Published Regional Research Report on Indirect Taxes

Published Regional Research Report on Indirect Taxes

Dear Readers,

It is with great pleasure that I share with you that ACCA’s report on ” Indirect Taxes – Current Trends across South Asia & UAE” has been published.

We at Millennium Law & Corporate Company are honored to be a part of this fantastic initiative and I’d like to take this opportunity to thank ACCA for their kind acknowledgement in the published version and otherwise.

Below are the direct link to the report and a brief summary of the report. I hope this is of benefit to you.

Direct Link:

Please find below the link to the research report on ACCA’s website and share your kind feedback at ozmeer@mlcc.pk:

Research Report on Indirect Taxes

 

Brief Summary:

Below is a very brief summary of key highlights, courtesy ACCA:

pi-indirect-taxes-sasia-uae-page-001

Tax is an instrument used to generate revenue and regulate national economies, it can be broadly divided into two categories: direct and indirect.

In many developing countries the contribution of VAT – an indirect tax – in total tax collections is increasing over time. This can be owing to an increase in unemployment or low per capita income as well as to innate features of VAT that make it less prone to tax evasion than income taxes, which are easier to evade/avoid.

Given the importance of VAT, this study discusses its features and the problems commonly faced by South Asian countries. Further, we look at the United Arab Emirates (UAE) which is in the process of introducing VAT and may benefit from the developments made in the VAT systems of various other countries.

KEY RECOMMENDATIONS IN THE REPORT INCLUDE:

  • Reduce tax concessions and tax amnesties, and avoid special regimes to protect the rudimentary character of VAT as a modern consumption tax.
  • Limit exemptions primarily to health, education, charity and basic essential food items (excluding those supplied at restaurants and hotels, etc.)
  • Use the services of VAT-experienced technical experts and professionals for smooth and trouble-free VAT implementation and management.
  • Reduce compliance cost but attract optimal voluntary compliance by building incentives into the tax system.
  • Share data among different government departments, organisations, institutions, authorities and agencies as well as between different government departments at regional and global level for BTB (broadening tax base) and anti-tax-evasion/avoidance purposes.
  • Make the VAT system a seamlessly integrated unified tax management regime with preference for single hand and single rate tax administration with a uni-declaration mechanism (in countries where powers to collect VAT are divided between the central/federal governments and the state/provincial governments).

Best Wishes,

Omer

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Formal Launch of My Youtube Channel

Dear Readers and Friends,

Assalam O Alikum! (Peace be on you),

The constant suggestion by many of you to launch a formal Youtube channel covering my key public and/or professional engagements with a dimension of educating and enlightening has been turned into a reality.

It is with pleasure that I announce on this auspicious day of Friday that my team has successfully launched the same. The channel can be accessed at:

There are already some very interesting videos covering some of the key current issues and opportunities such as Immovable Property Taxation Issues, CPEC, Budget Proposals, Finance Act, e.t.c.

We aim to constantly update our channel with valuable knowledge sharing videos. Your feedback and appreciation would be the fuel to keep us going in this effort. I hope you find this useful and wish you all the best in your lives and careers.

Take Care,

Omer

Inaugural session of Think Ahead with ACCA on CPEC – ACCA MNP Elections 2016-18

Salam,

Below is a picture from and video of the historic inaugural session of Think Ahead with ACCA (a TED Talk inspired program) on CPEC with me, resulting in ACCA becoming the pioneer accountancy body to launch such a program.

Mr. Hammad Azim (Head of Marketing, ACCA Pak) hosted the program. It was a phenomenal success generating over 27,000 views in just 2-3 days with extremely positive feed-backs. The technical content was highly appreciated and worked towards capacity building. The focus of this initiative was on expanding the footprint of and creating opportunities for ACCA fraternity.

CPEC

It is my vision and aim to build upon such historic successes for the betterment and professional development of ACCA fraternity.

This can only be possible with your vote and kind support in the ongoing MNP elections. For me, MNP is a platform to increase my positive contributions for ACCA fraternity, the profession and thereby our beloved Pakistan.

Please visit:           My Professional Profile, Achievements for ACCA & Manifesto  to consider me worthy of your valuable vote & kind support.

Thanks in anticipation.

Kind Regards,

Omer Zaheer Meer (ACCA MNP Candidate Sr. No: 23)

omerzaheermeer@hotmail.co.uk

 

Must Read: Malcolm X’s Letter from Makkah

Malcolm KSASource: Malcolm X’s Letter from Makkah (Original post from MyMFB.com)

Malcolm X, or Al-Hajj Malik El-Shabazz, is one Muslim who saw the light of true Islam through his Hajj in April 1964.  As a former member and speaker for the Nation of Islam, a black spiritual and nationalist movement, he believed that the white man was the devil and the black man superior.

After leaving the Nation of Islam in March 1964, he made Hajj, which helped change his perspective on whites and racism completely.

Here is an excerpt of a letter El Hajj Malik El Shabazz wrote a letter to his loyal assistants in Harlem… from his heart, telling them of his experience.  In it, he explains what it was during this blessed journey that made him so profoundly shift his perspective on race and racism.  We should keep in mind that this letter was written in a time when the history of African Americans in America was in making, a time when centuries worth of oppression was being spoken about and condemned in public.

“Never have I witnessed such sincere hospitality and overwhelming spirit of true brotherhood as is practiced by people of all colors and races here in this ancient Holy Land, the home of Abraham, Muhammad and all the other Prophets of the Holy Scriptures.  For the past week, I have been utterly speechless and spellbound by the graciousness I see displayed all around me by people of all colors.

“I have been blessed to visit the Holy City of Mecca, I have made my seven circuits around the Ka’ba, led by a young Mutawaf named Muhammad, I drank water from the well of the Zam Zam.  I ran seven times back and forth between the hills of Mt. Al-Safa and Al Marwah.  I have prayed in the ancient city of Mina, and I have prayed on Mt. Arafat.

“There were tens of thousands of pilgrims, from all over the world.  They were of all colors, from blue-eyed blondes to black-skinned Africans.  But we were all participating in the same ritual, displaying a spirit of unity and brotherhood that my experiences in America had led me to believe never could exist between the white and non-white.

“America needs to understand Islam, because this is the one religion that erases from its society the race problem.  Throughout my travels in the Muslim world, I have met, talked to, and even eaten with people who in America would have been considered white – but the white attitude was removed from their minds by the religion of Islam.  I have never before seen sincere and true brotherhood practiced by all colors together, irrespective of their color.

“You may be shocked by these words coming from me.  But on this pilgrimage, what I have seen, and experienced, has forced me to rearrange much of my thought-patterns previously held, and to toss aside some of my previous conclusions.  This was not too difficult for me.  Despite my firm convictions, I have always been a man who tries to face facts, and to accept the reality of life as new experience and new knowledge unfolds it.  I have always kept an open mind, which is necessary to the flexibility that must go hand in hand with every form of intelligent search for truth.

During the past eleven days here in the Muslim world, I have eaten from the same plate, drunk from the same glass, and slept on the same rug – while praying to the same God – with fellow Muslims, whose eyes were the bluest of blue, whose hair was the blondest of blond, and whose skin was the whitest of white.  And in the words and in the deeds of the white Muslims, I felt the same sincerity that I felt among the black African Muslims of Nigeria, Sudan and Ghana.

“We were truly all the same (brothers) – because their belief in one God had removed the white from their minds, the white from their behavior, and the white from their attitude.

“I could see from this, that perhaps if white Americans could accept the Oneness of God, then perhaps, too, they could accept in reality the Oneness of Man – and cease to measure, and hinder, and harm others in terms of their ‘differences’ in color.

“With racism plaguing America like an incurable cancer, the so-called ‘Christian’ white American heart should be more receptive to a proven solution to such a destructive problem.  Perhaps it could be in time to save America from imminent disaster – the same destruction brought upon Germany by racism that eventually destroyed the Germans themselves.

“Each hour here in the Holy Land enables me to have greater spiritual insights into what is happening in America between black and white.  The American Negro never can be blamed for his racial animosities – he is only reacting to four hundred years of the conscious racism of the American whites.  But as racism leads America up the suicide path, I do believe, from the experiences that I have had with them, that the whites of the younger generation, in the colleges and universities, will see the handwriting on the walls and many of them will turn to the spiritual path of truth – the only way left to America to ward off the disaster that racism inevitably must lead to.

“Never have I been so highly honored.  Never have I been made to feel more humble and unworthy.  Who would believe the blessings that have been heaped upon an American Negro?  A few nights ago, a man who would be called in America a white man, a United Nations diplomat, an ambassador, a companion of kings, gave me his hotel suite, his bed.  Never would I have even thought of dreaming that I would ever be a recipient of such honors – honors that in America would be bestowed upon a King – not a Negro.

“All praise is due to God, the Lord of all the Worlds.”

Malcolm X Thinker

Malcolm X saw and experienced many positive things.  Generosity and openheartedness were qualities which were impressed on him by the welcome which he received in many places.  He saw brotherhood and the brotherhood of different races and this led him to disclaim racism and to say:

“I am not a racist… In the past I permitted myself to be used… to make sweeping indictments of all white people, the entire white race, and these generalizations have caused injuries to some whites who perhaps did not deserve to be hurt.  Because of the spiritual enlightenment which I was blessed to receive as the result of my recent pilgrimage to the Holy City of Mecca, I no longer subscribe to sweeping indictments of any one race.  I am now striving to live the life of a true Sunni Muslim.  I must repeat that I am not a racist nor do I subscribe to the tenets of racism.  I can state in all sincerity that I wish nothing but freedom, justice and equality, life, liberty and the pursuit of happiness for all people.”

source:

From The Autobiography of Malcolm X with assistance from Alex Haley, the author ofRoots.

Budget, Taxation and Reforms – Blue Chip July 2015, 11th Anniversary Edition

The following article has been published in the renowned “Blue Chip” journal as an exclusive Op-Ed on Economy in its 11th Anniversary Edition published in July 2015.

Online Version Link: Blue Chip Article on Economy

Budget, Taxation and Reforms

Prof Dp

By: Omer Zaheer Meer

There were many positive indicators announced by the honorable finance minister, Mr. Ishaq Dar in his latest budget speech. The first one was the growth rate of 4.24% in 2014-15. Despite missing the target growth rate of 5.1% in last fiscal year, it is still a healthy sign when compared to the mere 3% from 2008 to 2013. The significant drop in inflation from 12% to 4.6% was also phenomenal. Fiscal deficit is expected to be brought down to the level of 5% of GDP from the previous level of 5.5%. However, all these were largely due to the significant reduction in global oil prices and the resulting deflation effects rather than the structural reforms and/or economic policies of the policy makers.

Furthermore, the foreign remittances to Pakistan showed an extravagant increase of 16.14%, which is the highest in the region and should be exceptional by any standards. However it would warrant further examination into the origins of the funds as the controversial law sanctioning no tax or questions about origins on foreign remittances has long made the foreign remittances route a heaven for money laundering and legitimizing black money. While legitimate foreign remittances are a great support for developing economies like Pakistan’s, the use of the above mentioned law for legalizing the black money actually costs more to the economy in terms of the lost revenue and the impact of black businesses on related industries.

In view of the above, it was rational to expect the shortcomings to be addressed in the budget including structural reforms in the taxation system pursuing a progressive regime, introduction of economic reforms and improvements in controversial laws hampering the economy. Whether that was the case is examined below along-with some recommendations

As for the reforms in the taxation system, the proportion of indirect and direct taxes has not changed substantially. This alone though is not sufficient as indirect taxes lead to a regressive system where not only are the rich and poor paying equal amount but unequal proportion of their incomes as taxes but it also causes inflation. This results in higher production costs, which leads to declining exports due to the loss of cost competitiveness and missed opportunities.

The government, in its defence points out to the existing trust deficit between the taxpayer and the taxmen which has created a tax avoidance culture in Pakistan. However there is a reason that all developed economies rely more on direct taxes to negate the disadvantages of indirect taxes which far outweigh the benefits to the national exchequer. The approach of using indirect taxes to fill-up government’s coffers has serious negative ramifications.

To make this clear, take the example of fuel. Upto 30% had been routinely charged as an indirect tax on every liter compared to only 13% in the USA. There are several types of indirect taxes levied within Pakistan including customs duty, sales tax, federal excise duty, petroleum levy, gas infrastructure cess, natural gas surcharge, e.t.c. All this focus on indirect taxation leads to inflationary pressures in the economy as increased prices translates into increased cost of production, services and living. The resulting impacts are hyper-inflationary in nature as there is a multiplicative rather than an additive element in the inflation passed-on at every level.

Furthermore the pay-rises are not proportionate to inflation. Only a 7.5% increase has been proposed in the federal budget. This forces people towards unfair means or rely on expensive credit in order to make their ends meet. Similarly finance requirements of businesses also increase. The resulting hyper-inflationary environment and decreased purchasing power leads to higher interest rates which negatively impacts the businesses as many otherwise viable projects become non-feasible. The declining business output results in lower employment opportunities which coupled with the limited money-supply puts recessionary pressures on the market. This ultimately results in the devaluation of the currency which in turn translates into increased foreign debt. As a result, financing costs of the foreign debts increases leading to a higher proportion of GDP being spent on debt financing. All this combined with hyper-inflation drags the already weak economy further back in Pakistan’s case.

It is therefore recommended that the policy makers should seriously consider pursuing a progressive tax regime where wealthy segments of the society are taxed more. Moreover large landowners and the various exempt sectors must be brought within the tax-net and the revenues raised should be utilized to subsidize the weaker segments of society and to support reforms. For example, it’s been suggested to the authorities before that the agriculture sector should be taxed at a reasonable rate, 5%-7% for landowners with holdings over 12.5 acres and the revenue raised should be used to subsidize the water and electricity for the agriculture sector. This would enhance the yield and therefore the GDP. To summarize, the proportion of direct taxes should be increased and reliance on indirect taxes should be minimized. While some exemptions have been withdrawn in the finance bill which is commendable, more needs to be done in this regard.

Also some structural reforms in the taxation system can go a long way to assist the authorities in meeting their revenue targets. One good step is the current budgetary proposal to allow computerized national identity card (CNIC) number to be used as the National Tax Number (NTN). However the proposal for using the CNIC number as Sales Tax Registration Number (STRN) for all citizens has been ignored. Together both these steps could not only make it extremely easy for any Pakistani to start a business having the requisite tax registrations and thereby promoting a culture of entrepreneurship but would also help broaden the tiny existing tax base as the number of filers and ultimately taxpayers are forecasted to increase with the increasing documented nature of the businesses.

Another key reform could have been to decrease the tax rates to make it more feasible to pay taxes with stringent penalties and cost of avoidance acting as a deterrent. The increase in the tax base would more than compensate for the loss from lower rates. Currently Pakistan has one of the lowest tax bases and tax-to-GDP ratios in the region. If implemented this proposal can turn this around and increase them both substantially.

In addition, to restore the faith of the taxpayers a multi-dimensional tax reforms agenda which has been constantly recommended by this writer must be implemented, where:

  • Taxpayers are encouraged and incentivized for paying taxes.
  • Taxpayers are facilitated by making the process easier and fairer, focusing on maximum automation in order to stem out corruption.
  • Instead of increasing the tax rates the tax net is constantly widened.
  • More focus is given to direct taxation.
  • Meaningful tax rebates and reliefs are introduced for the less able sections of the society.
  • A system of proportionate taxation is adopted with more affluent contributing more to the treasury.
  • Certain exempt sectors are brought into the tax-net (subsidies can be given for assisting any under-pressure areas/products).
  • Tax rebates and incentives are introduced to encourage foreign/local investments in key sectors with tax-breaks for transfer of technology, e.t.c. as may be required in a particular sector.
  • Tax money is actually spent on public welfare and infrastructure projects, which will improve the spending capacity and the business environment in Pakistan.
  • The massive corruption in public contracts/projects, now routinely in the range of 40-50% of tender values, is eradicated for better and efficient use of public money through revamping the pay and accountability structures.

Similarly the controversial law allowing foreign remittances to be brought to Pakistan without having to declare the source of origin or pay any taxes has more disadvantages than the benefits it brings. Let’s elaborate this further. As mentioned before, Pakistan saw an increase of 16.14% in foreign remittances from $12.89 billion to $ 14.97 billion in the last fiscal year. What’s interesting is that the remittances in the entire region have seen a much humble growth. Also, the work profile and the resultant pay scales of ex-pats Pakistanis have not been changed drastically. Furthermore, the inflation and cost of living has actually declined for the relatives of ex-pat Pakistanis as per the figures revealed by the finance ministry. Considering all this and the various studies conducted in the past, it can be safely said that a huge chunk of the foreign exchange remittances are actually the black money laundered and then brought back to legitimize the funds and that too tax-free. Now infamous model Ayan Ali is a case in point. We don’t know for sure how many Ayans are currently doing what she was caught for. It is therefore high time that the finance ministry officials give this a serious thought and atleast consider introducing checks about origins of finances to control and curtail the illegal economy hampering Pakistan’s economic development rather than actually assist it for some short-term gains at the cost of longer-term losses.

Pakistan has been blessed with all kinds of terrains and weathers, fertile lands, valuable natural resources, a high proportion of population been young and hardworking with cheap labor availability. A fairer system of taxation coupled with some key reforms culminating into a fairer economic policy can provide the necessary environment to harness the economic potential of Pakistan.

The key reforms outlined above, if properly implemented with a focus to rely on and develop indigenous capabilities, can resolve the current enigma facing the treasury. With the above actually implemented, there is no reason, why Pakistan cannot stand on its own feet and become an economic hub not only for the region but the whole world. Let us hope that our representatives give this all a serious thought while passing the amendments to the federal budget.

The author is Director of the think-tank “Millat Thinkers’ Forum”. He is a leading economist, CFA Charterholder, experienced fellow Chartered Certified Accountant and anti-money laundering expert with international exposure who can be reached on Twitter and www.myMFB.com @OmerZaheerMeer or omerzaheermeer@hotmail.co.uk

CPEC a Game Changer

The following article has been published in Daily Nation, dated 29th June 2015

(E-Paper (Print Edition)http://nation.com.pk/E-Paper/lahore/2015-06-29/page-9)

(Onlinehttp://nation.com.pk/business/29-Jun-2015/cpec-a-game-changer)

HNPI declares CPEC a Game Changer

Prof Dp

By: Omer Zaheer Meer

China Pakistan Economic Corridor (CPEC) is one of the most discussed topics in Pakistan of late. Several aspects of the proposed “super project” have been examined. It is rightly placed as a game changer for not just Pakistan or the region but one with the potential to change the global economic, military and strategic landscape. Before moving ahead on the topic let’s recall that CPEC is a series of projects worth $ 45.6 billion, aimed to connect Gwadar port in Pakistan strategically located on Arabian Sea just outside the Strait of Hormuz, with Northwestern China (Xinjiang) via Khunjrab (last town on the Pakistani side) along-with several development and uplift projects for transportation, energy and technical infrastructure in Pakistan. An extensive development and uplift of road and rail links is envisaged with energy pipelines decorating the “new silk road”.

In simple terms the plan is to provide the world with a new silk road for global trade, places so strategically that it makes it the most cost-effective and quickest route. The port fees, access charges and transportation revenues alone would be worth billions of $ for Pakistan. If proper policies are implemented, the industrial and business developments particularly along the routes can turn Pakistan into a global economic powerhouse.

It was against this backdrop that this writer was honored to be invited by the Mr. Absar Abdul Ali, director of the prestigious Hameed Nizami Press Institute (HNPI) as a keynote speaker to participate on a seminar on the subject. Mian Iftikhar, the head of the Engineers study forum worked extensively with his team to invite a bouquet of experts from various fields. The result was a brilliant seminar which thoroughly covered almost all the aspects relating to CPEC. Though all the speakers were learned and did justice to their subject, Engineer Iftikhar ul Haq and Mrs. Naheed Ghazanfar from UET covered areas largely neglected re CPEC. The latter explained the technical details of the construction and potential of tens of thousands of jobs resulting from the construction projects alone. Her experience of having already worked with Chinese on critical projects came in handy there. In addition to the above the following points were also discussed at the said event.

A common perception has developed amongst the masses of late that CPEC is all about the road network being built to link Gwadar with China. This is not true as one can see from the list of the projects envisioned under CPEC and shared on these pages before by this writer. While undoubtedly the road and rail links are of fundamental and strategic importance with long-term revenue generation potential and the ones which can be the catalyst for a geo-political shift in the region, they are not this project is all about. Infact most of the projects are related to technical and energy infrastructure projects. To put it in perspective, more than 70% of the proposed $ 45.6 billion investment is expected to be spent on these projects.

In addition to the benefits to Pakistan, the strategic benefits and significance of CPEC to China were also extensively discussed which includes the following:

Firstly China is heavily dependent upon the oil from Gulf. CPEC will reduce the transportation distance from 16,000 km to just 5,000 km for its oil imports of which 8-% is transported via ships while 60% comes directly from gulf, resulting in substantial economic savings, more business all around the year and neutralizing the threat of blockade by political rivals.

Secondly CPEC will also give China unparalleled access to the untapped and raw energy rich markets of Central Asia and Afghanistan, These regions are collectively seen as the next big thing in energy and natural resources terms. China envisions utilizing this for securing its energy needs for the next century as well as placing itself as the world leader re energy security by having similar influence and control on the future energy sources as the one currently held by America over the gulf.

Thirdly CPEC will also allow economic benefits to flow to lesser developed and troubled regions of western China including Muslim-majority Xinjiang. Also the enhanced security ties with Pakistan and economic developments, China hopes to eliminate the unrest in Xinjiang.

Last but not the least CPEC will provide China an additional key port, an opening to the world from its western side and the capability to blockade the oil supplies to any future adversaries by having a key naval port at Gwadar. The current attempts to encircle and contain China would therefore become redundant.

Moreover while it must be appreciated that the controversy over the three land routes planned to link Gwadar to Xinjiang is old and settled now with the Government promising to complete the western route passing largely through the underdeveloped Balochistan and KPK first, it is also a lesson for the decision makers. There are outside efforts led by India to disrupt the CPEC, evident by the now well publicized news of a RAW division established with starting allocation of $ 3 billion for the sole purpose of disrupting CPEC. Chahbahar port of Iran and Dubai port of UAE are at risk to become redundant with huge economic costs to them once CPEC is fully operational.

This unfortunately aligns Iranian and Emirati interests with Indian. Moreover quite obviously, the strategic great game with aims of containing China translates into USA having its interests in seeing through it that CPEC does not become successful. With the vested interests of all these regional and global players at stake, it is advised that all local stakeholders be taken into confidence and CPEC branded as a national project instead of belonging to any one party. We must remember that no outside efforts to disrupt can be successful without genuine internal dissatisfaction.

The author is Director of the think-tank “Millat Thinkers’ Forum”. He is a leading economist, CFA Charterholder, experienced fellow Chartered Certified Accountant and anti-money laundering expert with international exposure who can be reached on Twitter and www.myMFB.com @OmerZaheerMeer or omerzaheermeer@hotmail.co.uk

Pakistan can’t afford turning CPEC into another KBD (Part II of II)

The following article has been published in Daily Nation, dated 25th May 2015

(E-Paper (Print Edition)http://nation.com.pk/E-Paper/lahore/2015-05-25/page-9)

(Onlinehttp://nation.com.pk/business/25-May-2015/pakistan-can-t-afford-turning-cpec-into-another-kbd-part-ii)

Pakistan can’t afford turning CPEC into another KBD (Part II)

By: Omer Zaheer Meer

Link to Part I (Published): https://omerzaheermeer.wordpress.com/2015/05/18/pakistan-cant-afford-turning-cpec-into-another-kalabagh-dam-part-i-or-ii/

PART II

CPEC is strategically very important for China as it imports 60% of its oil from the Gulf of which 80% is transported by ships travelling over 16,000 kilometers in approximately three months on average through Strait of Malacca to Eastern China. This existing route is not only longer but is ridden with regular attacks by pirates, bad weather and political rivals under American and Indian influence. So the strategic benefits to China can be categorized in four major areas:

  1. China is heavily dependent upon the oil from Gulf for its energy needs. China will reduce the transportation distance from 16,000 km to just 5,000 km resulting in huge economic savings and quicker business all around the year sans the threat of blockade by political rivals.
  2. China will gain access to the untapped markets of the energy rich Central Asian states and Afghanistan which are termed as the next big thing and “Gulf replacement” for coming century. With this early access, developed secure routes and trade ties China can not only secure its energy needs for the next century but place itself as the world leader re energy security by having taps on the future energy sources, a place currently held by the USA.
  3. China will be able to spread its economic development benefits to its lesser developed western areas including the troubled Muslim-majority region of Xinjiang. Furthermore with enhanced security co-operation with Pakistan and economic developmental gains, China hopes to curb its troubles in its underbelly.
  4. Last but not the least, CPEC will not only provide China with an opening to the world from its western side but also ensure that by having a potential naval presence at Gwadar, not only does it hold an additional sea-port but has the capability to blockade the oil supplies to any future adversaries. Any attempts to encircle China such as those currently pursued by USA would become futile in such a scenario.

The benefits to Pakistan are numerous too. Some of the major ones are as below:

  • Uplift and development of badly needed transportation, technical and energy infrastructure.
  • Economic development through industrial and commercial zones setup along the CPEC.
  • Potential to earn billions of $ in transit fees, cargo handling and transportation charges.
  • Becoming economic connectivity hub for the entire region and beyond.
  • Security benefits of Gwadar port as outlined above.
  • With enhanced security ties with China and the economic developmental benefits, Pakistan also expects of stemming out the terror in lesser developed areas of Balochistan and KPK.

Considering all the significant benefits and strategic potential of the CPEC it was unfortunate that it became controversial. The controversy is two pronged. There are those who genuinely felt that the economic benefits of the CPEC were moved away from their provinces to Punjab, being the political constituency of the incumbent Government. However, there are also efforts led by India to disrupt the CPEC as is evident by the recently created desk at RAW with initial allocation of $ 3 billion for this purpose. Furthermore by signing accord to develop Chahbahar port with Iran, India has aligned Iranian interests with itself too. Moreover UAE’s interests also clash with Pakistan’s as the success of CPEC will render Dubai port an invalid. Furthermore, the strategic great game means that USA would rather not have it to see CPEC successful.

None of the external efforts would have been and can be successful without some genuine internal dissent though. Unfortunately the lack of transparency and undue secrecy around the CPEC allowed the propaganda as well as the genuine concerns to grow. Moreover the eastern route was the most talked about during the Chinese President’s visit to Pakistan, further raising concerns of depriving smaller provinces of their due. Absence of KPK, Sindh and Balochistan CM’s while CM Punjab was in attendance didn’t help the situation either. Therefore, KPK Assembly passed a resolution demanding the original route to be retained while Balochistan Assembly’s resolution demanded clarification on CPEC benefits to provinces from the federation. ANP then convened an “all parties’ conference” pressing the controversy and concerns forward.

Though late but some positive steps were taken. A meeting of the leaders of all parliamentary parties was convened to enlighten them on CPEC but the “Safora Goth” tragedy overshadowed the effort. However, the meeting didn’t address concerns with regard to greater transparency as little is revealed regarding the technical and financial parameters of the CPEC projects. The funding sources were also clouded in mystery but it now seems that most of the “investment” is in the form of soft loans with Chinese firms to execute several projects. Federal Minister for Planning and Development Mr. Ahsan Iqbal has claimed that all routes of CPEC are being worked at simultaneously and the western route will be the first one operational. Similarly he has claimed that Sindh and Baluchistan will be the biggest beneficiaries of power generation under CPEC with 36% and 26% shares respectively.

The government should use media to educate masses about the above claims as well as share why the alternate routes were developed. Was it to ensure connectivity across the country with developed areas, out of Chinese concerns for safety of passage in case of trouble on the route via Balochistan (as mentioned by some Chinese scholars in their write-ups in international media), to cater for the huge trade volume expected or some other reasons? Also more transparency such as clarifying that why the current PSDP contains allocations under CPEC only for the eastern route and not the others will help dispel the concerns and negative propaganda. CPEC is a game changer for Pakistan and the Government has the responsibility to ensure its successful completion. Pakistan cannot bear the potential loss and the dire consequences of CPEC turning into another “Kalabagh Dam”.

The author is Director of the think-tank “Millat Thinkers’ Forum”. He is a leading economist, CFA Charterholder, experienced fellow Chartered Certified Accountant and anti-money laundering expert with international exposure who can be reached on Twitter and www.myMFB.com @OmerZaheerMeer or omerzaheermeer@hotmail.co.uk