CPEC GETS A SHOT IN THE ARM

An article in the Asian Review by Adnan Aamir on October 13, 2019 reports that the government of Pakistan (GOP) has issued ordinances to create a powerful new agency—the CPEC (China Pakistan Economic Corridor) Authority and granted a 23 tax exemption to the Chinese company operating Gwadar Port. Gwadar is a key project of the CPEC. The 23-year tax holiday for Chinese Overseas Port Holding Company and other Chinese companies is meant to provide an incentive to continue working in Gwadar. In the agreement, COPHC will get 91% and the government of Pakistan will get 9% of profits from the operations of Gwadar port. The decision to grant a 23-year tax holiday means the federal government of Pakistan has given up tax revenue from operations at Gwadar port.” 

The Opposition is up in arms against the ordinances that bypass the legislature and they have rejected the ordinances calling them “illegal and in violation of Parliament’. They have not mentioned the fact that the government is compelled to follow the ‘ordinances route’ because no meaningful debate can take place in Parliament. The CPEC is too important a project to be kept in limbo while the political parties bicker in Parliament. The Opposition needs to signal that important issues that are in the national interest will be seriously debated and resolved on a priority basis. Unless this assurance is given and demonstrated the GOP will be compelled to rely on ordinances to move forward.

According to the author—“The CPEC Authority would be empowered to make decisions about CPEC projects all over the country, overriding the authority of the provincial governments. In the past Chinese officials have repeatedly complained about bureaucratic red tape in Pakistan stalling progress of CPEC projects. The creation of the CPEC authority will act as a one-window operation to avoid red tape.” The GOP was compelled to issue the ordinances because of the delay in CPEC projects as many of them were stalled and the CPEC project as a whole was being inordinately delayed.

The author cites just two instances of criticism of the ordinances by politicians—“–a member of the Senate from Baluchistan special committee on CPEC told the Nikkei AsianReview that—“ forming the CPEC authority was discussed in a Senate special committee on CPEC and the members opposed the idea. Later the government formed the authority using an ordinance bypassing the Senate. CPEC was already controversial and this move has made it more controversial,” he is quoted as having said. —-a Balochistan analyst based in Washington, D.C., believes the moves are an attempt by the government to discredit the former ruling party PML-N, which signed the CPEC agreement with China. “The PTI government’s move to act unilaterally without taking other stakeholders onboard would exactly [discredit PML-N government],” he told Nikkei. Most people however believe that the CPEC needed a push so that it could progress and gain momentum. There is no controversy over the CPEC that has been called a game-changer for the country and the region.

Michael Kugelman, Deputy Director of Asia Programs at the Wilson Center, believes that at the moment CPEC has lost some momentum, owing to mounting concerns in Pakistan about the debt risks of the project. “Islamabad has a very strong incentive to signal Beijing that it’s still committed to CPEC and what better can be to announce two new measures on CPEC that benefit CPEC in a very big way,” he told the Nikkei Asian Review. The main criticism of the CPEC has been its alleged opacity and lack of public disclosure of the agreement. The GOP satisfied the IMF on all aspects of the project while negotiating a loan. China and Pakistan have a strategic relationship and closely coordinate public disclosures and utterances. So far there has never been any move that was not in Pakistan’s national interest. The CPEC is most definitely in Pakistan’s interest and it is hoped that the new CPEC Authority will manage it competently and effectively.