Investing in Sudan a 'win-win' situation

Updated: 2011-08-29 07:17

By Ding Qingfen and Li Jiabao (China Daily)

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BEIJING - Sudan welcomes and is open to Chinese investment as it further develops its oil, agriculture and mining sectors following South Sudan's independence in July, Sudan's ambassador said.

Chinese investors create a win-win situation for both parties, Mirghani Mohamed Salih, ambassador of the Republic of the Sudan, said, adding that Chinese investment promotes not just economic but also social development.

Investing in Sudan a 'win-win' situation

South Sudan became independent on July 9 and the new state has the vast majority of the former state's oil reserves within its borders.

"Although we lost quite a lot of our oil, we gained peace and stability (from the separation) and this has provided us with the fundamentals needed for our economic growth," Salih said.

Losing such a vast amount of oil would be a blow to any country but the ambassador is confident that the economic outlook remains bright.

"We still have huge potential to tap in oil reserves and we have vibrant agriculture and mining sectors that will boost our economy. Oil, mining and agriculture are the three major industries," he said.

Before the split it was estimated that 80 percent of oil production, 500,000 barrels a day, came from what is now South Sudan. Sudan has the other 20 percent but it also has a pipeline and a port for oil exports.

Both countries are trying to come to an agreement on oil transit fees. Sudan is seeking a price of $22.80 a barrel from South Sudan.

Analysts believe agriculture will be a major factor in economic growth. The country is one of Africa's largest agricultural producers, said Wu Fang, a researcher at the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce.

Agriculture accounts for about 31.6 percent of Sudan's gross domestic product and it has 81 million hectares of arable land. Maize, millet, wheat and cotton are the major crops.

The country is also rich in mineral resources, including chromium, gold and iron ore.

China, a leading investor in Sudan, "will continue ... to be a big contributor to Sudan's economy," the ambassador said.

"Sudan provides preferential policies tailored for Chinese investors. We allow Chinese companies to wholly own local companies", he said.

Wu, from the Chinese academy, agreed. "Many Chinese companies want to invest in Sudan, and there is a wide range of sectors for cooperation."

During a recent visit to Sudan, Foreign Minister Yang Jiechi said that the two countries could cooperate further in oil, agriculture and mining.

China contributes up to 50 percent of annual foreign direct investment in Sudan, and the majority of this went into the oil sector, with China National Petroleum Corporation (CNPC) being a major player.

For example, in 2009, Chinese companies invested $8 billion in Sudan, and 90 percent of this went into the oil sector, according to statistics from Sudan.

The ambassador is optimistic that Chinese investment will grow rapidly, with the oil sector a favored destination.

A long-term agreement on oil between CNPC and the Sudanese government will be signed in the near future. "We have shown them the oil fields and they (CNPC) are conducting studies," the ambassador said.

In a major infrastructure project, China Civil Engineering Construction Corporation will build a rail link between Chad and a Sudanese port.

As Sudan discovers more oil fields, China's experience could be of immense benefit.. "It's a win-win situation," said Yu Wensheng, a researcher on African issues at the China Institutes of Contemporary International Relations.

With Sudan's economic growth model shifting from the oil sector to mining and agriculture, China's investment flow into these sectors will also grow, Salih said.

Six Chinese companies started investing in Sudan's cotton fields in 2010.

"China could help build agriculture-related infrastructure in Sudan, as outdated facilities are hindering the economy. Training programs for skilled laborers are another area for cooperation," Wu said.

The ambassador refuted some Western media reports that China's investment in Africa is ruining the environment and focuses only on natural resources.

"Our assessment of the impact of Chinese investment over the past 20 years shows China has been making a positive contribution," he said.

Trade between Sudan and China grew by 37 percent in 2010 from a year earlier to $8.6 billion.