Mega dams again?

THE confusion created by the Planning Commission apart, it is now apparent that the government has decided to defer work on three mega dam projects until concept clearance is obtained. This is a sensible decision and should be welcomed. Given the political repercussions of undertaking the Kalabagh, the Daimer-Bhasha and the Akhori dams and the massive sums required for their construction (Rs 1.027 trillion), it is appropriate that the government should give the matter, especially its technical aspects, some good thought. Considering the stiff opposition voiced by the smaller provinces, especially Sindh and the NWFP, it would also be politically wise to ensure that there is a national consensus on the issue. We are now told that the central development working party (CDWP) has formed an assessment committee to submit a comprehensive report on five key aspects of the three dams that have yet to be discussed and cleared before work can be started on them.

The assessment committee, which still has to hold its first meeting, has been asked to report on the environment impact assessment, sequencing of the dams, land acquisition, funding and implementation strategy. These are very crucial issues because it is inconceivable that any government would choose to undertake a mammoth project without as much as assessing how it will affect the environment, land use and the economy. Furthermore, issues like the acquisition of land and funds that are basic to the construction of a project of this size also call for some planning before the decision is taken to start work. The assessment committee would do well to start work immediately on the task assigned to it. It is shocking that without any work having been done on various aspects, such as the EIA that was made mandatory for all big projects by ECNEC in 2004, the president and the prime minister had been pushing for the Kalabagh dam and then the Bhasha dam last year.

It is important that while the assessment committee works on its term of reference and produces the required reports, the government should not neglect its power and water needs. In other words, it would be economically feasible and politically desirable for the authorities to opt for smaller dams and reservoirs that may meet the country’s requirements for water and electricity without damaging the environment and displacing thousands of people. Run of the river hydro-electric projects that do not divert water from the river will not hurt the lower riparians and allow them to receive their full share of water. Similarly, reservoirs designed to catch the excess river water in the rainy season that causes flooding and store it to meet the irrigation needs of agriculturists in the lean season would also be welcomed. The government must not make the dams an issue of prestige, especially the Kalabagh dam that has become a bone of contention between Punjab and Sindh at a time when the country is also passing through a water crisis. The government has yet to draw up and announce a water policy. Meanwhile, it could at least announce its commitment to small dams and water projects. Many NGOs have installed small power plants running on water or solar energy in the north at the village level. These are working quite effectively and are low-cost as well. To save water for agriculture, drip irrigation should be given serious thought.

A Karachi festival at last

A KARACHI festival as an annual cultural event has been long overdue. If the Hamara Karachi festival becomes an annual feature, as announced by Sindh Governor Ishratul Ibad on Tuesday, it would be a major contribution to the cause of giving the citizens of the nation’s biggest city a “we feeling”. Karachi’s image today is that of a violence-prone city. That is the reason why the federal government succumbs to pressures from foreign governments which insist that Karachi should not be on their visiting leaders’ itinerary. Recently, President Hu Jintao of China, British Prime Minister Tony Blair and Prince Charles and his wife visited Pakistan, but a visit to Karachi, with its long sea beach, boulevards and industrial and commercial hubs, was carefully avoided. Similarly, it takes great efforts on the part of the authorities to make international cricket teams play a five-day test in Karachi. This negative image is unfortunate and misplaced, for Karachi is not all violence. It still pulsates with life and with a vibrant culture that unfortunately has been overshadowed by the chaos of uncontrolled commercialism and an unabashed exploitation of its natural assets.

Today, Karachi is aptly called mini-Pakistan. People from all parts of the country - and even legal and illegal immigrants from Afghanistan, Iran, Central Asia, Bangladesh and Burma - have made it their home and contributed to the variety of its culture as seen in diversity in faces, languages, dresses, cuisines, ceremonies and customs and, of course, music and dances as seen at weddings. As for architecture, the Anglo-Mughal-style buildings, epitomised by the 75-year-old KMC building, still survive, despite decades of neglect. The festival should help foster a sense of belonging and a common identity among its 10 million-plus people, inculcate in them a pride of being Karachiites, and make every citizen conscious of his duty as an individual to make this city a better place with a harmonious society and a cleaner environment. One hopes the festival will become an annual affair, though it would be better if the festivities were week-long instead of being stretched over a fortnight.

Taliban excesses

THINGS have not settled down in North Waziristan despite a peace agreement that was brokered in September between the government and the tribal leaders. Take Tuesday’s incident in Miramshah. Members of the local Taliban showed up at a bookshop, owned by a senior journalist and burnt copies of newspapers they alleged carried an offensive news item about an encounter with security forces in which four Taliban men died. More worrisome is the fact that they also took into ‘custody’ the bookshop owner’s son. Mercifully, the son was released three hours later after his father pleaded and explained that he was in no way responsible for what was printed in some newspapers. As it turned out, the “offensive” news item was an old report about an encounter that had taken place in April but because of some technical fault, it appeared on an international news website before it was picked up and reprinted by a local agency. That such an error could provoke the Taliban’s ire shows their inability to think and behave rationally. They may have laid down their arms against the government but they have decided to form their own form of governance, issuing edicts that are clearly against the country’s laws. They now say they will not allow the distribution of newspapers for two days - and no one can dare challenge them.

This is not all. Local Taliban leaders are issuing all kinds of warnings to girls against going to school, against lady health workers and NGOs doing good work in the area and so forth. This medieval approach must be challenged or things are going to go from bad to worse for residents of the area. As things stand, tribal areas in and around the NWFP have the most dismal statistics for unemployment, child mortality, education and healthcare. If the Taliban continue to wield their obscurantist influence, there will be no hope left for the areas’ people.

Economic cooperation with China

CHINA, it appears, is the answer to Pakistan’s many problems. Not that the leadership in Pakistan wants to emulate China in the social, cultural or political spheres, but they want to benefit from the free market policies of the Chinese government which is eager to help Pakistan in every possible way to make it a total strategic partnership.

That a neighbour can help provide a solution of so many problems is indeed an extraordinary development. But then the abiding and long-standing friendship between the two countries has been an extraordinary relationship is acknowledged by all. So, over 18 agreements and 13 memorandums of understanding for cooperation between the two countries have been signed, beginning with the historic free trade agreement, following the visit of President Hu Jintao to Pakistan. It was a memorable visit and opens many vistas of collaboration between the two countries.

The FTA has come at a time when the exports of Pakistan have increased nominally by 1.3 per cent in the first four months of the current financial year. In comparison, India’s exports increased by 37 per cent during the first 6 months of its financial year. Pakistan’s imports during the same period went up by 7.7 per cent. It would have been much higher if the price of oil had not come down.

The FTA will become effective from July 1, 2007 and expand our exports to China in a big way and may solve some of the export problems of Pakistan. It would reduce the import tariff of China for 5,104 Pakistani products to zero and 3,942 items will be charged zero to five per cent tax within 5 years after the implementation of the agreement begins. That means that a great many Pakistani goods can go to China during the next five years and the total of the two way trade in five years may rise to over $15 billion. Pakistan is the second country with which China has signed an FTA, the first one being Chile.

President Hu says friendship between Pakistan and China is deep rooted, but the volume of trade between them is far below its potential which should be made up now. A joint investment company is being set up to promote investment in several key sectors including power, oil and gas. Earlier, the target for bilateral trade which is now very favourable to China was $20 billion. But that has been moderated to a realistic over $15 billion — five times the current volume of trade.

The two countries also signed a multi-faceted five year development programme for trade and economic cooperation in agriculture, energy, communications, infrastructure, tourism and industry. Some of the projects will be promoted by the joint investment company. The capital of the company has not been specified. But that depends on the nature of the projects identified for development in various fields.

President Hu has identified three projects as monuments of economic cooperation between the two countries. They are the two nuclear plants at Chashma including the one under construction, the new Gwadar port and the Karakoram highway for the renovation and realignment for which China has approved $377 million.

Prime minister Shaukat Aziz is happy that China has become a capital exporting country and competitive and reputable Chinese companies are being encouraged to invest in Pakistan. An example of that is the $200 million Haier and Ruba economic zone inaugurated near Lahore by President Hu. More such Chinese economic zones are expected to come up when more feasible projects are identified. With foreign exchange reserves of over $1,000 billion, China feels it easy to invest large sums in feasible projects abroad.

Shaukat Aziz wants the FTA to promote the service sector. The joint statement issued at the end of President Hu‘s visit takes care of that need. They have agreed to put the trade in services on fast track to make the FTA in goods and services very comprehensive. Already over 50 Chinese companies are operating in Pakistan and this agreement will enable more Chinese companies to come in. It may take a long time for Pakistani companies to operate in the service sector in China. Shaukat Aziz says the output of the industrial sector in Pakistan has increased from 23 to 26 per cent in seven years and the output of the large scale sector has increased from 10 per cent to 13 per cent in the same period.

But this is not fully reflected in the textile exports particularly after the expiry of the quota regime for the developed countries on January 1, 2005. Competitors of Pakistan like India, Bangladesh and China are doing far better in the selling textiles. So the Chinese companies are to help Pakistan’s textile industry in the area of weaving so that it can earn more by exporting cloth in place of cheap yarn.

Textile exports have to become increasingly value added in view of the fact that the country is running short of cotton for its industries and may have to import cotton as the current production may not exceed 12.5 million bales. China is also to help us in setting up a software industrial park to accelerate its progress in the IT sector. Besides, it will also help in setting up an electronic complex for developing electronics industry.

Meanwhile, the government has decided not to privatise the heavy mechanical complex at Taxila, but to renovate and expand it to manufacture machinery for producing sugar, cement plants, etc. The Chinese help in this sector will be extremely useful.

What has been agreed is only a part of the large-scale cooperation to come. As the public sector and private sector Chinese companies examine the feasibilities of more projects, they may agree to work together on more of them and make the strategic partnership richer and larger. The formal agreements between Pakistan and China are many and far larger and the new proposals for cooperation which are yet to be formalised are far more and their success depends as much on Pakistan as on China.

The private sector in Pakistan has a large role to play to expand and sustain the cooperation in various fields. On the Pakistani side there are many companies which want to flourish through economic cooperation. They should try to make a success of the various memorandums of understanding and implement the projects quick.

After the departure of President Hu, an MOU was signed between the Chinese steel making company MCC Beris and Moghul steel of Pakistan in the presence of the industries minister Jahangir Tareen for making a million tonne of steel a year by using indigenous iron ore reserves. A Pakistani delegation will also tour China to enlarge the cooperation between the two countries in the steel sector.

The recent expansion in economic cooperation between the two countries is a follow-up of a joint statement by the heads of states of China and Pakistan in 2003 which provided guidelines for deepening the bilateral relations and that is to be carried many steps forward by the latest and far more comprehensive agreement. The joint statement lists cooperation in 31 areas.

The success of the new five-year agreement between the two countries will determine the scope for further cooperation. The private sector in Pakistan will have to make strenuous efforts to benefit from China’s cooperation in the areas listed.

First of all, the private sector has to make a thorough study of the Chinese economy and more so of its market structure and the study is not to be confined to conditions in Beijing and Shangai, but cover all the major cities of China. As the economy of China expands, its less known regions are also becoming important consumer centres and deserve the attention of the Pakistani exporters.

It may not be easy for individual Pakistani exporters to undertake such studies. The Federation of Chambers of Commerce and Industry (FPCCI) should undertake such a task. In fact, the FPCCI and the leading provincial chambers and the All Pakistan Textile Mills Association (APTMA) must set up such special study or research units and make proper use of the reports of trade delegations to China. They should also project Pakistan’s products in China through single country exhibitions and participation in Chinese trade fairs.

Pakistani businessmen working in partnership with Chinese firms in joint ventures should make maximum advantage of the opportunities. They should be fair in their dealings and give no reason to the Chinese to complain. The exporters should also avoid the common malpractices. Seeking high profits per unit should not be their objective as China is now famous for its low prices. And the quality of its products is improving constantly. Hence Pakistani products in China should also be known for their high quality and competitive price.

It is for the government to help the business community formulate a policy by lowering the cost of production and the cost of doing business in Pakistan. The government should watch the situation constantly and remove the irritants in the way of the manufacturers and exporters.

Pakistan has seven months for the formal launching of the FTA. Meanwhile, it has the advantage of the early bird openings. It should prepare well for the launching of the FTA and make it a total success as the Chinese want to help Pakistan as much as possible to make the strategic partnership a real success. Pakistan needs to score in this area spectacularly.