Re: Difference b/w Narendra Modi & Imran Khan
India rejoices over $34 bn Japan investment
China’s offer to Pakistan comes under criti
*ISLAMABAD: While India is celebrating Japan’s willingness to invest 34 billion dollars, a similar offer to Pakistan from China has been greeted with irresponsible commentary by the PTI chief who has put the country’s time-tested friend in an awkward position.
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Japan decided last week to double its investment in India as two countries decided to elevate their ties to a ‘special strategic global partnership.’ This was announced during the visit of Indian Prime Minister Narendra Modi to Tokyo and this pledge is being hailed as a great victory on the front of economic diplomacy.
The situation is quite different in Pakistan. China, our best friend, agreed to Foreign Direct Investment in Pakistan at a time when no country was ready to invest here due to the security situation. Different agreements in this respect were to be signed during the much-awaited visit of Chinese President planned for mid-September.
While the visit had to be cancelled, like the visits of the heads of state of Sri Lanka and Maldives, due to the political turmoil created by the PTI and PAT, the PTI chief is inventing different excuses to escape responsibility.
First, he declared there was no planned visit of the Chinese President. He then ridiculed a generous investment offer of 34 billion dollars by the Chinese government saying it was a loan, not investment, being given at seven percent markup.
Like investors anywhere in the world, Chinese investors also get loans from banks on the basis of their creditworthiness. This deal is between the investors and bankers. Pakistan is not responsible for the loan being granted to the companies investing in Pakistan. That has to be paid by the companies.
The China Development Bank offers loans to the businessmen intending to invest in different countries. In a state-controlled economy like China, the companies largely rely on the government for obtaining loans. The Chinese government carries out risk analysis of different countries and then allows the state-run banks to allocate loans for investment in different companies. Although Pakistan’s rating is not quite good given the deteriorating security situation, nevertheless, the Chinese government decided to invest 34 billion dollars largely in Pakistan’s power infrastructure. Pakistan will only guarantee that power produced by Chinese companies will be purchased.
This offer is not confined to Chinese companies only. Any company from anywhere in the world investing in the power sector will get the same offering. This policy was introduced by Benazir Bhutto’s second government, and is in practice since then.
According to the officials privy to the project details, 90% of the Chinese investment will be in the power sector while 10% will be in road infrastructure that will be built on BOT (build, operate and transfer) basis, a model earlier applied when Daewoo constructed Lahore-Islamabad motorway.
Chinese government is giving special incentives for investment in Pakistan as its top bank will not only sanction loans, those entering into public-private partnership with the government of Pakistan will get free business insurance from their government. Since there are reservations about the political stability, insurance incentive is being offered by the Chinese government so that their investors do not feel insecure.
