CPEC used to be called the game changer. Thanks to PML-N's marketing gigs well displayed at the CPEC summit and expo held in Islamabad earlier this week, CPEC is now being called the fate changer. Pak-China friendship has also been elevated from being taller than Himalayas to higher than the stars.
So upbeat was Ahsan Iqbal at the summit that he pointed out China's emergence as top FDI supplier to Pakistan from being 15th a few years ago, without highlighting how and why FDI from all other countries has dwindled sharply, which is the only reason why Chinese FDI has come to top the FDI list in Pakistan (See BR Research column: Dropped: FDI published August 17, 2016).
Iqbal also highlighted that of the $46 billion projects under CPEC, $18 billion is currently under implementation and $17 billion is in the pipeline. Considering that the central bank's FDI data doesn't entirely reflect $18 billion implementation, it is best to take these numbers with caution.
Understandably, all CPEC inflows will not be investment; some will be long term loans. But considering that central bank's FDI dataset includes, intercompany loan and capital equipment brought into the country, the $18 billion projects currently under implementation ought to reflect somewhere, anywhere.
Anyway, a lot is happening. The Pakistani side is not alone in its euphoria; the Chinese are equally excited, if not more. A key constraint, however, is lack of information on both sides. When Bashir Ali Mohammad, Chairman Gul Ahmed Textiles, shared his insights about the potential to attract the Chinese for JVs and FDI in Pakistan's value added textile sector, nearly all and sundry said that's the kind of information and insight is missing from the picture (BR Research would shed light on that potential in subsequent columns).
Bashir acknowledged that "Pakistan's private sector is lazy"; and BR Research agrees with that assessment. In the years of interaction so far, it has become quite apparent that the private sector lacks the guts to go out and get it.
The reasons behind that may require another discussion but Bashir's statement almost immediately found proof when a representative from chemical association said that "the government should provide sector-wise feasibility studies for the private sector." Need one say more!
But while it is true that CPEC's success hinges on Pakistan's lazy private sector, it is equally true that government, being the driver, has to become transparent in all aspects of CPEC, and share all the related information instead of hoarding it in the Planning Commission. Hopefully, the recently formed CPEC Centre of Excellence in PIDE will bridge some of that information gap, sooner than later.
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