The Gwadar gateway

As China has developed on the world stage it has looked to further develop with a project known as the Belt and Road initiative, a process of opening trade going from Venice to Beijing. Crucial to this development is a port in Pakistan and the Gwadar Port is poised to take full advantage of this massively beneficial position.

Gwadar Port is one of three ports in Pakistan alongside Karachi and Qasim. While Karachi and Qasim have had some success in the local area there are some factors hampering further growth in both cases. The port of Karachi is based in the city and therefore it can only grow out as far as the city limits allow while Qasim is unfortunate as it is located 40 kilometres from open sea and this means that any visiting ships would have longer turnaround times.

In an interview, Dostain Khan Jamaldini, Chairman Gwadar Port Authority (GPA), while making a comparison explained, “by contrast, Gwadar Port is ideally situated around key shipping routes around the Persian Gulf. The port also has a number of factors in its favour such as natural deep-water with about 50 kilometres sea-front for further port development open in all-weathers. It’s present navigational channel is only 4.7 kilometres long and close to open sea. Being developed as a green-field port, it has a vast land-bank spread over 7000 hectares. Currently, it has two container berths with five STS cranes with required RTG cranes, one clean bulk-cargo berth with three cranes, and one Roll-Off Roll-On facility. The current port area also includes a 220,000 square metre container and other cargo stack area and 950 hectares of land set aside for the Gwadar Port Free Zone. The development has already caused excitement in the local area with recent estimates suggesting the port’s expansion could increase real estate GDP around the port from two to five per cent.”

He stated that the second phase of port development, scheduled to start in 2018 would add five additional berths in a new 1500 meters long Multipurpose Terminal with around 700,000 meters back-up area. He also informed that the GPA intends to develop, on the basis of BOT model, three additional Special Economic Zones for petrochemical, chemical, and mineral industries along with related port terminals on the respective seafront areas.

Above plans of port, commercial and industrial development have created opportunities for realisation of GPA vision and mission of transforming Gwadar Port as a future hub of transhipment and as the gateway of transit trade to Afghanistan, Central Asian Republics, and Western Provinces of China.

The potential of Gwadar was first noted as far back as 1954 when the area was still occupied by Oman. At the time Pakistan commissioned the United States Geological Survey to survey the coastline and as a result of that survey Pakistan purchased Gwadar from Oman for $3 million in 1958. Later, as Mr Jamaldini stated that in 1964 the first prefeasibility study was carried out. The process of developing the port took time, with a small wharf finalised in 1992 called Gwadar Fish Harbour-cum-Mini Port.

The construction of the port only started in March 2002 when the Chinese Vice- Premier laid the foundation stone for the Gwadar Port. Work on phase-one was completed in 2006 and the first Post- Panamax ship that called on the port was in 2008. In 2011 the Wall Street Journal noted that the port was ‘underused’, highlighting the potential that Gwadar had to offer.

Mr Jamaldini said: “The Gwadar potential would not remain untapped. Over the years China invested $278 million in developing the port during the period 2002-2006. Now, with the coming of China Overseas Ports Holding (COPHC) as the new port and free zone developer and operator, and with the start of China Pakistan Economic Corridor (CPEC), massive investments, both from public and private sectors, running in billions of dollars, Gwadar Port & Gwadar Port City are set in the process of transformation as one of the major projects of Belt & Road Initiatives.”

The main motivation for this is that securing the route through the port will make it easier to access trade routes and for China this will mean cheaper and faster shipping, something that could prove crucial in maintaining its trading power around the world. This is outlined in a plan known as the China-Pakistan Economic Corridor (CPEC) plan and over the years Chinese investment has resulted in developments in the local area such as the Gwadar Port Free Zone, a project that started construction in June 2016 and is being built on a 2292 acre site close to the port.

He stated that the free zone of the port will cover various aspects of trade and business such as areas specifically set up to attract manufacturing businesses, an area for warehouses and a special hub to handle logistics. In order to ensure these facilities are used companies are being offered 23 year tax breaks to stay in the Zone as well as for any imports of items used in the construction of the port and the free zone. He informed that companies are registered in the Free Zone and issued business licences for logistic, trade, services and processing & light manufacturing. Currently, the pilot phase is under construction on 60 acres of land, which is scheduled to complete by end of 2017. Work on the main Free Zone will start from 2018. He informed that the 1st Gwadar International Exhibition is planned in January 2018 in the pilot zone. COPHC & GPA would spend $2.500 billion on development of the main Free Zone. More than 100 companies from Pakistan, China, and other countries have submitted their applications for registration as Gwadar Port Free Zone enterprises.

Through CPEC plans, the investment includes a 300 MW power plant, $14 million desalination plant, the 19 kilometre East Bay Expressway to connect the port to the Makran Coastal Highway with a cost of $143.000 million and a $280 million international airport. In April 2016 Zhang Baozhong, the chairman of China Overseas Port Holding Company said his company alone would be investing $4.5 billion to develop the port and free zone area, covering everything from hotels to port & logistic infrastructure, roads and power.

It should be emphasised that China is not the sole investor in Gwadar and indeed the Pakistani government has put a lot into developing this area, both in terms of investment and infrastructure. One example of this is with the Pak-China Technical and Vocational Institute, a technical training facility that will train local residents to operate machinery and secure employment when companies arrive in the economic zone.

Port Authority Chairman Dostain Khan Jamaldini is in no doubt about the potential of this investment: “We could emerge as a key shipping point and when combined with surrounding areas we could become a trade hub and Pakistan’s business community is waiting to contribute,” he enthuses.

It should also be said that Gwadar has also benefited from recent concerns regarding security. There are particular worries about the Straits of Malacca and that any disruption there could prove potentially catastrophic for the CPEC project. Therefore investing in Gwadar not only makes economic sense but also provides an additional secure route in the event of any attacks around the Straits of Malacca and to minimise anything that could jeopardise Chinese economic progress, or indeed for any of China’s trading partners. This is why in the long term Gwadar is being primed to increase its capacity. Potential threats in Gulf Region and possible closer of Strait of Hurmoz is yet another challenge to businesses and shipping lines. For Gwadar, which is an open-to-ocean port at the mouth of Strait of Hurmuz, it is estimated that it will eventually be able to handle 400 million tons of cargo with long term plans for 100 berths to built in the port by 2045. The port Chairman Mr. Jamaldini is confident that Gwadar Port is symbol of peace and prosperity for economically weak Balochistan province as well as for the entire hinterland of the port spreading up to the Afghanistan, CARs and the Western Provinces of China. Traders and business people can attach expectations from Gwadar in coming times.

In some respects this may seem strange, almost a throwback to another era where countries traded goods across the high seas. While traditionally ports were massive economic hubs in recent years this has not always been the case. However there is no getting away from the fact the geographical location of Gwadar Port is a stroke of luck, something that others could not benefit from. Even in the modern day a well-positioned port is a massive advantage for any country and with the efforts of authority Chairman Dostain Khan Jamaldini and the rest of the Gwadar Port Authority it has shown that the port is poised to take full advantage of this fortune. There are a lot of potential rewards that can be made not just for CPEC but also for the local people who have worked for years to develop that area and deserve all of the benefits that come with it.

Gwadar Port Authority
Pakistan’s third port alongside Karachi and Qasim
Part of China’s ‘Belt and Road’ initiative & Gateway of CPEC
Caters for general, bulk and container cargo