China-Pakistan Economic Corridor ready to kick-start

ISLAMABAD: In order to materialise much-desired around $50 billion spending under China-Pakistan Economic Corridor (CPEC) on the eve of Xi Jinping visit, Islamabad will have to adopt pattern of China-Africa Development (CAD) Fund to accelerate the process of development here in this part of the world.
“Pakistan can follow CAD Fund model by establishing China-Pakistan Investment Fund (CPIF) with seed money in the range of $2 to $5 billion in order to undertake development projects under CPEC,” the Managing Director, Pak-China Investment Company (PCIC) Cao Wen Jiang and Deputy Managing Director Shahnawaz Mahmood said in a joint exclusive interview with The News here on Saturday.
The China-Africa Development Fund was established by the China Development Bank as an investment vehicle in Africa. The CAD Fund is managed independently and run on commercial basis.
The MD, PCIC said that China-Africa Development Fund came into being with equity of $1 billion but it was run successfully and now it was touching $7 billion portfolio.
He proposed that Pakistan required three policy level banks to accelerate the process of economic development. Pakistan, he said, should follow EXIM Bank, China Development Bank and another financial institution for catering requirement of agriculture sector in effective manner.
The MD PCIC said that by following the model of CAD Fund where Africa was contributing 20 percent while China was contributing 80 percent, the development fund for Pakistan should be run on 100 percent equity financing with the same share both from Beijing as well as from Islamabad.
He said that the CPEC would prove beneficial for both countries as well as for region where more than 3 billion people were residing. Two governments of Islamabad and Beijing are following CPEC so it should become successful as it will be win-win situation for both the countries, he added.
To another query, he said that the request for establishing Investment Fund should come from Pakistan as it would be the recipient country for absorbing huge investment of $45.6 billion under CPEC. He said that it was most popular topic in Pakistan where everyone was talking about the success of the CPEC.
Pakistan, he said, can learn lessons from reform plan being pursued by China.
He said that Pakistan should focus on improving rail track and signaling system that will help reducing the time for reaching freight trains on destinations.
The Deputy Managing Director (DMD) PCIC Shahnawaz Mahmood said that they were conducting studies to explore ways and means for boosting exports of Pak made ups to China especially in value added sectors.
He said that the CPEC would become win-win situation for both the countries where Beijing would be able to maximise benefits through development of Gwadar port. At least 12,000 kilometre distance will be reduced for oil transportation from Gwadar to China if compared with other routes.
He said that the Build-Operate-Transfer (BOT) model should be replicated in Pakistan under CPEC. Under the BOT model, toll tax will be collected in case of building infrastructure in order to recover the cost of investment and repayment in case of concessional borrowings.
He said that there was need to encourage Chinese investors to come and invest into privatisation plan of Pakistan where they can move ahead by establishing joint venture partnership in strategic sales of upcoming transactions of important Public Sector Enterprises (PSEs).
Pak-China Investment Company has so far financed 55 projects in Pakistan with annual investment hovering around Rs1.5 billion. With total portfolio of Rs8.5 billion, the PCIC has invested in different sectors including infrastructure, renewable energy, SMEs, hydro projects and agriculture related projects here in Pakistan. Now they are focusing on social sector as well.