The Gwadar port project has an exceptionally important function not only for Pakistan but also for the rest of the region. Notably, the Chinese government has paid the bulk of the funds for the project execution. The state-owned Frontier Works Organisation (FWO) of Pakistan received financial support of 360 million dollars from China for expansion and up-gradation of the Karakoram Highway in order to enable smooth and speedy transportation of imported and exported goods through the Gwadar port.
In the longer run, the Gwadar port will exceptionally serve the Chinese interest in the region. To meet the energy needs essentially required for the functioning of industries, China’s oil and energy supplies travel from the gulf region, passing through a long route across the Strait of Malacca near areas falling under the US influence. The current route of Chinese goods transportation takes more than 45 days to reach destined markets of Europe via the Middle East. Apart from this, oil supplies reaching China’s coasts in eastern parts require a great deal of additional time to transport these supplies to western parts of China. Whereas, oil supplies from the Gulf countries would be transported through Gwadar and the Karakoram Highway at a highly cheaper cost, safe transportation, and in a very short time the same process would be replicated for western parts of China. Likewise, the Chinese trade goods will also find an easier, shorter and secure route to the Middle East bringing profitability greater than ever before.
Once the project is functional, China will make huge revenues because with the completion of the China-Pakistan Economic Corridor (CPEC), Chinese shipments will be able to reach the same destination just within a period of 10 days. The Gwadar port will eventually create a nexus between China, Pakistan and the Central Asian countries with prospective revenues of billions of dollars every year for all the countries.
The changing landscape of the region would be prospectively abundant as finances of various mega multinational companies such as Shell — working for setting up a mega oil refinery in the area — start coming in. Moreover, Arab countries, flush with high revenues from oil resources also, are also formulating plans for the port city. Some business groups from the Gulf countries, particularly business enterprises from the UAE, are interested in investing 90 billion dollars for constructing high standard recreational hotels and industrial units.
The real-time efforts by China and Pakistan’s collaboration for the long-term usefulness of the port are mainly due to duty-free trade, and development of Gwadar as a free trade zone. These policies outstandingly appeal to the investor around the globe particularly the neighbouring Gulf countries. Moreover, these policies are also alluring to inspire confidence in many multinational companies with their immense financial strength to invest in this port that is already become the focus of the whole region. The greater economic opportunities are particularly related with the factor that most of the Central Asian states such as Tajikistan, Uzbekistan and Turkmenistan along with Afghanistan are landlocked countries, and they could all mainly depend on transportation through the Gwadar port for their trade and exports.
The Gwadar port has capability to handle ships of 50,000-deadweight tonnage (DWT), which enables importers to ship maximum cargo on a single ship. The flow of financial resources mainly contributing to the Chinese economy through the fully functional Gwadar and the CPEC is estimated at 40 billion dollars per annum by the year 2020. However, that in turn would also add a total of eight billion dollars per annum in revenue per to Pakistan’s economic resources. In addition, a narrow estimate of revenues through exports from Gwadar Industrial Park would reach at 1.5 billion dollars per annum.
Given the need of high interface of Chinese and Pakistani business and investment, collaboration will immensely spur the economic activity by generating around two million additional employment opportunities for the people of both countries. The recent MoU signed between the North South Transport Network Private Limited Pakistan and Gwadar International Terminal Limited have plans to set up three warehouses and storage of goods and containers. That would have an initial level anticipation of monthly volume capacity of 200-250 containers or 5,000-6,000 tons of cargo-total of five percent of China’s international cargo volume. The three transport and logistics subsectors could earn up to six billion dollars per annum, create 9,000 new enterprises and 400,000 additional jobs in the port city.
The writer works for the Strategic Vision Institute, Islamabad, and can be reached at [email protected]