ATTRACTING FOREIGN INVESTMENTS IN BALOCHISTAN
Dec 6 - 12, 2010
Balochistan is the country's poorest and least-developed province. The ever-neglected and discriminated masses of the province are still living in highest deprivation level and lowest development level. No foreign investment can be allured as long as the province remains in the state of turmoil. Many foreign firms have closed their operations due to the security reasons in the province.
Balochistan is however rich in natural resources. There are greater investment opportunities in all sectors of provincial economy. The distinctive climatic conditions in the province provide diversity and a great variety for fruit production. Nature has bestowed Balochistan with so many natural resources and its favorable climate and various plateau of land further enhanced its importance by producing dates, cherries, apricot, pomegranate, grapes, and apples. The province makes up 70 percent of Pakistan's total coastal belt.
The province offers access to new resources and markets and the prospect of more rapid growth. The province's geostrategic location makes it the most attractive for transit traffic to the landlocked Central Asian Republics (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 an excellent mining center.
Balochistan offers enormous opportunities in oil and gas sector for foreign investors. The prevailing security environment cannot attract foreign investment in the oil and gas exploration sector and calls into question the guarantees of security for a proposed multi-billion dollar gas pipeline from Iran that would have to run through the province.
The government should open up the province for exploration and production activities to fully and efficiently exploit its gas potential. The province presently produces more than 40 percent of the primary energy of the country in the form of natural gas, coal, and electricity. The E&P projects will open up the land of Balochistan converting it into a land of opportunities for foreign investors. The country needs modern technology for drilling.
According to one estimate, as many as 25 blocks of oil and gas were closed and 16 blocks had been opened with the co-operation of Balochistan government during past two years. The government needs to explore indigenous oil and gas reserves. Talks should be held with the Baloch leaders to expedite exploration activities in the province.
Balochistan is the province from where the greater part of the proposed multibillion gas pipelines would have to traverse-either from Iran, Qatar, or Turkmenistan. It is in the supreme national interest that security environment in the province would be ideal for bringing foreign investment in the country.
The province's huge yield potential of high quality deciduous fruits can efficiently be tapped by making investments in establishing 'crop specific zone' and 'fruit processing units' in the province. The key problems baring long-term investment in fruit production include shortage of irrigation water, non-availability of groundwater in highland, lack of marketing infrastructure and facilities like farm to market roads and sale centers, dearth of skilled labor and lack of technical knowledge and expertise. Investments can be made in building cold storage houses and air-conditioned transportation facilities to minimise the risks to spoilage of fruits.
The province has an ideal land and suitable conditions for shrimp farming. New hatcheries should be set up in coastal districts like Lasbella and Mekran for shrimp production as viable business - ventures. The provincial government should allot lands in coastal districts of Lasbella and Mekran to private parties interested in promoting shrimp farming. Government should announce incentives for induction of the private sector in this field, as the interested entrepreneurs and investors can play a key role in promoting the shrimp farming in coastal areas purely on the commercial basis.
Balochistan mineral sector needs to be developed for attracting international investment particularly in metallic minerals and coal related energy projects in the province. The province is rich in mineral resources. It is endowed with a large number of metallic and non-metallic minerals. The rising prices of minerals like coal, chromite, copper, lead and zinc in the world metal market has brought the mineral rich province in the radar screen of foreign investors.
The province's near term growth potential exists with commercial exploitation of Saindak copper and gold deposits and the possible future exploitation of Reko Diq copper deposits in Chagai and Duddar zinc-lead deposit in Lasbela district.
Balochistan's strategic copper and gold assets have attracted interests of foreign investors who have purchased stakes in copper projects during the last five-year period. The Chagai district is expected to become a hub for the metallic mineral mining industry in the next five years. Saindak and Reko Diq projects can make Pakistan one of the major producers and exporters of copper in the world. The country can save a huge amount, which is spent on the import of minerals each year.
The government may establish Export Processing Zones (EPZs) in different districts of Balochistan where mining and production activities are underway. The utilisation of EPZ facilities by foreign companies would bring foreign investment in mineral sector. There are other indirect benefits of establishing EPZ such as income from taxation, development of rural areas, infrastructure and support industries and poverty alleviation.
Worsening law and order situation in the province has raised security concerns among foreign firms working in the province and many Chinese engineers have lost their lives in acts of terrorism during last five years. The incidents of violence and terrorism that took place in different districts of the province including Gwadar during last three years had forced the government to carry out development activities at gunpoint, as it continued to beef up security in Gwadar. The local people have reservations about the Gwadar project. Baloch nationalist parties had also flayed the former government for ignoring the people and the Baloch leadership while it signed accords with various international firms without taking them into confidence. They call the federal government's decision of transferring the management of Gwadar port to the PSA as an infringement of rights of the Baloch people. The frequent recrudescence of tribal violence not only destroyed peace but also hampered development works and projects in different regions of Balochistan.
Local people have never been against the development of province's resources through attracting foreign investments. The province direly needs investment for the development of its enormous resources in all economic sectors. People have always been apprehensive about their due stake in the development projects, as they were not taken aboard when the authorities in Islamabad signed agreements with foreign companies for the development of local resources. They have ever resented over the virtual control of the centre and aliens over the province's resources.
Balochistan package is a good initiative but the government must try to resolve the security problem amicably through a peace truce with the tribal Jirga and halt military operation in the province.