Pakistan has signed CPEC with China which will benefit Pakistan and china greatly, it will not only improve the trade between the two countries but also open doors for future international ventures, and China-Pakistan Economic Corridor is a major project of the Belt and Road.
The Impact of International companies in Pakistan will have an immense impact on the economy and stability of our country.
In reference to the CPEC government of Saudi Arabia has signed three grant agreements with Pakistan to finance three road infrastructure and energy projects. Agreements on Reko Diq gold, copper mines and Gwadar oil refinery likely to be signed soon.
In addition to the agreements signed on the national level by International companies in Pakistan, there have been agreements signed with the local housing societies in Pakistan and international companies for increasing business and attracting investors.
One of those major projects is Capital Smart City which has signed two major agreements with international companies to build a hotel franchise and a golf course in the society.
The implications of these contracts will certainly be vast, with that said speculations have already begun in the news. Let us discuss a few key points how the international companies in Pakistan will effect the country.
POSITIVE IMPACTS:
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Softens the image of Pakistan:
The involvement of international Companies in Pakistan and its coverage by international and local media definitely softens the tarnished image of Pakistan in front of rest of the world and opens the door for foreign opportunities in Pakistan. It gives the world a clear message to the world that Pakistan is a safe and a secure country with favorable business opportunities.
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Economical Growth:
The major impact will undoubtedly fall on the economy. The experts are hopeful and optimistic about the improvement of economy in the country. Change of government policies and involvement of foreign companies in the ongoing projects all over Pakistan is something to look forward to.
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Increase In foreign capital:
There are very few countries which have successfully marched on the road to economic development without making use of foreign capital in one form or the other and with the signing agreements of foreign companies
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Capital formation:
Capital formation will increase with the import of capital goods such as machines, tools, transport equipment and material etc., which will continue to be utilized in future endeavors as well.
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Authenticity of the Project:
The agreements between the international companies will be successful in developing trust of the investors not only from the local investors but the international entities as well. The value of the project increases immensely and its authenticity becomes unquestioned.
NEGATIVE IMPACTS:
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Expensive:
China’s involvement will rather be expensive for Pakistan since the loans taken by these companies will have higher implications on the economy of Pakistan.
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High Interest rates:
Interest rates are extremely high and are much closer to commercial rates and higher than the World Bank and International Monetary Fund offer
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High Expectation on return on Investment:
Companies and the investors expect high returns on their investments after Pakistan pays back the loans that these companies have taken from Chinese. The situation remains risky until the project is full developed and becomes a success.
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Uncertainty of Economic Growth:
There is definitely uncertainty of whether there will be economic growth from the new infrastructure and investors will get a 100% profit for their investment.
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Overstated Hope:
The marketing and the hype created by the officials though might be very promising but there is always a risk in potential development, as to if the impact fueled is just a hope and it might be exaggerated.
