China-Pakistan Economic Corridor (CPEC) is expected to be a ’game changer’ not only for Pakistan and China but also for the whole region. The CPEC has the potential to usher in a new era of economic progress and prosperity for both countries and benefiting the whole region as well. Work on $47 billion CPEC is currently underway in which Gwadar port in Balochistan is essential part of this project involving construction of highways, railways and energy pipelines connecting western China with Pakistan and the Persian Gulf. After construction of the proposed rail, road and pipeline projects between China and Pakistan, Gwadar port will handle most of the oil tankers to China. Gwadar has the most advantageous location for an alternative port in the region and it could handle mother ships and large oil tankers and capture the transit trade of the Central Asian Republics (CARs) as well as the trans-shipment trade of the region, according to the Ports Master Plan Studies of Asian Development Bank.
The experts argue that Central Asia cannot be commercially served, as most of the ports in the Gulf are located on the wrong side of the Gulf. Gwadar port becomes a viable proposition for being located in the vicinity of both the Gulf states and Iran. According to one estimate, a fully functional Gwadar port could earn handsome revenue of $40 billion a year. The port is expected to be a higher revenue earner in terms of foreign exchange for the country, as China, Afghanistan, Central Asian states and Russia would also be using the port where huge cargo ships of up to 0.25 million tons could anchor.
With a fully operational port, Pakistan will become a key player in the Persian Gulf region and serve as an energy corridor for Central Asia, South Asia and western China provided the Gwadar port will prove a milestone in promoting regional trade between Pakistan, Iran, Turkey, Afghanistan and Central Asian states. For Pakistan, Central Asia is very important part of the region as the country is located close to the warm waters. Gwadar port is being developed into an international port with huge investment of China and the road network is being completed with the assistance of Asian Development Bank, which will connect CARs with this port and would generate massive economic activity in the region. The goods produced in Pakistan can be exported to CARs at much cheaper transportation rates.
CPEC will convert Gwadar into a regional hub of business, trade and commercial activity that will provide a solid base for the economic progress of Balochistan. The opening of Free Trade Zone, and Export Processing Zone (EPZ) will open the doors for development of small, medium and large scale industries generating revenue for the government and providing profitable avenues for both the skilled and non-skilled workforce in the province. The potential investment areas in Gwadar include fish processing, crabs processing, cold storage, ice factories, sea-water reverse osmosis desalination plants, shrimp farming, boat building and naval architecture institute, oil storage tankers, ferry service for Karachi Ormara-Pasni-Gwadar and up to Oman and Dubai.
GWADAR – REGIONAL AND INTERNATIONAL TRADE HUB
After the formal handover of the free trade zone to China, all business affairs of the Gwadar port in Balochistan are currently being carried out by Chinese authorities. Last year, Pakistan formally handed over the 2,281 acres free trade zone of Gwadar port to China on a 43-year lease. Pakistani government has already declared Gwadar port a free trade zone for the next 23 years. China is deeply interested to pour huge investments in Gwadar, which is located at the mouth of the Gulf and close to the Strait of Hormuz. Present government has already declared that Gwadar port would be developed on the pattern of Hong Kong, which is a model as to where the financial successes of Asia are headed. Being the builder, operator and financer of Gwadar port and also being the largest investor in the port city, China can play the role of a major driver of growth in Gwadar as it did in Hong Kong. Having a free market economy, Hong Kong is highly dependent on international trade. China’s share is over 35 percent in international trade.
Strategically located Gwadar port can be converted into a regional hub of international trade. By virtue of its geography, Gwadar has greater potential, wider scope and brighter prospects to emerge as center of trade and commerce serving at least 20 countries in the Asian region. Gwadar port is of immense importance not only for trade with CARs but also for the development of Pakistan. Of course, Gwadar has the potential to become a hub of major economic and commercial activities in the region. There is a high need for establishing roads and warehousing facilities at Taftan, Chaman and Torkham borders in order to make full use of Gwadar port. The future scenario necessitates the establishment of a strong, well-coordinated and metalloid highway and road and rail network spreading across the province and interlinking the major commercial centers in Balochistan. The CPEC project is perhaps the answer.
Pakistan and China have also discussed the laying an oil pipeline from Gwadar port to western China. The proposed pipeline, which is a part of CPEC, could be extended and connected with Iran, which has already offered to supply crude oil. In the proposed corridor, Gwadar port is likely to become a major outlet for trade between the China, Central Asia and the Gulf region. China has already taken the operational control of Gwadar port where oil shipped from the Central Asia and the Middle East may be unloaded and transported overland to China through the proposed trade corridor. Gwadar is poised to emerge as a hub port providing facilities of warehousing, trans-shipment, transit and coastal trade and the commercial and industrial openings for international export-import trade. On one hand, the two countries are working on laying the strategic Havelian-Khunjerab railway track in the difficult terrain of Karakoram connecting China with Pakistan from Gwadar in Balochistan. On the other hand, there are proposals to connect the Pakistan Railways with the trans-Asian railway network that will link the two countries through rail networks. This will facilitate trade to the Central Asian Republics (CARs), Russia and China and beyond.
In the present age of globalization, Gwadar has greater scope and tremendous potential to emerge as distribution and logistics hub in the region. It is because of its geo-economic importance that Gwadar was highlighted as the future port of global investors at an international conference on ‘Free zones, science and technology parks, enterprise zones’, held in Brussels in 2007. The conference was jointly organized by World Free Zone Convention (WFZC) and World Customs Organization (WCO).
The deteriorating law and order situation in the restive Balochistan is the main reason for slow progress on port-related projects in Gwadar. Today, the province suffers from a separatist insurgency. It reels from sectarian terrorism and targeted killings on ethnic lines. It is not the ports and pipelines which will bring peace and stability in the country but it is peace which will actually materialize the projects vital to economic progress and prosperity. Balochistan has ever remained on the political periphery of the country. The province has ever been at the receiving end. The long history of neglect and discrimination against the province and the military operations undertaken in the past and the one currently underway has turned it into a mega sensitive province.