IFB
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Thats weird.... if more foreign cos set up shop in pak the politicos can easily get huge kick backs from these cos for favours.
Pakistans GDP growth target for FY10/11 at 2.4 per cent
- Thread starter Lankan Ranger
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Thats weird.... if more foreign cos set up shop in pak the politicos can easily get huge kick backs from these cos for favours.
And you think you studied economics mate? Infact this is a great idea to build local industry and Pakistan must do it to create that self reliance.... Remember we did do that with Suzuki to expand Indian car market in 80's/90's and look where we have reached
Let me try and put in some of the economic theory that I know... Let's consider a simple case of a Chinese company establishing a 1,00,000 cars a year factory in Pakistan...
Why would they do it... Well because the cost of labor will be very competitive, low cost of land, and obvious new investment destination could give them a 10% point or so rebate on tax rates (on standard 30% tax rates)... Makes economic sense to manufacture in Pakistan and import it too, a it does not impact their 1.5million a month car market...
Now, let's look at how it adds to Pakistan... When they buy this land (or if the land is gifted to them), the will appoint construction workers to build the facility. That will create employment and those labors will go to the market and consume more goods (which they earlier could not afford) and to supply those good, production of consumer good will increase and so will the number of shops.. As a result of it, production (which contributes to GDP) and consumption (which contributes to standard of living) goes up. When a vehicle factory is being built, anciliary facilties (spare parts suppliers) will crop up closer to the factory - that's how it happens in automobiles, adding to more demand for labor and more of the virtuous economic cycle...
Once the facility is built, it will create employment... Those employees will start another cycle of consumption and create a market for secondary job growth (i.e. shop keepers and other service providers etc)... Then there will be consumption of Steel, Aluminium, Copper, leather, batteries etc etc... Which will create a new demand, some of which will be imported (addition of import duties) and some of which will be manufactured locally (addition to local economy)... So another virtuous cycle starts.. This will also lead to another thing... Demand of educated engineers, technicians and construction workers and there you have another industry strating out... education Industry
Then comes the taxes... The salaried people will pay taxes (because all these are white collar jobs) and that will add to government's coffers, which will lead to more infrastructure development... In addition, the car manufacturers will pay taxes and excise duty (you have to pay that on capital goods) and that will also add to the government... And the output from this factory will add to the local competition and reduce prices locally as well and directly push local level innovations to help reduce the prices to improve competitiveness by local players... That's what consumerism can do...
When people of one province see this, they will want more of it and the cycle can then be expanded to include more towns etc etc etc...
And, I am be happy to take a constructive criticism of this simplest possible economic theory and answer as much as possible
somebozo
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Zardari Gov is more pro china than Musharaff..and Zardari can be credited with bringing more Chinese investment than Mushraff..therefore i seriously doubt any sino-pak commercial relation would take a set back due to government change. The plan of Chinese industrial cities is well on track...its called..Chinese oppurtunity zones..or something similar across the lines.
Mo12
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Pakistan giving China no tariff or duties to make factories in Pakistan is a very bad deal for the Pakistan government.
Imagine country A, investing for free into country B, with no tax crossing the border, sure they will make factories and stuff, but all the profit the Chinese firms will make, some of it will be channelled back into China economy and could be put into a Chinese account or reinvested elsewhere say India.
All in all, its a very good deal in short term, but not in the long term, but as people care short term only, I guess most Paks will want it.
Imagine country A, investing for free into country B, with no tax crossing the border, sure they will make factories and stuff, but all the profit the Chinese firms will make, some of it will be channelled back into China economy and could be put into a Chinese account or reinvested elsewhere say India.
All in all, its a very good deal in short term, but not in the long term, but as people care short term only, I guess most Paks will want it.
Dude, if what you are saying is true, then why the hell India has SEZ (Special Economic Zones), which are tex exempt for 5-10 years or why Software Parks in India are not taxed and still we are making money from it??? It's called as Economic Activity, and Economic activity leads to new economic activity, which is a well established sustainable growth pattern in all emerging economies and to add to it, exports don't only bring in $$$, they also bring in new customers... Zero taxation has benefits, if applied correctly... Learn these two basic Macroeconomic principles as they will help you in life if you ever again claim to be a student of economics...
What you are prophecizing is not economics and that is as clear as it can get...
Land sd be provided only for manufacturing units which will help in employment. In India land acquisition has become a headache because of protest of farmers. In Pakistan large portion of land is owned by rich land-owners, the problems should be less. I think Chinese companies can be roped in for infrastructure prjects too....build and operate basis.
I agreed with Mastan in above post. Even if you exept the companies from tax to attract them to invest, there will be more earning people who will pay tax. And these earning people with enhanced purchasing power also help in boosting economy. but they can add clause about re-investment of some portion of profit within the country.
Evil Flare
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this incompetent govt is a disease . they gave us nothing but Debt ...
indianpatriot
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not good...I wonder if China is making lunch for you or eating it..it is a tested fact the countries which depend strongly on China degrade with time..for example..USA,North Korea,several African nation and Pakistan.I dont mean to say that China is bad..it perfect in implementation.the country is a bit unlucky for others.
Africans are asking whether China is making their lunch or eating it
Africans are asking whether China is making their lunch or eating it
It was 4.1 in 2009
GodlessBastard
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TopCat
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If somebody makes your lunch, you cant blame them for trying it.
Saying that, Chinese are easy to deal with. You just need to remind them that they are crossing the line and they will just get out of your way.
Chinese have the resources with bargain price and are willing to work in under any condition. They are heck of a deal maker.
