The Joint Cooperation Committee (JCC) of the China-Pakistan Economic Corridor (CPEC) approved the Long-Term Plan (LTP 2017-30) envisaging broad parameters for future cooperation. However, it could not conclude agreements on development projects and special economic/industrial zones. Informed sources said the Chinese delegation complained about the political instability in Pakistan that would negatively impact on the pace of CPEC progress. They also could not finalize taxation issues and stood short of final agreement on inclusion for financing of special economic zones.
A lot of time was also consumed over Chinese insistence on prioritizing the Hattar Industrial Estate in Khyber Pakhtunkhwa in view of its ready infrastructure instead of Rashakai near Peshawar, but it was finally agreed that the province’s priorities would be honored in this respect.
The LTP had been under preparation for several months involving consultations among all stakeholders in Pakistan and China. The CPEC’s first phase involved removing energy and infrastructure bottlenecks in Pakistan to make them enablers of economic growth and hence $35 billion out of $46 billion portfolio went to the energy sector, resulting in $27 billion worth of projects now in implementation stage. The LTP had now finalized a comprehensive framework for bilateral cooperation, particularly towards industrialization, value-addition and job creation.
Under the framework, investments would now flow to the special economic zones, while a joint working group (JWG) on agriculture had been created because China had made great progress from moving out of low value commodities to technological advancements in agriculture output. In view of the growing water scarcity, the JWG would work on drip irrigation techniques and transfer of technology from China. The two sides had approved feasibility studies of some projects cleared by the 6th JCC meeting held in December last year and those pending would be taken up when their studies were finalized.
The two sides also agreed that work on the Gwadar airport should start by the middle of next year. Its design is now being examined by the Chinese side would provide a grant for its construction. The two sides “exchanged views on issues of taxation and security and formulated a working group to settle issues of taxes in a comprehensive manner”. The presence of all chief ministers and their representatives also gave a strong message that the nation was united on progress and development of the country. Pakistan also asked the Chinese to appoint a full-time expert of its industrial sector who should be available for liaison with the Board of Investment.
The Karachi Circular Railway project was prepared by the Japanese who claimed its intellectual property rights and hence its fresh feasibility study would be vetted by the China Railway Institute for subsequent inclusion in the CPEC framework. The feasibility study of the Mainline Railway project was reviewed and decided that its cost estimates would be completed in two to three months and operationalized at the earliest after completing formalities.
The State Bank of Pakistan would examine an arrangement for treatment of Chinese equipment related to the CPEC against the Chinese currency.
Two hydropower projects of a joint capacity of 180MW in Gilgit-Baltistan had been made part of the CPEC framework. Because of exclusion of Diamer-Bhasha dam from the CPEC about 3,500MW of hydropower capacity was now surplus. Of this, 1900MW would now be taken up on the recommendation of the KPK government and 1600MW in Punjab and Azad Kashmir. GB-Chitral road, Greater Peshawar Rail and Peshawar-Torkham road would be made part of the next phase of the CPEC.
The 7th JCC in Pakistan was a milestone towards realizing the CPEC. People of Pakistan valued the multi-faceted cooperation extended by the government and the people of China to Pakistan. The EC now entered into the first phase of its completion and 7th JCC was of historic significance to finalize the long-term plan of the project. The long-term plan will give new dimensions to bilateral cooperation between China and Pakistan. This plan would expand the scope of cooperation in various new areas including cooperation in social sectors along with economic field.
Along with infrastructure development and upgradation, education and health sectors would also be targeted for their improvement and upgradation under the CPEC. Cooperation in industrial sector would ensure transfer of technology, knowledge and skills to Pakistan.
The seventh Joint Cooperation Committee meeting ended leaving more questions than answers in its wake. At the end it is not clear whether we have a final LTP or if some more work remains to be done. The details shared with the public after the meetings ended are far too scattered to build a picture of what all has been agreed upon. The Joint Cooperation Committee has approved the Long Term Plan for bilateral cooperation under the China Pakistan Economic Corridor (CPEC). However, the meeting failed to answer several questions that have been put forward by experts ever since the LTP was revealed in a newspaper report.
Interior Minister Ahsan Iqbal had said that the master plan published in the report was not the final version and that the document would be shared with the public after finalization. Amid this lack of transparency, it remains not clear to the public as to what the government is signing up for on its behalf. We have noticed in the news that a long term plan would create employment opportunities and help attain economic growth and development. We have been provided little or no information on what Pakistan will be offering to the Chinese in return for this unprecedented investment.
No details have been released by the government about the Special Economic Zones (SEZs) being set up for Chinese investors where they will be exempted from taxation and other regulations. Details about the structure of taxation and financing in the SEZs also remain unknown. Mr. Iqbal has yet to issue a clear statement in this regard. It is about time the full version of the LTP is made public.