CPEC a Game Changer – At a Glance

 A key part of China’s “ Belt and Road Initiative“

where China plans to promote ancient Silk Disputed Territory

Route as a trade and financial initiative.

 Provide a stimulus for growth in the
underdeveloped Western regions of China
 CPEC is being flagged as a game-changer for
Pakistan as it is expected to address chronic
weakness in country’s financial account while
putting Pakistan deeper into Beijing’s
geostrategic orbit.

 Corridor to attract Foreign Direct Investment (FDI) into Pakistan in the infrastructure,
power and construction sector.
 Gawadar port is the hotspot for both Pakistan and China as most of the trading
activity will be channeled through it. Due to its natural advantages, the port has the
potential to surpass neighboring ports in terms of trading activity.

Source: CPEC website, *initially USD 46 bn, further USD 9 bn committed recently
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 CPEC a Game Changer – At a Glance

Regional Connectivity Transformation of

• Transport infrastructure Pakistan into a
• Energy Hub/flows Global Economic
• Logistic Hub/flows Hub
• Trade & Commerce
• Peace & Development of Region Catalyst for
• Connectivity/Harmonization/Integration of civilizations Pakistan’s
Economic Growth

Largest Chinese
Corridor length Shorter Trade
Overseas Trade through
from Gawadar route for China as
Investment ever, CPEC has
to Kashgar well as Central
worth over Commenced
2,700 km Asian States
USD 60 bn*

Over 5000 MW
Strategic Game Changer for
electricity has been added over the 6
China and Pakistan
years
Source: CPEC website, *initially USD 46 bn, further USD 9 bn committed recently
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 Pakistan – A Strategic Part of One Belt One Road (OBOR)
The Belt and Road Initiative: Six Economic Corridors spanning 45 nations across
Asia, Europe and Africa

Source: The Economist

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 Importance of Maritime Connectivity through Ports

Models to Reap
National
Local Impacts Social Impact Benefit From
Impact
Ports
Improved Maritime
Economic services
Job Creation standard of
activity
living
Industrial
development
Lower trading Increase in per
Taxes Waterfront
cost capita income
development

According to study by OECD on 145 ports, 1 mn tons of transshipment generates

approximately 300 jobs and more than USD100 mn in added value.

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 Pakistan – A Vital Link between
Energy Rich and Energy Hungry Nations

Energy
Hungry
Energy Rich Nations
Nations

• Most populated region with over 45% of the world’s

population to cater to
• Asia Pac / South Asia is the world’s most growing region
with some of the fastest growing economies of the world
• By 2050 world’s leading economies would be from Asia,
led by China
Source: PWC
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 Gawadar – The Next Big Thing

Vital part of China’s Potential to generate Provide a sea trade

Around 40K new job
Maritime Silk Road billions of dollars of route to Central Asian
opportunities
Projects revenue States

Provide China a
Strengthen the case
Pakistan’s future Special Economic shorter access to
for additional ports
trading hub Zones are planned Middle East, Africa
along Pakistan’s coast
and Central Asia

Source: www.gwadarport.gov.pk/

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 Gawadar – A New Lifeline for Regional Maritime Connectivity
• China mainly procures oil from Iran, Russia and Saudi Arabia which is transported through the Strait
of Hormuz & Strait of Malacca and reaches Eastern side of China after passing through many
disputed and geopolitically sensitive territories after covering a distance of ~11,000 kms.
• Distance between Gawadar and Strait of Hormuz is about ~600kms. This can potentially help China
shift all of its oil import requirements and bypass the Strait of Malacca.

Gawadar ideally
located near the
Strait of Hormuz
where 17mn
barrels oil passes
each day

Reduction in
route by at least
5,000 km

Development of
Western China

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 Gawadar – Natural Transshipment Hub of the Region

• Considering the additional

distance ships have to
travel to reach Dubai from
the Indian ocean, hence,
Gawadar has the potential
to be developed into a full-
fledged regional hub and a
trans-shipment port in the
future.

• Shifting of ship traffic from

Dubai to Gawadar could
make it among the top 5
transshipment hubs
globally.

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 Gawadar – Natural Transshipment Hub of the Region

• UAE handles over 21mn TEUs

(20 foot equivalent units) each
year; this signifies the
opportunity that lies ahead for
Gawadar.

• Being a tax free port coupled

with no port congestion, after
full development, Gawadar has
leverage over other regional
ports.

• China exports ~36 mn TEUs of

containerized cargoes annually
which open up avenues for tax
collection.

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 Gawadar – A Port for Land-Locked Regions & Beyond
Apart from serving the needs of China and Pakistan, Gawadar would play an integral part
in connecting the region and assisting trade.

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 Case Study: Changing Dubai’s Sykline through Port Development

Development Good chunk of Port Jebel Ali – the Maritime sector

through maritime revenue is from port go to zone for all contributes ~4.6%
activity activity regional trade of GDP (US$3.9bn)

Dubai’s economic
Responsible for
Strong reputation in sectors were
~3.3% of Emirate’s
global trade developed based on
jobs
maritime activity

1970s
2018

Source: https://www.dsc.gov.ae/en-us
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 Gwadar
is Future of Pakistan

2018

Source: https://www.dsc.gov.ae/en-us
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 Economic Activity through Maritime Development
under CPEC

Increased economic
Establishment of
activity after availability Increased Maritime
necessary infrastructure
of uninterrupted Awareness
to support growth
electricity

Stable and conducive Increased collaboration

security environment, and transfer of local population base
promoting businesses knowledge resulting in is available
in the Region new businesses

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 Opportunities for Maritime Development
under CPEC

Maritime Seafood and Marine resources

Tourism Fisheries Industry extraction

Maritime
Ship building and Off shore Energy
Repairs Production Ancillary Services

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 CPEC – Private Sector Partnership
• Pakistan would achieve the next stage of growth by involving its Private sector in maritime related
CPEC projects.
• Without the inclusion of local Corporates, Pakistan would be unable to fully capitalize on the
opportunities CPEC has to offer.
• It will be win- win situation for both as the companies get -

GoP would benefit in Local population are

direct benefit from
the form of tax provided
CPEC – improved SC
revenue employment

CSR activities
Containment of
Development of including health,
foreign exchange
skilled labor education and
reserves
nutrition

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• Collaborative investments in all sectors of the economy such as (1) diversified sectors
agriculture, (2) health and (3) education, (4) transportation etc with Focus on
special emphasis on the SME sector
• Investments in collaboration with China should be made to setup
along CPEC route
value-added industry along the CPEC and near Maritime routes, for
value-added sector
local employment generation and gaining competitive advantages
Development of
• A clearly defined tariff and taxation structure should be built on a tariff structures
product by product basis to protect interests of both Pakistan and Clearly defined
Chinese industries
• Chinese equity investments, instead of loans, should be the focus and
than loans
major part of the CPEC. This will be a win-win situation for both as
investments rather
current rules in Pakistan are investor friendly
Focus on equity
CPEC
• Local industry should be deployed towards CPEC projects in local industries in
partnership with Chinese counterparts Involvement of
Action Plan to Develop the Maritime Economy at Gwadar
Prioritizing Maritime Security for Success od CPEC

Maritime Security should be prioritized to ensure Pakistan can counter any attempt
to sabotage CPEC or maritime security

Pakistan’s 1,046 km coastline requires round the clock protection for which
Pakistan Navy should be equipped with modern vessel’s

Pakistan and China’s Navy are jointly working to secure CPEC from threats. More
funds should be allocated for this purpose given sensitive nature of installments.

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Thank You
 Benefits of Increased Trade for Local Economy

Up to 2% incremental Reduced cost of

Expansion of local
GDP growth as a result manufacturing through
Maritime business
of CPEC cheaper electricity

Job growth especially in

Exporters benefit from
Businesses can benefit the maritime business,
larger, more open and
from foreign construction,
new markets – Fisheries
investment engineering and
and marine products
logistics sector

Fiscal space generated

Transfer of skills from from Gwadar can be
Chinese to local utilized in development
population base of Balochistan and other
regions

Source: State Bank of Pakistan

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