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Gwadar: an emerging logistics hub in Asia

Experts define a logistics hub as the integrated center for transshipment, storage, collection, and distribution of goods. Broadly speaking, the specific area designated to deal with activities related to transportation, organization, separation, coordination and distribution of goods for national and international transit, on a commercial basis by various operators is called logistics hub. To many experts, logistics hubs provide not only traditional activities such as storage, but also value-added logistics services such as labeling, assembly, semi-manufacturing, and customizing. These centers combine logistics and industrial activities effectively in major port areas to create specific products. The facilities provided at the hub include warehouses, storage areas, distribution center, offices, trucking and shipping services. Gwadar port in Balochistan is going to become the logistics hub in the Asian region as it complies with the features and definition of a modern logistics hub.

By virtue of its strategic location, Gwadar port 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 Organisation (WCO).

Work on $60 billion China-Pakistan Economic Corridor (CPEC) is currently underway. The CPEC has the potential to usher in a new era of economic progress and prosperity for both countries benefiting the whole region as well. This corridor is expected to be “a game changer” not only for Pakistan and China but also for the whole region.

A huge development process is underway in and around Gwadar to convert it into a new logistics hub such as Dubai, Hong Kong or Singapore. Former Prime Minister Nawaz Sharif already said 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 biggest 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. 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.

 

Gwadar free port project promises massive investment, greater generation of employment opportunities and more development projects in different sectors. Commerce, industry, trade and economic activities would receive a boost after the development of two-phased seaport. A fully functional Gwadar port will boost industrialization process in the province. With the functioning of industrial zone, Gwadar would become a hub of industrial and trade activities. The government has also reserved 3000 acres of land for the development of Gwadar Industrial Estate (GIE) to meet the demand of industrial plots. The government plans to establish a zone for the promotion of small and medium industries under the auspices of SMEDA in Gwadar. It also plans to open branches of banks and DFIs for making available loan financing to the intending entrepreneurs. The proposed Free Trade Zone, and Export Processing Zone (EPZ) will open the doors for investment and 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 Balochistan.

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. Pakistan and China have discussed 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.

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 up to 0.25 million tons could anchor. The 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 the country.

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. Pakistan has already handed over the 2,281 acres free trade zone of Gwadar Port to China on a 43-year lease. 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.

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