RE: 1m buy14 Jan 2020 22:37
Notwithstanding the desire to streamline the focus of the CPEC towards deeper industrial development on the Pakistani side, the CPEC portfolio is likely to remain skewed towards the energy sector in 2019-20, with six ongoing power projects estimated to add a combined 6,910 MW of electricity to the national grid once completed. Alongside energy, transport infrastructure will continue to comprise a sizeable part of the initiative, with the largest project being the upgradation of the Karachi-Peshawar main railway line (“ML-1”), at an estimated cost of US$8.2bn. On the other hand, success in promoting industrialization in Pakistan under the CPEC via the planned special economic zones is likely to be limited. Although the government has promised reduced red tape and tax concessions, a broadly difficult business environment will continue to deter investors. Export-oriented Chinese firms facing rising labour costs at home could consider relocating to the SEZs in Pakistan where wages are much lower.