Dr. Hafiz Zafar Ahmed

▪ the B&R initiative will include a total of 900 projects, amounting to an estimated cost of USD890bn.

▪ The B&R is geographically structured along six corridors and a maritime route. The six land corridors are:

▪ 1. from western China to western Russia

▪ 2. from northern China to eastern Russia via Mongolia

▪ 3. from western China to Turkey via central and west Asia

▪ 4. from southern China to Singapore via Indochina

▪ 5. from southern China to India via Bangladesh and Myanmar.

▪ 6. from south-western China to and through Pakistan.

Facts China World

ranking

Pakistan World

ranking

Area 9572900 (km2) 03 803940 (km2) 35

Population 1360 million 01 210million 06

GDP US$ 11500bn 02 US$ 284bn 41

GDP per Capita US$ 8123 66 US$1468 137

GDP Growth Rate 6.588% 10 4.707% 39

Details

▪ Total Investment = $80 bn

▪ Pakistan’s Share = $18 bn (6.3% of GDP)

▪ China’s Share = $62 bn (0.54% of GDP)

▪ Detail on Power Projects

▪ 14 Project (10400 MW – End of 2017)

▪ 7 Projects (6645 – After 2018)

▪ Total increase in capacity (17045 MW)

Investment Breakup

Infrastru

ctural

Projects,

25%

Power

Projects,

75%

7

Energy Demand/Supply Forecast

15000

17000

19000

21000

23000

25000

27000

29000

31000

33000

Tota

l D

em

and

Sup

ply

(M

W)

Demand Planned Supply

2016 2017 2018

Due to the energy initiatives under CPEC, Pakistan is expected to meet its

electricity demand by 2018

▪ Pakistan’s Energy Sector

▪ The largest component of CPEC deals with Pakistan’s energy sector. Approximately 72 percent of the proposed investment relates to energy-resource development, including gas and electricity generation through natural resources such as coal.

▪ A further $2.5 billion is also dedicated towards the construction of pipelines for transporting liquefied natural gas (LNGs) from Iran to the cities of Nawabshah (Sindh) and Gwadar (Balochistan).

▪ Transportation Infrastructure

▪ The second largest component of CPEC is investment in Pakistan’s transportation network. Specifically 24 percent of the proposed investment is directed toward enhancing Pakistan’s transportation infrastructure, including highways and railway networks.

▪ Special Economic Zones

▪ Since CPEC falls under the umbrella of the OBOR, it places special importance on the promotion of regional connectivity across the Eurasian continent. Regional connectivity will be promoted through the establishment of SEZs aimed at facilitating industrial growth in key financial centers and strategically significant locations in Pakistan.

Khairpur Economic Zone, Khairpur

Korangi Creek Economic Zone, Karachi

Bin Qasim Economic Zone, Karachi

M3 Industrial Zone, Faisalabad

Value Addition City, Faisalabad

Quaid-e-Azam Apparel Park, Sheikhupura

Hattar Industrial Estate, KPK

▪ Creation of cluster of industries in specific areas

▪ Creation of excellent infrastructure to meet competitiveness

▪ One window facility at the door step to reduce overhead costs

▪ Skilled and trained human resource through training centres in the

Zones

▪ Enforcement of effective and efficient regulatory measures

▪ Ensured availability of utilities

▪ SEZ Act passed by the Parliament in 2012 and subsequentamendments made therein in 2016 to make it more business friendly.

▪ SEZs can be developed by:

➢ Public sector

➢ Private sector

➢ Public-Private Partnership basis

▪ SEZ Act 2012 provides for the establishment of SEZ anywhere in thecountry with minimum 50 acres of land

▪ 70% area is to be used for processing while remaining 30% as nonprocessing area (hospitals, residence, vocational training institutes,etc.)

▪For Developers:

▪ One time exemption from all custom duties and taxes on plant and machineryimported into Pakistan for the development, operation and maintenance of the SEZ

▪ Exemption from all taxes on income accruable in relation to the development andoperation of the SEZ for a period of five years, starting from the date of signing ofthe Development Agreement

▪For Zone Enterprises

▪ One time exemption from all custom duties and taxes on imports of plant andmachinery into the SEZ for installation therein;

▪ Exemption from all taxes on income for a period of ten years to units startingproduction by 30 June 2020 and five years for those doing so after 30th June 2020.

▪ Gas, electricity and other utilities will be provided at the zero-point of the

Zones

▪ Captive power generation permissible to Developers of the Zones

▪Facilitation Services

▪ BoI to act as One Stop Shop for liaison and facilitation between the relevant

federal agencies and SEZ authorities, developers and enterprises

Short Distance and Low Cost

▪Europe to Western China Route

▪ Distance will be reduced by 50%

▪ Cost of transportation will be lowered by 50-65%

▪ Time cut by 50%

▪Middle East to Western China Route

▪ Distance will be reduced by over 80%

▪ Cost of transportation will be lowered over 75%

▪ Time cut by over 85%

Safer Route

▪ 60 percent of China’s imported oil comes from the Middle East, 80 percent of that is transported to China through the Strait of Malaaca

▪ CPEC will allow China an alternative route, to move energy and goods to inland China without going through the Strait of Malacca (bypassing an entire region influenced by the US and India)

▪ According to a report published by Price Water House Coopers (2017)

Pakistan is projected to become the world's 20th largest economy by 2030 and 16th largest by 2050.

▪ The economy has registered a 13 years high growth rate at 5.79 percent in FY208 (Ministry of Finance)

▪ Allotment of land of one acre free of cost to FPCCI for establishment of its liaison office in Gawadar

Suez Canal

• handles 10% of all seaborne trade.• Egypt earns over 5 billion USD per annum

directly from tolling revenues.

Panama Canal

• handles 5% of all seaborne trade • Panama Canal Authority earns over 2.5

billion USD per annum

As China is the largest consumer market

Pakistan’s Export capacity

800,000 carats of Ruby

875,000 carats of Emerald

5 Million carats of Peridot

▪FDI amounted to $1.733 billion during Jul-Apr, FY2017 compared to $1.537 billion during the same period last year, posting a growth of 12.75 percent.

▪Food, Power, Construction, Electronics, Oil & Gas exploration, Financial Business and Communication remained the main recipient sectors. Foreign Portfolio Investment (FPI) increased to $589.7 million during Jul-Apr FY2017 compared to $- 404.3 million last year.

▪ Current roads are around 265,000km

▪ Registered motor vehicles are 15m

▪ CPEC and related projects can add 12,000–15,000km of roads after accounting for additional lanes, as per current project details.

▪ CPEC’s impact on automobile sector, road projects will result in additional demand for 800,000 autos over next 15 years’.

▪ Steel usage will be extensive in CPEC projects and can run into millions of tons over the life of CPEC resulting in millions of dollars in terms of revenue.

▪ At present, [the] deposit base of local banks is around USD90bn and loans outstanding are around USD46bn.

▪ CPEC spread over 15-year can result in [a] direct additional 2–3% per year loan growth of the banking system.

▪ Approximately USD30bn of projects will be insured locally and internationally.

▪ All local insurance companies [are] likely to benefit and [this] can result in additional insurance premium of Rs. 2bn annually, which is 4% of [the] total gross premium of [the] insurance industry’. (Hashemy 2016.)

▪ In line with this, the hospitality industry has experienced a boom, as average hotel occupancy increased to 80% in 2016 from around 35% in 2015 (although one of the key reasons is an improved security situation in the country) (JCR-VIS 2016).

▪ ‘People can consider promoting tourism related to [the] Gandharacivilisation and Buddhism heritage, where people from China will particularly be interested’,

▪ Construction Industry

▪ Automobile

▪ Driving

▪ Security

▪ Financial Market

▪ Agriculture

▪ Livestock

▪ Communication

▪ Electrical and Electronics

Garments

Health

Leather

Chemical

Information Technology

Mechanical

Pottery and Ceramics

Services,

Textiles,

Sports Goods.

▪ The International Labour Organization (ILO) has estimated that CPEC will support the creation of around 400,000 jobs (APP 2017), while the Applied Economics Research Centre (AERC) has estimated that it could create over 700,000 direct jobs between 2015 and 2030 (APP 2016).

▪ The Planning Commission’s estimates show that the final figure may be much higher, as these indicate that CPEC would create around 800,000 jobs over 15 years (APP 2017).

Political Instability

Ranking: Political Stability and Absence of

Violence

0

5

10

15

20

25

30

35

40

45

1996 2000 2006 2010 2014

Perc

en

tile

Ran

kPakistan India China Afghanistan

Source: Worldwide Governance Indicators, World Bank

Singapore 1

Korea, Rep. 5

Sri Lanka 99

Pakistan 144

Bangladesh 173

Ranking: Ease of Doing Business 2015

1:Easiest to 189:Most Difficult

Source: Doing Business, World Bank

Pakistan’s political instability over the years has hurt the confidence of

investors