Pakistan FDI grows despite fears of growing Chinese influence

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The Arabian sea port Gwadar in Pakistan is one of many infrastructure projects in the region to have been built by China. (Reuters)
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A container is loaded on to the first Chinese container ship to depart after the inauguration of the China Pakistan Economic Corridor port in Gwadar. Foreign investment is on the rise in Pakistan but some investors are wary over increasing Chinese influence. (Reuters)
Updated 22 March 2018

Pakistan FDI grows despite fears of growing Chinese influence

ISLAMABAD: Pakistan expects net foreign direct investment (FDI) to jump about 60 percent in 2017/2018, the chairman of Pakistan’s Board of Investment said. However, some Western investors appear to be put off by China’s growing influence in the South Asian nation.
Chinese companies are building roads, power stations and a deep-water port in Pakistan after Beijing offered more than $50 billion for Pakistani infrastructure as part of China’s vast Belt and Road initiative.
Chinese investment has helped spur Pakistan’s economic growth to more than 5 percent, its highest in a decade, while also increasing Beijing’s clout in Pakistan. It comes at a time when Islamabad’s relations with the US, a historic ally, are strained over Pakistan’s handling of militants and the conflict in Afghanistan.
Naeem Zamindar, a state minister responsible for promoting foreign investment in Pakistan, said some Western investors appeared reticent because of a misconception that Chinese companies would get “exclusive advantages” and concessions that would not allow for an even playing field.
“A perception was created that the Chinese are taking over. The fact of the matter is that this is not true,” Zamindar told Reuters in his office in Islamabad.
“Pakistan’s government is very clear: we want investors of all hues to come in and participate in building this economy — whether American, English or Japanese.”
Zamindar said that some Chinese companies building power stations had obtained soft loans, with money that had been provided by Beijing, which made such terms a condition of its financing for projects that were part of the China-Pakistan Economic Corridor (CPEC), a key leg of the Belt and Road infrastructure network.
But for the second phase of CPEC, in which a series of Special Economic Zones (SEZs) will be set up to boost Pakistan’s industries, Chinese companies will not receive preferential treatment, Zamindar added.
“That is completely non-discriminatory,” he said, adding that Pakistan’s Special Economic Zones Act stipulates no country or company will get preferential treatment within the SEZs.
“The (SEZ) concessions are published and are on the website, open to all.”
Zamindar said net FDI for the financial year 2017/2018 (July-June) is expect to reach about $3.7 billion, with Chinese companies providing up to 70 percent of the new investment.
Net FDI has been gradually rising since 2014/2015, when it plummeted to less than $1 billion. It rose to $2.3 billion last year, according to central bank data.
Foreign direct investment is separate from the China-Pakistan Economic Corridor investments. More than 20 CPEC projects worth nearly $27 billion are currently being implemented, a senior government official told Reuters, meaning either work has begun on the projects or financing deals have been completed.
Zamindar said militant attacks were sharply down in recent years and security was much improved, but some investors are unaware of this and had an outdated “negative image” of Pakistan.
Yet overall interest in Pakistan had jumped, Zaminder said, and he would tour Britain, the US, France and Saudi Arabia in coming weeks to promote the opportunities available in the country of 208 million people and a fast-expanding middle class.
“We are open for business.”

Aramco to buy Shell’s 50% stake in Saudi refining joint venture for $631m

Updated 2 min 47 sec ago

Aramco to buy Shell’s 50% stake in Saudi refining joint venture for $631m

  • The sale is expected to complete later this year
  • Saudi Aramco Shell Refinery Co., based in Jubail Industrial City, has a crude oil refining capacity of 305,000 barrels per day

DUBAI: Saudi Aramco will acquire Royal Dutch Shell’s 50 percent stake in their Saudi refining joint venture SASREF for $631 million, the two companies said on Sunday.

The purchase, which is part of Aramco’s strategy to expand its downstream operations, will be completed later this year, they said in a joint statement.

Saudi Aramco Shell Refinery Co. (SASREF), based in Jubail Industrial City in Saudi Arabia, has a crude oil refining capacity of 305,000 barrels per day (bpd).

“Saudi Aramco will take full ownership and integrate the refinery into its growing downstream portfolio. SASREF will continue to be a critical facility in our refining and chemicals business,” Abdulaziz Al-Judaimi, Aramco’s senior vice president of downstream, said in the statement.

Aramco aims to become a global leader in chemicals and the world’s largest integrated energy firm, with plans to expand its refining operations and petrochemical output.

For Shell, “the sale is part of an ongoing effort to focus its refining portfolio, integrating with Shell trading hubs and chemicals,” the company said.

Shell has sold over $30 billion of assets in recent years as it shifts its focus to lower carbon businesses such as natural gas and petrochemicals.