China widely welcomed investments into Pakistan’s SEZs

China has welcomed investment into Pakistan’s Special Economic Zones (SEZs) from other countries. While speaking at the “Dialogue on Industrial Cooperation under CPEC and SEZs Framework” organized by the Board of Investment last week, China’s Ambassador in Pakistan Yao Jing said that the Chinese investors were showing keen interest to invest in these SEZs. The private businesses have come into joint ventures of tyres, manufacturing of buses and trucks and textiles in the last six months. The second phase of CPEC would cover industrial cooperation, agriculture cooperation, social protection, poverty alleviation and cooperation in science and technology to boost the economy of Pakistan and to raise the level of skills and living standards of the population. In the second phase, the private sector, local community and the society at large would be engaged. Present government led by Prime Minister Imran Khan has already declared that the SEZs are open for businessmen from all countries and nationalities, as the lucrative incentives under SEZs are the same for everyone.

The officials claim that investments in various sectors have started to pour in and it will pick up pace in the coming days. The Adviser to Prime Minister on Commerce Abdul Razak Dawood laid out the framework of the economic development strategy and said that the future lies in export-led growth strategy, making SEZs development vital to improve the capacity and to complement the export requirements of the country.

Gwadar – the main focus of attention

After taking over of the free trade zone at the Gwadar port in Balochistan, China is currently carrying out all business affairs of the port. Chinese authorities have also taken control of the 2,281 acres free trade zone on a 43-year lease. Pakistan has already declared Gwadar port a free trade zone for the next 23 years. The port is essential part of China-Pakistan Economic Corridor (CPEC), which involves construction of highways, railways and energy pipelines connecting western China with Pakistan and the Persian Gulf. After construction of the proposed rail, road and pipeline projects between China and Pakistan, Gwadar port will handle most of the oil tankers to China. The development of road and rail links between the two provinces, Balochistan and Xinjiang, will give distinction to Gwadar port of becoming the gateway port for western China. Rail link will transfer goods to and from western China, changing it from a remote region into a station that will transfer goods and commodities worth billions of dollars every year.

China has already declared Kashgar, an important transit point on the ancient Silk Route and a gateway between China and Pakistan, as SEZ. The proposed Kashgar SEZ would develop Xinjiang into a major trading hub and more energy and economic integration with South and Central Asia. The SEZs in Gwadar and Kashgar and the rail and road connectivity between the two proposed SEZs would have great economic, political and strategic implications for the whole region. On one hand, the two countries are working on laying the strategic Havelian-Khunjerab railway track in the difficult terrain of Karakoram connecting China with Pakistan from Gwadar in Balochistan. On the other hand, there are proposals to connect the Pakistan Railways with the trans-Asian railway network that will link the two countries through rail networks. This will facilitate trade to the Central Asian Republics (CARs), Russia and China and beyond.

China is deeply interested to pour huge investments in Gwadar, which is located at the mouth of the Gulf and close to the Strait of Hormuz. Pakistani authorities have already hoped that Gwadar port would be developed on the pattern of Hong Kong, which is a model as to where the financial successes of Asia are headed. Being the builder, operator and financer of Gwadar port and also being the biggest investor in the port city, China can play the role of a major driver of growth in Gwadar as it did in Hong Kong. Having a free market economy, Hong Kong is highly dependent on international trade. China’s share is over 35 percent in international trade. Strategically located Gwadar port can be converted into a regional hub of international trade. By virtue of its geography, Gwadar has greater potential, wider scope and brighter prospects to emerge as center of trade and commerce serving at least 20 countries in the Asian region.

Gwadar port, which has allured international attraction and is all set to emerge as modern hub port of the region, is the focus of attention of local authorities that are taking measures to upgrade and develop the old infrastructure of the port city. Balochistan government has launched several development projects to upgrade historical sports and attract more tourism in the province, particularly Gwadar. Federal government and China have agreed to expedite the development process in the port city. A huge development process is currently underway in and around Gwadar to convert it into a new logistics hub such as Dubai, Hong Kong or Singapore. The Gwadar Development Authority (GDA) has been given the special task of taking inclusive steps to ensure the provision of basic amenities to the city dwellers. The GDA plans to construct modern Monuments at Mala Fazal Chowk as part of the Gwadar master plan to attract more tourists. A six-kilometer long sewerage line with the cost of Rs 570 million is likely to be completed in the first phase of development projects in Gwadar port city. While the development work on 16 kilometers long sewerage line at a cost of Rs 750 million will be started in the second phase.

With the functioning of industrial zone, Gwadar would become a hub of industrial and trade activities. The government has also reserved 3000 acres of land for the development of Gwadar Industrial Estate (GIE) to meet the demand of industrial plots. The government plans to establish a zone for the promotion of small and medium industries under the auspices of SMEDA in Gwadar. It also plans to open branches of banks and DFIs for making available loan financing to the intending entrepreneurs.