CPEC & Pakistani Economy: An Appraisal (By: Dr Ishrat Hussain)
One of the common reservations expressed about CPEC is that it lacks transparency and non‐availability of complete information. The terms and conditions of financing at which the Chinese companies are participating in these projects are not fully known and the likely future financing burden on Pakistan’s balance of payments is not obvious. This booklet attempts to address some of these issues to the extent that the projects have been planned, agreed upon, finalized and implementation is under way. Only approximately half of $ 45 billion committed originally for CPEC would be utilized for these projects. Pakistan’s liability is therefore at present limited to this $ 23‐25 billion only. Many other projects are at feasibility stage, discussion or negotiation stage between the two governments or on hold. No amount has either been committed or disbursed for these projects and the liability of Pakistan has not yet arisen. It must be kept in mind that the planning of CPEC follows four stages and frim information would flow only when we reach that stage. These stages are:
(i) Early Harvest 2015‐2019 Most of the projects relate to Energy sector which are already completed or expected to be completed by 2019 adding approximately 7000 MW electricity to national grid and thus easing the energy shortages and load shedding that had crippled the industry and exports
(ii) Short term projects up to 2022 mainly Roads, Gwadar Development, Optic fiber network and the Hydel, coal mining and power projects
(iii) Medium projects up to 2025 Railways and Industrial zones
(iv) Long term projects up to 2030 Completion of Industrial zones, Agriculture, Tourism etc.
The confusion arises when some of the commentators mix up industrial zones that would spill over in the long term and on which very little planning or conceptual work has been done with the energy projects that would add 13180 MW to the national grid by 2022 and are at various stages of execution. A more disaggregated approach would help remove this confusion. But the fact that the industrial zones are still at their initial stage provides an opportunity for our private sector businesses to take active part in the design, policy framework, institutional arrangements , incentive structure to ensure a level playing field for all investors—domestic and foreign (Chinese or non‐Chinese) . Rather than remaining by standers, skeptics and critics at various fora the business community should become a stakeholder in this process. Two papers in this booklet specifically lay down the proposed policy and institutional changes that can help us derive maximum benefits for CPEC.