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CPEC = Foreign Investment in Pakistan

There is little doubt that China is the leading global investor in Pakistan right now and this is unlikely to change soon. One Belt, One Road (OBOR), is the title of China’s mission to renew the old silk trade route.  The China-Pakistan Economic Corridor (CPEC) is the $62 Billion flagship project of OBOR.  This huge investment from the Chinese has attracted the attention of many countries who are willing and eager to invest in this ambitious and far-reaching development.

The ‘Iron Brothers’, China and Pakistan, have a strong and historical alliance which will be further improved by CPEC.  Both countries will benefit from easier and less costly trade, and at the same time, Pakistan can use investment into CPEC to help increase its country’s security and continue to modernise its economy and democratic institutions.

Here are just some of the countries who have shown a keen interest in CPEC and are investing in Pakistan:

The UK

At a meeting with Interior Minister Ahsan Iqbal in London in February 2018, Foreign Secretary Boris Johnson was told that Pakistan is delivering a new era of improved security, impressive economic growth and strengthening of democratic institutions, along with measures to eradicate extremism and terrorism.6 Mr Johnson, for his part, praised Pakistan’s economic reforms, recognized that the country has great potential for economic growth, and welcomed the counter-terrorism measures taken so far. He confirmed that the UK is keen to benefit from opportunities arising from the CPEC.

The business sector in the UK has recently announced £100 million investments in Pakistan including oil & gas and other sectors, whilst the healthcare and tourism industries, mainly in Southeast Asia, are also expected to benefit from improved inter-connectivity. 

Iran

In April 2018, Abbas Akhoundi, Iran’s Minister of Roads and Urban Development, led a high-level delegation to Karachi Port Trust (KPT), where he expressed interest in the investment opportunities arising from CPEC.1 Iran is keen to link Karachi Port with Bandar Abbas, a port city on the southern coast of Iran, on the Persian Gulf, occupying a strategic position on the narrow Strait of Hormuz. They would like to promote tourism and pilgrimage. Akhoundi also indicated that 204,000 hectares are available at Bandar Abbas for developing trans-shipment and cargo handling.

Other projects that the delegation were interested in were: the deep-water container port project at KPT, the multipurpose bulk terminal, the cargo village, liquefied natural gas (LNG) terminal and port elevated expressway.

Saudi Arabia

The Saudi Ambassador to Pakistan visited the Lahore Chamber of Commerce & Industry (LCCI) in September 2017.2 In his speech he said that Saudi intended to invest in CPEC and Gwadar Port and stressed the importance of maintaining good fraternal relations and enhancing trade between the two countries. Al-Malkiy went on to state that a free-trade agreement needed to be negotiated, that the signing of a bilateral investment treaty was a distinct possibility, and that a delegation from the Saudi Commerce Ministry would visit Pakistan in the near future to negotiate on trade and investment.

The Russian Federation

Russia is already investing $2 billion to construct the North-South gas pipeline in Pakistan, which will transport gas from Karachi to Lahore.3 CPEC runs through the disputed region of Pakistan-occupied Kashmir (PoK) which is claimed by India. New Delhi, is concerned that Gwadar, situated at the western end of the CPEC, will be used by China to reduce India’s influence in the Indian Ocean, and that both the port and CPEC will have direct and serious security implications for India.

Meanwhile, Moscow is trying to encourage closer trade and military ties with Pakistan. The withdrawal of US-led coalition troops in Afghanistan after a decade-long ‘war on terror’, risks leaving a security void which Russia looks keen to fill. Moscow considers Islamabad to be instrumental in guaranteeing future stability not only in Afghanistan, but also in Central Asia, Russia’s neighbouring states. Moscow must tread a careful path in pursuit of a closer relationship with Pakistan while not alienating its longstanding ally, India.

Romania

Romania has supported Pakistan since diplomatic relations were established in 1964.4 As a member of the EU, it strongly supported giving Pakistan GSP Plus status, a ‘Generalised System of Preferences’ that allows vulnerable, developing countries to pay lower or no taxes on exports to the EU, thereby giving them vital access to the EU and contributing to their growth. Because of this, Pakistan has increased its export growth by more than 30%.

Although the relationship cooled after the end of the Cold War, the Romanian Ambassador, at a meeting in Islamabad in January 2018, said that many initiatives and proposals are now being considered by the two countries, such as investment in in the oil and gas sector, automobile and heavy industry, and military hardware.

France

A French business delegation expressed their enthusiasm to take advantage of the many commercial opportunities presented by CPEC.5 Companies are keen to invest in many sectors such as infrastructure, energy, agriculture, defence and digital technology which are key to Pakistan’s sustainable growth.  This news was shared by the President of the Pakistan-France Business Council, speaking in Islamabad in October 2017. Commerce Minister Dastgir Kahn told the delegation that Pakistan attaches great importance to its relations with France, that its market is largely unexplored, has huge potential and offers lucrative investment opportunities. He expressed the hope that French companies would invest in e-commerce, IT, logistics and infrastructure.

Brazil

Speaking to the Multan Chamber of Commerce and Industry in October 2017, the Brazilian Ambassador said that with the completion of CPEC, many opportunities for foreign investment would arise.7 In respect of renewable technology, he suggested that Pakistan could benefit from Brazil’s know-how and expertise. The country meets 42% of its energy needs through renewable resources and could help Pakistan generate energy through solar, wind, biomass, ethanol and other sources. He added that many Pakistani products had the potential to sell well in Brazil and businessmen should increase prospects for trade promotion.

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