Investment news relating to Pakistan currently features a significant number of column inches devoted to Gwadar. This port city on the south western tip of the country has been attracting interest from overseas investors for some time but why is Gwadar such a focal point?
Talk of Gwadar port investment directly involves China while the Saudis are also closely connected to the growth of this strategic location. In this article, we’ll see why this bustling Pakistan port is so important to those and many other countries.
Until 1958, Gwadar was part of Oman before Pakistan stepped in to purchase the region. This move came on the back of a 1954 US Geological Survey that initially recognised Gwadar port importance and its potential as a deep sea coastal gateway.
There was no investment in Gwadar for decades and the project was left dormant until the turn of the new century. In 2007, the first phase of port construction took place under General Musharraf at a cost of $248 million. Since then, China has invested heavily while Saudi Arabia have made their first steps into port investment. That’s a brief background into the region but why is Gwadar of such strategic importance to so many?
Location, Location, Location
The answer to the question lies firmly with the location of Gwadar. There are other port cities in Pakistan and in terms of the map, Gwadar is at the very south west tip of the Pakistan coastline, close to the border with Iran and looking over the Arabian Sea.
The real key to this vital Pakistan port lies with its close proximity to the Strait of Hormuz – the body of water that lies between the Persian Gulf and the Gulf of Oman. It’s estimated that some 20% of the world’s petroleum supplies pass through the Strait on an annual basis but until Gwadar port came along, there was no significant deep sea port available that was close enough and big enough to take advantage of this fact.
The Gwadar port city is located at around 600 km from the Strait of Hormuz and in global shipping terms, that’s close enough for a world of opportunities to open. This close proximity means that this strategic Pakistan port has the capacity to connect trade routes between Asia and the Middle East.
Looking to the Future
This strategic Gwadar port importance is underlined by the fact that the city is a focal point of the CPEC project. Among the many developments in prospect in 2019 and beyond, Gwadar is expected to become a big part of China’s Belt and Road initiative, which improves infrastructure in the Middle East.
China is putting its weight behind a number of CPEC projects and while the Saudis are not official members of the alliance as yet, they are funding a multi billion dollar oil projects in Gwadar. All of this has resulted in significant job creation and a property development boom as this strategic port city continues to thrive.