Pakistan to rope in GCC investors for CPEC

In this file photo, Chinese trucks stand on a pontoon during the opening of a trade project in Gwadar port, some 700 kms west of the Pakistani city of Karachi on Nov. 13, 2016. (AAMIR QURESHI/AFP)
Updated 17 September 2018
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Pakistan to rope in GCC investors for CPEC

  • Chalks out plan with China to overcome current account deficit
  • To offer Arab investors the same incentives as are being extended to Chinese companies

ISLAMABAD: With an eye on strengthening its economy and to overcome the current account deficit, Pakistan’s government said on Monday that it would invite firms from Saudi Arabia, United Arab Emirates and Oman to invest in the prestigious China-Pakistan Economic Corridor (CPEC), a multi-billion dollar project.
Labeled as a “game-changer” for the country, China’s $60 billion investment is expected to develop Pakistan’s infrastructure and overcome energy shortage with the help of new projects under the Belt and Road Initiative (BRI).
“Both Pakistan and China have mutually decided to include a third party in the CPEC projects. And we will definitely seek investment from our friendly Arab countries in the industrial and energy-related projects,” Hasan Daud, Deputy Project Director CPEC, told Arab News.
He said that the initiative was discussed at length during Chinese Foreign Minister Wang Yi’s recent visit to Islamabad. “This is a mutual decision and a framework for it is being worked out,” he said.
At the meeting, both Yi and Foreign Minister Shah Mehmood Qureshi agreed to offer GCC investors the same incentives as would be extended to firms from Pakistan and China. “It is a golden opportunity for our friendly countries especially Saudi Arabia, UAE, Oman and Bahrain to invest in the CPEC projects,” Daud said, adding that they were seeking investment particularly in the “export-led industry to overcome the current account deficit”.
Rebuffing reports of a renegotiation with China on CPEC as “propaganda by detractors”, Daud said the priority was now to work toward developing the social sector, Gwadar port, special economic zones and Pakistan Railways’ main line-1.
Dr. Ashfaque Hassan Khan, member of the government’s Economic Advisory Council, said that a “third-country” was being included to dispel the misconception that “there is no transparency in the CPEC projects.” “Investment from other countries will also help broaden the base of the projects and counter allegations of corruption and fraud in the investment,” Khan told Arab News.
He added that the move would further help share dividends of the BRI and ensure regional peace and development through infrastructure and social sector development. “This is a wise strategy and that’s why both Pakistan and China have agreed to it,” Khan said.
Political analysts, however, were quick to add a caveat.
Reasoning that the move was aimed at countering criticism of the BRI, Professor Tahir Malik — an academic and a political analyst — said that the initiative would help China increase its influence in the region, particularly Pakistan, as Islamabad would not be able to repay the money invested in the country by Beijing.
Malik said that China has been under increasing pressure from the United States and other western countries for its “debt trap diplomacy” in the region and the inclusion of a ‘third-country’ was aimed at increasing its ownership of the CPEC projects. “It will be a big achievement for both Pakistan and China if they succeed in getting a tangible investment in the CPEC-led projects from another country in the given international circumstances,” he told Arab News.


Foreign investors hope India dials back policy shocks after Modi win

Updated 24 May 2019
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Foreign investors hope India dials back policy shocks after Modi win

  • Modi’s pro-business image and India’s youthful population have lured foreign investors
  • After Modi’s win, about a dozen officials of foreign companies in India and their advisers said they hoped he would ease his stance and dilute some of the policies

NEW DELHI: Foreign companies in India have welcomed Prime Minister Narendra Modi’s election victory for the political stability it brings, but now they need to see him soften a protectionist stance adopted in the past year.
Modi’s pro-business image and India’s youthful population have lured foreign investors, with US firms such as Amazon.com , Walmart and Mastercard committing billions of dollars in investments and ramping up hiring.
India is also the biggest market by users for firms such as Facebook Inc, and its subsidiary, WhatsApp.
But from around 2017, critics say, the Hindu nationalist leader took a harder, protectionist line on sectors such as e-commerce and technology, crafting some policies that appeared to aim at whipping up patriotic fervor ahead of elections.

Opinion

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“I hope he’s now back to wooing businesses,” said Prasanto Roy, a technology policy analyst based in New Delhi, who advises global tech firms.
“Global firms remain deeply concerned about the lack of policy stability or predictability, this has sent a worrying message to global investors.”
India stuck to its policies despite protests and aggressive lobbying by the United States government, US-India trade bodies and companies themselves.
Small hurdles
Modi was set to hold talks on Friday to form a new cabinet after election panel data showed his Bharatiya Janata Party had won 302 of the 542 seats at stake and was leading in one more, up from the 282 it won in 2014.
After Modi’s win, about a dozen officials of foreign companies in India and their advisers told Reuters they hoped he would ease his stance and dilute some of the policies.
Other investors hope the government will avoid sudden policy changes on investment and regulation that catch them off guard and prove very costly, urging instead industry-wide consultation that permits time to prepare.
Protectionism concerns “are small hurdles you have to go through,” however, said Prem Watsa, the chairman of Canadian diversified investment firm Fairfax Financial, which has investments of $5 billion in India.
“There will be more business-friendly policies and more private enterprise coming into India,” he told Reuters in an interview.
Tech, healthcare and beyond
Among the firms looking for more friendly steps are global payments companies that had benefited since 2016 from Modi’s push for electronic payments instead of cash.
Last year, however, firms such as Mastercard and Visa were asked to store more of their data in India, to allow “unfettered supervisory access,” a change that prompted WhatsApp to delay plans for a payments service.
Modi’s government has also drafted a law to clamp similar stringent data norms on the entire sector.
But abrupt changes to rules on foreign investment in e-commerce stoked alarm at firms such as Amazon, which saw India operations disrupted briefly in February, and Walmart, just months after it invested $16 billion in India’s Flipkart.
Policy changes also hurt foreign players in the $5-billion medical device industry, such as Abbott Laboratories, Boston Scientific and Johnson & Johnson, following 2017 price caps on products such as heart stents and knee implants.
Modi’s government said the move aimed to help poor patients and curb profiteering, but the US government and lobby groups said it harmed innovation, profits and investment plans.
“If foreign companies see their future in this country on a long-term basis...they will have to look at the interests of the people,” Ashwani MaHajjan, an official of a nationalist group that pushed for some of the measures, told Reuters.
That view was echoed this week by two policymakers who said government policies will focus on strengthening India’s own companies, while providing foreign players with adequate opportunities for growth.
Such comments worry foreign executives who fear Modi is not about to change his protectionist stance in a hurry, with one offical of a US tech firm saying, “I’d rather be more worried than be optimistic.”