Its funny how local and foreign private sector players, especially the portfolio investor types, are so gung-ho about the CPEC, when even the central bank has little clue of whats actually going to happen. For capital market students, thats a classic case of bullish-bias.
Late last week, a foreign news agency quoted Ashraf Wathra, the SBP governor, as saying: CPEC needs to be more transparent. "I don know out of the $46 billion how much is debt, how much is equity and how much is in kind," Wathra told Reuters.
Those comments must have put off a lot of people across P and Q blocks as well as in PM secretariat, which is perhaps why the central bank sent out a clarification on a Sunday. The clarification was titled: "governors remarks on CPEC not quoted in its entirety." Well, it turns out the "entirety" raises even more concerns about the emperors new clothes. After saying sugary things about CPEC - none of which was quoted from the official transcription - this is what the central banks clarification said. "The transcript of expression on the subject has been the following:
"...we have CPEC in the lime light now which is a large investment program...well with debt some equity would also come...I think CPEC needs to be made more transparent...day before yesterday I was talking to the Planning Minister that we need to share the blue print of the project with all and sundry so that people could find their roles in that greater plan...right now... it is a bit of difficulty for analysts...if you ask me I don know out of 46 billion dollars how much is debt how much is equity and how much is in kind...where the investor would only sell his machine... and that will convert into a kind of debt with no inflows and in the longer run we have to make sure that we...have more capability to export which most likely CPEC will itself be generating some export. There is a plan to have industrial estates alongside this major route they are going to have with Chinese and Pakistani collaboration and these JVs are going to be export oriented but we need to see this plan with more clarity".
This column has been harping about the need for transparency since the day the CPEC hype began. Just last month, our column (titled "Can CPEC really be a game changer?" November 5, 2015), echoed Wathras concerns and much more. But to deaf ears!
Perhaps the government would pay heed to one of its donors: the Asian Development Bank. According to a study by Prime Institute, the ADB thinks there are four critical prerequisites for any economic corridor to be successful.
These are "(i) the need to identify economic potential, without which private investment would not be forthcoming, implying a need for geographic selectivity and prioritization both across and within a given corridor; (ii) political commitment and coordination across multiple stakeholders at various levels of government, across diverse government agencies, and among countries; (iii) detailed economic and technical analyses to identify business opportunities, infrastructure needs, and policy and regulatory prerequisites; and (iv) sustained commitment over 1 decade or more," Prime think tanks report titled "China Pakistan Economic Corridor: A Primer" quoted the ADB. And come to think of it, transparency is central to the first three of these prerequisites of success. However, many in the policy circles think that the CPEC is being given a strategic importance a la the nuclear programme, with the military "having a great say in it", to put it euphemistically. This is perhaps why Mr. Wathra is not alone in his clueless ness.
Sources tell us that the retired army officer working as project director in the Planning Commission holds the CPEC cards so closely to his chest that he doesn even share important information with his own colleagues in the commission. To those still hoping for clarity on CPEC, it would be an apt reminder that transparency is often sacrificed at the altar of strategic interests.