Huge Belt and Road infrastructure projects are helping to transform Pakistan, but Hong Kong investors have so far been notable by their absence in the country.
At a Chamber roundtable on 26 March, Abdul Qadir Memon, Pakistan’s Consul General in Hong Kong, and Horace Hui, CEO of Karachi International Container Terminal, discussed the opportunities available and addressed some of the concerns and misconceptions.
Pakistan was among the first countries to recognise the People’s Republic of China, Memon explained, and the relationship remains strong. Its GDP growth in 2017 was 5.3%, and is expected to be 5.8% this year.
The Belt and Road Initiative is “one of history’s most ambitious infrastructure plans,” Memon said, and Pakistan is one of the chief beneficiaries. In fact, cooperation between the two countries predates the initiative, and includes developments such as the China-Pakistan Economic Corridor (CPEC). The road element of this transit corridor between Kashgar in Western China and Pakistan’s Gwadar Port is already completed, and the rail section is in progress.
“Pakistan has given the rights to China to use its territory to access the port of Gwadar,” Memon said. No fees are involved, but in return the Mainland is helping Pakistan build infrastructure and overcome its energy crisis. “All projects are based on consensus on both sides,” he added.
The Mainland also plans to build 49 industrial zones, but Memon said that Hong Kong companies can play a role in these projects.
“Hong Kong has some of the world’s best infrastructure companies,” he said. “They can explore the possibility of investing and bidding for those projects, and the money is already there.”
He added that there were opportunities for the city’s financial sector. “Hong Kong has the potential to raise bonds, funds and develop innovative instruments to finance some of the projects from the private sector.”
Hui provided a first-hand insight into the operation of an overseas private company in Pakistan. He said that he had become accustomed to people expressing surprise at his choice to work in Karachi, adding that media reports tend to give a distorted picture.
Karachi International Container Terminal is part of the global operator Hutchison Ports. Hui explained that the company had invested US$230 million into upgrading the terminal since 2001.
Hutchison Ports has also invested US$600 million in a deepwater terminal project in Karachi.
“The new terminal is equipped with the latest technologies,” Hui said. “It is the only terminal in Pakistan that can handle the ultra large container ships.”
This ability to accommodate larger vessels, plus commercial activities stimulated by the CPEC, are driving an increase in Pakistan’s container throughput volume, Hui said.
Questions from the audience focused on the challenges of doing business in the country. Both Memon and Hui said that the security situation had improved in recent years.
“We believe there is a big perception gap between what is being reported in the media and the reality,” Memon said.
Hui addressed the perception that the opportunities are restricted to very large private companies and SOEs. He explained that a second wave of smaller investors – such as in the manufacturing, restaurant and tourism sectors – has followed the major Chinese firms into the country to take advantage of the booming economy.
Memon acknowledged that there had been a lack of information available, which they were trying to address through reaching out to the private sector. He encouraged HKGCC members to visit the country, and said that the Consul General would lend its support if a Chamber delegation were to visit Pakistan.