‘CPEC not a debt trap’

Islamabad: China-Pakistan Economic Corridor (CPEC) is not a debt trap as all projects in the energy sector are investments and loans constitute only a small proportion of the overall CPEC portfolio, said Dr Ishrat Hussain, adviser to the Prime Minister on Institutional Reforms and Austerity.

Dr Ishrat was speaking at a seminar on ‘Upscaling the economic activities of CPEC: opportunities and challenges,’organised by Institute of Regional Studies here.

Dr Ishrat said that the Chinese loans were on concessional rates of 2.34 per cent. He observed that completed CPEC energy projects had already added 5,320 MW to the power generation capacity in Pakistan with an investment of $7.9 billion. He added that a capacity of 4,440 MW would be added through an investment of another $9.55 billion. He said that the total tally of all projects under CPEC was around $52 billion. He added that plans for upgrading the transmission and distribution networks were already in the pipeline.

Abid Qaiyum Sulehri, executive director, Sustainable Development Policy Institute, urged the government to save the Special Economic Zones (SEZs) from becoming what he called real estate zones without any operational/industrial activity. Citing some implementation issues with regard to the operationalisation of the Gwadar SEZ, he stressed the need for fast-tracking government decision-making with regard to SEZs. He also called for greater focus on technological transfer and research and development collaboration between Pakistan and China in the agriculture sector, electric cars, and digitalisation.

Dr Hussain shared that the Multan-Sukkur Highway had reduced the travel time from Islamabad to Karachi by six hours and with the completion of the Sukkru-Hyderabad section, it would be reduced by another three hours. He was of the view that the construction of the planned ML-1 railway line from Peshawar to Karachi would revolutionise the railways sector in Pakistan.

He called for dispelling myths and suppositions about CPEC through an understanding of the ground realities.

Muhammad Mudassir Tipu, Director General China at the Ministry of Foreign Affairs, termed CPEC as a truly transformational project the real dividends of which would only be realised in the long term. He continued that with the increase in the power generation capacity, power outages in the country had already decreased substantially.

Hassan Daud Butt, CEO, the KP Board of Investment and Trade, highlighted the need for countering misperceptions about CPEC. As soon as the Joint Coordination Committee meeting nears, naysayers become active, he said. He called for learning from the Chinese experiences in China and elsewhere on fast-tracking the industrial process. He called for emulating the ink spot development model of China in which development is first concentrated in a few areas and allowed to stretch from those over a period of time. He said that the inflow of investment would depend on the investment climate in the country and the ease of doing business.

International development and public policy professional Hassaan Khawar was of the view that the challenges to the upscaling of CPEC could be summarised in the four Cs of capacity, context, consistency and communication. Elaborating on the four Cs, he said that public sector capacity in terms of facilitating business was essential for attracting investment. He added that one also needed to understand the context in which the economy of Pakistan was operating, such as the national context of IMF conditionalities putting limitations on Pakistan. He said the regional context of the Regional Comprehensive Economic Partnership (RCEP) and its impact on CPEC also needed to be understood.