With a new Chinese loan, CPEC is now worth $51.5bn - upgrade for railway line from Khi to Peshawar

[WebGuru]

ISLAMABAD: Despite Indian conspiracies, the size of the China-Pakistan Economic Corridor (CPEC) has been increased to more than $51.5 billion after China and the Asian Development Bank (ADB) agreed to lend $8bn to upgrade the main railway line from Karachi to Peshawar, according to a federal minister.

Addressing a news briefing upon his return from a week-long visit to China, Minister for Planning, Development and Reforms Ahsan Iqbal said Beijing has agreed to provide Pakistan with a $5.5bn concessional loan to upgrade and modernise the Karachi-Lahore main railway line called ML-1.

In addition, ADB will extend financing of $2.5bn for the Lahore-Peshawar railway track, he said.

“Both loans will carry less than 2 per cent interest rate. Both are concessional loans,” he said. However, he declined to discuss specifics of the lending programme, saying the Economic Affairs Division is still busy finalising the terms and conditions.

He said the original $46bn CPEC included about $3.56bn financing for the railway network, which has now increased to $8bn. “This is ad add-on” to the original CPEC, he explained.

He said the Karachi-Peshawar railway line processed 75pc of the passenger and cargo traffic, but its efficiency has dropped to 60-80 kilometres per hour. That is because of a continuous deterioration during the long tenure of former president Pervez Musharraf, he said, adding that the track, signalling system and bridges were in bad shape.

The refurbishment and upgradation of the main line will cost $8bn and take five to six years to complete. This will revive its efficiency to 120-160 kilometres per hour. It will be upgraded in a manner that it will accommodate fast-moving trains, reduce the cost of production and increase the competitiveness of Pakistani products.

The main line will then be expanded in the next phase to link Gwadar with Peshawar and then Havelian, Abbottabad, with Khunjerab.

Mr Iqbal said the CPEC has three phases and four major areas, namely Gwadar Port’s development, energy projects, road networks and industrial cooperation. The short-term, medium-term and long-term projects will complete by 2020, 2025 and 2030, respectively.

At present, work is in progress in the first three areas of infrastructure development, which will enable the two nations to push for industrial cooperation, he said.

Mr Iqbal said both sides agreed to convene the 6th Joint Cooperation Council (JCC) of the two countries in the last week of November. Before the JCC, working groups on transport, Gwadar Port and industrial cooperation will meet next month to firm up the implementation plan.

He said the long-term industrial cooperation has been finalised in Pakistan in consultation with all provinces, Azad Jammu and Kashmir and Gilgit-Baltistan. He said the four chief ministers belonging to different political parties have supported the CPEC that will be funded through the public-sector development programme, Chinese financing and funding by multilateral agencies.

Responding to a question, Mr Iqbal said some people have created misconceptions about the CPEC, adding that the federal government has invited the leadership of the Awami National Party for a briefing next week to address their concerns.

India has launched a massive campaign in the media to mislead people about the CPEC, he said. He noted that CPEC projects of about $18bn are currently in the implementation phase while another $17bn worth of projects are in the active pipeline. This means $35bn worth of projects have already been energised in just two years.

Source: http://www.dawn.com/news/1287040/with-a-new-chinese-loan-cpec-is-now-worth-515bn

 

[nish_mate]

Question to all Pakistanis- you say Kashmir is a disputed territory and still not resolved, so how comes they doing all this work in "AJK" and GB?

Folks here demonize India for building dams in their part of Kashmir and saying cannot be done as Kashmir is not resolved, but here Pakistan is doing the same.

Surely all this work, just dilutes Pakistan's claim on whole of Kashmir and weakens it's position on "disputed territory"?

Unless you all are assuming that there will be one Kashmir and will be under Pakistan and not an "Azaad Country"

 

[desirous of desire]

Question to all Pakistanis- you say Kashmir is a disputed territory and still not resolved, so how comes they doing all this work in "AJK" and GB?

Folks here demonize India for building dams in their part of Kashmir and saying cannot be done as Kashmir is not resolved, but here Pakistan is doing the same.

Surely all this work, just dilutes Pakistan's claim on whole of Kashmir and weakens it's position on "disputed territory"?

Unless you all are assuming that there will be one Kashmir and will be under Pakistan and not an "Azaad Country"

I don't know much about such issues but there are Kashmiris I know who have established their Business in Pakistani Punjab.It would be difficult for them to leave their business if they will want separate state or choose to be part of India. But In my tour to Pakistan administrated Kashmir, all they want from Pakistan is development in their region.Even though they live a difficult life but they see themselves free of any occupation.
I dont think you will believe me anyway but have you ever been to the other side of Kashmir yourself???

Maybe Pakistan can pay tax for using CPEC and Kashmir can exist independently considering there will be peace and Kashmir will be a tourists' heaven.

 

[cricketjoshila]

This is Loan or investment?

 

[nish_mate]

I don't know much about such issues but there are Kashmiris I know who have established their Business in Pakistani Punjab.It would be difficult for them to leave their business if they will want separate state or choose to be part of India. But In my tour to Pakistan administrated Kashmir, all they want from Pakistan is development in their region.Even though they live a difficult life but they see themselves free of any occupation.
I dont think you will believe me anyway but have you ever been to the other side of Kashmir yourself???

Maybe Pakistan can pay tax for using CPEC and Kashmir can exist independently considering there will be peace and Kashmir will be a tourists' heaven.

No I havent been to Pakistani Kashmir and dont think will, all I was questioning is if Pakistanis claim that J&K is not a part of India and is disputed territory, then why are they building CPEC through their part of it and not wait till it is resolved in entirety.

Would have been a different ball game if it was all Pakistani investment in it and they would have said building infrastructure- but here you have got foreign and third party investment.

Makes Pakistani case weaker in my eyes- Indian party is disputed, cannot build any dams there but we will build our biggest infra project and a link through it.

 

[desirous of desire]

No I havent been to Pakistani Kashmir and dont think will, all I was questioning is if Pakistanis claim that J&K is not a part of India and is disputed territory, then why are they building CPEC through their part of it and not wait till it is resolved in entirety.

Would have been a different ball game if it was all Pakistani investment in it and they would have said building infrastructure- but here you have got foreign and third party investment.

Makes Pakistani case weaker in my eyes- Indian party is disputed, cannot build any dams there but we will build our biggest infra project and a link through it.

have you been to indian occupied Kashmir(what ever you call it?)

 

[nish_mate]

have you been to indian occupied Kashmir(what ever you call it?)

Only to Srinagar many moons ago and to parts of Jammu and Ladakh more recently.

 

[enkidu_]

China is building infrastructure in whole of Eurasia and Africa, now that's a genuine globalization and how a world power with an ancient civilization should act, when others throws "aid" at the neo-feudal corrupt élite for its own economic interests and flood the world with weapons (when they themselves don't use them against natives).

 

[last_knight]

This is Loan or investment?

That's the smartest thing with our Politicians. We Don't like to pay.

Routine SOPs : "We want you to build this highway. We won't give you a cent in name of funds.After it becomes functional, Highway will generate an annual revenue that will be roughly 20% of total investment.We aren't giving you single cent as funds but you take all revenues for first 20 years".

Meanwhile, 'X' amount vanishes from the govt assets against 'Investment for Highway'.

 

[Gabbar Singh]

Another excellent acbievement by the government led by sher-e-Punjab. Yet the poor bloke still gets so much hate on here and elsewhere.

 

[Syed1]

This is Loan or investment?

Why does it matter to you? Ap se liya hai?

 

[Syed1]

By 2030 we can be a 2 trillion economy and high-income state if the CPEC starts functioning as promised.

 

[DW44]

By 2030 we can be a 2 trillion economy and high-income state if the CPEC starts functioning as promised.

For us to be considered a high income economy in 2030, accounting for population growth and inflation(to adjust current definition of high income for value after 15 years), we'll need to have a GDP of at least 6 trillion even if we use the technical definition of high income countries i.e. $12760 per capita in year 2010 dollars which is still very much in developing country territory(developed start at around $30000). At $2 trillion we'll still be at the lower end of middle income countries. The shortest period of time any country has ever taken to go from Pakistan's current income levels to high income status is about 50 years and 30 of those were spent growing at 10%+ which is beyond the realm of possibility in Pakistan for another 20 years due to structural inadequacies.

 

[Syed1]

For us to be considered a high income economy in 2030, accounting for population growth and inflation(to adjust current definition of high income for value after 15 years), we'll need to have a GDP of at least 6 trillion even if we use the technical definition of high income countries i.e. $12760 per capita in year 2010 dollars which is still very much in developing country territory(developed start at around $30000). At $2 trillion we'll still be at the lower end of middle income countries. The shortest period of time any country has ever taken to go from Pakistan's current income levels to high income status is about 50 years and 30 of those were spent growing at 10%+ which is beyond the realm of possibility in Pakistan for another 20 years due to structural inadequacies.

You can't expect a country to go from poor to developed in fourteen short years. 2 trillion economy is a realistic, achievable target and will firmly put us in the range of countries that are doing well.

By 2050 we would have to increase that 2 trillion to 10-15 trillion and that is when we will achieve the status of developed country.

 

[DW44]

You can't expect a country to go from poor to developed in fourteen short years. 2 trillion economy is a realistic, achievable target and will firmly put us in the range of countries that are doing well.

By 2050 we would have to increase that 2 trillion to 10-15 trillion and that is when we will achieve the status of developed country.

$2 trillion in 2030 means our economy grows 7.5 times in 15 years or nominal growth of 22% a year, a figure that is achievable if everything works out ideally but improbable to the point of being practically impossible when you account for the situation on the ground. The growth rates required to get there are comparable to China's between 2000 and 2015. A more realistic figure would be between $1.3 to $1.5 trillion, still about 5 times our current GDP, if CPEC works out extremely well. In all likelihood, it will be lower still but 1.3-1.5 is still achievable with reasonable performance. CPEC is just one cog in a larger machine and it needs the other cogs to run well if the who machine is to function at optimal capacity and, unfortunately, the other cogs are in such a poor shape that just putting in place the fundamentals to kickstart a growth spurt will take 10-15 years.

In any case, it's not the $2 trillion figure I was objecting to, it was the claim that this figure is sufficient to classify us as a high income economy. That would require a figure 3 times higher if we're using the technical definition and almost 8 times higher(15 trillion) if we're using the practical(i.e. real life) definition. High income status, or even levels approaching high income i.e. the upper end of upper middle income, are unlikely in this century.

 

[enkidu_]

For us to be considered a high income economy in 2030, accounting for population growth and inflation(to adjust current definition of high income for value after 15 years), we'll need to have a GDP of at least 6 trillion even if we use the technical definition of high income countries i.e. $12760 per capita in year 2010 dollars which is still very much in developing country territory(developed start at around $30000). At $2 trillion we'll still be at the lower end of middle income countries. The shortest period of time any country has ever taken to go from Pakistan's current income levels to high income status is about 50 years and 30 of those were spent growing at 10%+ which is beyond the realm of possibility in Pakistan for another 20 years due to structural inadequacies.

It's very much feasible if we get some Stalin or Mao Zedong and who treats the paindoos how it should be done. Pakistan's political system is polluted with a neo-feudal clergy which sociologically is unable to have such long term ambitions because it's structurally "conservative". You can't move much without an authoritarian-type figure with centralized powers and surrounded by a technocratic élite.

 

[DW44]

It's very much feasible if we get some Stalin or Mao Zedong and who treats the paindoos how it should be done. Pakistan's political system is polluted with a neo-feudal clergy which sociologically is unable to have such long term ambitions because it's structurally "conservative". You can't move much without an authoritarian-type figure with centralized powers and surrounded by a technocratic élite.

Stalin and Mao are poor examples to use here but I get your point and, for the most part, I agree. That said, how likely do you think that is, realistically speaking? Pakistan is generally ruled by the feudal classes or the military, both in collusion with the neo feudal clergy as you call it and both have a very poor track record on economic matters. Our military dictators have proven to be just as inept at developing the economy as the elected rulers and given the sheer scale of both social and economic reforms required before we can even think of starting an economic miracle, an Ataturk/Park/Chiang like figure is required, a breed that simply doesn't exist in Pakistan.

 

[Syed1]

$2 trillion in 2030 means our economy grows 7.5 times in 15 years or nominal growth of 22% a year, a figure that is achievable if everything works out ideally but improbable to the point of being practically impossible when you account for the situation on the ground. The growth rates required to get there are comparable to China's between 2000 and 2015. A more realistic figure would be between $1.3 to $1.5 trillion, still about 5 times our current GDP, if CPEC works out extremely well. In all likelihood, it will be lower still but 1.3-1.5 is still achievable with reasonable performance. CPEC is just one cog in a larger machine and it needs the other cogs to run well if the who machine is to function at optimal capacity and, unfortunately, the other cogs are in such a poor shape that just putting in place the fundamentals to kickstart a growth spurt will take 10-15 years.

In any case, it's not the $2 trillion figure I was objecting to, it was the claim that this figure is sufficient to classify us as a high income economy. That would require a figure 3 times higher if we're using the technical definition and almost 8 times higher(15 trillion) if we're using the practical(i.e. real life) definition. High income status, or even levels approaching high income i.e. the upper end of upper middle income, are unlikely in this century.

You are basing your growth on the 'official' GDP size. You and I both know the undocumented economy is somewhere around 50-70% of the the documented. I'm hoping that we are able to tax these segments and bring them under the 'umbrella' of the official economy.

By most estimates Pakistan right now is an economy of close to $500 billion. That means a increase of 4 fold to get to 2 trillion and not 7.5 times.


I agree with your premise that even with 2t economy we will be barely middle income and not high income as I had wrongfully termed it originally.

 

[enkidu_]

Stalin and Mao are poor examples to use here but I get your point and, for the most part, I agree. That said, how likely do you think that is, realistically speaking? Pakistan is generally ruled by the feudal classes or the military, both in collusion with the neo feudal clergy as you call it and both have a very poor track record on economic matters. Our military dictators have proven to be just as inept at developing the economy as the elected rulers and given the sheer scale of both social and economic reforms required before we can even think of starting an economic miracle, an Ataturk/Park/Chiang like figure is required, a breed that simply doesn't exist in Pakistan.

I guess you'd prefer Singapore's Lee Kuan Yew but conditions are such in Pakistan that you'd need a providential individuality who could incarnate an ideology in its fullest expression, and be the harbinger of a new era ; you need more of a revolutionary than a reformer-typology.

Personally I do believe that they exist, it'll be improbable that they don't, but you need a certain set of exogenous conditions, and we can only pray to Allâh (swt).

 

[DW44]

You are basing your growth on the 'official' GDP size. You and I both know the undocumented economy is somewhere around 50-70% of the the documented. I'm hoping that we are able to tax these segments and bring them under the 'umbrella' of the official economy.

By most estimates Pakistan right now is an economy of close to $500 billion. That means a increase of 4 fold to get to 2 trillion and not 7.5 times.


I agree with your premise that even with 2t economy we will be barely middle income and not high income as I had wrongfully termed it originally.

Bringing the unofficial economy into the official fold is easier said than done. Countries light years ahead not just of where we are now but where we will realistically be 50 years from now, the likes of Italy, Greece and Russia, not to mention lesser players like Brazil and Argentina, have tried and failed to bring the shadow economy into the official fold. Another thing I should clarify is that untaxed does not necessarily mean unofficial. Tax collection is a separate issue altogether since the shortfall there is mostly a result of inability to tax the formal economy. Pakistan's tax issues are due to an inability to collect income taxes from individuals which is mostly a formal economy issue. Most people who make their living in the underground economy wouldn't even qualify to pay income taxes which start at PKR 500'000 a year for the lowest bracket. For taxes, the people that need to be targeted are the rural elite who deprive the country of billions in tax revenue on their agricultural income and unfortunately, those are the very same people who make the laws.

 

[DW44]

I guess you'd prefer Singapore's Lee Kuan Yew but conditions are such in Pakistan that you'd need a providential individuality who could incarnate an ideology in its fullest expression, and be the harbinger of a new era ; you need more of a revolutionary than a reformer-typology.

Personally I do believe that they exist, it'll be improbable that they don't, but you need a certain set of exogenous conditions, and we can only pray to Allâh (swt).

Not really, no. Lee Kuan Yew's development model doesn't work for a country with Pakistan's socioeconomic structure with all its intricacies. I would personally prefer a combination of the three men I named earlier, Ataturk, Park and Chiang, Ataturk for his social policy and the other two for their economic policies. While such people may exist, like you said, it requires a lot of pieces to be perfectly in place for someone like that to actually get in a position of power and given how our system works, it's unlikely. It'll have to be a dictatorship, no two ways about it, but our dictators historically lean towards the national security state over the developmental state.

 

[enkidu_]

Not really, no. Lee Kuan Yew's development model doesn't work for a country with Pakistan's socioeconomic structure with all its intricacies. I would personally prefer a combination of the three men I named earlier, Ataturk, Park and Chiang, Ataturk for his social policy and the other two for their economic policies. While such people may exist, like you said, it requires a lot of pieces to be perfectly in place for someone like that to actually get in a position of power and given how our system works, it's unlikely. It'll have to be a dictatorship, no two ways about it, but our dictators historically lean towards the national security state over the developmental state.

but that's the whole point Yew, Ataturk, ... don't work in a country like Pakistan. You can't do without a Stalin or Mao type. It's impossible. And those individualities will be the one to form an technocratic élite. Pakistan's problems are sociological, like Tsarist Russia or Republican China.

 

[DW44]

but that's the whole point Yew, Ataturk, ... don't work in a country like Pakistan. You can't do without a Stalin or Mao type. It's impossible. And those individualities will be the one to form an technocratic élite. Pakistan's problems are sociological, like Tsarist Russia or Republican China.

I was talking more in terms of their specific policies than their personalities. Far as personality goes, it's true that in a nation like Pakistan, the required policies can only be implemented by someone as brutal and utterly unconcerned with public opinion as a Mao or Stalin though hopefully not as murderous(between the two of them, they have a body count of, what, 100 million?). It's no secret that by far the greatest impediment to Pakistan's progress is the public regardless of what the people tell you about corrupt politicians and you need someone who can completely disregard what the public wants in order to do what the country needs. When you start listening to the public in a third world country, you get into populist territory which is anathema to economic development.

 

[Hail-Akram]

Why does it matter to you? Ap se liya hai?

Interesting and very intelligent question. I suppose if he was the one to give (loan or invest ... whatever), he would know that and wouldn't post on the random thread.

 

[enkidu_]

I was talking more in terms of their specific policies than their personalities. Far as personality goes, it's true that in a nation like Pakistan, the required policies can only be implemented by someone as brutal and utterly unconcerned with public opinion as a Mao or Stalin though hopefully not as murderous(between the two of them, they have a body count of, what, 100 million?). It's no secret that by far the greatest impediment to Pakistan's progress is the public regardless of what the people tell you about corrupt politicians and you need someone who can completely disregard what the public wants in order to do what the country needs. When you start listening to the public in a third world country, you get into populist territory which is anathema to economic development.

That's how you'd have to deal with paindoos, otherwise they'll keep voting for Bhuttos/Sharifs for the next few centuries, when the rest of the planet would already have colonized Mars.

 

[TalentSpotterPk]

India wants to join CPEC : Dr. Shahid Masood

[UTUBE]XDeJmfCMJiE[/UTUBE]

 

[Gabbar Singh]

With general elections due in less than 18 months what effect, if any, will CPEC have on them? Could it play a part in gifting the Sher another 5 years?

 

[Black Zero]

No I havent been to Pakistani Kashmir and dont think will, all I was questioning is if Pakistanis claim that J&K is not a part of India and is disputed territory, then why are they building CPEC through their part of it and not wait till it is resolved in entirety.

Would have been a different ball game if it was all Pakistani investment in it and they would have said building infrastructure- but here you have got foreign and third party investment.

Makes Pakistani case weaker in my eyes- Indian party is disputed, cannot build any dams there but we will build our biggest infra project and a link through it.

Dams issue comes under indus treaty.

 

[Bewal Express]

Maybe this is a silly question but these are not grants from China, so how will the loans be paid off?

 

[Slog]

Maybe this is a silly question but these are not grants from China, so how will the loans be paid off?

Pakistan pays them off (to exact well the companies running these projects ou them off from revenues

 

[Moh@n]

This is Loan or investment?

Total investment = $2.6 billions, rest are loans

Watch the below from 5:04 onwards:

[UTUBE]9kmO_mX7Wl8[/UTUBE]

 

[Slog]

Total investment = $2.6 billions, rest are loans

Watch the below from 5:04 onwards:

[UTUBE]9kmO_mX7Wl8[/UTUBE]

Not really.

Some equity is being put in by the local sponsors, provincial governments and the Chinese companies as well.

But yes majority is debt

From an economists mindset my major issue isn't that these are leveraged but that the govt is not open about it

 

[TalentSpotterPk]

We are waiting for Indian response to Pakistan's invitation of joining CPEC : China

http://www.express.com.pk/epaper/PoPupwindow.aspx?newsID=1103934531&Issue=NP_ISB&Date=20161225



So who is telling truth ? China ? Dr Shahid Masood ?



In which capacity General Riaz has invited India ? (If he has)

 

[Pure Evil]

We are waiting for Indian response to Pakistan's invitation of joining CPEC : China

http://www.express.com.pk/epaper/PoPupwindow.aspx?newsID=1103934531&Issue=NP_ISB&Date=20161225



So who is telling truth ? China ? Dr Shahid Masood ?



In which capacity General Riaz has invited India ? (If he has)

India won't join CPEC. There is nothing in it for us

 

[Syed1]

India won't join CPEC. There is nothing in it for us

I'm highly against India being a part of CPEC but it is hogwash to think that CPEC has entirely no benefit for India.

Where does India buy her natural gas and oil from? What route does it take to get to India? What would be a cheaper more economical method of obtaining those energy resources?


Once you are able to answer those questions you would understand the benefits of CPEC for India.

 

[Pure Evil]

I'm highly against India being a part of CPEC but it is hogwash to think that CPEC has entirely no benefit for India.

Where does India buy her natural gas and oil from? What route does it take to get to India? What would be a cheaper more economical method of obtaining those energy resources?


Once you are able to answer those questions you would understand the benefits of CPEC for India.

Bhai everything has a counter weight too. India does not have the best relations with Pakistan and China and you want us to have our energy dependency on them? Thanks but no thanks

 

[Syed1]

Bhai everything has a counter weight too. India does not have the best relations with Pakistan and China and you want us to have our energy dependency on them? Thanks but no thanks

Yes you are correct.

However, on the flip side when two countries are economically linked the stakes automatically become higher and there will be more chance of peace.

And if India's energy is passing through Pakistan obviously Pakistan would be getting paid for it, do you think any Pakistani ruler would want to cut off this precious source of foreign exchange for a little chest thumping?

Anyways the present situation does not warrant an Indian inclusion in CPEC, maybe 7-10 years down the line perhaps.

 

[Pure Evil]

Yes you are correct.

However, on the flip side when two countries are economically linked the stakes automatically become higher and there will be more chance of peace.

And if India's energy is passing through Pakistan obviously Pakistan would be getting paid for it, do you think any Pakistani ruler would want to cut off this precious source of foreign exchange for a little chest thumping?

Anyways the present situation does not warrant an Indian inclusion in CPEC, maybe 7-10 years down the line perhaps.

So you agree nothing for us now

 

[endymion248]

However, on the flip side when two countries are economically linked the stakes automatically become higher and there will be more chance of peace.

Who told you that India wants peace on equal terms with Pakistan?

 

[Syed1]

Who told you that India wants peace on equal terms with Pakistan?

Maybe I'm naive and think all humans strive for peace but apparently folks like Modi hold a different opinion

 

[Tera Gawaandi]

Maybe I'm naive and think all humans strive for peace but apparently folks like Modi hold a different opinion

I am not a Modi fan, But India's foreign policy and Kashmir diplomacy is consistent across party lines. Modi was not responsible for partition, Kashmir issue.

To tell you the truth, India is happy with status quo, everything else is hogwash to damage reputation of Pakistan.

 

[moghul]

Can Pakistani government do anything without taking more loan which carries on to the next government .