China's Silk Road plan set to take off in Pakistan

More than three quarters of $46 billion of planned Chinese-led investment in Pakistan will be implemented by next year as part of the world’s second-largest economy’s flagship Silk Road plan.

“Out of this $46 billion, we have been so far able to energise about $35 billion,” Pakistan’s Planning, Development and Reforms Minister Ahsan Iqbal said in an interview in London. “By energising I mean these are projects either in advanced implementation or in a stage of financially closing.”

Pakistan’s Prime Minister Nawaz Sharif is seeking to boost growth to the highest in about a decade after China announced its investment plans in the nation of about 190 million people last year. It is part of an initiative the Chinese government calls “One Belt, One Road” that aims to revive trade across Central Asia and into Europe via a network of railways, ports and highways.

About $11 billion has been allocated to infrastructure projects including roads, with concessional loans provided at about 2 per cent with payback in 20 years, along with a five-year grace period, said Iqbal, who is heading the investment plans in Pakistan. The rest has been earmarked for generating electricity, with about 11,000 megawatts expected to be added by 2018 to end the nation’s chronic power outages.

In September, Iqbal said a further $8 billion would be provided by China and the Asian Development Bank to update Pakistan’s dilapidated railway network.

Iqbal said the government also expects to privatise state-owned power distribution companies after the 2018 elections, when Sharif will go to the polls again in a bid for a successive term. Pakistan’s growth will rise to 5.5 per cent in the current year ending June helped by these investments and between 5.5 per cent to 6 per cent next year, he said.

Iqbal played down security concerns that have plagued the investment plans after recent attacks in the restive southwestern province of Balochistan, which is the final road toward the flagship port of Gwadar. The first consignment of Chinese goods was shipped from the port this month after trucks from China made the 3,000 kilometres journey from western Xinjiang province.

“We have raised a special force of about 9,000-plus personnel that has been specially created to augment the present security apparatus in the country,” he said. “This force will directly support, it is the sole responsibility of the Pakistani government to provide security.”