Daily Times

The Chinese companies working in Pakistan want the government to offer a 20-year tax holiday in special economic zones to make Pakistan an attractive destination for foreign direct investment.

“I believe that the Pakistani government can consider the 20-year tax exemption policy for SEZs. Because in my opinion, only flexible policies can form certain advantages and attract more investors to choose Pakistan instead of other potential countries,” said Yang Jiandou, Chairman of All Pakistan Chinese Enterprise Association (APCEA), in an exclusive interview with Daily Times. “Long-term care and support for investors is of utmost importance. Investors who come to invest in Pakistan will definitely encounter many problems, and most of them cannot be solved by themselves, so they need long-term care and support from the local government and partners,” he said to a question as to what will be his top three recommendations to policymakers to make the environment conducive to attracting foreign direct investment in Pakistan.

“It is essentially valuable for the Chinese investors to have the support of the Pakistani government and local partners. It is necessary for the Chinese investors, to have the specific channels for addressing their concerns and have them resolved within a certain period of time. In this way, the investor feels cared for and well-supported. He will not only invest himself, but also introduce more investors and endorse the business sector of Pakistan. In this process, local investors and companies in Pakistan can grow and develop, and eventually evolve into regional or world-renowned enterprises,” he further said.

“A good reputation – as far as I know, many investors place great importance on the credibility of the government and local private sector companies, rather than the benefits of the project itself,” the APCEA Chairman said, narrating his another recommendation. “A good reputation will increase the confidence of investors. There is a saying in China that ‘trust is more precious than gold’. Maintaining a stable and good reputation is a long-term work, depending on a period of 10 to 30 years,” he continued. “As long as an investor comes to Pakistan for inspection, even if he does not invest in the end, he will create employment opportunities in Pakistan’s aviation, hospitality and service industries, and will naturally generate taxes,” Mr Yang added.

To a question as to which sectors would you like to recommend for the Chinese investors to invest in SEZs in Pakistan, he replied, “The advancements in energy and transportation/infrastructure sectors in the first phase of the CPEC have greatly paved way and laid a firm foundation for the development of SEZs, hence attracting many Chinese investors. Although, the current circumstances are somewhat complicated especially with the aftermath of the Covid-19 pandemic, Pakistan has its own distinctive orientation and an advantage of human resources,” he said. “According to the assessment of APECA, an increasing number of Chinese industrialists and investors are seeking collaborations with the local industries to secure win-win situations. Their present priorities include; enhancing the trade/business facilitation between Pakistan and China in the field of business services and logistics industry, increasing Pakistan’s potential and physical industrial capabilities at the automotive industry and textile industry, as well as improving the digital capacity building in the information industry, etc,” he further said. “I believe that industrial cooperation will continue to expand, and will certainly be extended to other fields,” he hoped.

To a question as to what role Chinese companies can play in producing skilled labour for win-win benefits both for Pakistan and Chinese investors, Mr Yang said, “I think Pakistan has good resources of skilled labor. For example, the company that I work for, POWERCHINA, already has a huge amount of skilled Pakistani labor active in various projects across Middle East, and even some excellent technical personnel are providing support to our projects in Eastern Europe and Africa. However, it is worthy to mention that Pakistan lacks skilled labor in some of the emerging industries. To overcome these gaps, I think local training institutes and Chinese companies need to work together to meet the international standards.”

“Chinese vocational training institutions are seeking cooperation with Pakistani training institutions to enhance skilled labor ability; Huawei also has a “Seed for Future Program” that continuously attracts Pakistani youth interested in the IT sector to enhance their skills. For this reason, many Chinese companies have launched several student aid programs. For example, the CRBC Hundred-Student Scholarship Program has funded 50 students to study in China so far; CPHGC has sponsored 30 students from Balochistan to go to China for training, of which 27 technicians participated in the construction of the Hub project. Some Chinese enterprises have also established local schools offering free technical training for the local youth. For example, Huaneng Sahiwal Power Plant has established a vocational and technical training school, which is free for the society to recruit students, and can produces 600-800 Pakistani youths every year with professional and technical training in Chinese, as well as welders, electricians, thermal power simulators and other professional and technical training,” the APCEA Chairman said.

“I would like to acknowledge that the Pakistani government has already established mechanisms for Chinese companies and investors to put forward their concerns and many issues have been resolved.”

“In addition, some companies have signed MOU with local colleges also. For example, Bank of China Karachi Branch signed a MOU with Confucius Institute in Karachi to provide various types of internship positions for local students; Energy China Gezhouba Dasu Project Department signed a MOU with COMSATS University to cooperate in scientific research, and other fields to harness the talents of the youth and pursue the goals of high-quality development together. I believe that with the in-depth investment and long-term development of Chinese companies in Pakistan, this gap will be reduced. APCEA will also provide active support and guidance in this regard,” he maintained.

On a question about political and security-related factors impacting Chinese investments in Pakistan, Mr Yang said, “I think the political stability of a location plays an important role in securing the confidence of the investors. Even more so, the security conditions and safety is a matter of utmost concern for the Chinese investors. We are well-aware that Pakistan has been working with laudable determination to overcome the security issues and has made successful efforts in this regard. Pakistan and China have maintained their collaborations and their ironclad bond through all scenarios. We are positive that with the continuation of this spirit, all such factors can be eliminated.”

About problems being faced by Chinese investors in Pakistan, Mr Yang said, “I think there are some general issues. The consistency and continuity of relevant policies is a crucial issue. Well-regulated policies, especially those pertaining to taxation, increase the confidence of investors. Moreover, I would like to acknowledge that the Pakistani government has already established mechanisms for Chinese companies and investors to put forward their concerns and many issues have been resolved, consequently. However, some problems may take relatively longer to be addressed due to inter-departmental or intra-departmental issues that may arise. But, with the continued support of our Pakistani counterparts, such little hurdles can surely be omitted.”

“The consistency and continuity of policies is a crucial issue. Well-regulated policies, especially those pertaining to taxation, increase the confidence of investors.”

“When we talk about industrial parks, aside the land and policies, the operation of an industrial park requires many auxiliary projects, all of which are of indispensable importance such as; electricity, gas, water, transportation, human resources, visas for the foreigners, etc. So issues might be encountered in these regards but they can certainly be considered and resolved in advance,” Mr Yang said.

“Established with the similar goals, Pakistan-China Business & Investment Forum (PCBIF), is our joint collaboration with Board of Investment (PMU-CPEC-ICDP). It has been endorsed by the government of Pakistan and China in a joint statement. One of the key aspects of this platform and its (soon-to-be launched) website is not only to guide and facilitate industrial/B2B endeavours but also address, and resolve, the difficulties and problems that Chinese enterprises face while operating businesses in Pakistan,” Mr Yang added.

The APCEA is an influential organization with more than 200 member Chinese enterprises and organizations based in Pakistan. It strives to enhance the economic and social cooperation between the member and local enterprises/ organizations – thus elevating China-Pakistan diplomatic ties. It has successfully established an avenue that facilitates mutual business ventures as well as economic and social connectivity. Currently, APCEA has three branches operating in Islamabad, Lahore, and Karachi. Its member enterprises sustain projects all across Pakistan in various sectors ranging from energy, aviation, infrastructure, textile, and telecommunication to industrial manufacturing, mining, and minerals.