Campaign of Fear, Uncertainty and Doubt (FUD) About CPEC

An unrelenting campaign of fear, uncertainty and doubt (FUD) about China-Pakistan Economic Corridor (CPEC) has been unleashed in the media in recent weeks. This strategy harkens back to the aggressive marketing techniques used by the American computer giant IBM in the 1970s to fight competition. As in IBM's case, the greatest fear of the perpetrators of FUD is that CPEC will succeed and lift Pakistan up along with rising China.

Fear, Uncertainty and Doubt (FUD):

A definition of FUD that captures its essence is offered by Roger Irwin as follows: "Unable to respond with hard facts, scare-mongering is used via 'gossip channels' to cast a shadow of doubt over the competitors offerings and make people think twice before using it".

A number of articles in western and Indian media have attempted to use FUD against China-Pakistan Economic Corridor. Some Pakistani journalists and commentators, some unwittingly, have also joined in the campaign.   As expected, these detractors ignore volumes of data and evidence that clearly contradict their claims.

Part of the motivation of those engaged in FUD against CPEC appears to be to check China's rise and Pakistan's rise with its friend and neighbor to the north. Their aim is to preserve and protect the current world order created by the Western Powers led by the United States at the end of the second world war.

Growing Infrastructure Gap:

Development of physical infrastructure, including electricity and gas infrastructure, is essential for economic and social development of a country such as Pakistan. China-Pakistan Economic Corridor financing needs to be seen in the context of the large and growing infrastructure gap in Asia that threatens social and economic progress.

 Rich countries generally raise funds for infrastructure projects by selling bonds while most developing countries rely on loans from international financial institutions such as the World Bank and the Asian Development Bank to finance infrastructure projects.

The infrastructure financing needs of the developing countries far exceed the capacity of the World Bank and the regional development banks such as ADB to fund such projects. A recent report by the Asian Development Bank warned that there is currently $1.7 trillion infrastructure gap that threatens growth in Asia. The 45 countries surveyed in the ADB report, which covers 2016-2030, are forecast to need investment of $26 trillion over 15 years to maintain growth, cut poverty and deal with climate change.

Chinese CPEC Loans to Pakistan:

About 80% of the $55 billion of the Chinese money for CPEC is private investment while the rest is composed of soft loans to the government, according to Shanghai Business Review.

The Chinese soft loans for CPEC infrastructure projects carry an interest rate of just 1.6%, far lower than similar loans offered by the World Bank at rates of 3.8% or higher.

Chinese companies investing in Pakistan are getting loans from China's ExIm Bank at concessional rates and from China Development Bank at commercial rates. These loans will be repaid by the Chinese companies from their income from these investments, not by Pakistani taxpayers.

Rising Confidence in Pakistan:

Pakistani economy is already beginning to reap the benefits of the current and expected investments as seen in the 5.2% GDP growth in the current fiscal year, the highest in 9 years.

The World Bank's Pakistan Development Update of May 2017 says that "Pakistan’s economy continues to grow strongly, emerging as one of the top performers in South Asia".

Rapidly expanding middle class and rising demand for consumer durables like vehicles and home appliances attest to the positive impact of CPEC. Consumer confidence in Pakistan has reached its highest level since 2008, according to Nielsen.

US-based consulting firm Deloitte and Touche estimates that China-Pakistan Economic Corridor (CPEC) projects will create some 700,000 direct jobs during the period 2015–2030 and raise its GDP growth rate to 7.5%,  adding 2.5 percentage points to the country's current GDP growth rate of 5%.

US News Ranks Pakistan Among World's 20 Most Powerful Nations

Countering FUD:

Pakistani government should respond to the FUD campaign against CPEC by countering it with facts and data and increasing transparency in how CPEC projects are being financed, contracted and managed. It is particularly important in a low-trust society like Pakistan's where people can be easily persuaded to believe the worst about their leaders and institutions. 

Summary:

An unrelenting campaign of fear, uncertainty and doubt (FUD) about China-Pakistan Economic Corridor (CPEC) has been unleashed in the media in recent weeks. This strategy harkens back to the aggressive marketing techniques used by the American computer giant IBM in the 1970s to fight competition. Part of the motivation of those engaged in FUD against CPEC appears to be to check China's rise and Pakistan's rise with its friend and neighbor to the north. As in IBM's case, the greatest fear of the perpetrators of FUD is that CPEC will succeed and lift Pakistan up along with rising China.  Their aim is to preserve and protect the current world order created by the Western Powers led by the United States at the end of the second world war.   Pakistani government should respond to the FUD campaign against CPEC by countering it with facts and data and increasing transparency in how CPEC projects are being financed, contracted and managed. 

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Comment by Riaz Haq on July 8, 2017 at 8:10am

#Harvard #HKS Center for International Development forecasts #Pakistan’s #GDP growth to average 5.97% until 2025

https://tribune.com.pk/story/1452332/pakistans-gdp-growth-rate-even...

http://atlas.cid.harvard.edu/rankings/growth-predictions/

Pakistan’s predicted annual growth rate over the next 10 years is nearly 6 per cent, according to the revised growth projections presented by researchers at the Centre for International Development (CID) at the Harvard University.

This is a one-point GDP increase as in the CID’s earlier projections, Pakistan GDP was set to grow at 5 per cent by 2025.

Although China’s huge economy (current GDP at $12 trillion) cannot be compared with that of Pakistan (current GDP at $300 billion), Pakistan’s 5.97 per cent growth rate is above that of China, which is set to grow by 4.41 per cent.

Pakistan’s 5.97 per cent growth rate is above China, which is set to grow by 4.41 per cent. PHOTO: THE ATLAS OF ECONOMIC COMPLEXITY, 2015. HARVARD CID

Pakistan’s 5.97 per cent growth rate is above China, which is set to grow by 4.41 per cent. PHOTO: THE ATLAS OF ECONOMIC COMPLEXITY, 2015. HARVARD CID

Led by Harvard Kennedy School, the research is called ‘The Atlas of Economic Complexity’.

The CID’s growth projections are based on the measures of each country’s economic complexity, which captures the diversity and sophistication of the productive capabilities embedded in its exports and the ease with which it could further diversify by expanding those capabilities.

According to the Harvard study, the economic complexity not only describes why countries are rich or poor today, but can also predict future growth — about five times more accurately than the World Economic Forum’s Global Competitiveness Index.

Pakistan’s neighbour India, on the other hand, is predicted to grow by 7.72 per cent, the world’s highest. The CID believes that the economic pole of global growth has moved over the past few years from China to neighbouring India and it is likely to stay there over the coming decade.

‘Pakistan’s GDP growth expected to hit 9-year high in current fisca...

Except for India, Pakistan will beat all Asian economies in GDP growth. These also include giant Muslim economies.

Here are some regional countries (and their GDP growth) Pakistan will be ahead of:

Muslim and South Asian countries:

Indonesia 5.82 per cent

Turkey 5.64 per cent

Malaysia 4.82 per cent

Sri Lanka 3.77 per cent

Saudi Arabia 3.17 per cent

Bangladesh 2.82 per cent

UAE 2.41 per cent

Shanghai Cooperation Organisation (SCO) countries:

Tajikistan 3.61 per cent

Uzbekistan 3.32 per cent

Kazakhstan 2.65 per cent

Kyrgyzstan 5.77 per cent

Russia 2.60 per cent

According to the Harvard study, the central reason for income differences is know-how. Poor countries produce few goods that many countries can make because of the lack of know-how, while rich countries produce a greater diversity of goods, including products that few other countries can make.

Harvard’s leading research hub uses this fact to measure the amount of the know-how that is held in each economy.

A major trend that emerges from Harvard’s report is that the growth in emerging markets is predicted to continue to outpace that of advanced economies, though not uniformly.

Pakistan’s GDP growth expected at 4.9%: Moody’s

In addition to Pakistan, the CID projections are also optimistic about new growth hubs in East Africa and new segments of Southeast Asia, led by Indonesia and Vietnam. it also notes that economies based on commodity output face slower growth rates as commodity prices continue to remain under pressure.

With special economic zones (SEZs) being built under the China-Pakistan Economic Corridor (CPEC) project, it is an opportunity for Pakistan to move away from commodity output by producing value-added goods in joint ventures with Chinese firms and increase its exports. This way, Pakistan can have even faster income growth.

The Harvard growth projections are in line with other short, medium and long-term GDP growth forecasts for Pakistan.

HSBC: 5 per cent leading to 2050

IMF: 5.5 per cent leading to 2020

The World Bank: 5.8 per cent leading to 2019

The Economist: 5.7 per cent in 2017

In a bid to materialise this growth projection, what needs to be chalked out is a multi-pronged strategy. Pakistan needs to diversify its product capabilities. With likely new FDI inflows, Pakistani firms can go into producing value added goods both for domestic consumption as well as exports.

The firms, currently content with domestic sales turnover, need to introduce some percentage of exports to their strategic plans. Similarly, Pakistan’s agriculture sector needs to address its lack of sophistication and crop and distribution losses. The cumulative effect of even modest steps will help increase our GDP growth.

Comment by Riaz Haq on July 14, 2017 at 4:14pm

We’ll make #CPEC a success, come what may: #Pakistan Army Chief Gen Bajwa. #China

https://tribune.com.pk/story/1456715/well-make-cpec-success-come-ma...

General Qamar Javed Bajwa reiterated on Wednesday the determination of the army and other law enforcement agencies to provide fool-proof security to the China-Pakistan Economic Corridor (CPEC) calling the multibillion-dollar project ‘harbinger of peace and prosperity’ in the region.

“While the army will provide security to the project [CPEC], the other national institutions will have to come forward and play their respective roles,” he said while speaking at a function in Islamabad on CPEC Logistics on Wednesday.

“We as a nation can only benefit from this historic opportunity, if we prepare ourselves to embrace it. All national institutions will have to make a deliberate effort to ensure success of CPEC,” he added.
CPEC is truly a harbinger of economic development, peace and prosperity in the region, he said, adding that unlike some other countries of South Asia, Pakistan believes in focusing its energies on peace and inclusiveness, rather than divisive competition. He was apparently referring to India which publicly opposes the multibillion-dollar project.

Country’s progress: Army chief hails role of overseas Pakistanis

“CPEC would bring increasing economic integration among regional economies and reduce the development gap within various regions of Pakistan,” he said.

Gen Qamar said the Chinese investment in various fields, including energy, infrastructure, Gwadar port and special economic zones, can lay the foundation of a fast-developing Pakistan if the opportunity was optimally utilised.

“We take immense pride in our relationship with China that has always remained on an ascending trajectory and now encompasses almost every sphere of our life. The lasting imprint of this brotherly partnership is visible in state-to-state, military-to-military, business-to-business and people-to-people contacts,” he said.

The army chief went on to say that the Sino-Pak relationship is based on the principles of peaceful co-existence, commonality of interest and shared perception on regional and global issues. “We have always stood by each other through thick and thin and at every critical juncture of our history. That is why we are called Iron brothers.

“Xi Jinping’s grand vision of One Belt, One Road (OBOR) has opened up a whole new world of opportunities for the countries of the region and beyond. CPEC, being an important project of OBOR, holds great promise for turning around the economies of Pakistan, Western China and the region,” he added.

Army chief appreciates security forces for ‘winning back dissidents’

The army chief said to reap benefits from CPEC Pakistan needs education, training and skill development of the youth. “We also need to improve our existing laws and regulations to provide a facilitating framework for trade and investment activities. We need infrastructure and urban planning to ensure that we are able to handle large volume of business and transport, without any hassle,” he added.

Commenting on the prevailing security situation in Pakistan, Gen Qamar said the “country is much safer today than before as peace has been restored in Fata and the adjoining areas”. He said normalcy was also returning to Karachi. “Similarly, the law and order situation has improved significantly in Balochistan and there is great focus on socio-economic development in the province,” he added.

“Pakistan is a resilient nation of over 200 million people, with a large ratio of vibrant, capable and enthusiastic youth. We need to capitalize on this opportunity to make Pakistan an economic power in coming years,” he added.

He encouraged entrepreneurs to join hands with Chinese investors and make this dream a reality. “My dream is that by the year 2030, when we complete the current phase of economic partnership between the two countries, Pakistan should at least be in league with middle income countries,” he stated.

Comment by Riaz Haq on July 15, 2017 at 7:06am

CPEC outflows to peak at $4.5bn: IMF

https://www.dawn.com/news/1345414/cpec-outflows-to-peak-at-45bn-imf


In a detailed look at the China-Pakistan Economic Corridor (CPEC), the International Monetary Fund (IMF) cautions that corridor projects will generate outflows of as much as $4.5 billion by 2024, while the export benefits of the projects “will likely accrue gradually over time”. Filling the gap in between could pose a policy challenge.

“These considerations warrant policymakers’ attention to two priority areas in order to realise the transformational potential of Pakistan’s investment programme while maintaining external stability,” the IMF report says.

The first challenge is to ramp up export revenue and build foreign exchange buffers, which “will be important to cushion the period of increased BoP outflows”. Ramping up exports will require “improving competitiveness and the business climate” in order to realise the potential benefits from the increased energy supplies and transport infrastructure that the corridor projects will create.

The second big challenge is bringing “full cost recovery” in power distribution. “Routing the increased generation capacity through a loss-making distribution sector could result in faster accumulation of circular debt and fiscal costs, as well as undermine long-term financial sustainability of the new energy projects,” the report adds.

The report stops short of advocating a specific path for improving recoveries, but points towards greater private-sector participation in metering and recoveries while “maintaining a strong and enabling regulatory framework”. The language could be aimed at the government’s proposed reforms to the Nepra Act that seek to parcel out many of the powers the regulator currently enjoys to the federal and provincial governments and their departments.

The report also cautions against going too far down the road of granting incentives to certain categories of investor. It urges the government to “rationalise and limit tax incentives and exemptions [and] maintain uniformity of the tax regime with respect to all investments” and ensure that new external commitments are in line with expected balance of payments trends.

The report notes the positive impact that CPEC projects can have on Pakistan’s economy. It says the direct impact of corridor projects on GDP will go from $2bn in 2017 to $4bn by 2024. By that point in time, the indirect, second-round impacts could commence, which could be “significant” but “will depend on many other supportive factors.”

The report notes that the investments coming under the early-harvest scheme could close Pakistan’s power deficit as 8,600MW are envisaged to be commissioned under CPEC over the next seven to nine years, out of a total capacity expansion of 24,000MW currently in the investment plan. “[T]his expansion will help eliminate Pakistan’s deficit of about 6GW in 2016 to a surplus as early as end-2018.”

Comment by Riaz Haq on July 17, 2017 at 3:58pm

Cultural Caravan with 8 #Chinese & 8 #Pakistani artists to travel in 3 segments of #CPEC. #Culture #China #Pakistan

https://www.thenews.com.pk/latest/217062-Cultural-Caravan-to-travel...

Chinese and Pakistani artists, eight from each country, will travel in a cultural caravan in three segments of the China Pakistan Economic Corridor (CPEC), each segment spanning a maximum of ten days’ duration.

“Creative Caravan of artists, musicians and film makers from China and Pakistan traversing the CPEC and documenting Art and Culture en-route,” said PNCA officials.

The Silk route has played a significant role in the culture and economy of the region through the history.

Its visionary transformation into CPEC will be seen as the most powerful engine of change, development, progress and economic turnaround for the entire region.

According to schedule the first segment will undertake the Western Passage covering route from Peshawar to Gwadar.

The second segment will take the Eastern Passage from Karachi to Islamabad while also taking detour between Eastern Western and Central Passages.

The third segment will cover Northern Passage starting from Kashgar and culminating at Islamabad.

Timings of the three segments of the caravan will be decided keeping climatic and other factors in mind.

The film makers will have all their equipment including editing systems with them so they can continue editing their films and also engage local talent in the process of filming and editing.

The painters and photographers will be encouraged to engage with local enthusiasts in creative processes by sharing their knowledge and skills with them and also letting them to take pictures and paint images.

The musicians will not only document local folk music but also perform at different places and interact with local musicians.

Comment by Riaz Haq on September 8, 2017 at 9:37pm

CPEC Fears and My Response
Published on September 6, 2017
LikeCPEC Fears and My Response 
Hamza Orakzai

https://www.linkedin.com/pulse/cpec-fears-my-response-hamza-orakzai

1. 91% of the income from Gwadar Port goes to the Chinese and 9% to Pakistan.

Reply: Can you kindly point out what's wrong with this model especially when all the liabilities and investments lie at their end? In past 7 decades, not only our government has failed to develop the port but also ignored the importance of its geostrategic location, and currently, doesn't have the resources to develop it even if they want to for next 3 decades or so. Every Pakistani still gets to use the port and enjoy the benefits from its development. The port is a window to the economic activity it will generate in the country.

2. Chinese companies get preferential treatment and tax exemptions (making it impossible for local companies to compete and opens the Pakistani market for a commercial invasion)

Reply: The statement is completely misleading. Only CPEC projects get tax exemptions, mainly in the power sector, because we are in dire need to mitigate the losses due to the energy crisis in Pakistan. Moreover, tax exemption also drives down the cost of building these strategic projects, which results in lower tariffs and repayments. 

(Impossible is a strong word. Construction companies in Pakistan are working at their full capacity, turning down projects due to output issues. Commercial Invasion? I think mentioning special economic zones would be more relevant since the argument of building infrastructure has no correlation with the commercial viability of businesses.)

3. Money for the road network comes from Pakistan (so we're paying for the roads China will use to export stuff to us and the world)

Ans: Let me break the statement into 2 parts:

1) The Road; 2) The Money

1) The Road: The roads built under CPEC will be the property of National Highway Authority and will generate revenue through the toll tax. Moreover, as a Pakistani, will you want strategic roads in the country to be the property of a foreign country?

2) The Money: These projects are being built on Engineering-Procurement-Construction+Finance (EPC+F) Model. Finance comes from China and our government takes it as a concessionary loan. Same as ADB model. But the difference is that Chinese companies are mandated to complete these grand projects within 24-36 months. There needs to be open bidding for these projects, but then again, it will push the timeline of the CPEC to 30 years instead of 15 years.

4. Of the original $50b, over $30b was loans to build power plants for which we'll pay a) interest to Chinese banks b) exorbitant profits to Chinese companies who will build and supply to these plants c) guaranteed profits to the Chinese companies that will operate and own these plants d) backed by sovereign guarantee

Ans: This figure is completely incorrect. All the power projects under CPEC are BOOT (Build-Operate-Own-Transfer) basis which means that investment, loans, and liabilities are all the investor problems. Our problem is to pay for the electricity they produce. No loan has been acquired so far by the government of Pakistan for energy projects.

a) We have nothing to do with the interest rates. 

b) Getting a payback for what you invested is a very fair request so don't know what's wrong with it? 

c) Guaranteed profits because we have PKR 800 billion in circular debt? Why would anyone even want to invest? Would you? 

d) Same as above.

5. We're making commitments to buy electricity at over 8 cents from coal-based plants and India is buying solar electricity at 4 cents (solar price is crashing every year). This will make our manufacturing uncompetitive for the next 15 years or longer.

Ans: We have a problem in this argument. First, we are comparing apples to oranges. The feed-in tariff for coal power plants is around PKR 8/Kwhr in India as well. Although it's a lengthy discussion,

Comment by Riaz Haq on September 12, 2017 at 11:18am

Chinese perceptions of CPEC
ISHRAT HUSAIN
https://www.dawn.com/news/amp/1357043

The Chinese have voiced concerns regarding negative CPEC talk, security and red tape.

Under its One Belt One Road Initiative announced in 2013, China is planning to invest more than $1 trillion in 60 countries all over the world to establish six different corridors. The receptivity in other countries to this proposal has been anything but enthusiastic; however, some Chinese friends are puzzled by the sceptical and negative reactions from certain quarters in Pakistan expressed in the media, particularly on social media. This comes to them as a surprise because of the long uninterrupted record of strong bilateral relations between the two countries that were not even affected by changes in political leadership in either country. CPEC is the first project of its kind to foster economic cooperation on a massive scale for building large infrastructural projects in Pakistan.

Although realising that there are some external forces hostile to this initiative, Chinese analysts and participants are concerned about what they see as the misrepresentation of facts by many Pakistanis. It is not obvious to them as to what purpose is served by raising doubts and fears about CPEC in the minds of the Pakistani population. The aspersions being cast on the motives of the Chinese, such as the analogy with the East India Company or Pakistan becoming a satellite of China, are very unnerving: external detractors of CPEC pick up these reports and after bundling them as ‘risks’ of CPEC to Pakistan, disseminate them widely.

The Chinese argue that the IPPs have been a policy instrument for investment in Pakistan’s energy sector for a very long time. When the country was facing serious energy shortages no one else came to Pakistan’s rescue and invested in the sector. Now that China has come forward with a planned investment of $35 billion or 70 per cent of the total CPEC allocation under the same policy, questions are being raised.

Had it involved extraction of natural resources from Pakistan for the benefit of the Chinese, this criticism would have been justifiable. On the contrary, the benefits of this investment would be exclusively appropriated by Pakistan’s industries and households that would no longer face load-shedding while the country would record a 2pc annual rise in GDP growth.

Chinese state-owned companies, designated by the Chinese government based on their expertise and experience, are executing the projects with loans provided by government-owned banks on concessional terms both in tenor and pricing. In several projects, Chinese and Pakistani companies have entered into joint ventures. The repatriation of profits and debt-servicing in foreign exchange arising out of these obligations would become possible after an increase in the volume of exports as a result of the Chinese-Pakistani joint ventures relocating their industries to the Gwadar Free Economic Zone and the nine industrial zones to be established under CPEC.

In the opinion of some, the negative feelings can have unintended adverse consequences for the personal security of Chinese nationals working on these projects, particularly in some sensitive areas of Balochistan. Some elements unhappy with the Pakistani state and government and possibly acting at the behest of foreign powers hostile to CPEC appear to have created conditions in which the murders and kidnappings of Chinese nationals that were almost non-existent have begun to take place. Our interlocutors were grateful for the new division being raised by the Pakistan Army for protection of the Chinese; but the security risk is raising premiums for relocation to some of the vulnerable areas.

Comment by Riaz Haq on September 22, 2017 at 8:40am

Value Added Sector Helps #Pakistan’s #Exports Upsurge. Textiles up 11.8%, non-textiles up 23.5% - https://pakwired.com/value-added-sector-behind-pakistans-exports-up... … via @pakwired

According to a recent report by the Pakistan Bureau of Statistics (PBS), Pakistan’s exports have shown a positive trend backed by rising exports via the value added sector. The growth pattern has been observed during the first two months of the current fiscal year 2017-18. The upward trend in the value added sector has given a significant boost to cummulative export numbers as the New Year kicked off.

Total exports during the two month period, July-August, increased to $3.49 billion as compared to $3.12 billion showing a growth of 11.8%. While the increase in non-textile goods has been registered at 23.5% reaching $1.31 billion during July-August 2017-18 versus $1.06 billion during the same period last year.

PERFORMANCE OF VALUE AND NON-VALUE ADDED TEXTILE EXPORTS

Readymade garments have given a major upward push to the overall exports pie increasing by 15.65% on a yearly basis reaching $418.63 million during July-August period. Garments in general have also surged by 16.4% showing volume based growth.

Another integral value-added product, knitwear managed to go up by 7.53% to reach $439 million during July-August. The volume based increase of knitwear exports was 8.23%. Additionally, bed wear exports grew by 8% amounting to $384.32 million while its quantity wise growth stood at 8.79%. Furthermore, the value based growth of towel exports showed 0.67% rise while its volume based growth was registered at 0.03%.

Conversely, the picture has not been equally nice for the intermediate goods like cotton yarn, as their exports slumped by 4% (value) and by 3.3% (volume). Deteriorating demand of cotton yarn and fabric from China is considered a crucial reason for their low sales. Another slump has been seen in the exports of cotton cloth, down by 7.8% in terms of value and quantity. Exports of raw cotton have also seen a downward trend with 14.7% in value and 14.15% in volume during July-August 2017-18.

A major blow has emanated from exports of non-value added products such as cotton carded, which dropped by a whopping 100% in value and volume. In addition, exports of tents and canvas declined by 22% in terms of value. On the other hand, exports of yarn slumped by 0.2% in value but increased in terms of volume.

Quick Read: When will Pakistani companies really value their human resource?

A GLANCE AT NON-TEXTILE EXPORTS

From the non-textile related goods, rice exports grew by a significant 40% during the two months. Basmati and other types of rice exports took a major leap.

From the food category, a major jump was seen in exports of wheat, sugar, fruits during the given period. Crude petroleum and petroleum naphtha registered a growth of 100% and 404% accordingly. Nonetheless, exports of sports goods and carpets saw a downward trend.

Value added leather products increased by 5.8% which was witnessing continuous slump during the last two years. Footwear showed a feeble growth of 0.1% during July-August 2017-18. Furthermore, surgical and engineering goods managed to rise by 26% and 23% respectively.

Comment by Riaz Haq on September 22, 2017 at 5:31pm

#Pakistan exported #food commodities worth $500m in July-Aug 2017. #exports #rice #wheat #fish #sugar

https://www.geo.tv/latest/159391-pakistan-exported-commodities-worth

The country earned US$ 512.3 million by exporting different food commodities during the first two months of the current financial year as compared the earnings of the corresponding period of last year.

During the period from July to August 2017, food group exports from the country increased by 30.6 percent as compared the exports of the same period of last year.

According to the data of Pakistan Bureau of Statistics, since the last two months exports of rice grew by 40 percent as around 428,993 metric tons of rice worth US$ 223.97 million were exported.

The rice exports, during first two months of last financial year, were recorded at 3810,861 metric tons, which were worth US$ 159.54 million, it added.

Meanwhile, the exports of basmati rice grew by 10.35 percent and about 59,433 metric tons of basmati rice, worth US$ 62.741 million, were exported as compared the exports of 59,192 metric tons, valuing US$ 56.857 million, in the same period, last year.

The exports of rice other than basmati also witnessed an increase of 58.98 percent, around 369.580 metric tons of rice costing US$ 161.198 million exported as compared to the exports of 251,669 metric tons worth US$ 102.888 million last year.

From July-August, 2017-18, fruit and vegetable exports increased by 8.74 percent and reached at 56,280 metric tons worth of US$ 20.58 million against the exports of 73,751 metric tons of US$ 18.88 million of the same period last year, it added.

The other commodities which witnessed an increase in their exports during the period under review include fish and fish production, which increased by 19.63 percent, wheat and sugar increased by 100 percent respectively. 

It may be recalled here that imports of the food commodities into the country also witnessed an increase of 27.18 percent and about US$ 1.123 billion was spent on the import of different food items to fulfill the domestic requirements.

Comment by Riaz Haq on September 22, 2017 at 5:41pm

’s to will rise in second phase of .

https://tribune.com.pk/story/1506672/pakistans-exports-china-will-r...

Chinese Ministry of Commerce Vice Minister Wang Shouwen said on Thursday that after conclusion and implementation of the second phase of China-Pakistan Free Trade Agreement (CPFTA), Pakistan will be able to expand its exports to China with the help of low tariff rates and attract more Chinese investment in the next five years.

“In the next five years, China will import products worth $8 trillion and once the second phase of our FTA is concluded and implemented, Pakistan will be able to expand its exports to China due to low tariff rates. In addition, Pakistan will also be able to attract more investment from China,” he said. He was speaking at the opening session of the eighth meeting of the second phase of FTA negotiations held at the Chinese Ministry of Commerce.

He said China was a huge market and home to 1.3 billion people and its domestic consumption was booming, adding economic and trade cooperation was the anchor and propeller of relations between China and Pakistan.

“In recent years, our cooperation has developed remarkably and benefited many enterprises and people in both the countries,” he added.

Terming CPFTA one of the earnest FTAs of China, he said it had played a significant role in promoting Sino-Pakistan cooperation and made China Pakistan’s largest trading partner.

He was of the view that the first phase of the FTA had given a lot of impetus to the economic and trade ties.

“However, with the trade liberalisation level of only 36%, there is still a huge space for both sides to raise the current level,” he said. “I believe a relatively high level of liberalisation will promote common development and provide benefits for more people of our countries.”

The vice minister said the leadership of the two countries attached great importance to the FTA negotiations. A statement of Chinese President Xi Jinping during his visit to Pakistan in April 2015 clearly pointed out that both sides had decided to speed up negotiations on the second phase of FTA, he added.

While reciprocating the warm feelings of the Chinese official, Federal Commerce Secretary Younus Dagha said, “China is now Pakistan’s major trading partner with volume of trade reaching an all-time high at $16 billion in 2016-17 from $4 billion in 2006-07.”

“However, keeping in view the respective sizes of the two economies, the gains for both sides should be equal,” he emphasised. Following the FTA, Pakistan’s trade deficit with China has widened markedly, surging from $2.9 billion in 2006-07 to $12.7 billion in 2016-17. Last year, Pakistan’s global imports grew 18.5% while exports edged down 1.6%.

He said imports from China alone accounted for 36% of Pakistan’s global non-oil imports.

Dagha underlined the need for sending positive signals to the people of both countries that benefits of the China-Pakistan Economic Corridor (CPEC) and CPFTA would be shared equitably and that the economy of Pakistan would be a major beneficiary.

Comment by Riaz Haq on September 26, 2017 at 6:48pm

Pakistan targets import curbs to ward off currency crisis

Abbasi to impose fresh curbs on luxuries in effort to avoid devaluing rupee

https://www.ft.com/content/a495b148-a1d2-11e7-9e4f-7f5e6a7c98a2


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https://www.ft.com/content/a495b148-a1d2-11e7-9e4f-7f5e6a7c98a2

Pakistan plans to tighten curbs on luxury imports to ward off a foreign currency crisis without devaluing the rupee, Shahid Khaqan Abbasi, the prime minister, has said.

Mr Abbasi said he would rather place further controls on imports in an effort to preserve fast-dwindling foreign reserves than allow the rupee to fall against other currencies.

Some experts believe Pakistan will have to request another bailout from the International Monetary Fund within a year.

In March, the Pakistani government made it harder to import non-essential items such as vehicles, mobile phones, cigarettes and jewellery by insisting buyers put down 100 per cent of the cash upfront.

The measure drew criticism that it would encourage people to trade instead on the black market. The IMF said it had been told by Pakistani officials that the restrictions would be removed within a year but Mr Abbasi told the FT his government was planning to impose more.

“We can put regulatory duties on certain items, especially luxury finished goods, that’s possible,” he said. “We probably will do more of that, yes definitely, to discourage imports.

“Currency devaluation is not on the table, it’s not. A lot of people thought it was . . . [but] it is important to have stability for the rupee,” said Mr Abbasi.

Pakistan is running out of foreign currency as exports and payments from Pakistanis abroad fall while imports rise.

The central bank had $14.3bn of foreign reserves as of September 15, according to the most recent data — enough to cover exports for about three months. That is down from a high of $18.9bn last October.

Pakistan has been importing more than it exports for some time, but the problem has been exacerbated by having to buy Chinese supplies for projects as part of the $55bn China-Pakistan Economic Corridor.

While the scheme is aimed at improving Pakistan’s energy supply and transport networks, many economists believe that in the short term it will push Islamabad back towards the IMF.

“We will have to go back to the IMF any time now,” said Muhammad Zubair Khan, a former commerce minister who worked at the IMF for more than a decade. “The current situation is not sustainable.”

Sakib Sherani, a former economic adviser to the government, warned: “From a balance of payments crisis, we will have a full-blown macroeconomic crisis, where private sector sentiment is hit, growth stalls, inflation is high, and the central bank has to act.”

As well as restricting imports, the country has also borrowed money at short notice from various international lenders to pay off its debts. In 2016 and early 2017, Pakistan borrowed $1.2bn from state-backed Chinese banks.

Many economists believe the only long-term way out of the crunch is to allow the rupee to fall, encouraging exports and discouraging imports.

But doing so has become politically sensitive, with ministers insisting on a strong currency while central bankers warning of the likely consequences.

In July, the rupee suddenly fell 3 per cent, having traded in a narrow band since 2015. Central bank officials said they had backed away from shoring up the currency, but the move drew an angry response from the government, which stepped in to boost its value again before replacing the acting governor.

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