Page 2 of 2 Singapore takes over
Pakistani port By Syed Fazl-e-Haider
equipment will be be $1 billion to
$1.5 billion; the terminals will cost $2 billion
to $4 billion; the cost of the Free Zone
development is expected to be $1.5 billion to 2.5
billion; while the marine services and others will
cost $500 million.
The GPA is to receive
revenues from the CHC over the next 40 years
estimated at between $17 billion and $31 billion.
The revenue to be generated from containers and
other cargo is
projected at $10 billion to
$18 billion; the Free Trade Zone is expected to
generate $3 billion to $6 billion; and the
terminals will generate an expected $4 billion to
$8 billion during the period.
Some ports
and shipping experts in Pakistan believe the
revenue-sharing formula goes against the country's
interests. They contend that the negotiators have
overlooked the fact that if the port stopped
operating there would be no revenue. According to
the experts, the GPA or the national exchequer
will bear the permanent costs of
navigational-channel maintenance, dredging,
security and firefighting.
The experts
have also objected to leasing Gwadar port for a
40-year period. They say the longest acceptable
long-term contract period is 25 years, mid-term
10-15 years and short-term five to seven years.
Even in cases where a port is given over on a
"build, operate and transfer" basis and operators
bring in all the required equipment, they say the
maximum lease period never exceeds 20-25 years.
It is expected that with Gwadar port
operational, Pakistan will become a key player in
the Persian Gulf region and serve as an energy
corridor for Central Asia, South Asia and western
China. With the exception of Chahbahar port in
Iran, Gwadar will be the only free port between
Dubai and Colombo providing container storage and
warehousing facilities.
Gwadar has been
designed to be operated as a hub port, and it aims
to provide better investment incentive packages
than regional ports such as the United Arab
Emirates' Jebel Ali, Hong Kong, and Singapore. The
port project aims to accommodate facilities that
will help to develop Gwadar as an industrial city
- privately owned warehouses and cold storage,
private cargo-handling equipment, truck yards, and
corporate infrastructure such as offices along the
same lines as Jebel Ali, Hong Kong, Malaysia and
Singapore.
As a free-trade zone and as a
corridor to the Central Asian republics, Gwadar
offers great opportunities for investors. Pakistan
has already declared Gwadar a special economic
zone and all imports coming through this zone will
be exempted from customs duty and sales tax along
with concessions on income tax. Pakistan has
reportedly decided to give a seven-year tax
exemption to industrial and commercial
establishments in the Gwadar Special Economic Zone
(GSEZ). This is expected to boost both domestic
and foreign investment in the area, especially in
such sectors as fish-processing, real estate, and
tourism-related infrastructure and services.
Moreover, the Ministry of Ports and
Shipping has recommended that the GSEZ be exempted
from the Foreign Exchange Regulation Act of 1947
and the Protection of Economic Reforms Act of
1992. The Central Board of Revenue is of the view
that no area in Pakistan could be exempted from
these laws except as provided in the constitution,
as in the case of the Federally Administered
Tribal Areas and Provincially Administered Tribal
Areas.
The challenge before Pakistan is to
attract international investors by trumpeting its
incentive packages for investment in Gwadar Free
Trade Zone.
Pakistan plans to spend $7
billion in the next eight years to improve the
country's road infrastructure, completing a
network linking China and South Asia through
Gwadar by 2014.
Because of its
geo-strategic location, Gwadar has the potential
to become a regional maritime hub. The 14.5-meter
draft of the port will be able to accommodate up
to "fifth-generation" ships, including Panamax and
mother vessels.
Islamabad firmly believes
that the Gwadar port is a key entry point for
energy supplies for Central and South Asia, as
well as western China. It will allow the expansion
of oil trade in the region, as it provides the
shortest possible route to landlocked, oil-rich
Central Asian states.
Syed
Fazl-e-Haider is a Quetta-based development
analyst in Pakistan. He is the author of six
books, including The Economic Development of
Balochistan, published in May 2004. He can be
reached at sfazlehaider05@yahoo.com.
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