ROZS TO BOOST INDUSTRIAL DEVELOPMENT IN BALOCHISTAN

SYED FAZL-E-HAIDER
Nov 12 - 18, 2007

Islamabad has reportedly proposed to include the whole of Balochistan for establishment of Reconstruction Opportunity Zones (ROZs) on the pretext that it would help in providing more employment opportunities to the people of the province. At present, only the border districts of Balochistan with Afghanistan have been included in the ROZs list of eligible areas.

In fact, Islamabad has proposed a range of amendments to the United States for consideration of the legislation for establishment of ROZs in the terrorist-prone areas of Pak-Afghan border. According to the official sources, the amendments are related to coverage of areas, inclusion of more items for manufacturing in these zones for duty free export to the United States market and issues of rules of origin. The government is reportedly pushing for more relaxation in the rules of origin, which would actually determine the status of the products to be exported to the US market. The legislation is expected to be presented in the US Congress soon and the law would be ready for implementation in a period of around three months.

The RoZs can initiate fast-track industrial development in Balochistan. Presently the province lacks a sound industrial base and hence it lacks the employment opportunities for the local people. The province however, possesses enormous industrial potential in key sectors. There are greater investment opportunities in all sectors of provincial economy. A large number of agro-based, livestock-based, fisheries-based and mineral-based industries can be set up in the province. For example, the province is rich in mineral resources and hence there exist a lot of opportunities for setting up mineral-based industries. There are vast opportunities available for establishing industrial units from the mineral resources. Such units may be established at ROZs in mineral-rich districts like Chagai, Lasbela, Loralai, Kohlu and Bolan.

The idea of setting up RoZs in areas close to the Afghanistan border came when a US consulting firm issued an assessment report. Pakistan wants these zones to be set up in backward areas of the country. The government recently conducted a province-wise study to locate the economically under-developed and deprived districts for the establishment of ROZs to provide employment opportunities to the people of the areas.

The poor distribution of wealth during the past years deprived these and other districts of economic development, which resulted in turning these areas to a hub for extremist fanatics. The study emphasized the need to combat unemployment of young educated males and pay attention to reducing poverty in these districts.

Balochistan is the least developed province with no development infrastructure and industrial base and hence no employment opportunities for its people. It lacks the investment opportunities for having a very small size of market. Lack of capital, low investment, and low productivity have led to the low income of the province. The people in rural Balochistan absolutely lack access to basic needs such as education, health, clean drinking water and proper sanitation, which undermine their capabilities and limit their opportunities to secure employment. The prevailing poverty has been a big hurdle in the way of economic development of the province. The deficiency of resources is the root cause of underdevelopment.

Balochistan for the second time emerged out to be a frontline province in the US military campaign in Afghanistan after trauma of 9/11 in the US. For the first time, it attained the frontline position in 1979 when US backed Afghan Jihad against the defunct Soviet Union forces was underway in Afghanistan. On both the occasions, the province had to have worst repercussions of the war in Afghanistan for being on the frog trafficking during the Afghan crisis that destroyed peace in the province.

Although Pakistan has been a leading partner of the US in the war against terrorism, but it falls fairly low in the list of US trade partners in terms of trade in goods and services. The share of exports from Pakistan to the US market remained stagnant at around 0.21 per cent during the past four years. The establishment of ROZs in all districts of the province would be a positive step in combating economic backwardness and poverty in the province. The districts in Balochistan earlier identified for the establishment of ROZs included Gwadar, Kalat, Kharan and Sibi.

The goods produced in RoZs are to be exported to the US at zero tariff. Pakistan has already identified variontline position. The fallout effects of Afghan crisis traumatized Balochistan both socially and economically. Under military regime of late General Zia-ul-Haq, the Afghan refugees were not confined to their camps but they were allowed free movement and interaction with the local people. They got employment and permanently settled in Balochistan. Resultantly, the unemployment problem became acute in the province. The province was absolutely unable to meet its own requirements from its meager economic resources. With the massive influx of Afghan refugees, the province had to bear extra burden of aliens and it frequently faced resource scarcity to feed, clothe and employ the Afghan refugees.

Without an iota of doubt, no other province in Pakistan so suffered from the worst fallout effects of the crisis in Afghanistan than Balochistan. The local economy has already been bearing the burden of over one million Afghan refugees infiltrated into Balochistan since the Soviet invasion of Afghanistan in 1979. The fresh influx of Afghan refugees as a result of US attack on Afghanistan after 9/11 events overburdened the local economy. During the period of US attack on Taliban in Afghanistan, the terrorists accelerated their activities in order to spread anarchy through creating new monsters of disharmony in Balochistan. The province was in particular made the target by terrorists as it was on frontline position. It witnessed the growth of Klashnkove culture and druus sectors like agriculture, social welfare and manufacturing with a budget of Rs6.5 billion. The country hopes to get at least Rs10 billion for this project from the US, which had agreed to accept duty free imports of items manufactured in backward areas to be designated as ROZs. USA is generally a low tariff market with average duty on manufactured goods at 3.9 per cent. With the establishment of Rozs, Balochistan can emerge as a strategic manufacturing base in the region. The RoZs could also be a joint venture between investors from Pakistan and Afghanistan which could promote bilateral trade.