In his first interview, Yu Bo the new chairman of China Overseas Port Holding Company (COPHC) stated that the Gwadar Free Zones are on the path to becoming “Export Industrial Parks” due to the various benefits that have arisen from the ten-year development of the China-Pakistan Economic Corridor (CPEC).
He answered many questions that are given below.
Question: How profitable will Gwadar Port and Free Economic Zones for investment?
Ans. Gwadar Port and Gwadar Free Zones offer immense potential investment opportunities for investors from Pakistan and beyond. The policy framework and guiding principles administering Gwadar Port and Free Zones have been formulated and implemented keeping in view its geo-economic significance for transshipment. Since Gwadar Free Zones are exempted from all sorts of provincial taxes, federal taxes and custom duties, the investors especially those who plan to do manufacturing businesses will be in good position to cash in such incentives.
With no additional costs in the zones, the cost of production becomes much less than that of tariff area. Subsequently, the products will be cheaper and compete in the international market. Potential investors must take advantage of these commerce enticements. Besides, these business encouragements provide Pakistan traders with an indispensable thrust to expand exports and strengthen foreign exchange reserves.
Question: What do you think about Gwadar Port’s importance?
Ans. Gwadar port in the Arab sea, located in the mouth of Persian Gulf, the strait of Hormuz, enjoys geographical connection in the Middle East, central Asia and South Asia. In 2013, China Overseas Ports Holding Company (COPHC) took over Gwardar Port. Now it is completely functional. It is equipped with full capacity to handle bulk cargo, containerized and LPG vessels. The three multi-purpose berths continue to process hundreds of metric tons of urea, wheat and DAP fertilizer. Previously, Gwadar Port hosted around 0.1 million metric tons of urea. Currently, Gwadar Port is handling of 450,000 tons of wheat, providing jobs and business opportunities to the local community. With major projects under CPEC in Gwadar, including Gwadar Power Plant, the New Gwadar International Airport Project, the China Pak Friendship Hospital, China-Pak Technical and Vocational Institute, the Gwadar East-bay Expressway, Gwadar Free Zone North, Gwadar Port will become a shining pearl in the region.
Questions: What kind of difficulties do you face in making Gwadar Port and Free Economic Zone functional and profitable?
Ans: Number one obstacle is security precariousness. Although it has been improved over the last many months but still there is a bigger room to bridge security gaps. Second irksome problem is high costs of electricity generated with diesel-generator. If we receive Grid-related power, development will be accelerated. Another dilemma is about Pakistan currency devaluation. Chinese companies in Gwadar have been demanding and seeking permission to transect in Chinese currency instead of dollar to prevent from transection cost and high deduction cost. If government accepts the demand, Companies will have sigh of relief.
Questions: How will businessmen and industrialists invest in Gwadar without availability of electricity and water?
Ans. The operator of Free Zones, Gwadar Free Zone Company, makes sure that all utility facilities including water and power are provided to its investors. For this purpose, COPHC is working on many power and water projects.
COPHC has established two desalination plants with production capacity of 0.2 million and 0.1 million gallons per day in the Free Zone and Port areas respectively to supply uninterrupted water for consumption. In connection with addressing water woes, Chinese funded 1.2 MGD desalination water plant is in its final stage of completion.
Similarly, in order to ensure all power requirements of the allied industries and port facilities, 8.5 MW diesel generator is providing electricity to keep port and free zones’ operations running 24/7 without any interruption. Gwadar Port is also going to receive 20 MW from Gwadar Grid Station that will help meet electricity needs presently.
Besides, efforts are afoot for installation of 300-megawatt (MW) coal-fired Gwadar Power Plant under China Pakistan Economic Corridor (CPEC). The project will aim at improving reliability on local power supply that would help gradually solve the problems in current economic development and urban construction in Gwadar region, being restricted by the shortage of power. The power plant will be great significance to deepening the energy cooperation between China and Pakistan, boosting the development of the Belt and Road Initiative, improving the overall power structure of Balochistan, and promoting local economic development in Gwadar Port.
Questions: When will the 1.2 desalination water plant project be completed?
Ans. In a major development, 85 percent of the construction work of the plant has been completed. It will be completed and start operation by this summer.
Questions: When will New Gwadar Airport be fully functional?
Ans. New Gwadar International Airport (NGIA) will change development dynamics in Gwadar. Its launch and completion will be shot in the arms of potential investors and traders. We expect completion of project by September 2023.
Questions: Are investors and industrialists satisfied with security and law and order in Balochistan and especially in Gwadar?
Ans. The government of Pakistan has established a Special Security Division (SSD) within Pakistan Army to provide additional security to projects in Gwadar associated with CPEC. The policies to investment are being improved.
Questions: How many companies have started working in the Gwadar Free Zone South so far?
Ans. As much as 35 companies are now registered in the Freezone South. Out of them nine are in full operation.
Questions: In which sector are these companies operating?
Ans. The operating companies are diverse in their operational category, ranging from service industry to fertilizer, metal processing, foods processing and so on.
Questions: How many more companies will start operating soon in Gwadar Free Zone North?
Ans. To give an accurate number would be too early at the moment. However, since we have signed sub-lease agreements with a number of companies last year, we hope they will undertake their construction and consequent operations soon.