The once sleepy fishing village of Gwadar on the tranquil shores of the Arabian Sea is undergoing massive development as part of the $62 billion China Pakistan Economic Corridor (CPEC) project. It is well on the way to becoming the most important deep-water port in South Asia.
CPEC involves building a super highway, known as the New Silk Road, from the southern tip of Western China through the centre of Pakistan, ending at Gwadar. Railways and power stations are also part of the programme.
Described as the jewel in the CPEC crown, when complete, Gwadar is expected to rival Dubai as one of the world’s greatest trading centres. Its growth potential has been described by experts as limitless. It is expected to boost Pakistan’s economy by 60%.
Perhaps one reason for the all the optimism surrounding Gwadar is that it is being constructed along the Shenzhen model. Shenzhen is a Chinese town which in the 1970s had a population of just 30,000. Today, it boasts over 10 million inhabitants and is home to China’s third busiest container port and fourth busiest airport.
Its GDP grew in 2018 to just above that of Hong Kong, which itself increased to slightly more than $360 billion. The most recent figures for Dubai put the city-state’s GDP at around $110 billion.
So, will Gwadar become the new Dubai and eventually overtake it in terms of trade and prosperity?
Here are 10 reasons why most observers are convinced it will happen:
1. Gwadar will become the gateway to and from the Middle East, Africa and Europe not just for China, but also for the energy-rich and landlocked Central Asian Republics like Kazakhstan and Azerbaijan. It will become the principal port for countries with two thirds of the world’s population and two thirds of the world’s oil and gas and make it much easier for businesses in those countries to reach international markets.
2. As a modern Duty Free Zone it will provide generous incentives to attract new businesses, like a 23-year tax holiday, 99-year lease of plots and the option of 100% foreign ownership. Dozens of companies from around the world have already joined the Free Zone, investing nearly $500 million.
3. Situated at the focal point of the world’s busiest sea lane, it will drastically reduce the time it takes for imports and exports to reach and exit China – from 45 days to 10 days. Taking these cargos by road both ways through the China Pakistan Economic Corridor will generate savings of $200 billion annually. With the rising middle class population in China the demand for energy is going to increase by 50% between now and 2030. When CPEC is complete all raw materials and finished goods could flow in and out of China through Gwadar.
4. Gwadar provides China with energy security and, as such, is vital to the future of the Chinese economy. Consequently, the Chinese government have designated its success as one of their highest priorities in terms of national interests. The new port will solve the bottleneck China has with the “Malacca Dilemma”. Oil supply security has become a major concern for the Chinese government, who are worried about the safety of their imports. Beijing lacks the naval power necessary to protect its seaborne trade. The Malacca Strait is a narrow and congested waterway, but it is the shortest route between the Indian and Pacific oceans. At present, approximately 75 percent of China’s crude oil imports originate in the Middle East, and it is shipped via Malacca. When the CPEC project is fully operational those imports will funnel through Gwadar.
5. Real estate returns will be the highest in Pakistan, due to the influx of hundreds of thousands of highly-skilled workers from around the globe who will be needed to fuel Gwadar’s growth. Thousands of people have already migrated from other parts of Pakistan to take advantage of the employment opportunities. In 2007 Gwadar’s population was around 85,000. Today, as it transforms into a symbol of prosperity for the nation, the number of residents has almost doubled to around 150,000.
6. Dubai, less than 450 miles from Gwadar by sea, currently serves as the most vital trading centre in the region. More than 85% of its shipping cargo is re-exported. Due to its more strategic location, it is expected that much of this traffic from Dubai will eventually transfer to Gwadar, particularly oil and gas, transforming it into the commercial hub of the region. By 2022 over 13 million tonnes of cargo will travel through it, according to forecasters. Just eight years later, when it is fully operational, that figure is expected to rise dramatically to 400 million tonnes.
7. Gwadar is the world’s third largest deep sea port. It will compete with Dubai by providing ultra-modern facilities to attract investment, manufacturing, tourism and communities. The port itself has been fully functional since late 2016.
8. Saudi Arabia is building a large $10 billion oil refinery and petrochemicals manufacturing complex just off Gwadar’s coast. The refinery will have a capacity of 100,000 barrels per day and will represent one of the most modern and largest refinery plants in owner Aramco’s international portfolio. When complete, Gwadar will become a major petrochemical and industrial hub similar to Singapore and Jubail. Incentives will be offered to attract heavy industries like copper, iron and steel.
9. A new desalination plant is currently under construction and will provide 5 million gallons of drinking water daily. Work on a new hospital, expressway and airport is also under way. Gwadar’s strategic location means the new airport could replace Dubai Airport as a major hub, since Gwadar lies at the centre of the region’s international air routes. Special areas of land have been set aside for tourism, leisure, water sports, hotels and family accommodation. These will be shielded from the industrial sites in order to maximise comfort.
10. The masterplan for Gwadar includes brand new facilities for storage, logistics, exhibitions, financial services, manufacturing and assembly plants for vehicles, household and electrical appliances, textiles and garments, a fishing industry and halal food processing. All of these will engage with local communities in Ballochistan by contributing to education, employment and public welfare. This is seen as a vital component of the town’s future prosperity in a region that has traditionally been impoverished.