CPEC a game changer ?

[The Sandman]

Most of the loans have low interest rate, due to sovereign guarantees. I don't know where that 18% came from, but it's either cherry picked, or is completely wrong.

Well our neighbors are even claiming that Chinese are gonna hire Private army to protect Gawadar and other places after completion of CPEC i have asked for a source but got no reply from them.

 

[That Guy]

Well our neighbors are even claiming that Chinese are gonna hire Private army to protect Gawadar and other places after completion of CPEC i have asked for a source but got no reply from them.

Private army?

If they mean security firms, that's standard practice by most corporations. A thing to keep in mind is that it is not just China itself that is investing time and money, it is private and government owned corporations that are mainly involved. In this case, hiring security firms for guards isn't out of the question. After all, the police and military can only do so much to protect them, for basic security, they need their own personally employed guards.

 

[ghauri05]

Btw do u know the selection process ?

i am not sure about that..but i think they applied after seeing the ad in some news paper.

 

[Nilgiri]

A few flies in the ointment:

a) Mainly Loan route instead of FDI route (already proven seeing Pakistan FDI figures are still terribly low).

b) The servicing rate of these loans + long term liability payments

c) Pakistan poor education/training sectors (look up UNESCO database)...potentially declining literacy rate (from Pakistan own bureau of statistics)

d) Pakistan abysmally low gross capital formation (and specifically the existing inertia from this, CPEC cannot address it fully even if everything goes perfectly to theory).

e) Pakistan govt development policies + further implementation (at some point the buck starts with Pakistan to harness and transfer infra capacity to long term jobs by fixing point c to create sustainable long term production, jobs and wealth.

If Pakistan has a solidly dedicated core of bureaucrats, there will probably be a good chance CPEC will succeed and "ignite" the real development. Otherwise its a recipe for long term fiscal nightmare and immense opportunity cost for Pakistan.

 

[Viper0011.]

A few flies in the ointment:

a) Mainly Loan route instead of FDI route (already proven seeing Pakistan FDI figures are still terribly low).

b) The servicing rate of these loans + long term liability payments

c) Pakistan poor education/training sectors (look up UNESCO database)...potentially declining literacy rate (from Pakistan own bureau of statistics)

d) Pakistan abysmally low gross capital formation (and specifically the existing inertia from this, CPEC cannot address it fully even if everything goes perfectly to theory).

e) Pakistan govt development policies + further implementation (at some point the buck starts with Pakistan to harness and transfer infra capacity to long term jobs by fixing point c to create sustainable long term production, jobs and wealth.

If Pakistan has a solidly dedicated core of bureaucrats, there will probably be a good chance CPEC will succeed and "ignite" the real development. Otherwise its a recipe for long term fiscal nightmare and immense opportunity cost for Pakistan.

Why is it that you guys from India ONLY write hate speech / wrong version of the truth on here? A stable and economically powerful Pakistan is in India's best interests (more than the rest of the world).

1) Check India's debt before you complain about Pakisan's. Check India's history in the 90's (before the economic boom) before complaining about Pakistan. India got a LOT of US investment. Pakistan got Chinese investment. The term loan isn't applicable here.

2) Majority of the projects are BOT projects (Build, Operate and Transfer), meaning, the Chinese will build them (using a huge % of Pakistani labor and contracting companies), they will Operate these projects for a specific amount of time and will Transfer these to Pakistan after investment returns have been achieved. Meaning they have returned their own loans along with the expected ROI. After FDI, this is one of the best options to grow a country's economy as Pakistan has much less risk than China does and has a huge labor and industry potential to grow due to this massive initiative.

3) CPEC will re-create a similar (yet lower dollar value due to the smaller size ) economic activity that back in 1960-1980 the US experienced when the Road network was built by Mr. Al Gore's father. Same thing happened in China during the 90's till date.

Just like that, dozens of new cities will be born around the route, dozens of new power plants, hundreds of new hotels (large and small), malls, shopping centers, thousands of gas stations and grocery stores, hospitals, health clinics, engineering companies, construction companies, real estate housing communities, new airports to sustain travel from new cities, industry in these areas, goods and services for consumer consumption will be needed. All this would overtime result in trillions of rupees worth of more tax as unlike the rest half of Pakistan, this half is being born in the computer age, so tax evasion would be close to impossible as everything will be recorded and systematic for businesses.

So as you can see, an individual working at a low pay packaging job to production of thousands of engineers, doctors, nurses, businessmen, etc, etc will take place. Meaning, from a layman with a daily job to highest earners will benefit from it and the entire country will feel the growth as all business will expand out to this entire area of hundreds of miles (just within Pakistan). Then there is external countries that can serve as markets and route for trade too.

Do you understand the magnitude of what I just wrote above? The entire country will transform as a result of this initiative. And this is outside of the trade that will take place with shipping goods and transportation.

 

[Nilgiri]

1) Check India's debt before you complain about Pakisan's. Check India's history in the 90's (before the economic boom) before complaining about Pakistan. India got a LOT of US investment. Pakistan got Chinese investment. The term loan isn't applicable here.

Loan is totally applicable since the Chinese are not pouring in FDI. You have to pay back the large majority of the CPEC money with interest...hoping it will be a net gain fiscally in the long term. If you have FDI figures for Pakistan that show anything drastically more than the 1 billion or so it gets per year, please post it.

2) Majority of the projects are BOT projects (Build, Operate and Transfer), meaning, the Chinese will build them (using a huge % of Pakistani labor and contracting companies), they will Operate these projects for a specific amount of time and will Transfer these to Pakistan after investment returns have been achieved. Meaning they have returned their own loans along with the expected ROI. After FDI, this is one of the best options to grow a country's economy as Pakistan has much less risk than China does and has a huge labor and industry potential to grow due to this massive initiative.

All sounds good on paper. Problem is capacity addition (which is the easy part) needs human capital improvement (the hard part) for it to be sustainable. Pakistan human capital indicators (education) are quite shocking, a lot worse than Bangladesh even.

The most basic metric is not even improving slowly, but declining:

http://tribune.com.pk/story/886027/2013-14-report-literacy-rate-slips-nationwide-by-2/

CPEC will re-create a similar (yet lower dollar value due to the smaller size ) economic activity that back in 1960-1980 the US experienced when the Road network was built by Mr. Al Gore's father. Same thing happened in China during the 90's till date.

Not without basic human capital to create and operate the industry (Esp manufacturing). Want me to post just how many Pakistani students make it all the way through high school (which is the global pre-requisite for having a base level of middle class employable skill)? It will make for really sobering reading....especially when I post it alongside what the figures were for the US and China in the time periods you talk of.

Just like that, dozens of new cities will be born around the route, dozens of new power plants, hundreds of new hotels (large and small), malls, shopping centers, thousands of gas stations and grocery stores, hospitals, health clinics, engineering companies, construction companies, real estate housing communities, new airports to sustain travel from new cities, industry in these areas, goods and services for consumer consumption will be needed. All this would overtime result in trillions of rupees worth of more tax as unlike the rest half of Pakistan, this half is being born in the computer age, so tax evasion would be close to impossible as everything will be recorded and systematic for businesses.

So as you can see, an individual working at a low pay packaging job to production of thousands of engineers, doctors, nurses, businessmen, etc, etc will take place. Meaning, from a layman with a daily job to highest earners will benefit from it and the entire country will feel the growth as all business will expand out to this entire area of hundreds of miles (just within Pakistan). Then there is external countries that can serve as markets and route for trade too.

Do you understand the magnitude of what I just wrote above? The entire country will transform as a result of this initiative. And this is outside of the trade that will take place with shipping goods and transportation.

Sorry I don't buy it. Pakistan's bureaucracy is too corrupt, self serving....and its human capital is just too weak, stagnant and even declining.

It is more likely that CPEC will be a grandiose fiscal failure....but I am willing to wait and see and be proven wrong.

 

[Maira La]

Why is it that you guys from India ONLY write hate speech / wrong version of the truth on here?

It's futile spending so much time responding to these tamil idiots. Try dispensing a few of these:

 

[Viper0011.]

Loan is totally applicable since the Chinese are not pouring in FDI. You have to pay back the large majority of the CPEC money with interest...hoping it will be a net gain fiscally in the long term. If you have FDI figures for Pakistan that show anything drastically more than the 1 billion or so it gets per year, please post it.

You clearly don't read anything do you? China is building this entire national infrastructure on BOT basis. Ever worked on a BOT engagement? Well, India didn't get that from anyone, till Uncle (and real loving Uncle Sam) decided to pour our economy inside India. Go back to 90's and remmeber the dark days before an Angel from heavens (called the USA, aka, Uncle Sam) showed up and turned India's life forever as we know it today!!!! Remember your own past before you stupid criticize others. Just a word of advise.

Now, if the US had decided to not treat India special by giving her a pie of the US economy, but the US still wanted to help India, it would've been either low interest rate loans or BOT based projects. China is doing both. Many power plants are being built on 2% loan. I went to a large investment bank today to discuss some financing for a $ 31 million loan and we have decades of large project experience and excellent loan returning history. With the super low rates in the US and out dealings with this bank, guess what did the contract say? We get a very special 7% APY!!!! And here, China is giving billions on 2%. Tell me what would a bank charge you for a personal loan in India !!! Yup, a whopping 8-13%!!!! Next, the 2% is ALSO BOT based, meaning the Chinese are responsible for getting that 2% and their perceived profit back. WHILE, they pay to Pakistani labor and contractors and teach them the work. Once the profit is realized in a set amount of time, they'll transfer the infrastructure to Pakistan and will leave.

This has nothing to do with the FDI's. FDI isn't the ONLY way to grow an economy. The Chinese did it without FDI's. Many other nations did it too. The US initially did it before the Oil boom in the 70's. If you can create internal demand enough to provide millions of jobs for everyone, grow infrastructure and start to bring other investors with incentives, until you start to receive FDI, there is enough work inside the country to continue to run the economy. Not sure which school of business did you go to, but its pretty cleat they didn't teach you everything there. [/QUOTE]

All sounds good on paper. Problem is capacity addition (which is the easy part) needs human capital improvement (the hard part) for it to be sustainable. Pakistan human capital indicators (education) are quite shocking, a lot worse than Bangladesh even.

Ok......what "capacity" addition? Pakistan has 50% of her population as male and ages between 15-23. Meaning 50% of the Pakistani population has standard 30 years or more working life left. That's one of the largest male working population in the world!!!! There are plenty of analysis about it, you should do some research.

Pakistan will be competing with India in IT, Medical and in Engineering in the next three years (per her population's smaller size vs. India's much larger population). Obviously they can't go one to one with you because of your size and population, but the pain of losing some business will be felt (specially both of you being the arch rival). I know many Indian CEO's (Desoza, Desai, etc, etc), they are now openly stating that if things are favorable, they'd like to invest into expanding IT stuff in Pakistan to kill off competition. Pakistani labor speaks English and is just as "genetically" skilled as the Indian smart guys.But it would be half the cost of India as Pakistan is starting out and India's grown into these offshore roles. This is JUST one example.

It is more likely that CPEC will be a grandiose fiscal failure....but I am willing to wait and see and be proven wrong.

If you want to feel like a total fool, check back with my post by the end of 2018. I'll be the guy doing .....because I told you so. You are just biased because of your origin and truth is hard to fathom. But trust me, change force you to adapt to it. Which is why, you should adapt to it when it starts to happen. That way, its less pain and mental f**k if you know what I mean

 

[fjavaid]

90% of Pakistani population would have access to a motorway within 1-2 hour of drive from their remote place. That is a big game changer, you'd be able to pray Fajir in Peshawar and Maghrib in Karachi.

n on top of that , fast connectivity via fiber optic link n power generation increasing ( if our govt fixes our transmission system) shd be able to jump start modern industrial era across Pakistan, tht is not limited to Major cities

 

[Nilgiri]

Now, if the US had decided to not treat India special by giving her a pie of the US economy, but the US still wanted to help India, it would've been either low interest rate loans or BOT based projects. China is doing both. Many power plants are being built on 2% loan. I went to a large investment bank today to discuss some financing for a $ 31 million loan and we have decades of large project experience and excellent loan returning history. With the super low rates in the US and out dealings with this bank, guess what did the contract say? We get a very special 7% APY!!!! And here, China is giving billions on 2%. Tell me what would a bank charge you for a personal loan in India !!! Yup, a whopping 8-13%!!!! Next, the 2% is ALSO BOT based, meaning the Chinese are responsible for getting that 2% and their perceived profit back. WHILE, they pay to Pakistani labor and contractors and teach them the work. Once the profit is realized in a set amount of time, they'll transfer the infrastructure to Pakistan and will leave.

I'm not talking about just the loan repayment rates but all the other liabilities in the fine print such as in one such project:

http://www.dawn.com/news/1194014

Sinosure is charging a fee of 7pc for debt servicing, which will be added to the capital cost of a project. For instance, the capital cost of a 660MW project at Port Qasim is $767.9m. But it goes up to $956.1m by adding Sinosure’s fee of $63.9m, its financing fee and charges of $21m, and interest during construction of $72.8m; a 27.2pc return on equity is guaranteed.

Ironically, interest during construction is allowed at the rate of 33.33pc for the first year; 33.33pc for the second; 13.33pc for the third; and 20pc for the fourth year. The scenario presents a bleak picture, as the availability of affordable energy will likely remain a pipedream.

Not to mention that the 1.6% overall service rate for the early projects is something Pakistan admits it wants to be lowered as well:

http://www.brecorder.com/editorials/0:/1225344:cpec-china-must-reduce-interest-rate/

Ok......what "capacity" addition? Pakistan has 50% of her population as male and ages between 15-23. Meaning 50% of the Pakistani population has standard 30 years or more working life left. That's one of the largest male working population in the world!!!! There are plenty of analysis about it, you should do some research.

I've done my research plenty of times. Its all well and good if you have access to a large youth....but whether that becomes a benefit or curse depends on their level of education and training.

Only 46% of Pakistani kids finish high school....compared to 79% in India among other measures of education:

https://defence.pk/threads/pakistan...angladesh-diplomat.410043/page-6#post-7921579

https://defence.pk/threads/little-to-cheer-for-in-pakistan.414089/page-2#post-8007271

Pakistan will be competing with India in IT, Medical and in Engineering in the next three years (per her population's smaller size vs. India's much larger population). Obviously they can't go one to one with you because of your size and population, but the pain of losing some business will be felt (specially both of you being the arch rival). I know many Indian CEO's (Desoza, Desai, etc, etc), they are now openly stating that if things are favorable, they'd like to invest into expanding IT stuff in Pakistan to kill off competition. Pakistani labor speaks English and is just as "genetically" skilled as the Indian smart guys.But it would be half the cost of India as Pakistan is starting out and India's grown into these offshore roles. This is JUST one example.

Read about the education difference between India and Pakistan....Pakistan has to address that before dreaming of trying to compete with India. It reminds me of a 10 page article Pakistan govt did in a Singapore newspaper in the early 2000s (when I was living in Singapore)....that they were going to match and surpass India in IT in just a few years time blah blah blah.

All dreaming, no concrete ground results....thats the story of Pakistan. If CPEC bucks the trend, it will be a first....and it in itself will still not be sufficient for Pakistan. Thats why every major international financial organisation is predicting like 5% max real growth for Pakistan over the next decade, factoring in CPEC.

 

[PAKISTANFOREVER]

Loan is totally applicable since the Chinese are not pouring in FDI. You have to pay back the large majority of the CPEC money with interest...hoping it will be a net gain fiscally in the long term. If you have FDI figures for Pakistan that show anything drastically more than the 1 billion or so it gets per year, please post it.



All sounds good on paper. Problem is capacity addition (which is the easy part) needs human capital improvement (the hard part) for it to be sustainable. Pakistan human capital indicators (education) are quite shocking, a lot worse than Bangladesh even.

The most basic metric is not even improving slowly, but declining:

http://tribune.com.pk/story/886027/2013-14-report-literacy-rate-slips-nationwide-by-2/



Not without basic human capital to create and operate the industry (Esp manufacturing). Want me to post just how many Pakistani students make it all the way through high school (which is the global pre-requisite for having a base level of middle class employable skill)? It will make for really sobering reading....especially when I post it alongside what the figures were for the US and China in the time periods you talk of.



Sorry I don't buy it. Pakistan's bureaucracy is too corrupt, self serving....and its human capital is just too weak, stagnant and even declining.

It is more likely that CPEC will be a grandiose fiscal failure....but I am willing to wait and see and be proven wrong.

Doesn't matter what indians think or say. Your opinions are worthless and meaningless to us. indian experts also said that pre-May 1998 that it was impossible for Pakistan to ever have nuclear weapons with or without Chinese help. They used all the facts & figures under the sun to prove this. We all know what happened to that indian fantasy and delusion. Just as then so is now. When CPEC IS successful, indians will be saying that it is a bubble that will burst and then Pakistan will disintegrate.....lol. Just as they have been saying since 14th of August 1947. It is genetic for indians to be overly critical and heavily biased against Pakistan so anything they say should be taken with a pinch of salt.

As long as Pakistanis remain one of the most beautiful races of the world and not one of the super ugliest, then we'll always be successful and winners.

 

[Nilgiri]

Doesn't matter what indians think or say. Your opinions are worthless and meaningless to us. indian experts also said that pre-May 1998 that it was impossible for Pakistan to ever have nuclear weapons with or without Chinese help. They used all the facts & figures under the sun to prove this. We all know what happened to that indian fantasy and delusion. Just as then so is now. When CPEC IS successful, indians will be saying that it is a bubble that will burst and then Pakistan will disintegrate.....lol. Just as they have been saying since 14th of August 1947. It is genetic for indians to be overly critical and heavily biased against Pakistan so anything they say should be taken with a pinch of salt.

As long as Pakistanis remain one of the most beautiful races of the world and not one of the super ugliest, then we'll always be successful and winners.

Yes this is the umpteenth time you have asserted this. Maybe add a little variety. You are that half-brazilian guy from that previous forum right? Things barely change with you I see, though I notice you are more cautious here since you will get banned here for the stuff you used to spout in the other place.

 

[Viper0011.]

I'm not talking about just the loan repayment rates but all the other liabilities in the fine print such as in one such project:

http://www.dawn.com/news/1194014

http://www.dawn.com/news/1194014

Have you seen estimates in 90's from India on repayments of her debt? You'd be SHOCKED to see what Mr. Singh and Mr. Rao were dealing with.....a billion population with 850 MILLION people without homes, proper sanitary (bathrooms and food to eat). Today, even with all that growth in India, this number stands at 600 MILLION people. Pakistan is in a MUCH better condition. The poverty level is much below compared to what India saw before the boom. If you don't understand an "Emerging Market", then try to not write silly statements and go learn a few things about economic growth.

Not to mention that the 1.6% overall service rate for the early projects is something Pakistan admits it wants to be lowered as well:

http://www.brecorder.com/editorials/0:/1225344:cpec-china-must-reduce-interest-rate/

http://www.brecorder.com/editorials/0:/1225344:cpec-china-must-reduce-interest-rate/

Again, you don't understand and some stupid journalists don't understand either. Chinese loans are not to Pakistan. Pakistan is the beneficiary. They are given to Chinese private companies to complete the CPEC in Pakistan. Those companies are running BOT projects. They are responsible for paying the loan's back and make profit. When they make their profits, they then transfer these projects to Pakistani companies. You continue to write statements without understanding the real picture!!!

I've done my research plenty of times. Its all well and good if you have access to a large youth....but whether that becomes a benefit or curse depends on their level of education and training.

Only 46% of Pakistani kids finish high school....compared to 79% in India among other measures of education:

79% of Indian kids graduate but 600 million families still don't have access to proper bathrooms in India???? Give me something I can accept. Your image of India that you are showing us is like the US. When its a lie. Its good that Indian kids are graduating more than Pakistani kids, but Pakistan with a growing economy and less population, can provide a much better lifestyle to its people with much less sized growth than India will need, as Pakistan is 5th the size of India both area and population wise.

46% of Pakistani kids graduated as of 2014 or may be last year. Punjab state has a 100% focus on education and they've taken measures to support it. Like I said, you think Pakistan is Europe and India is the US
. And due to your childish misconception, this silly argument is going on. Pakistan is an emerging market and unlike India, there is no uncle Sam to invest billions into her. But that has changed so watch the education, jobs and the entire economy sky rocket starting 2018. Till then, writing these silly posts makes no sense. Its like a Police officer without investigating calling someone a Criminal. The CPEC needs time to finish. They will start to show results by the end of next year. In 2018, you'll start to realize real benefits of the Phase I. Then the Phase II will start and by the end of 2022, you'll see Pakistan's GDP around 6-7% annual growth with a 3X tax collection base that didn't exist in the entire history of Pakistan. Which means, the government then, would have Trillions of Rupees coming in Taxes to spread education and other projects from their own funds!!!! What would this do? Grow Pakistan more and on its own.

Let's stop the false propaganda please.

 

[Nilgiri]

Have you seen estimates in 90's from India on repayments of her debt? You'd be SHOCKED to see what Mr. Singh and Mr. Rao were dealing with.....a billion population with 850 MILLION people without homes, proper sanitary (bathrooms and food to eat). Today, even with all that growth in India, this number stands at 600 MILLION people. Pakistan is in a MUCH better condition. The poverty level is much below compared to what India saw before the boom. If you don't understand an "Emerging Market", then try to not write silly statements and go learn a few things about economic growth.



Again, you don't understand and some stupid journalists don't understand either. Chinese loans are not to Pakistan. Pakistan is the beneficiary. They are given to Chinese private companies to complete the CPEC in Pakistan. Those companies are running BOT projects. They are responsible for paying the loan's back and make profit. When they make their profits, they then transfer these projects to Pakistani companies. You continue to write statements without understanding the real picture!!!




79% of Indian kids graduate but 600 million families still don't have access to proper bathrooms in India???? Give me something I can accept. Your image of India that you are showing us is like the US. When its a lie. Its good that Indian kids are graduating more than Pakistani kids, but Pakistan with a growing economy and less population, can provide a much better lifestyle to its people with much less sized growth than India will need, as Pakistan is 5th the size of India both area and population wise.

46% of Pakistani kids graduated as of 2014 or may be last year. Punjab state has a 100% focus on education and they've taken measures to support it. Like I said, you think Pakistan is Europe and India is the US
. And due to your childish misconception, this silly argument is going on. Pakistan is an emerging market and unlike India, there is no uncle Sam to invest billions into her. But that has changed so watch the education, jobs and the entire economy sky rocket starting 2018. Till then, writing these silly posts makes no sense. Its like a Police officer without investigating calling someone a Criminal. The CPEC needs time to finish. They will start to show results by the end of next year. In 2018, you'll start to realize real benefits of the Phase I. Then the Phase II will start and by the end of 2022, you'll see Pakistan's GDP around 6-7% annual growth with a 3X tax collection base that didn't exist in the entire history of Pakistan. Which means, the government then, would have Trillions of Rupees coming in Taxes to spread education and other projects from their own funds!!!! What would this do? Grow Pakistan more and on its own.

Let's stop the false propaganda please.

So quoting 600 million as the "current" data (when it comes from 2011 at best) is fine for India...but 46% applied to 2014 and in 2 years time the "focus" has completely changed in Pakistan?

I don't have to convince you, I'll let the numbers from the IMF and world bank do the talking.

 

[PAKISTANFOREVER]

Yes this is the umpteenth time you have asserted this. Maybe add a little variety. You are that half-brazilian guy from that previous forum right? Things barely change with you I see, though I notice you are more cautious here since you will get banned here for the stuff you used to spout in the other place.

LOL....lol........it's the truth though. The PTB that ensured Pakistan becomes a nuclear weapons state when it was virtually impossible to do so (on paper) and the world was against it is the same force that will ensure CPEC makes Pakistan an economic powerhouse. Something that is far easier to do so.