Czech Academy of Sciences Talk on China Pakistan Economic Corridor (CPEC) Talking Points for Ambassador of Pakistan to the Czech Republic
My dear Ambassador Ma, Excellencies Prof. Marek Hrubec
Ladies and gentleman.
Thank you very much for gracing the round table today.
CPEC is of great significance to the development of Pakistan - China strategic cooperative partnership and the building of the community with shared destiny between both the countries. People's Republic of China is one of Pakistan most reliable friend. We call this friendship as,"all weather friendship." This friend span over past 5 generations.
CPEC is not about roads and motorways; it's about connectivity." The China-Pakistan Economic Corridor (CPEC) will benefit Pakistan as well as China in several dimensions.
In was great historic month of May 2013, when Chinese Premier Li Keqiang proposed the initiative of CPEC during his visit to Pakistan, which immediately got positive response and support from the Pakistani government. The implementation time frame of CPEC is 2013-2030.
China-Pakistan Economic Corridor (CPEC) is a major pilot project of the Belt and Road Initiative a vision of Chinese President Xi Jinping. CPEC has become the framework and platform for comprehensive and substantive cooperation between China and Pakistan. It has also won across-board support from the political parties and peoples of our two countries, which provided profound and solid public support for CPEC.
According to the concord both sides agreed to promote a "1+4" pattern of economic cooperation, featuring a central role of the CPEC and four key areas including the Gwadar port, energy, transportation infrastructure and industrial cooperation. In the medium-to-long term, both sides have agreed to expand the cooperation fields to financial services, agriculture, science and technology, tourism, education, poverty elimination and city planning, etc., so as to meet the demands of deepening and expanding of China-Pakistan all-round cooperation, and play a better role in leading and promoting substantive cooperation between the two countries.
Financial Outlay of CPEC
Under CPEC China through its institutions has pledged around US$ 50 Billion (currently this outlay is expected to reach US$ 60 billion) to support Pakistan develop energy, transport infrastructure, Gwadar Port and industrial economic zones. Financial pledge by China is a mix of grant, long term government concessional loans, zero interest loans and simple partnership or investment mode.
Out of 50 billion dollars, huge portion of 35 billion dollars is ear marked for Energy projects of over 17000 MW to be completed by 2018 and 2020. Whereas, 15 billion dollars are meant for other components with around 12 billion dollars only for transportation infrastructure.
An expert on economic policy, noted that "The energy sector has already started experiencing improvements in the shape of reduction in unit costs," he said. Thanks to all the spending, the efficiency factor in the energy sector could be increased by 41 per cent, he added.
"Given that around $190bn worth of merchandise will pass through Pakistan under CPEC, the corridor will help Pakistan generate huge [tax] revenues," he later remarked.
"Apart from the energy and infrastructure sectors, CPEC will also benefit the industrial sector," the analyst commented. "Pakistan will become a favourite destination for investments, whereas jobs will also be relocated from other countries in the region to Pakistan," he added.
"Two-thirds of the workforce on CPEC projects is Pakistani, compared to one-third Chinese nationals.
Tang Hao, vice president of the China State Construction Engineering Corporation (CSCEC), said that the economic and social benefits of the corridor will be visible within the next few years.
As we speak today, let me share with some of the major milestones achieved under CPEC.
1. Gwadar Port, third largest deep sea port in the world has become operational.
2. Gwadar International Airport and Gwadar Free Economic Zones are under construction along with several other projects for development of Gwadar city and area.
3. Energy projects of more than 5000 MW has already been completed and rest shall be completed by 2020. Energy projects includes coal based power plants, solar parks, wind power and hydro power projects.
4. Several transportation infrastructure projects (Motorways, Highways etc and Railway Lines) are near completion.
5. Several Industrial parks, special economic zones and IT Parks are at different levels of development in different regions of Pakistan.
What will be impact of CPEC on Pakistan economy?
After successful implementation of CPEC following benefits are expected to accrue in economic terms:
1. economic growth is expected to reach 7% by 2020
2. Industrialization and technology transfer through development of special economic zones
3. Overcoming energy shortages
4. Development of transport infrastructure.
5. Job creation and poverty alleviation
6. Development of services sectors
7. Industry relocation from other regions
8. Huge growth in transit trade
9. Annual revenue from toll collections is expected to reach US$ 5 billion by 2020.
10. 9% gross revenue of Gwadar port and 15% gross revenue of Free Trade Zone of Gwadar."CPEC has now become a reality - two power projects under the initiative have been completed and the third one is about to be finished."CPEC not only about economic growth' For the past 40 years, China has made every effort to develop and grow its economy, said Chinese Ambassador Yao Jing in his address. China has combined socialism and market economy to benefit people.
"China wants to see its relationship with Pakistan serve as an example for its relations with other states," said Jing while speaking on the CPEC. "We look at CPEC as a significant project. I'm proud that after five years of implementation, it [CPEC] has contributed to Pakistan's development."
"CPEC is not just about economic growth; we want to develop a community." CPEC has helped strengthen the federation of Pakistan; today, Pakistan is a happening place and CPEC has proven that it is a country where people's money is safe," he said."CPEC has been a turning point in Pakistan's history.
CPEC and Opportunities for Czech Companies
One Belt One Road Initiative of China also includes connectivity with Europe through 16 plus 1 arrangement for Eastern and Central Europe. Therefore, Pakistan and Czech Republic share common ideals of regional connectivity and people to people contact under OBOR.
Accordingly, CPEC provides countless opportunities for Czech businesses to become part of CEPEC either through business cooperation with Chinese companies/Institutions or cooperation/joint ventures with Pakistani partner companies. As I have mentioned above CPEC financial portfolio for projects in Pakistan is worth 50 billion dollars. This includes energy projects of 35 billion dollars and 13 billion dollars of road and railway projects. Besides, 09 Special Economic zones (SEZ) and several Industrial and IT parks shall be established across country along CPEC Routes. Given strengths of Czech Industry, following Specific opportunities exist for Czech companies to become part of CPEC projects.
1. Czech companies can partner with Chinese and Pakistani counterparts for supply of technical services and supply of components and equipment; especially in energy and construction sectors.
2. Czech Companies can establish part of their production in Pakistan inside SEZ, Industrial Zones and IT Parks. Advantages include cheap and abundant supply of labor, long term Tax incentives and availability of huge Market of over 3 billion people in China, South Asia and Central Asia.
3. Given the labor supply challenges for Czech Companies at home, this relocation of industry shall ensure smooth supply of product line and increased profits of Czech companies.
4. By adopting forward looking approach and particularly by participating in OBOR including CPEC, Czech companies can avoid risks of greater reliance on EU market. The Czech Government, I understand, is conscious of this fact that is heavy reliance on EU market and taking necessary steps to reduce greater reliance on EU and to look for new Markets. And CPEC should be the logical choice.
5. IT industry is one of the area where Pakistani professional can provide necessary services to Czech companies for procurement of IT services.
6. Pakistan investment policy is one the liberal policy in the region and provides complete ownership of the project, no restrictions on repatriation of profits and dividends and tax incentives.