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SCMP Reporter

GORDON Wu Ying-shueng says his decision to build a US$5.5 billion coal-fired plant in Pakistan was mainly because there was little red-tape, an 18 per cent rate of return and a 30-year tax holiday.

  Mr Wu, who yesterday was addressing a group of leading Pakistani and Hong Kong businessmen at a one-day seminar on investment opportunities in Pakistan, signed the deal on Consolidated Electric Power Asia's (CEPA) behalf earlier this month in Islamabad.

  He said CEPA's foray into Pakistan was part of a regional diversification away from power projects in China following the country's decision in December to cap its rate of investment return at 12 per cent.

  '[There was] no way we were going to risk our friendly bankers' money on 12 per cent return,' said the CEPA chief, adding that China's decision went against the international norm of 15 to 21 per cent returns.

  Mr Wu said he had planned to use the $1.8 billion raised from the CEPA flotation to build power plants in China but it had since signed projects in the Philippines and Indonesia because of the better returns.

  Mr Wu said he was approached by the World Bank during a visit to Washington in May to look at investing in Pakistan.

  He was sceptical in the beginning but was won over after he saw a document on power investment put together by the Pakistani Government.

  'The power document set out clearly what the authorities wanted on investment in the power sector. I have never seen a document [on the subject] so well presented - it's short, covers all the ground and is very sincere.'   Mr Wu said that with the exception of Indonesia, tax holidays were routinely offered for power projects but the maximum he had come across was only eight years, offered in Thailand.

  He added that the government had cut down on red tape by creating a 'one-stop agency' to handle all the negotiations between the government and foreign businessmen.

  '[We concluded] a $5.5 billion power deal in less than 12 months which is unheard of even by Hong Kong standards.'   In contrast, he had spent 12 years negotiating with China for the land to build the Guangzhou Superhighway while only two years were spent building it.

  Mr Wu also lauded the Pakistani Government for its decision to give foreign investors 100 per cent ownership of a project.

  '[Pakistan] is destined to be another tiger of Asia because they have the economic policies in place.

  'Obviously this is not going to happen tomorrow but if you give the country 10 to 15 years . . . it could surpass Malaysia because Pakistan is so rich in resources.'   He believed the government would continue with its economic liberalisation reforms started in 1988.

  'The sub-continent has awoken to the fact that they must liberalise the economy and let market forces go to work,' Mr Wu said.

  He noted that together Pakistan, India and Bangladesh had a combined population as big as China's.

  Late last month, CEPA signed a $12 billion deal to build two plants in China.

  The 61-member Pakistani business delegation, which leaves tomorrow, was led by Asif Ali Zardari, a member of the National Assembly.



Gordon Wu reveals reasons for US$5.5b power pact in Pakistan