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JCC on CPEC will to finalise LTP 2017-30

20 November, 2017

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ISLAMABAD: The Joint Cooperation Committee (JCC) on China-Pakistan Economic Corridor (CPEC) will meet here on Tuesday (Nov 21) to review and finalise a long-term plan (LTP) 2017-30 envisaging key areas of bilateral cooperation over the next 13 years amid Islamabad’s policy adjustments to facilitate Chinese investment and financing.

A senior government official told reporters that both senior officials meeting (SOM) and formal JCC meeting headed by ministers from the two countries would begin with discussions on the LTP in an attempt to sign a final agreement. He said the LTP draft, finalised after the 6th JCC meeting held in Beijing in December last year and shared with the provincial governments, had remained unchanged.

The official said a cabinet committee on CPEC headed by Prime Minister Shahid Khaqan Abbasi had already agreed in principle to offer a special incentive package under which all investments in the first phase of nine special industrial/economic zones to be made by end-2020 would enjoy complete tax holiday.

The 40-member SOM to be presided over by the planning and development secretary and his Chinese counterpart on Nov 20 will begin the day with discussions on the LTP and industrial and economic cooperation flowing out of it. All the six joint working groups on the LTP – industrial cooperation, Gwadar, transport infrastructure, energy and security – are led by federal secretaries and their Chinese counterparts.

Any outstanding matter relating to taxes and exemptions based on the special package cleared by the prime minister would come up for discussion in the last session of the SOM for submission to the JCC the following day.

On the next day, the formal JCC session would also begin with the LTP and would be co-chaired by Planning and Deve­lopment Minister Ahsan Iqbal and Vice Chairman of China’s Nat­ional Development and Re­forms Commission Wang Xiaotao.

China Development Bank (CDB), the main financier of the CPEC, will make a presentation on the LTP on behalf of the Chinese side based on the outcome of the SOM and will be responded to by the Pakistani side. The JCC will conclude with the signing of documents, including the LTP, subject to resolution of all outstanding issues on taxation and policy direction.
Challenges to CPEC

Besides the ongoing cooperation on road and rail networks, the LTP seeks to boost information connectivity through operation of local communication networks and broadcast and TV networks and “expedite Pakis­tan to adopt China’s Digital Terrestrial Multimedia Broad­casting (DTMB) standard” and border electronic monitoring and safe city constructions.

The two sides will strengthen cooperation in trade and industrial areas, expand bilateral economic and trade relations and enhance the level of bilateral trade liberalisation. They will promote the quality and efficiency improvement of the textile and clothing industry, expand the size of the textile industry and increase the supply of high value-added products and promote the Kashgar Economic and Technological Development Zone and Caohu Industrial Park to adopt the means like export processing to establish a regional cooperation and development model based on complementary advantages and mutual benefits.

The two sides will also expand cooperation in the appliance industry, promote Pakistan’s industries from assembling imported parts and components to localised production of parts and encourage various forms of Chinese enterprises to enter the Pakistani market to improve the development of energy efficient appliance industry in Pakistan, besides chemicals, engineering, agro, iron & steel and construction materials to meet the local demand and expand to export market.

They will cooperate in key construction areas such as biological breeding, production, processing, storage and transportation, disease prevention and control, water resources development and utilisation, land development and remediation, besides ICT-enabled agriculture and marketing of agricultural products so as to transition from traditional agriculture to modern agriculture in the regions along the CPEC to effectively boost the local agricultural economy.

The two sides will exploit the potential advantages of tourism resources in the regions along the CPEC, especially the China-Pakistan border areas, and “actively help Pakistan’s coastal areas become more livable, business-friendly and tourist-friendly”.

The LTP envisages construction of the “2+1+5” tourism spatial structure, which includes two centres, one axis and five zones: Karachi Port and Gwadar Port as the two centers, and the coastal tourism belt as the development axis, and five tourist zones of Jiwani & Gwadar, Jiedijiao, Olmara, Songminiya and Keti Bander.

Pakistan will apply international and China’s new urbanisation concepts to the municipal construction of node cities along the CPEC, such as the construction of the public transport system and water supply and drainage systems and “give full play to China’s advantages in technology, equipment and capital, and solve some prominent livelihood issues via pilot projects”.

The two sides agree to strengthen cooperation in financial regulation. They will continue to sign currency swap agreements and expand swaps size, enrich the scope of foreign currency from currency swap, assign the foreign currency to domestic banks through credit-based bids to support the financing for projects along the CPEC, besides creating bilateral payment and settlement system to reduce the demand for third-party currency and move to a bilateral foreign exchange reserve pool to form an effective mechanism for stabilising the exchange rate through cooperation of central banks and other financial sector regulators.

In the process, they plan to create a settlement platform for RMB cross-border trade and investment and a monitoring and early warning platform for cross-border cash flow and promote free flow of capital and facilitate cross-border transfer of legitimate funds, including those in financial markets.

Gwadar Port free zone will be developed on the pattern of Shanghai free trade zone and allow RMB offshore financial business. Both countries will encourage Chinese enterprises, private sectors and private sector funds of other economic entities to make various forms of direct investment, welcome Pakistan’s private capital in participating in the projects along the CPEC and establish various types of private financial institutions or infrastructure funds.

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