CONTROVERSY OVER ZULFIQARABAD CITY PROJECT

SYED FAZL-E-HAIDER
(feedback@pgeconomist.com)

July 23 - 29, 20
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The Sindhi nationalists, who are strongly opposing a Chinese project, have called for a boycott of Chinese products in Sindh. This month, Jeay Sindh Qaumi Mahaz (JSQM) a Sindhi nationalist party took out a rally and staged a sit-in on National Highway in southern port city of Karachi against the development of Special Economic Zone (SEZ) in the proposed coastal city of Zulfiqarabad in Thatha district of Sindh. The nationalists deem the project not in the Sindh's interest and fear that it will turn the local Sindhis into minority changing the demography of the province. China is the major investor and stakeholder in Zulfiqarabad project. JSQM activists wanted to stage the sit-in outside the Consulate General of China in Clifton area of Karachi but the police did not allow them hence they blocked the National Highway suspending traffic between the port city and the interior Sindh. The rally's participants chanted slogans against the President Asif Ali Zardari and the Chinese government. JSQM appealed the people of Sindh to stop buying all types of products made in or made by China.

The SEZ proposed by the Chinese last year, will house leading investors and industrialists from China to undertake mega developmental projects in the new city project. A significant feature of the project is that the Chinese would invest and reinvest for 15 years in the proposed city before taking out profits. Local analysts believe that the opposition of a Chinese project by Sindhi nationalists and boycott of Chinese products does not augur well for the China's increasing stakes in other districts of Sindh. The development program of Zulfiqarabad city is spreading over on 15 years. Initially, the industrialists and investors from China would be brought in to initiate the developmental activities which would subsequently be followed by investors from other countries. The proposed economic zone would not be confined to industrial and economic activities but cover the entire range of activities in a modern metropolis.

The Sindhi nationalist parties are opposed to the development of Zulfiqarabad city, referring to it as a "new Israel". Even many provincial lawmakers of the ruling Pakistan People's Party (PPP) have expressed their reservations on the new city. They have called for a constitutional guarantee to the local people for not giving voting rights to outsiders. The opponents fear that with the influx of population, the demography of the area will change and the natives will turn into a minority.

The massive resentment on Zulfikarabad project is somewhat like Gwadar port city in Balochistan province where Baloch nationalists have been expressing their reservations about development of deep-sea port being developed by Chinese. Baloch nationalist parties believe that the local people would see the control of outsiders over the natural resources of their province, as the grandiose schemes and projects in Gwadar port will change the demography of the province owing to a large-scale influx of outsiders.

The Chinese have paid heavy price for their developmental efforts in Balochistan. In May 2004, three Chinese engineers lost their lives in an act of terrorism in Gwadar. In April 2006, Chinese embassy in Pakistan barred its country's services companies from oil and gas exploration and production work in Balochistan for security reasons.

China's growing interests in Sindh are virtually caught under Sindhi nationalists' threat. A number of Chinese companies are involved in many projects in different areas of the province. For example, China Three Gorges International Corporation (TGIC) is presently involved in building a run-of-the-river hydro project at the Sakhur Barrage of 120MW in Sindh. Similarly, the Hong Kong-based United Energy Group (UEG) has acquired British Petroleum (BP)'s assets worth $775 million in the South Asian country. The BP's main assets in Pakistan include nine production and exploration blocks in Sindh province.

Last year, Global Mining Company (GMC) of China signed a multi-billion dollar deal with Sindh government for coal mining and setting up a power plant in Thar coalfield in the province. Under the deal, the Chinese company will initially invest $3 billion to develop a mine producing five million tons of coal per annum initially with power generation of 900 megawatts in next three years. The company will make a total investment of $8.5 billion by 2020.

President Zardari has directed the Sindh government to identify a million acres of land near the coast in Thatta district for the development of the proposed new city. In March this year, a Chinese business delegation led by Li Yan, Chairman of Asia Investment Houtang, met with President Zardari in Islamabad and expressed interest in the development SEZ in Zulfiqarabad. During meeting with Li Yan, President Zardari appreciated the Chinese interest in the development of SEZ in the proposed city project and assured him of providing all possible assistance and facilitation to the Chinese companies and investors especially in the petrochemicals and other areas especially those that do not exist in the country at present. Yan's delegation included among others China Petrochemical Corporation DG Chen Qi, HOPU Investment Chairman Fang Fenglei and Professor Tang.

China is a major investor in Pakistan though foreign investment in the country has witnessed a steady decline over the past five years. Chinese investments and projects in the south Asian country have reached $25 billion. China's public and private sector is currently involved in over 250 projects in the country from mega to minor and from strategic to ordinary businesses. Presently many Chinese firms are interested in making investments and establishing joint ventures with local companies.

China's investment in the country has expanded from resources, home appliances to communications and finance. In December 2011, the two countries signed a landmark currency swap agreement on the occasion of visit by a high-powered delegation from China headed by Di Bingguo, China's state councilor to Islamabad. The currency swap agreement will last for three years and can be extended by mutual consent. Under the deal signed between State Bank of Pakistan (SBP) and Peoples Bank of China (PBC), China agreed to swap 10 billion Yuan ($1.6 billion) for 140 billion Pakistani rupees.

Last year, the Chinese banking giant, Industrial and Commercial Bank of China (ICBC) started its operations in Pakistan by opening its branches in Karachi and Islamabad. Presence of a Chinese bank in Pakistan will provide financial support to Chinese companies, which are exploring investment opportunities or engaged in infrastructure development and financial business in the country.