One Belt, One Road win-win for China, Pakistan

Can you give some advice about preparing a safe, peaceful environment, enhancing expectations on investment returns for investors involved, through the infrastructures projects cooperation?

I think for any infrastructure projects, clearly security is a big factor. And we have this challenge in Pakistan too. In the case of One Belt One Road initiative, the government decided to set up a separate security unit, just to protect people who are working on it. So anybody who is working on that, dedicated to the initiative, would be protected by special force. This is a great initiative, because what usually happens, normally the local police is always under pressure, there are so many things going on, so the needs for protection goes up immediately. But there are also some forces that don’t like projects, who may try to create the trouble. So we need to have a dedicated force, whatever happens, there must be a force there all the time. I think it’s quite a good initiative for our government to provide for this force, give them the funding, the equipment, the training, and the resources. So when all the Chinese companies come in there, we could try to make sure nobody is security jeopardized.

What suggestions would you offer to foster co-financing for these projects? How to attract more social capital and private capital into these projects?

Clearly some of these projects are very commercially viable. Those projects have packages by banks and investment banks, securitized bonds can be shoot onto international markets, loans can be taken by many different banks, like AIIB now, which is a multilateral institution set up in China, it’s also a MDB, like the World Bank, they’re all there. So they are all viable for development of projects, financing will be available. And now we could benefit from the credit rating from UCRG and Dagong, it also helps. The other thing is whenever you build up these projects, the variability of these projects, the cash flow, the generator should be looked up very closely. Otherwise you’ll be leaved with a lot of debts and there’s no implement capacity. For the project to be intelligent, they have to be viable, and they have to be able to generate enough money to pay back. So that’s what the concept should be going, most developing countries are in shortage of capital. What One Belt and One Road initiative does for Pakistan, is the 46 billion dollars of projects to be coming, and they will be implemented on time. When they’re all built, new towns come up, industrialized state comes up, and more economic activities are generated. Because you opens up the areas of your country. So it’s what Pakistan’s banking on, and I’m very confident about the future success of the initiative. It will link China and Pakistan even closer together.

Is there any very successful PPP (Public—Private—Partnership) project cases that used to impress you as for the infrastructure construction?

We have to promote public private partnerships, because government cannot do everything. When private sectors comes in, the approach is different from the government. So public private partnerships can work very effectively. For example, you need electricity for your system, electricity generation could be given to private sectors companies rather than government doing everything. And they can sell it to the private distribution companies, which give to every home. The government could only be the regulator just to make sure the public interests are protected. And normally the financial needs of infrastructure projects are so huge that you need the government’s support, because government usually could give better credibility than private sector. And then private sector would bring management and expertise which is sometimes modern and superior to the government to do these things. So what already done in my government in Pakistan, is that we privatize a lot of asserts and give it to the private sector. However the regulation of government does not go away. Like the electricity system and the telephone system, we can give them to the private sector. But the regulator regime has to be there to protect the public interest. The government doesn’t have to own all these asserts. And it works well in the Pakistan.

How do policy makers in Pakistan value the AIIB’s prospect and future? Compared to the MDBs like the World Bank, ADB and New Development Bank, how would AIIB make specific contributions beyond them, or make up some space that used to be neglected?

The demand for development of financing in the world today is much more than the ability of the old institutions could offer to meet with. They don’t have the capacity to do it. So the first point is that there’s need for additional investment institutions. AIIB fills that void. AIIB would provide for another window even they can’t meet all the needs. The more people you have, the better it will be. The second point is the Britain financial institutions are built after the Second World War, and their structures, bylaws and regulations are going back to the old days, though staffs of these Britain institutions are excellent people. We should be driven by the merit, and by the merit alone. And as for the IMF, you have to be European, and the World Bank, you have to be American. And these, for nowadays, are clearly unacceptable. You should go for the best person, through a financial process, select the talent, the global search should be done, and through a professional manner. So there should be a lot of reforms and reconstruction to be needed among these institutions: the World Bank, ADB, IMF, they have to meet the new demands of the world, they’re living in the past. Good people, professional, but not based on merit.