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Thursday March 28, 2024

SCB launching RMB-based solutions to boost CPEC trade

By Mehtab Haider
April 26, 2018

ISLAMABAD: The Standard Chartered Bank (SCB) is all set to launch RMB-based solutions for traders to assist Pakistan maximise its share in $2.5 trillion worth of trade available to China’s revolutionary ‘Belt and Road Initiative (BRI)’ beneficiary countries, an official said on Wednesday.

“Of course, we will provide hedging to suppliers to mitigate their risks. RMB (Renminbi, the official currency of People’s Republic of China) is increasing its share in different international baskets as it had obtained share of 11 percent in Special Drawing Rights (SDRs) of the IMF,” Shazad G Dada, CEO SCB, said at a press conference.

Dada, who was flanked by Jean Lu, Managing Director, Head of Global Banking, CIB, Standard Chartered Bank (China) Limited, said the bank would provide RMB-based solution to promote trade under China Pakistan Economic Corridor (CPEC).

Replying to a query, Lu made it clear that RMB was not replacing US dollar, but rather being used as an alternate option.

“Pakistan and China had done currency swaps and they were seeking offshore and onshore licenses from China in order to promote trade in different currencies,” the SCB global banking head said.

Commenting on the increasing tightening of regulatory regime under Financial Action Task Force (FATF)), Dada said Pakistan had undertaken several steps by enacting Anti Money Laundering (AML) laws, Benami act, and others and it was hoped the identified gaps would be filled in due course.

“Out of 47 projects under the CPEC, eight were completed and work was underway on 22 with a cost of $29 billion and their Bank has provided different kind of services in 50 percent projects,” the CEO SCB Pakistan said.

The official said that experts from Standard Chartered’s Greater China Region hosted roadshows in Sri Lanka, Bangladesh, and Pakistan to outline the benefits of and investment opportunities from China’s BRI, together with Renminbi internationalisation.

“The purpose of these roadshows is to enable our clients to take advantage of the benefits presented by China-led Belt & Road initiative (B&R), which is also bringing more cooperation opportunities for Pakistan and China,” the banker said.

The BRI, the biggest support to globalisation in the world today, is aiming to boost trade and investment growth across Asia, extending to the Middle East, Africa and Europe.

Trade between China and countries along the Belt and Road has been robust, whereas total trade between China and BRI countries exceeded $3 trillion between 2014 and 2016, and the momentum continued in 2017 despite subdued growth in global trade.

The BRI has made significant headway in the past four years, and has gained support from more than 100 countries and international organisations, and more than 80 of them have signed cooperation agreements with China.

Lu was of the view that the BRI would benefit all countries along the routes, contributing to global economic and social development.

“Many countries, like Pakistan, have robust demand for infrastructures, as they move toward further industrialisation, move up the value chain, as well as absorb fast-growing populations,” she said.

Citing an Asia Development Bank report, Lu said Asia needed to invest around $8 trillion in infrastructure over 2010-20 to maintain its growth momentum.

“Improved infrastructure will foster formation of production chains at the regional level based on comparative advantage, hence improving productivity,” the SCB China official said quoting the report.