Fabien Baussart
Fabien Baussart

CEPC projects facing hurdle

Despite all efforts and public posturing by Pak officials that CPEC project in Pakistan was on track and beneficial for the country, a section of the Pak bureaucracy is reportedly unhappy with the Gwadar Port project.

2.​At a recent high-level meeting on CPEC, some members raised objections over the marketing plan proposed by the China Overseas Port Holding Company Pakistan Ltd (COPHC), the Chinese operator of the Gwadar Port. However, the Chinese company representative blamed Pak government’s inability to provide requisite infrastructure, including power, water and road connectivity as the bottlenecks for operationalizing the Gwadar Port and freezone project. Apparently, Pak has no provision to meet the Gwadar Port city’s energy requirement as the planned power plant at Gwadar is to be commissioned by 2023 only.

3.​Interestingly, despite efforts by both Islamabad and Beijing, Chinese investors have shown little interest to invest in CPEC projects. They are apparently discouraged by the poor investment climate in Pakistan, including high cost of land in industrial parks & SEZs, delays in registration, security clearance as well as lack of tax incentives, exemptions, export rebates. Further, the high tariff on import of raw material, exorbitant license fees, delays in repatriation of profits, clearance of consignments, lack of warehouse facilities at ports and high costs of inland transportation also put off potential investors.

4.​The recent suicide bombings targeting Chinese personnel working on CPEC in Pakistan has further highlighted the risk involved for the Chinese and has apparently slowed down the pace of work with Chinese companies unwilling to endanger their staff. They are reportedly nearly 7,000 Chinese working on projects in Pakistan.

5.​Meanwhile, Bangladesh authorities too have expressed concern over slow progress of Chinese assisted infrastructure projects agreed under the bilateral MoUs in 2016. The latest project facing uncertainty and delay is the construction of the Double Line (DG) Rail Link between Joydebpur-Ishurdi section of Bangladesh Railway. Estimated to cost USD 1.68 billion, the project faces delay due to objections raised by the Chinese side in its evaluation report.

6.​27 MoUs / Agreements were signed during the October 2016 visit of Chinese President Xi Jinping to Dhaka worth about USD 20 billion for implementation of various projects under government-to-government (G2G) arrangement. However, China has been very slow in completing the financial modalities and pursuing implementation of these projects despite Bangladesh’s repeated requests. China has so far extended financial support to only 09 projects worth USD 7.11 billion and the rest are in various stages of negotiations. A total amount of USD 1.78 billion has been disbursed for these 09 projects so far.

7.​Such instances raised doubts over Beijing’s intentions and its commitment to the development and upliftment of these South Asian countries.

About the Author
Fabien Baussart is the President of CPFA (Center of Political and Foreign Affairs)
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