Private-sector investors need to play larger role to ensure sufficient capital for CPEC projects

By Hu Weijia Source:Global Times Published: 2018/7/24 22:48:40

The multi-billion-dollar China-Pakistan Economic Corridor (CPEC) has again made headlines as some people focus on the alleged financial crisis faced by the project. When it comes to infrastructure financing in Pakistan, the private sector needs to play a larger role to ensure sufficient funding for the CPEC.

The CPEC is an open initiative that welcomes private-sector players from China, Pakistan and third countries to join on the principle of equality and voluntary participation. As Pakistan strives to attract more foreign direct investment (FDI), the private sector's share of CPEC projects is likely to increase.

The Pakistan government is working to make the country more appealing to foreign privately owned companies by offering incentives such as investor facilitation services to attract new capital inflows.

The CPEC is the major driver of FDI in Pakistan, driven by China's rising investment in roads, railways, power facilities, industrial zones and other infrastructure. The multi-billion-dollar project has improved local infrastructure, which is a precondition for Pakistan's economic take-off. Although Pakistan's external debt is a source of concern, its economy is on an upswing. Pakistan's positive economic outlook will make it a more attractive destination for private players.

The question remaining is how to encourage private-sector companies to capitalize on business opportunities under the CPEC. Infrastructure improvement has enabled Pakistan to overcome bottlenecks such as power shortages, and this will encourage greenfield investment in areas such as garments, manufacturing and other labor-intensive industries. But foreign companies have expressed concerns over issues such as political stability, policy transparency and the security situation of the country. There are also concerns over Chinese influence, because some have an incorrect perception that Chinese companies will receive preferential treatment because of the China-Pakistan friendship.

The first step is always the hardest, so joint ventures with local and Chinese companies will help foreign private players start doing business in the emerging country. Chinese State-owned enterprises are expected to keep an open mind to work with private players in Pakistan. CPEC will help Pakistan improve its infrastructure and regional connectivity, with the goal of letting all countries, instead of only China, gain benefits.

FDI in Pakistan reportedly increased 21.76 percent year-on-year in June to $291.5 million. An increase of foreign capital inflows will help ensure sufficient funding for CPEC projects. We have confidence in Pakistan's ability to attract private investors.

The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn



Posted in: EYE ON ECONOMY

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