Questions raised over growing Chinese ingress

MUSHTAQ GHUMMAN

ISLAMABAD: Commerce Ministry and Trade Development Authority of Pakistan (TDAP) on Tuesday engaged in a fracas on incentives given to China under the China Pakistan Economic Corridor (CPEC) and Free Trade Agreement (FTA).

The unpleasant scenario was witnessed at a meeting of Senate Standing Committee on Commerce headed by Senator Syed Shibli Fraz. Commerce Ministry was represented by the Additional Secretary (Admin and Policy) Dr Aamer Ahmed as both the Minister and Secretary were present in the cabinet meeting being held at the same time.

During discussion on CPEC and exports performance, Chief Executive TDAP, S. M. Munir who is also a major leather exporter of the country, criticized the FTA signed with China which is hurting Pakistans industry. He also expressed concern at the influx of Chinese in Pakistan, saying that he feared the time will come very soon when Chinese would be seen selling Paans (betel leaves) in Pakistan. CE TDAPs plea was that if the current trend continues, his countrymen would lose jobs.

FTA with China is massively flawed and the review exercise has been going on for the last several months. All indicators are in favour of China. Pakistan is being deprived of money. Chinese investment is welcome in Pakistan but not at the cost of local industry or jobs. FTA should be revisited as soon as possible, he added.

Additional Secretary did not reply directly to the concerns expressed by the CE TDAP but rather directed Joint Secretary Dr Kausar Zaidi to come forward and explain the Ministrys position.

Zaidi defended FTA with China saying that China has given special concessions to Pakistans bank i.e. HBL which has opened its business in China, adding that Pakistan would earn around $ 5 billion per annum from banking services. He said Pakistans exports to China have increased substantially but at the same time imports have also increased manifold.

He dispelled the impression that Chinese are coming to Pakistan unchecked whereas Pakistanis are facing problems in getting Chinese visas.

Chinese are coming to Pakistan through proper channels and Pakistanis get Chinese visas after receiving invitation letters. Visas are being issued on a reciprocal basis, he added.

Electricity crisis for the industry is over for the last one and half years but a gas crisis still exists. He also stated that gas price is Rs 600 per MMTBU in Sindh whereas Punjab based industry is paying Rs 930 per MMBTU. He maintained that when the price of petrol is same in Karachi and Lahore, gas prices should also be the same across the country.

He further expressed reservations at Pakistans over valued currency: the entire world has devalued its currency but in Pakistan it has appreciated by three percent at a time Pakistans exports are going down.

He further stated that Federal Board of Revenue (FBR) has to pay refunds of Rs 300 billion to exporters of which Rs 55 billion have been cleared so far. Finance Minister Ishaq Dar has promised to clear all the refunds soon, adding as refunds are cleared the industry will again stand on its feet.

Chief Executive TDAP quoted a seminar held in Karachi wherein the participants had argued that Pakistani industry cannot compete internationally given the taxes and duties on products that would be manufactured and exported duty free by Chinese companies that would be established in Economic Zones along the CPEC route.

Chairman standing committee said that it is a very critical issue and he has already raised it in the forthcoming session of Senate. He further that the committee would also evaluate the impact of FTAs on the Pakistani economy and industry, adding that people matter as they are the real exporters and importers.

We dont want CPEC to become a project of our devastation. We have to work it intelligently in favour of our industry, he said, adding that the agreement should be formulated in a way that Pakistans existing industry should benefit from CEPC.

He sought a detailed briefing on overall impact of CPEC on Pakistans industry specifically export industry. What strategy has the government formulated to protect local industry, he queried.

Chairman standing committee expressed his anger at the Commerce Ministry for not consulting him on appointments of Commercial Counselors in South America where he spent most of his time as a banker and businessman. He said Pakistans exports future looks very bleak due to weak policies formulated in isolation.

Lower oil prices are oxygen for Pakistan. If oil prices are going up and exports and remittances coming down then Pakistan would be stuck in a situation where it would be difficult for her to come out of, he added.

It was suggested that Board of Investment (BoI) which is dealing with China specific Economic Zones should also be invited to the forthcoming standing committee meeting so that a joint strategy could be formulated.

He said that exports of China, India and other countries have declined during the last year but Bangladeshs and Brazils have increased by 10 percent. Bangladesh has the status of Least Developed Country (LDC) and enjoys duty free incentives. Pakistans exports have declined by 12 per cent, he added.

The committee directed Commerce Ministry to give a detailed briefing on budget utilization of the Ministry and attached departments and FTAs.

Chairman Standing Committee expressed annoyance at the continued delay in functioning of Exim Bank with the government trying to run it on ad hoc basis. SBP has released Rs 7 billion for the bank which are deposited in NBP.

He further directed the Commerce Ministry to constitute the TDAP Board as early as possible and the weaknesses in the TDAP Act be removed.

Dr Nazim Latif, Director General Trade (Commerce Ministry), gave a detailed presentation on trade performance along with issues hurting growth in exports. He also mentioned that appreciation of Pak rupee is one of the reasons for decline in exports.

In reply to a question, he said that Commerce Ministry is starting mid-term review of STPF in February in consultation with all the stakeholders including the Chambers and Associations.

The officials of Intellectual Property Organisation (IPO) also gave a detailed presentation about its functions, performance and future plans. Senator Shibli Fraz said that law enforcing agencies do not take the IPO seriously, adding that lack of powers to implement decisions is disappointing. Senator Umsan Kakar, Senator Mufti Abdul Sattar, Senator Karim Khowaja and Senator Saif Ulla Bangesh attended the meeting.