China Pakistan Economic Corridor

30 JANUARY 2016
Contents

1. Where the region stands

2. Pakistan’s current situation and its role

3. What is CPEC

4. Catalysing growth with CPEC

a. Benefits to Pakistan

b. Benefits to China

c. Benefit to Region

Page 2
South Asia remains one of the least integrated regions in the world

CPEC via Gawadar Port will act as a funnel for Western China, Northern India, Central Asia and Afghanistan
Contents

1. Where the region stands

2. Pakistan’s current situation and its role

3. What is CPEC

4. Catalysing growth with CPEC

a. Benefits to Pakistan

b. Benefits to China

c. Benefit to Region
Pakistan is falling behind in all social indicators in South Asia

Literacy Rate 2014

Infant Mortality Life Expectancy

Page 5
Pakistan’s GDP and GDP per Capita is among the worst in South Asia

GDP (US$) GDP Per Capita (US$)

Source: World Development Indicators, World Bank

Page 6
Investor Confidence via FDI

FDI (US $)

Source: World Development Indicators, World Bank

Page 7
Why is Pakistan here?

Page 8
Unavailability of electricity is a barrier to growth

Energy Crisis- Electric Power Consumption

Source: World Development Indicators, World Bank

Page 9
 More road connectivity is required for a progressive economy

Lack of Infrastructure- Road Network

Source: World Bank Report 2013

10 Page 10
 Pakistan’s political instability over the years has hurt the confidence of
investors
Political Instability

Ranking: Ease of Doing Business Ranking: Political Stability and Absence of

2015 Violence
1:Easiest to 189:Most Difficult

Source: Doing Business, World Bank

Source: Worldwide Governance Indicators, World Bank

Page 11
Contents

1. Where the region stands

2. Pakistan’s current situation and its role

3. What is CPEC

4. Catalysing growth with CPEC

a. Benefits to Pakistan

b. Benefits to China

c. Benefit to Region

Page 12
Panama Canal Suez Canal
•handles 5% of all seaborne trade •handles 10% of all seaborne trade.
•Panama Canal Authority earns over 2.5 •Egypt earns over 5 billion USD per annum
billion USD per annum directly from tolling revenues.
CPEC focuses on building the necessary infrastructure and energy self
sufficiency for Pakistan’s economic take-off

CPEC Portfolio

Total CPEC Investment Net FDI over the years

Sectors MW/K Est. Cost
M (US $ Bn)
Energy (Priority )
10,400 15.506
MW
Energy (Actively
6,645 18.287
Promoted) MW
Road (Km) 832 5.900
Rail (Km) 1,736 3.690
Gwadar (including
0.662
sea, air, land links)
Mass
Transportation 1.600
Orange Line
Cross-Border
Fibre Optic Cable 0.044
System
DTMB Pilot Project 0.002
Total 45.651
Source: State Bank of Pakistan Page 14
Gwadar will be developed into an international standard deep-sea port which
will enhance regional connectivity and trade
Development of Gwadar

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Contents

1. Where the region stands

2. Pakistan’s current situation and its role

3. What is CPEC

4. Catalysing growth with CPEC

a. Benefits to Pakistan

b. Benefits to China

c. Benefit to Region

Page 16
 Due to the energy initiatives under CPEC, Pakistan is expected to meet its
electricity demand by 2018
Energy Demand/Supply Forecast

2016 2017 2018

17 Page 17
Sustainable Growth

Source: BMA Capital Management Limited, Investor 360

Page 18
Employment

Page 19
Employment

Source Jobs Study 2013 , IFC World Bank

Page 20
Contents

1. Where the region stands

2. Pakistan’s current situation and its role

3. What is CPEC

4. Catalysing growth with CPEC

a. Benefits to Pakistan

b. Benefits to China

c. Benefit to Region

Page 21
 Benefit to China

Short Distance and Low Cost

•Europe to Western China Route
– Distance will be reduced by 50%
– Cost of transportation will be lowered by 50-65%
– Time cut by 50%
•Middle East to Western China Route
– Distance will be reduced by over 80%
– Cost of transportation will be lowered over 75%
– Time cut by over 85%

Safer Route
– 60 percent of China’s imported oil comes from the Middle East, 80 percent of that is transported to
China through the Strait of Malaaca
– CPEC will allow China an alternative route, to move energy and goods to inland China without going
through the Strait of Malacca (bypassing an entire region influenced by the US and India)

Page 22
 Existing Trade route

Distance Europe to Western China 19132 miles

Middles East to Western China 12537 Miles

Page 23
 Trade route- CPEC
Europe- Western China Middle East- Western China
Distance will be reduced by 50% Distance will be reduced by over 80%
Cost of transportation will be lowered by 50-65% Cost of transportation will be lowered over 75%
Time cut by 50% Time cut by over 85%

Page 24
 Economic Advantages to China

Europe- Western China Existing Route Post CPEC Savings to China

Total route 19,132 miles Total route=9,597 miles Distance is reduced
16,507 by sea 7847 by sea by 50%
2625 by land 1750 by land

Freight charges and time for a Cost= 2500-3000 USD Cost= 1000 USD Cost of transportation
unit (40 ft container) from Time=50 days are lowered by 50-
Hamburg to Shanghai range Time=25 days 65%
Time is cut by 50%

Middle East- Western China Existing Route Post CPEC Savings to China
Total route 12,537 miles 2295 miles Distance is reduced
9912 by sea 545 miles by sea by over 80%
2625 by land 1750 by land

Freight charges and time for a Cost= 2000 USD Cost= 200-250 USD Cost of transportation
unit (40 ft container) from Abu Time=16 days Time=1 day are lowered over 75%
Dhabi to Shanghai range Time is cut by over
85%

Page 25
 a de
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Contents

1. Where the region stands

2. Pakistan’s current situation and its role

3. What is CPEC

4. Catalysing growth with CPEC

a. Benefits to Pakistan

b. Benefits to China

c. Benefit to Region

Page 27
OPPORTUNITIES FOR INDIA

• Gravity Model* suggests a potential increase of 10-15 times of the current trade with
central Asia if routed through Pakistan & Afghanistan.
• CPEC will double the Indian trade with china.
• After improvement in bilateral relations, India can secure 2.6 billion USD trade in
addition to the current 3 billion USD with Pakistan.
• Pakistani Ports will be the convenient transit for North western India as compared to
Mumbai and Calcutta.
• Central Asian fuel will cater growing Indian energy needs.

*trade
1 2
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OPPORTUNITIES FOR CENTRAL ASIA

• Gwadar will be a gateway for Central Asia.

• Central Asia can be connected to CPEC via Tirmiz, the southern city of Uzbekistan.
• CPEC and its related future projects can cater both Turkmenistan and Uzbekistan’s
liquid cargo through pipelines and Kazakhstan and Kyrgyzstan’s dry cargo via road.
• Can increase energy market share in Western China and India. .
• For Landlocked countries, distance coefficient of gravity model is 5.5% (every 1%
decrease in distance from port increases the trade by 5.5% and CPEC will decrease this distance by 22%.)
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OPPORTUNITIES FOR AFGHANISTAN

Afghanistan can be connected to western alignment of CPEC from Chaman and

eastern alignment with Peshawar from Jalalabad.
• CPEC will provide shortest and most cost effective route for landlocked Afghanistan
to China, India and Indian ocean.
• Approx. 600km less as compared to the other nearest port of Chabahar.
• CPEC will also help in making Afghanistan a transit route for energy rich Central
Asia and energy starved South Asia.
• Improve Geo-Political scenario for early completion of CASA 1000 and TAPI
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THANK YOU

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