RECORDER REPORT
ISLAMABAD: Pakistan and China will strengthen strategic cooperation between policy banks, development finance institutions and commercial banks, reduce financing costs, and protect the rights/interests of creditors, while Pakistani federal/provincial governments along the China-Pakistan Economic Corridor (CPEC) would attract investments by issuing financial bonds in domestic and foreign capital markets. Under the Long Term Plan for China-Pakistan Economic Corridor (2017-2030) issued by the government here on Monday, investment and financing mechanism between Pakistan and China has been elaborated.
Both countries shall strengthen strategic cooperation between policy banks, development finance institutions and commercial banks, and study and resolve financial issues with the CPEC building; explore various ways to support the Silk Road Fund and China- Eurasia Economic Cooperation Fund, in participating in the investment and financing for the CPEC.
Both countries shall 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 the projects along the CPEC and establish various types of private financial institutions’ infrastructure funds.
The plan highlighted that China should give full play to its advantages in investment and financing in accordance with the principle of joint investment, joint construction and sharing benefits. The two countries should reasonably determine the investment and financing modes based on the nature of projects and the status of cash flow. They should create necessary commercial conditions for the enterprises to carry out the projects according to the market-oriented principles, and establish a reasonable cost and revenue sharing mechanism to ensure reasonable commercial returns from the projects for all stakeholders.
Both countries welcome the World Bank, Asian Development Bank, Asia Infrastructure Investment Bank (AIIB), and other international financial institutions to provide long-term concessional loans to support the investment and financing for the projects along the CPEC.
The governments of the two countries bear the primary responsibility for investment and financing of public welfare projects. Relevant policies and procedures shall be honored to coordinate the use of grant, interest-free loans, concessional loans and preferential export buyer’s credit provided by China to support strategic priority projects along the CPEC, further enhance the preferential margins and ensure the funds are used exclusively in the projects along the CPEC. Pakistani federal government and provincial governments along the CPEC should try to assume some investment and financing responsibilities by various means, such as earmarked budget funds at all levels for the CPEC building and allowing provincial governments to issue financial bonds in domestic and foreign capital markets. Both governments actively take various forms to provide credit enhancement support for major financing projects, reduce the financing costs effectively and protect the rights and interests of creditors.
The plan said that the role of existing institutions and cooperation documents shall be given full play: China-Pakistan Economic Corridor Joint Committee, China-Pakistan Joint Economic and Trade Committee, Bilateral Investment Protection Agreement, Free Trade Agreement, Agreement on Service Trade in Free Trade Zones, Agreement on Expanding and Deepening Bilateral Economic and Trade Cooperation, and Framework Agreement on Energy Cooperation, as well as the Five-Year Development Plan for China-Pakistan Economic and Trade Cooperation.
Based on the Joint Committee of the China-Pakistan Economic Corridor, the two countries will further deepen bilateral cooperation, hold regular meetings and solve the problems through consultation; strengthen the communication and cooperation between various departments of the Committee, put forward work plans for specific cooperation projects and related matters, and formulate detailed plans and cooperation agreements that will be implemented jointly.
The Long Term Plan for China Pakistan Economic Corridor (2017-2030) revealed that in the field of energy, both countries shall negotiate to sign cooperation documents on oil & gas pipeline networks, grid connectivity, power utilization and electricity price in due course; in the field of transportation, they shall determine as early as possible investment and financing plans, related charging standards and repayment agreements, and the Pakistani side will formulate the charging standards for urban rail transit projects and laws and regulations related to local financial subsidies. They shall also establish a regional policy system conducive to the construction and operation of Gwadar Port & Free Zone, and the Pakistani side will introduce specific policies on the taxation, land, workforce employment, customs clearance and cross-border use of RMB.
