Binding ties
Yan Wei

“China-ASEAN relations are a fine example of friendly exchanges between countries in this region. They have brought real benefits to the peoples of China and ASEAN countries and made important contributions to peace, stability and prosperity in Asia and the world at large.”—-Chinese Premier Wen Jiabao, speaking at the summit marking the 15th anniversary of the establishment of the China-ASEAN dialogue
The day before the annual exposition co-sponsored by China and the Association of Southeast Asian Nations (ASEAN) opened in Nanning, Donny W. Nagasan, a 29-year-old Indonesian, and his father were busy at the exhibition center, decorating their booth with posters and sorting out everything for the show.
They are chief executive officer and chairman, respectively, of an Indonesian food company, Landkrone, which manufactures oil and fat products from the country’s abundant palm and coconut oil. Having just signed a contract with a Chinese agent, they appeared in high spirits. “Everything is going well; we may set up a factory in China,” said Nagasan.
For Landkrone, a firm that employs some 200 people with an annual turnover equivalent to about $129 million, building up a sales network in China is only the first step in penetrating the potentially huge market of the world’s most populous nation.
Ip Cho Yuk, the company’s adviser, said Landkrone now exports its butter to Europe and Africa but the demand for butter, an important ingredient in making bread and biscuits, in China can be even greater than in Europe.
“We are eager to establish a presence in China so that the Chinese can share our first-class products,” said Ip. He added that he can feel the Chinese Government’s enthusiasm to attract foreign investment, adding that Nanning is a good place to get started since it is geographically closer to Indonesia and has a good investment environment, such as easy access to seaports.
At present, the company’s biggest concern is the tariff. Ip said the 25 percent tariff, plus the 17 percent value added tax severely reduce the products’ competitiveness in the Chinese market. He indicates it is his hope that China will scrap the tariff on ASEAN products as the two sides intensify their efforts to establish a free trade area by 2010.
Landkrone is among the 3,000 companies that had displays at the four-day China-ASEAN Expo from October 31 to November 3. The expo, which has been held annually since 2004, is designed to offer business people a platform for exploring opportunities in China and ASEAN, two large and growing markets. The high-profile event this year was jointly inaugurated by government leaders from China and the 10 ASEAN member countries in a display of determination to cement trade and economic ties between China and ASEAN.
A consistent policy
“The ASEAN region represents a market of over half a billion people for Chinese exports. It is a supplier of much-needed resources. In turn we-the ASEAN countries—can reduce our dependence for our exports on Western markets, such as the United States and Europe.” —-Philippine President Gloria Arroyo, speaking at the launch of the Third China-ASEAN Expo
Statistics show that bilateral trade volume between China and ASEAN reached $130.37 billion in 2005, with each being the other’s fourth largest trading partner. In its rapidly growing trade with ASEAN, China has posted a deficit, which hit $19.6 billion by 2005. However, Premier Wen Jiabao sought to reassure ASEAN countries when he addressed the opening ceremony of the Third China-ASEAN Business and Investment Summit in Nanning on the day the China-ASEAN Expo opened. He said despite China’s deficit, it is willing to open its market to ASEAN countries and will continue to increase its imports from ASEAN.
Chia Tai Group, the first foreign-invested company in China after the country adopted the reform and opening-up policy in the late 1970s, has benefited from China’s uninterrupted openness. Founded by Thai investors of Chinese origin, it entered China via Shenzhen, the first special economic zone in China, in 1979.
Today, the group has over 200 companies across the country, with a total investment of nearly $5 billion and a staff of more than 80,000. It is engaged in a wide range of businesses with agribusiness as the core.
Like the executives of Landkrone, Prasertsak Ongwattanakul, President of the Shanghai-based E.C.I. Group, Chia Tai Group’s industrial wing, has his eyes set on China’s huge market of 1.3 billion prospective customers. Moreover, he noted that the ever-strengthening relations between China and ASEAN countries have brought great opportunities to both sides.
Reviewing Chia Tai’s history in China, he said China’s greatest credibility is that its policies have remained stable through the years. “Since China opened its doors some 30 years ago, Chinese leaders have all been committed to the policy.”
However, he said he believes that China will play a more proactive role in the region with its economy revving up. China used to rely on foreign-invested companies like Chia Tai to fuel its economy, but today these companies have introduced China to the world, he said, adding that Southeast Asia now counts on China to achieve economic growth.
In an interview with Beijing Review, he repeatedly emphasized that Chia Tai is a Chinese brand rather than Thai. For one thing, the company is registered in China; for another, its Thai investor has a different name-Charoen Pokphand Group, he said. As a Chinese company, Chia Tai wants to participate in China’s “going global” strategy, a slogan that inspires Chinese firms to establish an international presence. According to him, Chia Tai currently exports motorbikes to some other countries, including Bangladesh, and in the future it may even set up subsidiaries in ASEAN countries as a Chinese investor.
Investment gap
“We have reason to believe-we have always believed-that China has never been a threat. Seeing China as a threat is wrong.”—-Malaysian Prime Minister Abdullah Ahmad Badawi, addressing a press conference on the sidelines of the series of China-ASEAN events in Nanning
However, the campaign to go global is still at a fledgling stage. By the end of 2005, ASEAN countries had made actual investments totaling $38.5 billion in China in nearly 30,000 projects. Compared with these figures, China’s investment in ASEAN countries remains small, standing at $1.08 billion by 2005. “But you should look at the trend and the development,” said Wan Jifei, Chairman of the China Council for the Promotion of International Trade (CCPIT), told Beijing Review.
Wan explained that in past years China gave top priority to utilizing foreign investment. As the investment environment has continued to improve, companies from the ASEAN countries, which came to China rather early, have enjoyed rapid development, he said. It was not until two or three years ago that Chinese firms began to eye foreign markets.
It is only in the last few years that the Chinese Government has accumulated adequate foreign exchange, that the firms have grown competent enough to leap into the cutthroat international market and that the government has adopted policies in this regard, he noted. However, the trend is growing fast. In the first six months of 2006 alone, China invested $152 million in ASEAN countries.
Wan predicted that China’s investment in ASEAN countries is bound to rise dramatically in the next few years, especially in fields such as natural gas, petrochemicals and offshore oil exploration.
One such deal was unveiled by Malaysian Prime Minister Abdullah Ahmad Badawi and Wen on the sidelines of the Commemorative Summit in Nanning on October 30 marking the 15th anniversary of the dialogue partnership between China and ASEAN. Under the deal, Malaysia’s state-owned oil and gas firm Petronas will supply China with liquefied natural gas worth $25 billion over 25 years.
Abdullah said at a press conference that the Malaysian Government would keep encouraging Chinese investment in Malaysia, while identifying energy and biotechnology as key areas of cooperation between the two countries.
Wan said the Chinese and ASEAN economies are highly complementary, with China enjoying competitive advantages in sectors such as manufacturing, high technology and agriculture. At the same time, he noted that ASEAN countries see great value in China’s stable, rapidly growing economy, hoping to cash in on China’s development.
Given these factors, he said the Chinese Government as well as the CCPIT are expected to pave the way for Chinese firms to expand internationally. The CCPIT, for its part, will provide useful information for the firms seeking ASEAN markets while establishing a platform of communication between them and their prospective partners in ASEAN countries.
Working contacts
Wan said the CCPIT has extensive contacts with chambers of commerce in the ASEAN countries. For example, he said the CCPIT created the China-ASEAN Business Council in 2001 together with the ASEAN Chamber of Commerce and Industry, national chambers of commerce and industry in ASEAN countries and entrepreneurs. Within this framework, the CCPIT is also seeking to establish bilateral business councils with ASEAN countries to further facilitate trade and investment.
Li Ruogu, Chairman and President of China Exim Bank, pointed out that while being capable of operating projects in foreign countries, many Chinese firms simply lack the funds. Unable to make use of many financing instruments at present, they mainly depend on banks to finance their overseas operations, he noted. In this context, China Exim Bank, a Central Government-owned bank tasked with supporting economic and trade cooperation between China and other countries, is obligated to offer strong financial support to the Chinese companies seeking to invest in ASEAN countries.
According to Li, the bank offers preferential loans as well as regular loans to sponsor infrastructure construction in ASEAN countries such as power plants, expressways and railways. He also said the bank would implement the commitment made by Premier Wen last year to offer $5 billion in preferential loans to ASEAN countries as soon as possible.
According to Wan, the CCPIT will sign a landmark agreement with China Exim Bank to development strategic cooperation between the two trade promoters so that they can make the most of their respective advantages in a bid to strengthen economic and trade links between China and other countries.

(The Daily Mail-Beijing Review Articles Exchange Item)


Nuclear technology & Pakistan’s energy needs
Shamsa Ishfaq

Discovery of Khushab Nuclear Reactor (KNR) and a report published by Institute of Science and International Security (ISIS) has been projected in many different ways by various quarters. The report said that Pakistan was building a new nuclear reactor at Khushab that could produce enough plutonium for 40 to 50 nuclear weapons a year, which would be a major expansion of its nuclear programme and could prompt an intensified arms race in South Asia. The report was released in the same week that the US-India nuclear deal was slated for a vote in the House of Representatives and F-16 deal concluded its 30-day notification period.
Some critics highlighted KNR as Pakistan’s reaction to Indo-US nuclear deal. Some used this information to block F-16s sale to Pakistan and some linked it to AQ Khan emphasizing the need to pressurize Pakistan. However, Bush administration has rejected such allegations saying that ‘we are aware of Khushab nuclear reactor. The reactor and its capacity mentioned in the report are grossly exaggerated’.
It needs to be understood that Pakistan’s nuclear programme is neither proliferation nor aggression. It intends to keep the atomic sphere peaceful without disturbing the peace in South Asia. In addition, Pakistan’s energy needs necessitate the acquisition of nuclear technology for peaceful purposes. It was pointed out in 1980 by the then President General Zia that, “ the acquisition of nuclear technology is imperative to meet the country’s energy requirements because neither oil nor hydro electric power would be able to meet the country’s requirements in future and alternate source of energy could only be provided by nuclear technology”.
Pakistan is a fast developing country and, therefore, its energy requirements are increasing day by day. Its increasing population and demand for improving economic status and living standard stipulates a substantial increase in the total energy consumption. Almost all of her hydel resources for generating electricity have been utilized and fossil fuel reserves are scarce. Pakistan needs to generate 8,800 MW of nuclear energy by 2020 to cater for growing energy needs. Nuclear power generation is a mature technology and nuclear energy is relatively cheaper, economic and important source of power.
Despite the developments in nuclear field, Pakistan is fully committed to the doctrine of minimum credible deterrence. Her nuclear programme is peaceful and is in safe hands. Pakistan instead of plutonium took the uranium route for its future Light Water Reactor (LWR) for nuclear stabilization and restraint in South Asia.
Plutonium is needed usually for Fast Breeding Reactor (FBR). Pakistan has single facility for separating or recovering plutonium from spent uranium fuel rods at the Karachi Nuclear Power Plant (KANUPP). KANUPP is under the International safeguards and the International Atomic Energy Agency (IAEA).
No doubt Pakistan’s nuclear programme has helped maintain power balance between India and Pakistan which was disturbed in 1974 and then in 1998 with the explosions of atomic device by India. While the nuclear deterrence is maintained there is a considerable scope to use this technology to promote prosperity, progress, human health and environmental protection.
Pakistan has no choice but to take atomic technology since it is not possible any longer to fulfill the country’s energy needs through conventional methods, which are thrice as much expensive. And as power producers, the reactors run on enriched uranium are graded as cheaper and superior. For the same reason over 90 per cent of the nuclear reactors producing nuclear power in the world are run on enriched uranium.
The tremendous effect of advanced science and technology is felt once transformed into productive force. Thus, Pakistan’s nuclear technology is intended to bring about obvious social and economic benefits and she should be given a way to improve the lot of its people.


Development linked to population control
Arham Khokhar

WHILST the Government is wrangling with the restive Balochistan further complicated by the involvement of foreign hand, it has not put emergent problems like, population control and eradication of abject poverty in the backburners. Pakistan is confronted with a horrendous problem of over population. If the present rate of sprouting population goes unchecked, the country would move towards the worst-ever crises in near future. As estimated in July 2006, by CIA World Fact Book, Pakistan with 165,803,560 people living on its soil is the sixth most populous country on the globe and fourth in Asia and pacific region. By looking at this unabated trend, Pakistan’s population would shoot to 195.5 million by 2020, says a National Institute of Population Studies (NIPS) report. Pakistan is just one of many countries in which high population growth has fueled abject poverty. According to the Government’s latest estimate in June 2006, 23.9% people are living in poverty. The impact of population growth on poverty is obvious, as the country will find it hard to support such a large number of people even with our present GDP growth rate of 6-7 per cent. The government is seriously striving to reduce the population growth rate, to about 1.3 per cent in the coming years. If this is achieved, the benefits of economic development in the country will begin to expand to the lower-middle and lower classes, where they are most required. As per government’s latest statistics, the GDP per capita is US $847 (Rs 51,000/- or Rs 4,250/- per month), life expectancy has improved to 64 years, and literacy rate of adult population has crossed well over 50%.
It is imperative to contain the rapid population graph in the country to ensure “sustainable economic growth rate” as it is essential to bring improvement in the quality of life of the people. The government is committed to stem population growth rate so that better health care facilities are provided to the people and their quality of life is improved. The development and prosperity level can be sustained by overcoming higher population growth rate. The Government is spending Rs 4.4 billion (100 per cent increase) on the programs to control increasing population during current fiscal year. If population growth spirals out of control, it poses severe challenges to the society. Rise in unemployment at national level, fragile infrastructure and problems of housing and food security are the product of increasing population. We have to overcome these problems, and the only way out is that a moderate population guarantees for our national development.
13,000 people from all over the country have undergone training for the crash courses for prayer-leaders (Imams) and teachers. These courses were focused on family planning in line with the teachings of Islam. However, the programme was hit by the leaders of different religio-political parties. They consider that the burgeoning population is not a burden on the national economy rather every newborn brings in his own fortune. They don’t know that even the robust economy growth would nullify all achievements. These hardliners and other religious parties should get together and work on this vital project and help the government. It should not be connected with politics but with the practical need which must be addressed by all of us. However, these two factors are responsible of reducing the population growth rate from 2.9 percent to 1.86 percent.
Containing rapid population growth to ensure sustainable economic growth rate of country is on top priority list. At the present time, the population of Pakistan is on decline but to maintain it in that trend can help a lot in achieving the progress. Pakistan is now among the top eight countries in terms of high economic growth. The world’s second-fastest growing economy after China, is Pakistan. The country’s $110 billion economy is estimated to have grown 8.4 percent in the last fiscal year. While poverty still remains endemic, and inflation rate shooting up to double digit, a new middle class has increasingly started to emerge in Pakistan. Financial advisors and economists forecast that once Pakistan crosses the $1,000 threshold, as China did last to last year, it will become a middle-income country with a lucrative domestic market of 165 million consumers. The progress achieved in various sectors should stay in conformity with the decline in population growth, so the fruit of development may be trickled down to the common man.