GWADAR: AN EMERGING INVESTMENT CENTER
Sep 8 - 14, 2008
Strategically located Gwadar port in the southwestern province of Balochistan has begun cargo handling from March 15, 2008. Initially, Gwadar port will be used as captive cargo or for trans-shipment purposes only. 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. Pakistan has already prepared Rs400 billion plan to rehabilitate the country's major road network by 2012 so that quick trade and travel linkages with China and the CARs could be provided. The plan has been linked to Gwadar port which is expected to be fully operational this year and will have increased facilities ó including an international airport, free industrial zone, export processing zone and a housing scheme for local and foreign investors.
Gwadar's development as free port on lines of Dubai certainly promises massive investment both foreign and domestic and more development projects in different sectors of provincial economy. The project will revolutionize the communication sector of Balochistan. It will entail a multi-directional network of road communication in the province. The federal government has focused on strengthening infrastructure, as 35 percent budget of NHA is being spent on building a network of roads and highways, which would open up more income generation and employment opportunities in the province. An amount of Rs 40 billion is being spent on the development of road networks aimed at connecting Gwadar port with the entire region. Gwadar would be connected with Afghanistan through Surab- Quetta and Chaman.
Gwadar port is equally attracting the interest of the local and foreign investors.
The potential business areas in Gwadar include fish processing, crabs processing, cold storage, ice factories, sea-water reverse osmosis desalination plants for profitable purpose, shrimp farming, boat building and naval architecture institute, oil storage tankers, ferry service for Karachi Ormara-Pasni-Gwadar and up to Oman and Dubai, training services in fisheries and aquaculture, port management projects, hotels and restaurants and resorts, date processing, canned food, gravel crush plant, water sports center and recreation facilities, palm oil cultivation, marine and automobile repair workshops, cluster for Internet service providers, renewable energy, wind, solar and IPPs, clearing and forwarding agencies, hospital clinics, re-rolling mills and warehouses.
Gwadar port has become a virtual tax-free port to the extent of its development and operations after Pakistan granted 40-year tax exemptions to the proposed operators of Gwadar port. Some of the major tax exemptions and incentives given to PSA include complete exemption from corporate income tax for 20 years, duty exemption on import of material and equipment for construction and operations of Gwadar port and development of Free Economic Zone for 40 years and duty exemption for shipping, bunker oil for Gwadar port for 40 years. It is hoped that Gwadar would emerge as a hub for PSA and would be like Dubai port, which is a tax- and duty-free port.
Islamabad has already declared Gwadar as Special Economic Zone (SEZ). It is believed that free zones, which would be set up along the port, would contribute to the harnessing of Balochistan's potential in natural resources and development of heavy and large-scale industries, petrochemicals and manufacturing. The port would provide large-scale employment, and value of land would further increase, and there would be other income generating activities for local people. But how would investors choose that destination for transshipment and setting up industries in the free zone when there is no infrastructure ñ water, electricity, roads and adequate settlements for living?
Gwadar seaport and the related planned regional highway projects will help the province become a world-class mining center. A fully operational Gwadar port provides the province enormous opportunities to exploit its mineral resources, which have so far been untapped. The Gwadar seaport and the related planned regional highway projects will help the province become a world-class mining center. Foreign mining firms, which are presently operating mining business in Balochistan province, have already shown keen interest in bringing their cargoes through the new port of Gwadar on Arabian Sea. Last year, a delegation comprising Canadian, Australian and Chinese companies reportedly approached the Ministry of Ports and Shipping and the Gwadar Port Authority (GPA) to collect basic facts about the operational activity of the port. The tariffs and port charges are yet to be announced.
For industrialization of Gwadar, investors and entrepreneurs have shown a keen interest from all over the world, particularly Central Asia, Afghanistan, China, South Korea, Japan and Singapore. Last year, the United Arab Emirates (UAE) signed two agreements with Pakistan for launching two multi-billion dollar projects in coastal Balochistan, which include US$5 billion Khalifa Coastal Refinery (KCR) and US$3.2 billion Gwadar coast centre (GCC). The port is expected to enhance the capability of the province to export its products and commodities to foreign countries. It will revive trade links between China and Central Asian states extending cargo facilities to both sides. Investment opportunities in Gwadar are identified in the following areas:
- Infrastructure development including internal roads and services, water and power and communication services for the new township and the industrial zone
- Private-owned ware houses and cold storages
- Private cargo handling equipment and trucking yards
- Corporate infrastructure i.e. offices for operating firms and agencies
- Development of commercial and residential areas and buildings
- Labor related amenities for thousands of workers employed on developmental work
- Development of hotels, motels, hospitals, colleges and schools
- Tourism related industry, marine fuel bunkering for visiting ships to include large fuel storages and mobile barges etc.
- Oil refinery and large oil storages
- Ferry services between Gwadar-Karachi/Oman/Bunder Abbas and UAE
- Industrial Export Processing Zone
- Hinterland road, 735 km long Gwadar-Rattodero Expressway
- Improvement of existing Gwadar-Quetta road via Turbat-Panjgoor-Kharan-Nushki.
For the current fiscal year, the present coalition government has allocated an amount Rs. 1.0 billion for establishment of Export Processing Zones (EPZs) to support the growth and development activities around Gwadar port. The government plans the construction of railway line and container terminal at Gwadar to provide up-country linkages. An amount of Rs 750 million has been allocated for construction of new Gwadar international airport to meet the requirement of wide bodied aircraft B-747. The government also plans to complete business plan of Gwadar port in the new fiscal year.