Significance of Gwadar Port for Pakistan’s Economy

Gwadar Port is located in Balochistan on the Arabian Sea. It is the warm water and deep sea port of Pakistan. It is 17-19 depth in meter. It is the key project of CPEC ( China Pakistan Economic Corridor). It is national as well as International Port to gained more economics and strategic importance. It is quickly turning into the major center of international trade.

The port’s advantageous position offers convenient entry to a number of the maritime trade routes. It’s location improves the economical growth of Pakistan and extend the regional connectivity. Gwadar provides numerous economic opportunities to Pakistan, China and also countries of Central Asia and Middle East. Through the CPEC, Middle East, Africa and Europe also get benefits that helps to increase their economy.

Introduction;

For the duration of construction phase, from 1988-1992 small port was constructed that was not enough for the large-scale trading. Then In 2007, well known Musharraf inaugurated the port. From 2007-2012, Gwadar port remained below Port Singapore Authority (PSA) but because of its negative performance, the port became exceeded over to China remote places Port keeping organization (COPHC) in 2013. When you consider that, then the development work has been completed at a rapid pace. Along with the Gwadar port, the building up of Gwadar metropolis, Gwadar electricity technology and Gwadar worldwide Airport are the proposed tasks below development. The Port has started shipment, seasonal cargo and commercial trade but it is still under construction for the improving of facilities.

Characteristics of the CPEC ;

There are basically four significant projects that make up CPEC in total; Energy, the Gwadar port, special economic zones, and infrastructural construction. The CPEC aims to strengthen Pakistan’s economy, update its infrastructure, and enhance connectivity across the whole nation. A connection between the port of Gwadar in Pakistan and Xinjiang in China is another objective of CPEC. China can reduce the amount of distance traversed and associated costs by creating a link between Gwadar port and China.

Importance of Gwadar Port for Pakistan;

Gwadar Port has a great significance to improve the economical status of the Pakistan. It is the one deepest and central sea port in the world, which is designed as a free profitable zone by the Pakistan government. Gwadar Port has a wide range of trade that are eventually for Pakistan, China and other countries like Europe, Iran, India, Turkey, Africa etc. The megacity’s high marketable areas similar as the Central Business District and avenues like Marine Drive, Balochistan Broadway, Padi Zer Boulevard and Jinnah Avenue are the anticipated to attract public and transitional business organization, Entrepreneurs, and dealers from around the world. Also, Gwadar Port is a beautiful abecedarian strands, Ocean life, and large open space make it too attractive and unique position for the interest development of tourism.

Overview of Gwadar Sea Port

 Pakistan will benefit from Gwadar’s assistance in keeping an eye on the Sea Lines of Communications (SLOCs) coming from the Persian Gulf and the Strait of Hormuz. Gwadar will be able to dominate the commerce routes and oil shipping lanes between the Gulf, the Middle East, South Asia, Africa, and Central Asia. Given that the port is out of reach for India relative to the other two Pakistani ports, it will provide Pakistan strategic influence over India. Through transit trade fees and foreign exchange reserves, Gwadar will improve employment prospects for Pakistanis and support national economic growth. The oil and energy sector collaboration between Pakistan and other nations would improve as a result of Gwadar. The economy of the nation will be strengthened by an increase in tourism, trade, hotel income, and state spending.

A significant number of International investors are drawn to Gwadar by its tax-free investment and trade opportunities, which provide new development initiatives and economic strategies. Asia, the world’s biggest area, contains a huge number of landlocked nations, and travelling by land to reach the sea is quite expensive. Such nations search for the quickest routes in order to conduct international commerce. An example would be China, whose western region is located thousands of kilometers from its eastern seaports. China would get access to the closest port, Gwadar, through the Pakistan-China Economic Corridor (CPEC). While Gwadar is 2800 kilometers away from the Port of Shangai, Kashgar is 4500 km away. China would have access to Afghanistan and the Central Asian Republics (CARs) thanks to the port. India may close the Strait of Malacca, but Gwadar would offer a another maritime route.

As an alternative to routes across the Indian Ocean or the South China Sea, Gwadar can be used. As the Chinese Premier referred to Gwadar as a “Economic Corridor” during a bilateral visit to Pakistan in May 2013, Pak-China relations will strengthen. The same is true for Gwadar, which may act as a regional centre and open up improved commercial routes to the landlocked Caspian area.

The port is now dealing with a number of difficulties, including a lack of connection and underdeveloped infrastructure and supporting infrastructure. There are security issues that must be resolved.

“CPEC is a framework of regional connectivity for the common interests of China, Pakistan and other countries. Pakistan wants to upgrade its infrastructure and strengthen its economy by constructing of modern transportation network and special economic zones.”

 Government plans to train and develop skilled manpower for long term requirements for the construction and operational phases of this project. Thus, this project will provide opportunities for employment.

When the economic of Pakistan improve and stable, then it overcome the poverty and the employment ratio will also increase.

Significance of Gwadar Port ;

CPEC is a innovative project under Belt and Road Initiative. It is a combination of roads, railways, telecommunication, power and manufacturing development expected to be finished with an investment of over 62 billion dollars by 2030. In addition, Gwadar Port is also a security core for the Maritime Silk Route (MSR). As part of CPEC, a total of 3000 km of road and railway channels will be drawn-out from the Chinese city of Kashgar to province Balochistan in Gwadar. This will increase Pakistan’s Foreign Direct Investment (FDI). The invasion of foreign, direct investment into Pakistan and the progress of energy and infrastructure will extremely beneficially for Pakistan’s sluggish economy. In inclusion, to the increasing bilateral trade between China and Pakistan, CPEC is the gateway to Africa.

Economic Development Indicator;

Economic development of a country can be assessed by using economic indicators. Some economic indicators are :

• Gross Domestic Product ( GDP)
• Gross National product ( GNP)
• Wealth Inequality
• Inflation
• Unemployment

These are above indicators are only improves by the Gwadar Port because it increase the employment opportunities for the locals. Unemployment rate in Pakistan is about 4.70% in 2022. But through the Gwadar Port, 3% of our economy increase at initial stage.

Gwadar Sea Port increase our Gross National Income (GNI), by providing opportunity of employment, trading platform, export import of goods. It is one of the major platform to improve our economy and give excessive benefits.

Developed Gwadar Sea Port in the province Balochistan

Establishment of Gwadar Port ;

The fact that traditional globalisation is considered to have its roots in trade by  sea, the development of Gwadar is establishing high standards for South Asia as a whole, not just for Pakistan and China but also for its billion-plus inhabitants. By establishing an atmosphere that is conducive to inclusive collaboration and  opening up new trade routes to other regions of the world, the development of  Gwadar Port is rebalancing the regional geoeconomics equilibrium and beginning to the address Pakistan’s economic problems.

Modern Technical Advancement ;

In the present era of technical advancement, Gwadar is leading the way, and it is firmly believed that it has the capacity to create a world in which there is permanent peace, regional security, and shared prosperity.

The explanation is clear-cut and straightforward because Gwadar Port’s influence extends beyond China and Pakistan and has the ability to have an impact not only on the local economic climate but also on future global dynamics of trade and economic connections between other nations.

Energy Project of Gwadar Sea Port on the Economy of Pakistan

One of the factors that adds to a country’s total economic growth is energy. Industrial and manufacturing sectors take a wide range of energy sources, including but not limited to electricity, pulping liquids, natural gas, petroleum, and hydrocarbon gas liquids.

  Importance of Gwadar For Pakistan ;

• Strategic and Economic Trade Routes
• Development of Infrastructure
• Job Opportunities
• Connect to All Province and Countries
• Development of Fata, KPK and Balochistan
• Equalization of Provinces
• Revenues for Gwadar Port
• Improve Economy
• Increase Income
• Overcome the poverty
• Better Foreign Relationships
• High Foreign Visits
• Fulfil the deficiency of electricity, gas etc
• Improve regional status
• Earn lot of Foreign Exchanges Reserves

Table 1. Development of Power projects under CPEC’s 

In order to improve commerce and market accessibility, CPEC-related projects also aim to build new routes and upgrade current road infrastructure. The transportation network will include a network of roads, railroads, motorways, and energy tunnels. Gwadar port would be connected by 2500–3000 km of roadways. One railway project has been finished and is operating out of the eight projects including road and rail infrastructure, while 70% of the construction on the Karachi-Lahore highway has been finished.

Trade between Pakistan and China will rise, as will trade and economic collaboration with China thanks to CPEC investments in transit infrastructure. Pakistan will switch its trading channels from the sea and the air to the least expensive ground transit with China and other nations. As a result, the export of agricultural goods, which was previously discouraged now improving rapidly.

Conclusion and Recommendations ;

One of the most prominent examples of relations between Pakistan and China is the CPEC. With this effort, Pakistan has a fantastic opportunity to relaunch the declining economy of the nation. Both the government and people of Pakistan have great expectations that the CPEC would benefit the economy of their nation. Construction of infrastructure projects, such as roads, highways, railroads, and cross-border fibre optic networks, will result in the creation of jobs and investment opportunities when they are finished.

In addition, to producing new employment in Pakistan, the development of the Special Economic Zones under the CPEC and associated infrastructure projects would benefit the economy of the nation as a whole. The installation of a toll levy, among other things, has had positive benefits on Pakistan’s economy.

The China-Pakistan Economic Corridor is a strategic economic initiative that aims to increase regional connectivity for China’s and Pakistan’s respective economic growth. In light of this, the purpose of this study is to project how CPEC-related economic activities would affect Pakistan’s total and sectorial energy consumption as well as their potential for energy savings by 2030. We used scenario analysis to look into the effects of CPEC on future energy consumption by 2030 and used Johansen-Julius Co-integration analysis to assess the long-run connection between energy consumption and its underlying components both at aggregate and sectorial level.

The findings of co-integration show that the elasticity of energy consumption with respect to price is negative at both the aggregate and sectorial levels, but it is positive for GDP and energy intensity. For the elasticity of energy consumption with regard to foreign direct investment, mixed findings have been reported. In the grand scheme of things, trade openness contributes significantly to rising energy use.

Author: Sayyad Muhammad

         Supervisor: Farzaad Ahmed Cheema

           Department of Politics and International relations

        University Of Sargodha