pakistan’s current economic · cpec is the flagship project of the bri as well as the fastest...
TRANSCRIPT
Pakistan’s Current Economic
Development: Footprints of BRI &
CPEC
17th
January 2019
Belt & Road Initiative
China Pakistan Economic Corridor
Pakistan’s Economic Profile
Sectors for Investment in Pakistan
German Exposure in Pakistan
Sequence
2
Belt & Road Initiative
(BRI)
“The Silk Road Economic Belt and the 21st Century Maritime Silk
Road”, proposed by Chinese President Xi Jingping in late 2013
Focuses on west-ward connectivity between China across Central
Asia and Eurasia to Western Europe
BRI encompasses two major areas:-
Building physical infrastructure to enhance China’s external
connectivity
Policy coordination and financial integration of BRI countries
3
Belt & Road Initiative
(BRI)
4
Six major BRI corridors/projects
China-Mongolia-Russia Economic Corridor
New Eurasian Land Bridge Economic Corridor
China-Indochina Peninsula Economic Corridor
Bangladesh-China-India-Myanmar Economic Corridor
China-Central Asia-West Asia Economic Corridor
China-Pakistan Economic Corridor
Belt & Road Initiative
(BRI)
5
CPEC is the flagship project of the BRI as well as the fastest growing
project under BRI
It is primarily aimed at the welfare of the people of the two countries
and the region
It will connect the Chinese western city of Kashghar with the port of
Gwadar (Pakistan) at Arabian Sea, through a series of land, rail and
road networks, pipelines and corridors, together with energy,
infrastructure, industry and investment projects
China Pakistan Economic Corridor
(CPEC)
6
22 projects worth around US$ 28.6 billion are under various phases of
implementation. These include:
Develop and operationalize Gwadar Port (Core Project)
Karachi-Peshawar Main Line
Upgrade of Karakoram Highway
Energy Cooperation, which would alleviate the energy crisis in
Pakistan
Establishment of Special Economic Zones (SEZs) and industrial
parks
China Pakistan Economic Corridor
(CPEC)
7
Components:
I. Gwadar Port (Socio-economic development)
II. Energy (Coal, Hydel, Wind, Solar, LNG , Transmission)
III. Infrastructure (Road, Rail, Aviation, Data connectivity)
IV. Industrial Cooperation (Gwadar Free Zone and other industrial
parks)
Nodes:
All provincial capitals are included as nodes, the key corner stones
of CPEC on which it will be constructed.
Long Term Cooperation Plan
(2017-2030)
8
Joint Cooperation Committee
(6 x Joint Working Groups)
Policy Formulation and Comprehensive Planning
Energy
Transport/ Infrastructure Gwadar
Industrial Cooperation Security
Institutional Framework
(CPEC)
9
PROJECTS US$ Millions
Energy 33,793
Transport and Infrastructure
Roads 3,500
Rail Network 3,690
Gwadar Port 622
Others 4044
Total 45,649
CPEC Portfolio-Projects
(Initial Estimates)
10
PROJECTS US$ Millions
Gwadar East-Bay Expressway 168
New Gwadar International Airport 230
Construction of Breakwaters 123
Dredging of berthing areas & channels 27
Development of Free Zone 32
Necessary facilities of fresh water treatment, water supply
and distribution
130
Pak China Friendship Hospital 100
Pak-China Technical and Vocational Institute at Gwadar 10
Total 820
Gwadar Project
11
Gwadar Project
12
PROJECTS Length (KMs) US$ Millions
KKH Phase II (Thakot -Havelian Section) 118 1,315
Peshawar-Karachi Motorway (Multan-Sukkur Section)
392 2,889
Khuzdar-Basima Road N-30 (110 km) 110 80
Upgradation of D.I.Khan (Yarik) - Zhob, N-50 Phase-I (210 km)
210 195
KKH Thakot-Raikot N35 remaining portion (136 Km) 136 719.8
Expansion and reconstruction of existing Line ML-1 (Railway Line)
1,830 8,172
Havelian Dry port (450 M. Twenty-Foot Equivalent Units)
- 65
Total 13,435.8
Infrastructure Projects
13
Infrastructure Projects
14
China-Pakistan Economic
Corridor (CPEC)
Gwadar-Khunjrab Routes
15
PROJECTS Power (MW) US$ Millions
2×660MW Coal-fired Power Plants at Port Qasim Karachi 1320 1912.2
Suki Kinari Hydropower Station, Naran,Khyber Pukhtunkhwa 870 1707
Sahiwal 2x660MW Coal-fired Power Plant, Punjab 1320 1912.2
Engro Thar Block II 2×330MW Coal fired Power Plant TEL 1×330MW Mine Mouth Lignite Fired Power Project at Thar Block-II, Sindh, Pakistan ThalNova 1×330MW Mine Mouth Lignite Fired Power Project at Thar Block-II, Sindh, Pakistan
660 330
330
995.4 497.7 497.7
Surface mine in block II of Thar Coal field, 3.8 million tons/year 1,470
Hydro China Dawood Wind Farm(Gharo, Thatta) 49.5 112.65
Quaid-e-Azam 1000MW Solar Park (Bahawalpur) Quaid-e-Azam
300 /600 /100
1,302
Energy Projects
16
PROJECTS Length (KMs) US$ Millions
UEP Wind Farm (Jhimpir, Thatta) 99 250
Sachal Wind Farm (Jhimpir, Thatta) 49.5 134
SSRL Thar Coal Block-I 6.8 mtpa &SEC Mine Mouth Power Plant(2×660MW) (Shinghai)
1320 1912.12 + 1,300
Karot Hydropower Station 720 1698.26
Three Gorges Second Wind Power Project Three Gorges Third Wind Power Project
49.5 49.5
150
CPHGC 1,320MW Coal-fired Power Plant, Hub,Balochistan 1320 1912.2
Kohala Hydel Project, AJK 1100 2364.05
Rahimyar khan imported fuel Power Plant 1320 MW 1320 1,600
Total No. of Projects: 21 (worth US$ 21,682 million)
Energy Projects
17
Energy Projects
18
Social Sector Development
Vocational Skill Development/Transfer of Knowledge
Social and Cultural Exchanges/People to People Contact
Educational linkage-establishment of Pakistan Academy of Social
Sciences
Health Care
Tourism
Security
Industrial Cooperation
Other Avenues of Cooperation-CPEC
19
Security
Mobilization of all possible resources (human and others) for speedy
implementation of projects
National transformation from friction of conflicts to harmonization of
geo economics
Financing (China, Pakistan and Multilateral)
Challenges
20
6th most populous nation in the world (210 million approx.)
Pakistan has one of the World’s largest youth bulge with 48% of the
population aged between 15-49 years
It’s the 25th largest economy, with a GDP growth of 5.8%,
GDP(nominal) of US $ 320 billion
GDP is forecasted to be the 20th largest economy by 2030 (PWC
Report)
Inflation 2.86% (lowest in 47 years)
Pakistan’s Economic Profile (1/2)
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Included in Emerging Market Index by Morgan Stanley Capital
International
Recognized as one of the top 10 reformers in the business regulations
in the world (World Bank)
Foreign Direct Investment (FDI) registered a growth of 12%, with
considerably high trend of attracting US$ 52 billion as FDI in the next
decade
GDP Sectors (contribution wise)
Industrial Sector 21%
Services Sector 59%
Agriculture Sector 20%
Pakistan’s Economic Profile (2/2)
22
Bilateral trade has increased from US$ 3.1 billion (FY-2017) to US$
3.6 billion (FY-2018), registering a growth of 14%;
Major exports from Germany to Pakistan includes machinery,
electronics, medical equipment, chemicals, dying & tanning extracts,
vehicles, etc.
Major exports from Pakistan to Germany includes textiles, leather
articles, sports goods, surgical equipment, fruits & vegetables,
engineering goods, cereals, cutlery, etc.
Germany is the 7th largest FDI investor in Pakistan and its net
investments are expected to increase substantially in coming years.
Pakistan-Germany Economic Relations
23
German Investment Exposure
Through Pakistani Partners
Instruments
Services
Cars & Technicalequipment
Chemical Medical& Pharmaceuticals
Electric & TextileMachines
Other Products
24
The very first bilateral Investment between Germany and Pakistan
was signed in 1959;
35 German Multinational Companies (MNC) have directly invested in
Pakistan like BASF, Linde, Merck, Bayer, Hoechst, Siemens, Metro,
Allianz, Nordex & Alno etc
Major exposures are in chemical & pharmaceuticals; followed by
electronics industry, services, transport sector and textiles sector.
The business activities of 565 small and medium sized companies are
represented by 231 Pakistani.
German Investment Exposure
Through Pakistani Partners
25
o Braun
o Bayer
o BSN
o DHL
o DS Con
o engro
o Excel
o General
o DEC
o Techno Links
o Linde
o Siemens
o Nordex
o Pegasus
o DF Deutsche
Forfait
o KSB
o Remington
o KIK
o Voith
o DEC
o Linde
o Melchers
o Schletter
o Merck
o VW
Major German Companies in Pakistan
26
Logistics
Textiles
Food Processing
Tech & IT Enabled Services
Automotive & Auto parts
Energy
Sectors for Investment in Pakistan
27
The trade route from Kashgar, Xinjiang province of China to
Gwadar Port, Karachi will significantly ease the strategic and
financial cost of trade and give undeterred access to China to
Europe and Africa
Almost 80% of China’s oil is currently transported from the Strait of
Malacca to Shanghai, (distance is almost 16,000 km and takes 2-3
months), with Gwadar becoming operational, the distance would
reduce to less than 5,000 km. Shipments of crude oil into the
country last month stood at 37.12 million tonnes, or 9.05 million
barrels per day (bpd)
Approximately 200 freight stations are operated by Pakistan
Railways’ freight business unit with 16436 freight wagon which in
2017 carried 5.63 million tonnes
Logistics Sector (1/2)
28
Plans by the government for the development of logistic hubs in
the private sector, integrated into the existing industrial estates,
industrial parks, export processing zones and others, will be
carried out on pilot basis in all the provinces.
Pakistan Customs is in the process of developing an integrated
web-based and paperless arrangement ‘Web- based one customs
system’. It will be tested first at Karachi, and Transport and logistics
subsequently rolled out to all other stations in the country. The
system is expected to significantly reduce the custom clearance
time from two days (current) to a few hours, and add efficiency to
facilitate trade immensely.
Logistics Sector (2/2)
29
8th largest exporter of textile products in Asia;
8.5% contribution to the GDP;
Ranked 3rd in the world in terms of yarn production;
4th largest producer and 3rd largest consumer of cotton in the world;
International brands including Adidas, Nike, Puma, H&M, Levis,
S.Oliver, Tom Tailer, etc;
Comprises of 46% of the total manufacturing sector and provides
employment to 40% of the total labor force;
Pakistan has supply base for almost all man-made and natural yarn
and fabrics, including cotton, rayon and others. Abundance of raw
material is a big advantage for Pakistan due to its beneficial impact on
cost and operational lead time;
Textile Sector (1/2)
30
Drawback of local taxes and levies has been provided to
manufacturing-cum exporting units on exports of products under
specific tariff codes.
Ready-made garments industry has emerged as one of the important
small-scale industries in Pakistan. These readymade garments and
products have large demand both at home and abroad.
Exports of readymade garments increased 43% in value from US
$1.62 billion in 2011-12 to US $2.32 billion in 2017-18 and are
expected to continue doing well.
The utilization of better technology and techniques can help to
improve production and so there is an opportunity to invest in better
techniques to convert Pakistan’s competitive advantage in both the
domestic and international market
Textile Sector (2/2)
31
4th largest milk producer
11th largest citrus producer in the world
35 different varieties of vegetables produced
More than 30 varieties of fruits are produced
The food processing sector of Pakistan has the ability to create
spillover effects in multiple other industries such as food packaging,
bottling, retail chains (hypermarts, supermarkets) etc. The main sub-
sectors however that need to be focused on a priority basis include:
Dairy
Value addition in fruits
Frozen foods (fruits, vegetables and meat)
Olive oil extraction units.
Potato powder and flakes manufacturing unit
Food Processing
32
Pakistan’s IT industry generates approximately $2 Billion annually
through its 1800 IT Companies
International Clients - Motorola, Toyota, BMW, Halliburton and many
more;
Foreign Investment by ZTE, Bearing point, Mentor graphics, NCR
Teradata;
With an average annual growth rate of 30%, Pakistan’s IT industry has
enough potential to contribute more to the overall economy;
This Sector can generate up to $10 Billion in the next 2-3 years;
Rapid investment is fueled by the growth of exports encompassing
software development along with the government support and policies;
25 IT companies won Silver and Gold Awards at Asia Pacific Information
and Communication Technology Awards.
Tech & IT Enabled Services
33
17 million middle class households consisting of102 million individuals
and consistent increase in disposable incomes in the rural-urban
sectors
Auto financing has increased substantially, doubling from Rs.20 billion
in 2014 to over Rs.40 billion year-to- date in 2018.
Pakistani Auto industry has recorded a 171% growth rate in
production and a 172.5% growth rate in Sales between 2014 and
2018
The Automotive Development Policy (2016-21) has provided the much
awaited fuel to the foreign automobile companies to establish their
plants in Pakistan. Market expansion is to be achieved by lowering
entry thresholds creating an investment conducive environment for
foreign firms to enter the market and compete.
Automotive & Auto parts (1/2)
34
Interventions under the China Pakistan Economic Corridor (CPEC)
and other mega projects e.g. the Karachi – Lahore Motorway provide
a huge opportunity for the corporatization of the trucking sector by
incentivizing fleet operation schemes. The State Bank of Pakistan will
dedicate funding at reduced interest rates to enhance volumes of the
industry.
The entrance of transportation network companies Uber and Careem
into the local market has spurred vehicle purchases particularly for the
1000cc (and lower capacity) passenger cars.
Automotive & Auto parts (2/2)
35