Third-country investment in CPEC

Federal Minister for Planning Development and Reforms Khusro Bakhtiar after presiding over China Pakistan Economic Corridor's (CPEC's) fifth progress review meeting announced three major deviations from those supported by the PML-N administration: measures to resolve the energy crisis, invite third-country investment and include social economic development projects in line with the Pakistan Tehreek-e-Insaf (PTI) election manifesto.
Measures to resolve the continuing energy crisis, Bakhtiar stated, would include a focus on projects that rely on domestically available fuel, hydel as well as Thar coal, rather than on imported fuel and he added that the circular debt issue would be resolved through dealing with the existing fuel mix imbalance. The obsolete transmission and distribution network, ignored by the previous administration, would be strengthened, he further stated. Sector experts would no doubt fully support these measures, however, Bakhtiar did not mention the amounts involved, which would be significant, the time required to change the fuel mix of existing generation plants and upgrade the transmission and distribution network, which would also require from five to 10 years, and last but not least; he did not dwell on the financing terms that would be acceptable for these projects. Project financing reports for CPEC projects indicate financing available at around 2 percent, an excellent rate, however, the previous administration provided other incentives to Chinese companies including the absence of international bidding that, critics maintain that with the lack of transparency that purportedly characterize these projects it is simply not possible to control the project cost as is possible if bidding was open to all interested parties; and CPEC projects were granted tax exemptions under the lopsided FTA with China. The devil as they say is in the detail.
Cognizant of the difficulties in participating in CPEC projects raised by not only prospective third-country investors but also local investors, Bakhtiar stated that "Pakistan will be open for business for all for this purpose and we will invite third country investment. Two focal persons have been appointed by Pakistan and China to determine the investment of the third country." There is no clarity in this statement and it raises more questions than it answers. Would all CPEC projects and sub-projects be opened for international competitive bidding (ICB) or only some relatively low-cost subprojects as has been the case till date according to local investors? If all projects are open to ICB then there is no need for focal persons unless they are to be given veto powers which may be challenged in a court of law.
And finally, Bakhtiar stated that CPEC would also include socioeconomic development projects targeted towards improving the quality of life of the people of this country, which PTI is committed to. This too must be supported because it is investment in the people of this country, in providing clean drinking water, education and health to all, that would generate a workforce able to compete with the rest of the world.
And finally, Bakhtiar added that the focus will be on manufacturing and industrial development which will not be limited to special economic zones but "would constitute a comprehensive agreement with China in this regard". Again details were not provided as to what would constitute a comprehensive agreement with China with regard to the special economic zones (SEZs). There is serious concern within Pakistan's productive sectors that Chinese manufacturing units may sprout up in SEZs which would be exempt from taxes and which would use Gwadar port to ship their products to the outside world while domestic businesses may not have a level playing field.
To conclude, the recent statement by Bakhtiar is not that different from the statements made by Ahsan Iqbal when he was the Minister for Planning, Development and Reforms. True, the new government is not even one month old, yet one would hope that details are soon shared with the public in the spirit of transparency and accountability that was an integral component of the commitment made by Prime Minister Imran Khan to the people of this country.