I have been reading and hearing some outrageous, naive and misunderstood comments on the developments of CPEC. Some of these comments are:
“Pakistan will be in debt to china! We will never be able to pay China back!”
Response: We are not taking on debt as nation. Projects are receiving debt capital that will be paid back by the companies involved in creation of a certain project. Debt is not always bad, sometimes you need debt financing to make good things happen. If you read some random complicated debt/GDP ratios, ignore them. These indicators are meaning less measures without an overall economic context of a growing economy!
“Pakistan is being colonised by the Chinese!”
Response: Please stop sounding like Trump. In this age Pakistan as a nation is in a “globalization disconnect” which limits our economic activity and also hurts our reputation. Yes the Chinese are coming to work in our projects. Most of the projects are being built on Build Operate Take Over model and our local companies are involved too. In a BOT model a project is made then stabilized and then the operations are handed over. In this case either, to a local corporation or the government. So yes we will have foreigners working among us but we aren’t being colonised!
“Pakistan does not have the ability to manage the projects.”
Response: Well, that might be true but if this remains true over the periods of planned projects then Pakistan is to be blamed for not catching up. However, this is not very likely to be the case as we have plenty of Pakistanis working at key positions in international large corporations. As gaps of skills are created they will also be filled either by us or foreigners. In simple terms it means that we will have more jobs! Let’s stop complaining and start training.
Now that the problems being pointed out are addressed let’s look at how we are benefiting.
CPEC is bringing in investments into our infrastructure and energy sectors. The energy sector in Pakistan is not very healthy. We have huge amounts of circular debt- a fancy term that means people in the sector do not get paid on time or ever for what they do. Without incentives of healthy returns to CPEC projects, the energy sector would be stagnant like it has always been for God knows how many years. Energy and poor infrastructure are also two of the limiting factors of our GDP growth.
As projects are being initiated resources such as coal are being tapped into for development. Areas where once the World Bank had rejected are back under development. Roads are being constructed on public private partnerships which means there is a corporate involvement which may increase the integrity and speed of delivery of such projects.
Yes we may see increased debt but overtime it is leading to a strategic vision of economic stimulation and development. Once we have projects that have been fruitful investments the world will see Pakistan as a feasible country to invest in. This will increase the sophistication of investment landscape in Pakistan.
Money is not being thrown around for fun and marketing here. The money involved in the CPEC projects is being invested by sophisticated institutions that conduct in depth due diligence of projects. Some of these projects have been cancelled too. Sophisticated investors don’t just bring in money but they also enforce laws and regulations for protection of their investment. This will put pressure on our authorities to provide an investment friendly landscape for facilitation of investments.
It is true Pakistan faces a lot of issues with terrorism, political unrest and corruption. These problems will not go away in a day or two or even a year. CPEC is a small ray of light that is not eliminating our problems but it will help us develop politically and economically in the long term. We definitely need protection of the rights of our people if they are displaced or affected along with restoration of wildlife and preservation of the environment. It is equally important to stay positive, adapt and accept the challenges that are faced by an unstable growing economy.