Chinese companies investing in CPEC to get tax breaks: Dar

WASHINGTON: Finance Minister Ishaq Dar has admitted that Chinese companies investing in China Pakistan Economic Corridor (CPEC) will be getting heavy tax breaks to the tune of billions of rupees per annum but maintained that it’s a conscious decision of the government taken after careful calculations of cost and benefits.

“There is no free lunch. These concessions are given in lieu of $56 billion Chinese investment in CPEC. It’s a fiscal decision of the country and its is done elsewhere too,” Dar said while asked about reports suggesting Chinese companies will be getting exemptions worth Rs150 billion annually.

While addressing an Economic Forum hosted by Pakistan Embassy here Dar said United States also offered exemptions to its neighbours and the concept of European Union was also based on tax-free trade between members.

“If it can work for EU and other countries it will work for Pakistan too,” Dar said adding that Chinese government should be commended for investment in Pakistan. He said the concept of CPEC is largely misunderstood.

“China is not giving this money to government. Its financial facilities provided to private sector for projects in energy sector and infrastructure development,” the minister said.He said positive impact of CPEC will be felt in coming years but Pakistan’s economy is already on the move owing to measures taken by current government.

Dar also told the audience mostly comprising Pakistani Americans that World Bank has shown interest in solar power projects in Balochistan.“I told the World Bank President (Dr Jim Yong Kim) about our plans to provide electricity to entire Balochistan with solar power and President Kim has shown interest in the plan,” he said.

Dar said his party’s government had announced in 1999 to develop Gwadar as alternative Mideast but unfortunately subseqent military coup resulted in loss of so many years. He calimed that Gross Domestic Product (GDP) growth is under-reported by 20 to 25% so a new mechanism would be devised with the help of World Bank to accurately assess the GDP growth.

“If GDP growth is measured correctly our last year’s growth would be 5.6% and this year’s figure could be 6 but so far we are sticking with actual numbers but we are engaging World Bank professional to improve the assessment,” he said.To another question about IMF’s concerns that Pakistan’s growth could be affected by strong rupee, populist measure ahead of elections and a troubled US economy under new administration in washington, Dar hoped none of these factors will impact the economy.

“We don’t believe that just for winning elections we should lose the gains made during last few years. This is not policy of the government. Let me assure you just for being populist we will not take any such measures in the upcoming budget.”

He said strong rupee is a sign of good economic policy and there is nothing the government and State Bank can do in this regard as Pakistan is following an open marke policy about its currency. “Investors are happy that our currency is stable.

In Middle East currencies are stable for many decades yet their economies are not adversely impacted so why would Pakistan’s stable currency harm its growth?” he asked rhetorically.He admitted that there has been decline in Pakistan’s export during last few years but blamed low oil prices for decrease in unit value for products.