- Central monitoring would have created unwieldy bureaucracy, claims Ahsen Iqbal
Though the much vaunted CPEC project might have been declared a game-changer by the prime minister, there doesn’t seem to be much clarity on the project since there is no centralized body which is monitoring all its subsidiary projects.
“Even the Parliament has not been taken onboard over the prospects and plans,”, told Asad Umer, a leading economist from Pakistan Tehreek-e-Insaf, in an exclusive conversation with Pakistan Today.
“All the focus at the moment is on investments, but what would be the terms of trade? We have not at all been briefed about these issues and everything is unclear,” he said.
Regarding these issues , Minister for Planning, Development and Reforms Ahsan Iqbal, in an exclusive interview with Pakistan Today said, “If we had established any particular centralized body for the monitoring of the whole project, it would have created massive bureaucratized issues”.
Explaining, the minister said CPEC has an extremely diversified portfolio, thus a centralized monitoring body wouldn’t work in this case. “If someone has issues in CPEC, they can approach the Planning Commission and I hope they will get satisfied,” he said.
While the government is bullish about the multi-billion dollar CPEC and pushing through the projects, economists and academics fear that these projects may have repercussions for Pakistan’s economy. “A number of the economists and academics who are engaged in research on the implications of CPEC think that Chinese businesses are much bigger in size and may kill local industry using economies of scale”, says Wasim Ahmad, currently doing PhD on CPEC at the University of Fujian Agriculture and Forestry China.
In the short run, Pakistan may get a boost in our industry and trade, but in the long run, Pakistani investors will get crushed and Chinese investors and businessmen will monopolise Pakistan’s markets, he added.
However, Asad Umer said, these fears are not relevant because trade with China is already open and if they had any such intentions they could have easily done it. Nevertheless, the still had some questions to ask of the Pakistani government. “What will be the tax rates? Which goods and products will be traded? What will be the status of transit goods? Will our local businessmen will have access to it? What is the benefit for our local industry? All of this is all unknown”, stated Asad.
Ahsen Iqbal’s response: “the kind of strategic relations Pakistan and China have had in the past and in the present geo-strategic situation, mean that China cannot afford to compromise the good-will relations with Pakistan.” Additionally, he said since China is a huge market, so it would provide an opportunity to our local businessman to extract the maximum out of the Chinese markets.
On top of everything, the massive loans and investments that CPEC would generate is the most debated issue among the economists. In case of loans, our debt would increase, while with reference to the investments, the capital outflow, in terms of profits, in the long run will create a severe economic setback for Pakistan.
“I have been asking this asking question from the government but was not informed by them,” said Asad. “It took me 6 months to get the information on my own about the prospects of loans and investments in the project”.
Speaking about the debts that the government will generate and the investment that will pour in as part of CPEC, Iqbal said, “the major portion of the money in CPEC being given by China is investment, instead of loan”.
Whereas as the question of capital outflow is concerned, USD 35 billion of investment is being put in the energy sector, which will remove the hurdles and limitations from our industrial sector and will going to create a boom in our industry, thinks Iqbal. Therefore, “it is quite obvious that the overall magnitude of the capital outflow will be less than what Pakistan would be gaining in return”.
Contradicting Iqbal’s claim, Asad categorically said that “just USD 2.7 billion is equity investment.” Moreover, he said that even if the government’s claims for the investment are correct, the issue of capital outflow will still be a problematic one.