Raheel Hassan |
The 56-billion-dollar China-Pakistan Economic Corridor (CPEC) is a part of China’s One Belt, One Road vision. Pakistan sees it as a gateway to prosperity, no doubt, but there are too many ambiguous policies of this project with which people are not aware, yet. All is not good in the CPEC. We have to focus on details of this project and need to see the other side of the picture.
The important question to ask is what will be the impact on the 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?
Pakistan’s lower house was informed last month that the government had issued a statutory regulatory order (SRO) giving a series of tax exemptions to Chinese firms as an incentive for working in what is considered a highly dangerous decision. These concessions, like 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. Through this policy, there will be an influx of Chinese companies and investors in Pakistan and we will not be benefited sufficiently enough in terms of tax collection. Surely there will be adverse effects on our fragile economy.
The important question to ask is what will be the impact on the 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? Because when Chinese industries come in Pakistan, it will directly affect our local industry because of the cheapest rates. Why doesn’t the government think about the survival of our local industries?
Pakistan will have to pay $90 billion back to China with $34 billion Interest over 30 years against loans and investments of $56 billion under CPEC. The average annual repayment of CPEC will be US$3.7 billion.
There are nine Special Economic Zones planned along the CPEC routes. One each in Panjab, Khyber Pakhtunkhwa, Baluchistan, and Islamabad, two in Sindh and one each in FATA, Azad Kashmir, and Gilgit-Baltistan. Last month, the standing committee was informed that only Chinese industrialists would be allowed to set up their industries in these economic zones. What will the domestic companies do? Will our role just be to consume the output of these zones? Why don’t Pakistani industrialists and investors can invest in those zones. Local employment and investment should be a central objective of the CPEC projects.
The worst mistake is to view CPEC as a gift from China or as some sort of self-paying project. Pakistan will have to pay $90 billion back to China with $34 billion Interest over 30 years against loans and investments of $56 billion under CPEC. The average annual repayment of CPEC will be US$3.7 billion. These repayments will peak at around $5 billion in 2022. There is a great saying that “control the debt controls everything”, after IMF, China is going to do the same to us. After controlling the debt, China will command us to structure our policies as per China’s interests. If we look at the bigger picture, then this appears to be China’s soft imperialism. We are transforming from one slavery to another (from the West to the Chinese). Some experts are cautioned that if we would not address these concerns, CPEC will be a big disaster for Pakistan in the long run.
The government has to make policies which would be in Pakistan’s national 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? Putting public approval behind 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 traverse together. Planning Commission should answer all the concerning questions and have to make this project transparent and clear from all the objections.
Raheel Hassan is a student of journalism at National University of Modern Languages (NUML), Islamabad. The views expressed in this article are the author’s own and do not necessarily reflect Global Village Space’s editorial policy.