There are many concerns about Chinese investment in Pakistan. Many observers have mixed it with the East India Company and expressed concern that China will become a Pakistani like a British.
On one hand, on the other hand, there is no lack of land and skulls found in the definition of C-pack. To know what is happening, we have to see the different types of external investment (FDI) visible to the angel.
Basically FDI is two types. Brown Field Investment is the investment that is already made in existing assets and companies. For example, Shanghai Electric has recently purchased Electricity. In addition, Chinese companies are also participating in Pakistan Stock Exchange.
On the other hand, Greenfield Investment is the investment which is created to increase the capabilities and capabilities of new assets, such as construction of coal power plants.
In addition, Chinese companies have also expressed interest in starting new airlines and stepping into banking sector. This investment is not quite different from the purchase of PTCL from Etisalat or by the construction of Pakistan's largest independent power plant (IPP) Hub Power Plant by the National Power in the 1990s. These things should not be worried. It is a matter of doing business in private companies in Pakistan, and Pakistan does not ban the business here for foreigners.
Another type of 'investment' is the orange line metro train in Lahore. It has also been investing in the country and Infrastructure is also building, but it does not meet traditional definition of the FDI. Instead, it is more purchasing by Punjab government. Land is acquired from the provincial government's development funds for the project. Construction work and engines are getting through loans on easy terms. The government will be obliged to fulfill all the business deficit of this project, but it will also be responsible for paying the loan.
The contract for running it is also being given to a private firm, whose expenses will be paid in addition to the government's debt consolidation after the end of the Discount Period (Grace Period). One way to purchase this service.
This type of expenditure will legally question the priorities of development expenditure, transparency in purchase, and economically suitability of the project, and the government has to answer all the questions related to the public interest.
So we have another question, which is in constant circulation in public and private circles: Is the CP project debt or direct external investment?
For any project to be FDI, there is a need to be a recognized investor who can bear some part of the business deficit. It can be a private investor like a national power in case of hub power plant, or Shanghai Electric in case of a foreign government company, such as PTCL in Etisalat, or Electric.
So far, the upcoming investment for CP projects is in the case of heavy heavy electrical equipment, and a few construction work is being done for the contractors, which will be paid to sub-contractors. The thermal power plants are undoubtedly direct external investments, because investors are Chinese companies that will be part of the business deficit.
Whichever lending is made for it, private companies will be responsible for paying them (besides power plants are saverian guarantees). Savanny Guarantee reduces risk, but does not change the type of deal, in which a foreign investor becomes part of the loss. If a local firm is part of the joint venture, or the debt is raised from the local market, this fund is not counted directly into external investment.
On the other hand, transport projects, such as road construction, railway upgrade, and Lahore Orange Line Metro are a public project that can not be considered direct external investments. Not even hydro power projects. These are the loans and the amount of money spent from the public sector development programs of federal and provincial governments.
The third question is whether these loans are in simple terms or on strict terms. Loans are usually given on commercial terms for commercial projects, such as power plants etc. Public sector projects are given easy terms.
So what should we give to Chinese investment? There is a huge investment in Pakistan. Earlier, we were forced to dump the doors of international financial institutions for direct external investment, and loans for development work.
Will China become dominant on our economy, as some people are afraid?
On one hand, on the other hand, there is no lack of land and skulls found in the definition of C-pack. To know what is happening, we have to see the different types of external investment (FDI) visible to the angel.
Basically FDI is two types. Brown Field Investment is the investment that is already made in existing assets and companies. For example, Shanghai Electric has recently purchased Electricity. In addition, Chinese companies are also participating in Pakistan Stock Exchange.
On the other hand, Greenfield Investment is the investment which is created to increase the capabilities and capabilities of new assets, such as construction of coal power plants.
In addition, Chinese companies have also expressed interest in starting new airlines and stepping into banking sector. This investment is not quite different from the purchase of PTCL from Etisalat or by the construction of Pakistan's largest independent power plant (IPP) Hub Power Plant by the National Power in the 1990s. These things should not be worried. It is a matter of doing business in private companies in Pakistan, and Pakistan does not ban the business here for foreigners.
Another type of 'investment' is the orange line metro train in Lahore. It has also been investing in the country and Infrastructure is also building, but it does not meet traditional definition of the FDI. Instead, it is more purchasing by Punjab government. Land is acquired from the provincial government's development funds for the project. Construction work and engines are getting through loans on easy terms. The government will be obliged to fulfill all the business deficit of this project, but it will also be responsible for paying the loan.
The contract for running it is also being given to a private firm, whose expenses will be paid in addition to the government's debt consolidation after the end of the Discount Period (Grace Period). One way to purchase this service.
This type of expenditure will legally question the priorities of development expenditure, transparency in purchase, and economically suitability of the project, and the government has to answer all the questions related to the public interest.
So we have another question, which is in constant circulation in public and private circles: Is the CP project debt or direct external investment?
For any project to be FDI, there is a need to be a recognized investor who can bear some part of the business deficit. It can be a private investor like a national power in case of hub power plant, or Shanghai Electric in case of a foreign government company, such as PTCL in Etisalat, or Electric.
So far, the upcoming investment for CP projects is in the case of heavy heavy electrical equipment, and a few construction work is being done for the contractors, which will be paid to sub-contractors. The thermal power plants are undoubtedly direct external investments, because investors are Chinese companies that will be part of the business deficit.
Whichever lending is made for it, private companies will be responsible for paying them (besides power plants are saverian guarantees). Savanny Guarantee reduces risk, but does not change the type of deal, in which a foreign investor becomes part of the loss. If a local firm is part of the joint venture, or the debt is raised from the local market, this fund is not counted directly into external investment.
On the other hand, transport projects, such as road construction, railway upgrade, and Lahore Orange Line Metro are a public project that can not be considered direct external investments. Not even hydro power projects. These are the loans and the amount of money spent from the public sector development programs of federal and provincial governments.
The third question is whether these loans are in simple terms or on strict terms. Loans are usually given on commercial terms for commercial projects, such as power plants etc. Public sector projects are given easy terms.
So what should we give to Chinese investment? There is a huge investment in Pakistan. Earlier, we were forced to dump the doors of international financial institutions for direct external investment, and loans for development work.
Will China become dominant on our economy, as some people are afraid?
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