Pakistan official’s criticism of China’s ‘Silk Road’ projects raises worries

A Pakistani soldier stands guard beside a ship carrying containers during the opening of a trade project in Gwadar port, some 700 kms west of Karachi on November 13, 2016. (AFP file photo)
Updated 10 September 2018
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Pakistan official’s criticism of China’s ‘Silk Road’ projects raises worries

  • Commerce Minister Abdul Razak Dawood suggested that all projects in the $57-billion China Pakistan Economic Corridor program were eligible for suspension and review
  • He said that China may have been granted too-favorable terms in many projects by the former government of Nawaz Sharif

KARACHI/ISLAMABAD: A Pakistani official's critical comments about projects funded by China to the tune of billions of dollars rattled investors and sparked worries on Monday of a souring in ties, a day after Beijing's top government diplomat concluded a visit.

Abdul Razak Dawood, the Pakistani cabinet member for commerce, industry and investment, suggested that all projects in the $57-billion China Pakistan Economic Corridor program could be eligible for suspension in a review to be conducted this week under the orders of new Prime Minister Imran Khan.

"I think we should put everything on hold for a year, so we can get our act together," Dawood told the Financial Times in an interview. "Perhaps we can stretch CPEC out over another five years or so."

He added that he thought China had been granted too-favorable terms in many projects by the former government of Nawaz Sharif.

"Chinese companies received tax breaks, many breaks and have an undue advantage in Pakistan; this is one of the things we're looking at because it's not fair that Pakistan companies should be disadvantaged," Dawood said.

Pakistani markets fell in early trading on Monday, with the benchmark KSE 100 index down 477.38 just after midday at 40,374 points, before recovering to close at 40,684, still down 0.4 percent.

Dawood's comments were "mind-boggling" and rare public criticism of China, said Mohammad Zubair, privatization minister in the previous government.

"This is probably the harshest statement about the Chinese in the last 50 years or so," Zubair told Reuters. "Even if there are issues with the Chinese, those issues could be dealt with in private rather than being made public."

Later on Monday, Dawood told domestic broadcaster Geo TV that his statements had been misconstrued and he would clarify them later.

The critical comments were published just after the Chinese government's top diplomat, State Councilor and Foreign Minister Wang Yi, visited Pakistan and the two sides reaffirmed the mutual benefits of the Beijing-funded projects.

While Khan, a former cricket star, has made no secret he plans to review all government projects and expenditure, the finance ministry last month said Pakistan was "fully committed to undertake and complete CPEC projects in their totality."


SoftBank mobile unit to go for $21bn IPO

Updated 13 November 2018
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SoftBank mobile unit to go for $21bn IPO

  • The IPO will be one of the biggest ever worldwide, and will provide the group with funds to pay down debt and continue placing big bets on innovations
  • SoftBank’s bets so far have been as varied as small gaming startups, ride-hailing firms such as Uber Technologies, and e-commerce behemoth Alibaba Group Holding

TOKYO: SoftBank Group Corp. has won approval to conduct a 2.4 trillion yen ($21.04 billion) initial public offering (IPO) of its domestic telecoms business, in a deal that will seal the group’s transformation into a top global technology investor.
The IPO will be one of the biggest ever worldwide, and will provide the group with funds to pay down debt and continue placing big bets on innovations that CEO Masayoshi Son predicts will drive future tech trends.
SoftBank’s bets so far have been as varied as small gaming startups, ride-hailing firms such as Uber Technologies, and e-commerce behemoth Alibaba Group Holding.
SoftBank Group aims to raise 2.4 trillion yen through the sale of 1.6 billion SoftBank Corp. shares at an tentative price of 1,500 yen each, a filing with the Ministry of Finance showed on Monday.

 

 The amount could rise by 240.6 billion yen if demand triggers an overallotment, taking the total closer to the $25 billion that Alibaba raised in 2014 in the biggest-ever IPO.
The final IPO price will be determined on Dec. 10, and SoftBank Corp. will list on the Tokyo Stock Exchange on Dec. 19 with an initial market value of 7.18 trillion yen — about 1 trillion yen above that of rival KDDI Corp, which has about 10 million more subscribers.
The parent will retain a stake of around two-thirds, depending on the overallotment.
The mammoth offering comes at a time when investors have begun questioning the outlook for Japan’s telecoms companies.
The IPO was initially expected to appeal to investors seeking stability, but the government has recently called on carriers to lower fees while backing more wireless competition, sending shockwaves through the industry.
Yet SoftBank’s brand is still likely to draw retail investors long accustomed to using SoftBank’s phone and Internet services. Many still see CEO Son as a tech visionary who brought Apple’s iPhone to Japan.
Japanese households are commonly seen as an attractive target in IPOs with their 1,829 trillion yen in financial assets, even if they are traditionally risk-averse with over 50 percent of assets in cash and deposits. More than 80 percent of the shares will be offered to domestic retail investors, a person with knowledge of the matter told Reuters.
“I think a reasonable amount of money will be attracted to this one,” said Tetsutaro Abe, an equity research analyst at Aizawa Securities. “It’s a mobile company, so the cash flow is steady.”

FACTOID

SoftBank to sell 1.6 billion shares at a tentative price of 1,500 yen ($13) each.