CCP: CPEC queers the pitch

The Competition Commission of Pakistan (CCP) has revealed in its study titled "Competition Assessment of the Road Construction Sector in Pakistan - 2018" that some Chinese firms were granted tax exemptions, thereby disabling even local-based large companies, with the capacity to compete with their Chinese counterparts, from competing in contracts/works to be carried out in Pakistan. The report notes that "the China Pakistan Economic Corridor projects undertaken by Chinese firms are often sub-contracted/sublet to small local contractors. This results in poor quality projects due to small firms' inadequacy and no stringent check on sub-contracting by the implementing agencies." Even more disturbing is the report's contention that issues of possible collusion between the implementing agencies and the bidders and bid rigging by contractors also came to light.
Much has been made of CPEC having the capacity to be a game changer for Pakistan as it envisages 50 plus billion dollar Chinese investment in Pakistan's deficient physical infrastructure sector. There is no doubt that no other country has ever indicated willingness to invest that large an amount in our deficient physical infrastructure sector and hence CPEC presents Pakistan with a golden opportunity; however, questions are increasingly being raised about the content of the actual agreements/deals signed with Chinese companies, all state-owned, given that the PML-N administration kept the deals secret. Ahsan Iqbal, the then federal minister who was dealing with CPEC-related matters, consistently maintained that he had shared details with members of parliament - a claim disputed by all opposition members as well as some PML-N parliamentarians.
Whatever the agreed amount of total Chinese investment as per the legally non-binding Memoranda of Understanding signed between the two countries, actual disbursement by the Chinese remains appallingly low: data uploaded on the State Bank of Pakistan website indicates that during July-May 2017, Chinese investment inflow was 1.14 billion dollars while the figure in the comparable period of 2017-18 was 1.5 billion dollars. At this rate, the 50 plus billion dollar envisaged investment under CPEC may take well over 35 to 40 years.
The CPEC also envisaged generation of employment opportunities for Pakistani unskilled labour - a claim that is being challenged by the fact that Chinese unskilled labour is reportedly being used extensively on CPEC projects - a charge that other countries engaged in One Belt One Road projects, of which CPEC is a component, have also levelled against the Chinese, including some Central Asian states, Sri Lanka and Malaysia. And finally, the massive import bill estimated at over 50 billion dollars by May 2018 as per the SBP website, barring our fuel imports, is mainly sourced to China. There is no doubt that China has been an all weather friend to Pakistan and has frequently supported us at international fora. However, the Chinese are known to be great negotiators where their self-interest is at stake unlike their Pakistani counterparts.
Encouraging local industry to participate in all projects must be a priority and Pakistan Business Council has repeatedly urged the PML-N administration to ensure a level playing field for all in CPEC-related projects. It is unfortunate that the PML-N did not heed this suggestion and continued to provide tax exemptions and failed to ensure quality control measures in those projects in which Chinese companies are engaged. It is critical for the next government to revisit all CPEC agreements, upload them on the website of the relevant ministry/department and begin to undertake quality control measures to ensure quality work.