ISLAMABAD: The $56 billion China-Pakistan Economic Corridor (CPEC) is a part of China’s One Belt, One Road vision.
Pakistan sees it as a gateway of prosperity and there is no doubt in that but there are too many ambiguous policies of this project that people are unaware of.
Pakistan’s lower house was informed last month that the government issued a Statutory Regulatory Order giving a series of tax exemptions to Chinese firms as an incentive for working, in what is considered a highly dangerous decision. These concessions, extensive tax breaks from customs duty, income tax, sales tax, federal excise duty and withholding taxes have been granted to Chinese companies for the whole of the CPEC operation, including road, mass transit and Gwadar port projects. Although this policy will bring in a lot of Chinese investors, we will not get any benefits which will heavily affect our economy.
The important question to ask is what will be the impact on domestic industry from the special incentives being given to Chinese investors. What policies have been made in order to protect our own enterprises and industries? Why doesn’t the government think about the survival of our local industries?
Last month the parliamentary committee was informed that only Chinese industrialists would be allowed to set up their industries in Special Economic Zones planned along CPEC route. But what will our companies do then, is our role only to consume the output of these zones? Why can’t Pakistani industrialists and investors invest in those zones? Local employment and investment should be the central objective of CPEC.
The worst mistake is to view CPEC as gift from China or as some sort of self-paying project, as Pakistan will have to return $90 billion to China inclusive of $34 billion interest over 30 years against loans and investments of $56 billion under CPEC.
The average annual repayment of CPEC will be $3.7 billion. There is a great saying, “control the debt, control everything,” after IMF, China is going to do the same. After controlling the debt China will order us to run or make our policies as they want. If we see in a bigger picture, this is China’s soft imperialism.
The government has to make policies that would be in Pakistan’s national and people’s interest in the long run. Why is the government not able to share comprehensive and up-to-date details on all CPEC-related projects with the public? Considering public approval itself is the best way for the government to strengthen its own position. Let CPEC be the way of prosperity for both countries and let them travel it together. The planning commission should answer all the questions and make the project transparent and clear from all the objections.
Published in The Express Tribune, May 8th, 2017.