CONVERTING BALOCHISTAN INTO A REGIONAL HUB FOR BUSINESS
Jan 18 - 24, 2010
There are many daunting challenges that need to be seriously addressed if Balochistan is to convert to a regional hub for business and attract the investors from all over the world. First and foremost is the challenge is to improve law and order and ensure the security of investors and all stakeholders involved in the economic development of the province.
Balochistan's strategic location has enhanced its importance in the Asian region. The plans for development of communication links, network of roads, railways and relating activities, including trade transactions, goods transportation and storage facilities would integrate the province with landlocked Afghanistan and the Central Asian Republics (CARs). By virtue of its geophysical position, Balochistan coast is considered the gateway to Central Asia. The under construction Gwadar port in the province offers tremendous prospects for regional trade, as it lies outside the traditional areas of conflict.
The port complex will provide facilities of warehousing, transshipment, transit and coastal trade, commercial and industrial openings for international export-import trade.
Central Asia is home to a significant amount of the world's known oil and gas reserves. It has a rich mineral base, fertile agricultural land, well-educated workforce, and a decent transport network. These assets lay solid foundations for economic growth, investment, and trade. For landlocked Central Asian economies, Balochistan offers access to new resources and markets and the prospect of more rapid growth. The province's geo-strategic location makes it the most attractive for transit traffic to the landlocked CARs. Gwadar port would provide Afghanistan and the CARs the shortest and fastest access to the warm waters of the Arabian Sea. The port can also provide them with warehousing facilities along with transit and possibilities of import of goods. The port and its related planned regional highway projects will help Balochistan become a world-class mining center.
Pakistan views Central Asia as its strategic hinterland. The proposed Turkmenistan gas pipeline project (TAP) would develop a regional trading system, by facilitating trade through the Karachi port via coastal highway and through Gwadar port to Afghanistan and through Afghanistan to the CARs. Similarly, the Central Asian states would find ways to transport goods and vast untapped energy resources to Pakistani ports and to the rest of the world. The establishment 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 Balochistan.
As a regional hub of business, trade and commercial activity, Gwadar port would provide a solid base for the economic progress of the province.
Pakistan plans to spend Rs12 billion on road sector development, which would include the Gwadar-Karachi, Gwadar-Khuzdar-Quetta-Chaman, Gwadar-Khuzdar-Ratodero highways, opening route to Afghanistan and the CARs. The Asian Development Bank (ADB) already earmarked $500 million for the construction of the ECO Highway linking Gwadar with Turkmenistan. Around $300 million will be spent in Balochistan and the remaining fund in Afghanistan and Turkmenistan.
Pakistan is developing additional infrastructure, which will serve both bilateral and transit trade with Central Asia. Islamabad has approved a Rs27.3 billion ADB-assisted sub-regional connectivity and trade facilitation program under the Medium-Term Development Framework (2005-10) to improve trade relations with Afghanistan, Iran and Central Asian states. The ADB has agreed to offer Rs1.8 billion for the project, which includes rehabilitation of key national highways that were part of the sub-regional corridor, cross-border infrastructure development.
A Rs400 billion plan has already been made to rehabilitate the country's major road network by 2012 so that quick trade and travel linkages with China and the Central Asian Republics can be provided. The plan has been linked to Gwadar port which is expected to be fully operational by 2012, 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.
The ADB has already agreed to fund a $455.7 million cross-border infrastructure development programme aimed at creating a sub-regional corridor from Gwadar port to Afghanistan and Central Asia. Under the programme, a Trade Facilitation and Land Border Crossing Authority is being established to supervise significant land border crossings and facilitate freight and passenger cross-border and transit traffic.
China is providing financial and technical assistance to help rehabilitate 616km long Karakoram Highway, which has been included in the rehabilitation plan. Beijing is interested in improving trade relations with Central Asian states after having just 2,600km of distance between Gwadar and Kashghar. Makran coastal highway would also encourage Chinese businessmen to establish contact with Central Asian States through Gwadar.
The planned railway line from Chaman to Spin Bodlak would facilitate the utilization of the vast potential of Balochistan's trade with Afghanistan and through Afghanistan with the countries of Central Asia. A road from Gwadar to Saindak, running parallel to the Iran-Pakistan border will make it the shortest route to reach Central Asia from the warm waters of Arabian Sea. Another 515-km long highway connecting Gwadar via Panjgur, Kharan, Chaghi and Rabat up to Herat in eastern Afghanistan is on the drawing boards. This would link up Pakistan directly by road with the CARs.
Peace and stability is the key to luring foreign investment in the province. No economic activity can smoothly take place in a risky environment. Promoting political reconciliation among different political parties is the biggest challenge for the government in order to continue the development process in the province. There is a need to address the major concerns and genuine grievances of the local population with regard to the ongoing process of development in the province.
Secondly, Balochistan lacks the essential infrastructure for regional integration. An efficient transportation network is essential for this integration. An efficient national highway system can contribute largely to the economy by lowering the transportation costs and increasing international traffic once the Gwadar port is completed. The government must place high priority on improving the efficiency of land border crossings to facilitate cross-border and transit traffic.
Third challenge is to nurture an enabling environment that fosters entrepreneurship and private sector development. A competitive base of small and medium enterprises and efficient state-owned firms is a prerequisite for benefiting from this integration. What is critical in this regard is to improve governance and strengthening legal and regulatory frameworks.
Fourth challenge is about poverty alleviation, as Balochistan is the poorest province of the country. The ongoing process of economic development, the associated job creation, and the province's rich natural resources have yet to make a meaningful dent in poverty.
Finally, the Balochistan is to set up market for exporting different items to Afghanistan and concentrate on trade with the CARs through the neighboring Afghanistan.