China Pakistan Economic Corridor from Kashgar to Gwadar port is the starting and ending point with a total length of 3000 km along the MSR (maritime Silk Road) in the 21st century is a key hub linking the north and south Silk Road including highway, railway, oil and gas trade corridors and cable channels.
The CPEC with an investment of $62bn in energy and infrastructure development in Pakistan seems indispensable and sizeable to Pakistan’s economy. Besides enhancing bilateral trade between Pakistan and China, the CPEC is also going to oblige Africa as a gateway.
Under CPEC Chinese multinationals and other private companies have guaranteed to invest $20bn in the energy sector and a massive amount of above $42bn in other sectors of Pakistan’s economy. In the past few years, China’s outward investment has increased tremendously and it is currently a global leader in the construction of transportation infrastructure but the signature ‘Belt and Road Initiative’ (BRI) is often portrayed as a threat by policymakers and media in the West. Belt and road initiative (BRI), is China’s most ambitious mega-project with the potential to transform the geopolitics and economics of many countries western media highlighted China’s strategic objectives in BRI as a game that enhances China’s power and influence the region but if we focus on the cost efficiency than no doubt that, Chinese initiative promote inter-regional connectivity and trade that ultimately drive higher economic growth in member countries.
If we review all from Pakistan’s perspective then it’s not only the need but the game changer for Pakistan’s economy. Our domestic economy is suffering from poor infrastructure, energy and power shortages accompanied by the average shortfall of electricity from 4000 to 7000 MW per year but hopefully, CPEC completely change the dilemma of energy shortage in Pakistan as the cost of energy shortages and chronic power cuts reach 7% of the GDP (which is a direct drag on economic development, on the improvement of people’s livelihood, and even on the development of the national defense).
The CPEC will address Pakistan’s energy crisis and will fill the fundamental shortage of energy and electricity as 76% of CPEC-related projects are in the energy sector Fully stimulating the economic development of Pakistan. China and Pakistan both have signed 51 cooperation agreements covering transportation and logistics, infrastructure, port development, energy, agriculture, trade, finance, health, media marine science and education. Currently, $46bn of projects are being defined and implemented in Pakistan’s infrastructure which is about 20% of Pakistan’s total GDP. This amount of foreign investment in Pakistan is equal to the total amount of foreign investment made in the country since 1970 but the entire outcomes of CPEC move around the Gwadar port.
In the era of trade globalization, it is very important for ports to play a key role and act as pivotal points throughout the supply chain. In order to integrate the supply chain by facilitating communication between different modes of transportation, ports (as logistics centers offering value-added services) must create information and communication links between supply chain components. They also need to play an active role in providing a standard pattern or model for different port logistics processes.
Today, ports are dynamically involved in the management and coordination of cargo and information flows and are considered an integral part of the supply chain. Ports’ competitive position is not only determined by their internal strengths such as the efficiency of loading and unloading and access to the hinterland but also it is affected by the strength of communication in the supply chain. Thus, improving port competitiveness entirely depends on the ability of a port in coordinating the environmental factors and controlling all components of the supply chain.
Gwadar is a newly built warm water seaport in the southwest of Pakistan on the shores of the Arabian Sea along a 600 km-long coastline. It is a God-gifted natural deep seaport unlike the contemporary ports of Iran and Dubai and has the capacity to have 88 berths and the ability to anchor a mother ship of 1,00,000-2,00,000 DWT.
The importance of the Gwadar seaport depends upon its development into a potential economic hub. Gwadar seaport lies at the heart of the Sino-Pakistan partnership and is its litmus test. If we see this whole region, it is like a funnel. The top of the funnel is this wide area of Central Asia and also China’s western region. And this funnel gets narrowed on through Afghanistan and Pakistan and the end of this funnel is Gwadar port.
So this funnel futuristically is the economic funnel of this whole region. The contemporary ports of the region do not have the advances of the Gwadar seaport which can bring together world business and trade. The ideal location of the Gwadar seaport and coastal belt significantly enables Pakistan to keep an eye on the oil shipped out of the Middle East. The products of oil refineries and LNG plants can be shipped or piped to any country of the globe with short consumption of energy.
The transit route to the CARs and China would be dependent on Gwadar. Further, Pakistan can be able to develop an understanding of India because the western part of India will also prefer to have transit trade through Gwadar as it lies at a shorter distance than Indian ports. The Gwadar port requires less maintenance cost as compared to other ports since it’s a natural deep seaport and can attract trade and business like a magnet due to cheap sea transportation. Gwadar free port project promises massive investment, greater generation of employment opportunities and more development projects in different sectors.
Commerce, industry, trade and economic activities would receive a boost after the development of a two-phased seaport. A fully functional Gwadar port will boost the industrialization process in the province and with the functioning of the 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 for 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 intending entrepreneurs.
The proposed Free Trade Zone, and Export Processing Zone (EPZ) will open the doors for investment and 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.
According to one estimate, a fully functional Gwadar port could earn handsome revenue of $40 billion a year. The port is expected to be a higher revenue earner in terms of foreign exchange for the country, as China, Afghanistan, Central Asian states and Russia would also be using the port where huge cargo ships up to 0.25 million tons could anchor.
The CPEC will convert Gwadar into a regional hub of business, trade and commercial activity that will provide a solid base for the economic progress of the country. Potential investment areas in Gwadar include fish processing, crabs processing, cold storage, ice factories, sea-water reverse osmosis desalination plants, shrimp farming, boat building and naval architecture institute, oil storage tankers, ferry service for Karachi, Ormara, Pasni, Gwadar and up to Oman and Dubai and Saudia.
The running of millions of vehicles on the route from Gwadar to Khunjrab would resemble the ancient Silk Road caravans that carried silk along the Golden Route, albeit trading many more different products in the present day.
The Author is an MD IRP/Faculty Dept. Of H&SS/Bahria University Karachi