Pakistan still at the beginning of 21st century is a developing country, that has not yet reached the stage of economic development characterised by the growth of industrialisation, nor a level of national income sufficient to yield the investment necessary for further growth despite having all natural resources to develop and rank with developed nations especially the province of Balochistan.
Pakistan is situated in an area in South Asia where it is enjoying a privileged position among neighbour countries.
It consists of four provinces, Sindh, Punjab, NWFP and the largest Balochistan having only 5.0 million populations.
The people of Balochistan are hard working, accustomed to bear extreme climatic and arid conditions.
They are ethically diverse people of Pathan, Baloch, and Barohi origin, intermingled with other migrant races that have been attracted by the mining prospects in the area.
The province is rich and endowed with mineral resources, like iron and coal, mining and oil and gas explorations.
The Asian largest gas reserves are found in Balochistan at Sui. The gas was discovered in 1952.
This province is also famous for its varieties of dry and fresh fruits. The fruit is not only supplied in local markets but also export to Middle East and Central Asian States etc.
Handcrafts of beautiful and intricate craftsmanship are produced here the most typical of the region being the exquisite mirror work, embroidery, fine quality precious stones and marble works.
Since the independence of Pakistan, the economic planners have been neglecting Balochistan for development.
If the process of development of Balochistan was started in 1960s, It would have been yielding the fruit and the local population was gaining the fruit of development.
If we glance at in economic history of the world, we will know that western countries now called developed countries did not rely on foreign investment and foreign aid. A group of indigenous capitalist of those countries brought about a significant investment and economic changes in their countries.
Province of Balochistan is bestowed upon huge resources that have not yet been exploited due to lack of investment diversion, which has been flowing mainly to Sindh, Punjab and NWFP.
To cure the problems, Board of Investment, Government of Pakistan has liberalised the foreign investment policy as previously there were some restriction that were hurdle in inflow of foreign and indigenous capital. BOI has issued a following new policy:
-- Previously, only the manufacturing sector was open to foreign investment. Now, the policy regime has been liberalised by opening up other economic sectors to FDI and by mobilising domestic financial resources to encourage investment.
-- Foreign investors are allowed participation in industrial projects, on the basis of 100% foreign equity, without any permission from the Government.
-- No Government sanction is required for setting-up an industry, in any field, place and of size, except in the four specified industries.
-- There is no requirement to obtain a No Objection Certificate (NOC) from the Provincial Governments for the establishment of projects.
-- Full repatriation of capital gains, dividends and profits.
-- The facility for contracting foreign private loans is available to all those foreign investors who make investment in the approved sectors.
-- Foreign controlled semi-manufacturing and non-manufacturing concerns can access loans equal to @ 75% & 50%, respectively, of their paid up capital including reserves.
-- There is no restriction on payment of royalty / technical fee etc., in the manufacturing sector, allowed non in non-manufacturing sectors. For non-manufacturing sector, the initial lump sum fee should not exceed US $100,000. The maximum rate will be 5% of net sales. Initial period for which such fees may be allowed should not exceed 5 year. Further information can be supplied by BOI.
Balochistan consists of very strategic position for investment purpose like Gawadar port, Turbat, Quetta, Gandani, and Hub.
These strategic positions may attract huge indigenous as well as foreign investment. It may play a role of hub to central Asia, Middle East and south Asia.
The incident of 11 September 2001 brought about a two trillion dollar outflow of capital from USA that flown $130 billion to Europe and $70 billion to Asia.
Pakistan got only 0.2% shares out $70 billion. It is a dilemma and misfortune that our system believes in making decision on moment-to-moment basis instead of long term planning as it was made in 1960s.
A comprehensive planning, first of all, requires accurate statistical information about major sector of the economy.
In Pakistan, due to various reasons, the data on natural, human and financial resources, provided to the planners, are mostly inaccurate and unreliable, rather mainly based on assumptions and estimation.
As a result, the objectives of planning cannot be achieved what we could not get a marginal proportion of outflow of two trillion dollars from USA due to lack of planning especially in Balochistan province.
The data about Balochistan in true sense is not available at international level. Foreign investors while planning to expand their business do not consider Balochistan for investment even though it has potentials for investment especially in the field of Oil and Gas, Mining, Ship-breaking, agriculture, construction, railways, highways, trading to central Asia via Afghanistan, exploration, energy and power, service sector, tourism, Afghanistan related projects.
Balochistan may play a vital role to attract the foreign investors from Central Asia and China. If these central Asian States trade from Iran (Port Bandar Abbas) it is very expensive as it costs them $5000 to Ashkabad (Turkmanistan), Biskake (Kirgizia), Taskent (Uzbekistan), Alma-ata (Kazikistan), Dushanbe (Tadzhikistan).
Whereas, if the same trading is done from Port of Gawadar Balochistan to these location it costs $3600 per 35 Metric Tons.
Though the work has begun since 1996, the several industrial zones including export-processing zone in Balochistan have started working. The brief summary of these is as under
HUB INDUSTRIAL AREA: In 1970s, Hub area in district Lasbela Balochistan was identified as suitable juncture for building up an industrial area because of the following reasons.
1. Its proximity to the port city of Karachi
2. Connected to Karachi being located along R.C.D highway
3. Ideal law and order conditions
4. Low price of land
5. Lucrative fiscal incentives and concessions
6. Availability of water which is a scarce commodity in Karachi
7. Karachi had become saturated and could not provide adequate infrastructural services to more industrial projects.
In 1984 Lasbela Industrial Estate Development Authority (LIEDA) was established. LIEDA controls not only Hub Industrial Trading Estate but also Uthal Industrial Estate 130 Km from Karachi, Winder Industrial Trading Estate 80 Km from Karachi, Special Industrial Zone 80 Km from Karachi and 42 Km from Hub on main R.C.D, Gadani Industrial Area 25 Km from Karachi.
All the basic facilities and necessities to run the industry are available in these industrial areas.
However, among these, Gadani Industrial Zone may play a vital role for Iron and Steel Industry as there is already developed a ship-breaking industry at Gadani Area providing raw material for iron and steel industry.
It is a lack of information in indigenous as well as foreign investors that the main raw material is supplied and forwarded to Lahore, Gujranwala, Multan via Karachi from Gadani.
They make finished goods and supply again to Karachi. Ultimately the cost increases. Therefore, it is a lack of awareness and interest that Government of Pakistan failed to divert the attention of these indigenous and foreign investors towards Gadani Industrial area where they can develop industry and can produce cheap goods as compare to above area due to saving of transportation, time, and availability of raw material that will also boost the Gadani Ship breaking industry which is already under pressure at international level due to increasing costs of old ships.
God has bestowed upon Pakistan every resource to attract investment. There are several reasons for indigenous as well as foreign investors for investment in Balochistan area, as it consists of abundant land and natural resources, strong human resources, large and growing market, well established infrastructure and legal system and very important the strategic location as a regional hub to central Asian States, middle east, and south Asia.
It is suggested that a comprehensive survey and study should be made to prepare the pre feasibility reports sector wise, suitable place for the industry, availability of raw material for production at nearest location through SMEDA (Small and Medium Enterprises Development Authority) which may be available for indigenous as well as for foreign investors who are desirous to invest in Balochistan area.
Often telecast reports at regional, and international level may help awareness of investment climate in Balochistan area through local and foreign missions. Like International Conference of Investment in Balochistan on 8th May 2004 at Quetta is really a remarkable efforts by BOI Government of Pakistan to attract foreign investor in the province.
Pakistan through its foreign mission abroad should issue booklets, news letters to their chambers of commerce, advertising in news papers and on TV, about the investment opportunities in Balochistan area and should give them pre feasibility reports prepared by SMEDA available to foreign investors to make up their mind to invest in the province.
Human Resources Development programme (Training and Development) should be launched in the province to educate and train the masses of the province so that they may be able to contribute industrial development in the area that would bring about the alleviation of poverty which is a curse in Pakistan.
The financial system in the Balochistan area is dysfunctional. The financial institutions and Government have no co-ordination about investment policies. Therefore, the functional approach to development of financial system in Balochistan province should be pursued and there should be minimum control by Central Bank, Corporate Law Authority, and Ministry of Finance and should have full co-ordination between both to make the financial system functional.
A strong functional financial system would bring about attraction of foreign investor to the province.
1960s growth strategy be followed to attract foreign investment and induced in a profitable sector in Balochistan that could produce industrial growth through application of Linear-Stages Theory (Rostow's growth theory and Harrod-Domar Model), Privatisation, Deregulation, and Free Market.
Political lords of Balochistan may be strictly dealt with if they create any instability in the area.
These politicians for the sake of their own interest damaged the gas pipeline, which was supplying to Punjab while the Pakistan and India were making pre feasibility reports for gas pipeline from Iran to India via Pakistan.
Indian media exploited the news that the gas pipeline is not secured from Pakistan and then India reserved to go ahead.
The Government should strictly watch such actions of these lords otherwise they will continue spoiling the investment climate not only in Pakistan but also in the province of Balochistan.
In the last, it would be suggested that the Government should come forward to invest first time to run the business cycle that in the long run not only the Government will get benefits but also the people of Balochistan will be having fruits of the investment that would also contribute the national income, bring about alleviation of poverty and training to the masses of the province.
When the masses have money in their pocket they will spend ultimately the consumption level and standard of living will be increased bringing about growth in business cycle.
The more consumption level increase the more investment will be in the province as it is found in USA. The consumption level USA is very high in the world.
(The writer is Muhammad Arif M.A, Research Scholar)