Some Indian media say that China always puts Pakistan first when handling its relations with South Asia countries. I want to tell you this is not true. Simply said, we always put China first and we deal with problems based on their own merits. Take Kashmir issue for example, we supported the relevant UN resolutions before 1990s. Then we supported a settlement through bilateral negotiation in line with the Simla Agreement. This is an example of China taking care of India’s concern. On promoting India-Pakistan reconciliation, China hopes that both sides could live together in peace. `The development of China, India, Pakistan and the stability of the whole region call for a stable and friendly environment. Otherwise, how could we open up and develop? That’s why we say we are willing to mediate when India and Pakistan have problems. But the precondition is that both India and Pakistan accept it. We do this only out of goodwili.

Exemptions to Chinese won’t affect Local Industry Contractors

on 02/05/2017

The Federal government has claimed the tax exemptions given to Chinese companies in the China-Pakistan Economic Corridor (CPEC) would neither harm economy nor would it affect local industry. It asserted that a necessary cushion has been provided to local industry as the concessions and exemptions to Chinese are subject to the condition that the imported goods were not manufactured locally. However, the power plants above 25 MW have not been kept under such condition. Pakistani industrialists, trade and business community have been perturbed over exemptions given to Chinese investors and have expressed their concerns that it would harm local industry. However, the government claims otherwise and, this time Ishaq Dar, the Fedral Minister for Finance came out in the National Assembly with a written reply that the income tax exemption for the income of companies, contractors, sub-contractors etc engaged in CPEC projects was not likely to impact the interests of local contractors and sub-contractors, etc. Experts say the exemptions to Chinese companies would inflict a loss of Rs.150 billion in revenue. Mr. Dar however claims there will be no adverse impact on local industries and domestic investors. He did not share with the house the financial loss borne out by the concessions. He explained the series of tax exemptions or discounts offered to Chinese investors, which have been notified through statutory regulatory orders (SRO). According to him, exemptions from levy of customs duty at import stage have been specifically designed, notified and made available to Chinese contractors for a few projects of roads, mass transit and Gwadar port. They include exemption of customs duties on the import of plant machinery and equipment, if not manufactured locally, by the China State Construction Engineering Corporation Limited and the China Communication Construction Company for the construction of Sukkur-Multan section of Karachi-Peshawar Motorway and Karakoram Highway Phase-II (Thakot-Havelian section), respectively. Also included in this category are the customs duty exemptions on the import of equipment and material for Lahore`s Orange Line Metro Train Project. The original exemptions were notified on Jan 25 and further eased through another notification on March 6. Similarly, customs duty exemptions were also allowed on imports to the concession holder and its operating companies for the construction, operations and development of Gwadar port and all port-related businesses established in Gwadar Free Zone. In addition, concessions and exemptions from levy of customs duty on import of goods were already available to some early projects of Thar coal field sector, which have now been extended to CPEC projects. Some of them include the exemption of customs duties on import of coal mining machinery, equipment and spare parts not manufactured locally, for Thar coal field. For the power sector, a concessionary duty rate of zero per cent, 3pc and 5pc on the import of machinery, equipment and spare parts, not manufactured locally, is available for generation projects using oil, gas, coal, wind and tidal energy. On top of that, income derived from port operations by the China Overseas Ports Holding Company Limited, the China Overseas Ports Holding Company Pakistan (Private) Limited, the Gwadar International Terminal Limited, the Gwadar Marine Services Limited and the Gwadar Free Zone Company Limited has been granted exemption from income tax for 23 years, with effect from Feb 6, 2007. Besides, income generated by contractors and subcontractors of those five companies from port operations has been granted income tax exemption for 23 years from July 1, 2016. Similarly, income and interest earned by a foreign lender or a local bank with more than 75pc government or State Bank of Pakistan shareholding by virtue of a financing agreement with the China Overseas Ports Holding Company Limited, are exempt from income tax for 23 years with effect from July 1, 2016. Dividends received by the China Overseas Ports Holding Company from the China Overseas Ports Holding Company Pakistan (Private) Limited, the Gwadar International Terminal Limited, the Gwadar Marine Services Limi‘Exemptions to Chinese won’t affect local industry, contractors’

The federal government has claimed the tax exemptions given to Chinese companies in the China-Pakistan Economic Corridor (CPEC) would neither harm economy nor would it affect local industry. It asserted that a necessary cushion has been provided to local industry as the concessions and exemptions to Chinese are subject to the condition that the imported goods were not manufactured locally. However, the power plants above 25 MW have not been kept under such condition. Pakistani industrialists, trade and business community have been perturbed over exemptions given to Chinese investors and have expressed their concerns that it would harm local industry. However, the government claims otherwise and, this time Ishaq Dar, the Fedral Minister for Finance came out in the National Assembly with a written reply that the income tax exemption for the income of companies, contractors, sub-contractors etc engaged in CPEC projects was not likely to impact the interests of local contractors and sub-contractors, etc. Experts say the exemptions to Chinese companies would inflict a loss of Rs.150 billion in revenue. Mr. Dar however claims there will be no adverse impact on local industries and domestic investors. He did not share with the house the financial loss borne out by the concessions. He explained the series of tax exemptions or discounts offered to Chinese investors, which have been notified through statutory regulatory orders (SRO). According to him, exemptions from levy of customs duty at import stage have been specifically designed, notified and made available to Chinese contractors for a few projects of roads, mass transit and Gwadar port. They include exemption of customs duties on the import of plant machinery and equipment, if not manufactured locally, by the China State Construction Engineering Corporation Limited and the China Communication Construction Company for the construction of Sukkur-Multan section of Karachi-Peshawar Motorway and Karakoram Highway Phase-II (Thakot-Havelian section), respectively. Also included in this category are the customs duty exemptions on the import of equipment and material for Lahore`s Orange Line Metro Train Project. The original exemptions were notified on Jan 25 and further eased through another notification on March 6. Similarly, customs duty exemptions were also allowed on imports to the concession holder and its operating companies for the construction, operations and development of Gwadar port and all port-related businesses established in Gwadar Free Zone. In addition, concessions and exemptions from levy of customs duty on import of goods were already available to some early projects of Thar coal field sector, which have now been extended to CPEC projects. Some of them include the exemption of customs duties on import of coal mining machinery, equipment and spare parts not manufactured locally, for Thar coal field. For the power sector, a concessionary duty rate of zero per cent, 3pc and 5pc on the import of machinery, equipment and spare parts, not manufactured locally, is available for generation projects using oil, gas, coal, wind and tidal energy. On top of that, income derived from port operations by the China Overseas Ports Holding Company Limited, the China Overseas Ports Holding Company Pakistan (Private) Limited, the Gwadar International Terminal Limited, the Gwadar Marine Services Limited and the Gwadar Free Zone Company Limited has been granted exemption from income tax for 23 years, with effect from Feb 6, 2007. Besides, income generated by contractors and subcontractors of those five companies from port operations has been granted income tax exemption for 23 years from July 1, 2016. Similarly, income and interest earned by a foreign lender or a local bank with more than 75pc government or State Bank of Pakistan shareholding by virtue of a financing agreement with the China Overseas Ports Holding Company Limited, are exempt from income tax for 23 years with effect from July 1, 2016. Dividends received by the China Overseas Ports Holding Company from the China Overseas Ports Holding Company Pakistan (Private) Limited, the Gwadar International Terminal Limited, the Gwadar Marine Services Limited and the Gwadar Free Zone Company Limited have also been granted income tax exemption for 23 years from July 1, 2016. If this was not enough, exemptions from sales tax and federal excise duty have been provided on materials and equipment for construction and operation of Gwadar port and Gwadar Free Zone through the Finance Act, 2016 to the China Overseas Ports Holding Company Pakistan (Private) Limited and its operating companies, their contractors and subcontractors. This exemption is equally available for imported and locally-manufactured materials and equipment. Plant machinery and equipment, including dumpers and special purpose motor vehicles, imported for the construction of the Karachi-Peshawar Motorway Project and the KKH Phase-II are also exempt from income tax and sales tax. Likewise, exemption from sales tax and federal excise duty has also been granted to machinery, apparatus, materials etc imported by the China Railway Corporation for the Orange Line project. Rail-based mass transit projects in the four provincial metropolises have also been exempted from the provisions of Section 148 of the Income Tax Ordinance, 2001, which deals with advance income tax at the import stage. This is in addition to exemption from income tax to interest and income derived by the Industrial and Commercial Bank of China (ICBC) and the Silk Road Fund in Pakistan from loans relating to the energy projects mentioned in CPEC Energy Projects Cooperation Agreement signed in Beijing in Nov 2014.
ted and the Gwadar Free Zone Company Limited have also been granted income tax exemption for 23 years from July 1, 2016. If this was not enough, exemptions from sales tax and federal excise duty have been provided on materials and equipment for construction and operation of Gwadar port and Gwadar Free Zone through the Finance Act, 2016 to the China Overseas Ports Holding Company Pakistan (Private) Limited and its operating companies, their contractors and subcontractors. This exemption is equally available for imported and locally-manufactured materials and equipment. Plant machinery and equipment, including dumpers and special purpose motor vehicles, imported for the construction of the Karachi-Peshawar Motorway Project and the KKH Phase-II are also exempt from income tax and sales tax. Likewise, exemption from sales tax and federal excise duty has also been granted to machinery, apparatus, materials etc imported by the China Railway Corporation for the Orange Line project. Rail-based mass transit projects in the four provincial metropolises have also been exempted from the provisions of Section 148 of the Income Tax Ordinance, 2001, which deals with advance income tax at the import stage. This is in addition to exemption from income tax to interest and income derived by the Industrial and Commercial Bank of China (ICBC) and the Silk Road Fund in Pakistan from loans relating to the energy projects mentioned in CPEC Energy Projects Cooperation Agreement signed in Beijing in Nov 2014.