Tuesday, October 24, 2017

Will Gwadar Grow to Become a Major Metropolis Like Shenzhen?

"We believe Gwadar is following in the footsteps of Shenzhen which represented a historic population rise, from a population of 30,000 in 1980 to 11 million people in 2017. Gwadar is poised to see massive population growth due to incoming industries, and we expect this to be one of the most strategic cities in South Asia." Hao-Yeh Chang,  China Pak Investments Corporation

Gwadar: The Next Shenzhen?

Gwadar is booming. It's being called the next Shenzhen by some and the next Hong Kong by others as an emerging new port city in the region to rival Dubai. Land prices in Gwadar are skyrocketing, according to media reports. Gwadar Airport air traffic growth of 73% was the fastest of all airports in Pakistan where overall air traffic grew by 23% last year, according to Anna Aero publication.  A new international airport is now being built in Gwadar to handle soaring passenger and cargo traffic.

Recent Aerial View of Gwadar Hammerhead Growth

Gwadar Property Boom:

The volume of Gwadar property searches surged 14-fold on Pakistan’s largest real estate database, Zameen.com, between 2014 and 2016, up from a prior rate of a few hundred a month. “It’s like a gold rush,” said Chief Executive Zeeshan Ali Khan to an Express Tribune newspaper reporter. “Anyone who is interested in real estate, be it an investor or a developer, is eyeing Gwadar.”

Chinese private investment company China Pak Investment Corporation has recently announced it is acquiring 3.6 million square foot International Port City project in Gwadar. It plans to develop a $150 million gated community to handle the influx of 500,000 Chinese professionals expected in Gwadar by 2022.

China Pak Investment Announcement:

On October 20, 2017, Pakistan's Geo TV news reported that China Pak Investment Company plans to increase its commitment to  invest $500 million in Gwadar in the first phase of a project aimed at building homes for around 500,000 incoming Chinese professionals expected in Gwadar by 2023. An earlier September 29, 2017 press release by China Pak Investment Corporation said as follows:

"The final master plan for China Pak Hills is currently being refined in Hong Kong, and will feature a range of state-of-the-art amenities including an open-air shopping boulevard; indoor shopping mall; restaurants and eateries; an international school and nursery; six community parks; indoor and outdoor sports facilities including tennis courts and a resident's gymnasium; a water desalination plant and recycling centre. China Pak Hills will also be home to the Gwadar Financial District, catering to the growing financial sector and adding much needed A Grade office space to Gwadar's growing market."

Gwadar Port Development:

Gwadar port's planned capacity when it is completed will be 300 to 400 million tons of cargo annually.  It is comparable to the capacity of all of India's ports combined annual capacity of 500 million tons of cargo today.   It is far larger than the 10-12 million tons cargo handling capacity planned for Chabahar.

To put Gwadar's scale in perspective, let's compare it with the largest US port of Long Beach which handles 80 million tons of cargo, about a quarter of what Gwadar will handle upon completion of the project. Gawadar port will be capable of handling the world's largest container ships and massive oil tankers.

Gawadar port is being built in Pakistan by the Chinese as part of the ambitious $46 billion China-Pakistan Economic Corridor (CPEC) that will eventually serve as Hong Kong West for  growing Chinese trade with the Middle East and Europe.  CPEC will also enable Pakistan to bypass Afghanistan to trade with Central Asia through China across China's borders with Tajikistan, Kyrgyzstan and Kazakhstan.

India's Strong Opposition: 

Pakistan suspects that India's real objective in Afghanistan and Iran is to locate its intelligence agents under the cover of Chabahar port construction workers to sabotage China-Pakistan Economic Corridor (CPEC) and support Baloch insurgency to destabilize Pakistan. These suspicions were strengthened when Indian spy Kulbhushan Yadav, operating under the fake name Husain Mubarak Patel, was arrested in Balochistan in March, 2016. Yadav confessed he was operating as an undercover RAW agent from his base in Chabahar, Iran. Indian Prime Minister Narendra Modi has made no secret of his strong opposition to CPEC and his support for Baloch insurgents.

Chinese Commitment to Pakistan: 

Unlike US-Pakistan ties that have been essentially of a transactional nature, Pakistan-China relationship appears to truly strategic.  A recent book "The China Pakistan Axis: Asia's New Geopolitics" by American policy analyst Andrew Small quotes a top Chinese official as saying to his American counterparts that "Pakistan is China's Israel". Earlier, in 2011, some news reports quoted Chinese officials as warning that "any attack on Pakistan would be construed as an attack on China".  Growing Chinese investment commitments in Pakistan now exceed $100 billion, a further indication of the importance China attaches to Pakistan as one of its closest allies.

Summary:

China-Pakistan ties appear to be truly strategic.  The strength of Chinese commitment to Pakistan is increasing with growing investments in China-Pakistan Economic Corridor related projects. It is now highly visible in terms of the influx of the Chinese money and citizens into Pakistan. China's actions on the ground reinforce the credibility of Chinese officials' reported quotes describing Pakistan as "China's Israel" and warnings to the United States that "any attack on Pakistan would be construed as an attack on China".

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16 comments:

Ahsan H. said...

Don't know about that. But the aerial view is certainly very impressive and beautiful.

Riaz Haq said...

Dubai and Gwadar: the silent economic war in the Gulf of Oman
TARIQ AL-SHAMMARI 14 August 2017
The expansion of Gwadar port in Pakistan is a game-changing venture that would reformulate the economic agenda of the entire region.

https://www.opendemocracy.net/north-africa-west-asia/tariq-al-shammari/dubai-and-gwadar-silent-economic-war-in-gulf-of-oman



Many economic analysts believe that Gwadar is another Dubai emerging on the world’s map. The controversial issue here is that an economically powerful Gwadar threatens the strategic influence of Dubai in the region. This challenging point, recently, has caused a silent economic war in the Gulf of Oman between two groups of countries. Pakistan, China and Qatar on one side. India and the UAE on the other.

Dubai is located on the southeast coast of the Persian Gulf. It is the largest and most populous city in the United Arab Emirates (UAE). Dubai has invested in infrastructure to overcome its poor natural resources and become a global business, trade and tourism hub. Thus, Dubai has emerged as a multi-cultural city and enjoys to receive millions of leisure and business visitors each year from around the world.

The major revenue of Dubai comes from tourism, aviation, real estate, and financial services. Large construction projects, iconic skyscrapers and sports events are other means of income for Dubai. The world’s tallest building called the Burj Khalifa is located in this emirate.

It is clear that the area where Dubai is located can offer a distinct geographical advantage to businesses. There are two major commercial ports in Dubai, Port Rashid and Port Jebel Ali. The latter one is the biggest man-made harbor in the world and the biggest Middle East port. It is home to over 5,000 companies from 120 countries.

However, Gwadar port is a serious rival to Dubai. Gwadar port is considered a strategic location, giving China and Central Asia access to the Gulf region and the Middle East. Gwadar port will become the main sea gate for Central Asia. It will also become easier to send products from Xinjiang and central Asian countries to other regions. “The corridor will help reduce transport time for goods from Gwadar port to western China and central Asian regions by about 60 or 70 per cent,” Vice Premier of China Ms Liu Yandong said.

On 10 April 2016, talking to The Washington Post, Zhang Baozhong, chairman of China Overseas Port Holding Company said that his company could spend a total of $4.5 billion on roads, power, hotels and other infrastructure for the industrial zone of Gwadar. He also added that the company also plans to build an international airport and power plant for Gwadar.

‘Dubai Investment Forum’, a platform aiming to persuade local and international investors will be held in October under the patronage of Crown Prince of Dubai Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum. Undoubtedly, this Forum is so crucial for the future of Dubai to continue its development as now it has a strong rival named Gwadar.

India is another key player in this regional battle. The Chabahar-Gwadar adversary is due to the fact that the ports are at a distance of about 72 km from each other. Both India and Pakistan have been attempting to undermine each other in the region and the development of the two ports is bound to add to the animosity.





Theo said...

Karachi is a well established port for Gwadar to work the costs have to be lower than those thru Karachi. There are established business relationships within Gwadar businesses aren't going to shift relationships to Gwadar just because.

Riaz Haq said...

Theo: "Karachi is a well established port for Gwadar to work the costs have to be lower than those thru Karachi. There are established business relationships within Gwadar businesses aren't going to shift relationships to Gwadar just because."

Karachi Port and Port Qasim will grow but still not be able to handle the biggest container ships and the trade volume Gwadar deep sea port is planned for.

Gwadar port's planned capacity when it is completed will be 300 to 400 million tons of cargo annually. It is comparable to the capacity of all of India's ports combined annual capacity of 500 million tons of cargo today.

To put Gwadar's scale in perspective, let's compare it with the largest US port of Long Beach which handles 80 million tons of cargo, about a quarter of what Gwadar will handle upon completion of the project. Gawadar port will be capable of handling the world's largest container ships and massive oil tankers.

http://www.riazhaq.com/2016/05/comparing-irans-chabahar-and-pakistans.html

Riaz Haq said...

#China Turning #Pakistan's #Gwadar Port Into Regional Giant. #CPEC

https://www.voanews.com/a/pakistan-china-gwadar-port/4084175.html

An unprecedented Chinese financial and construction effort is rapidly developing Pakistan’s strategically located Arabian Sea port of Gwadar into one of the world’s largest transit and transshipment cargo facilities.

The deep water port lies at the convergence of three of the most commercially important regions of the world, the oil-rich Middle East, Central Asia, and South Asia.

Beijing is developing Gwadar as part of the China-Pakistan Economic Corridor, known as CPEC. The two countries launched the 15-year joint mega project in 2015 when President Xi Jinping visited Islamabad.

Under the cooperation deal construction or improvement of highways, railways, pipelines, power plants, communications and industrial zones is underway in Pakistan with an initially estimated Chinese investment of $46 billion.

The aim is to link Gwadar to landlocked western China, including its Muslim-majority Xinjiang region, giving it access to a shorter and secure route through Pakistan to global trade. The port will also provide the shortest route to landlocked Central Asian countries, including Afghanistan, through transit trade and offering transshipment facilities.

Chinese fuel imports and trading cargo will be loaded on trucks and ferried to and from Xinjiang through the Karakoram Highway, snaking past snow-caped peaks in northern Pakistan.

‘Qualitative change’

Gwadar will be able to handle about one million tons of cargo annually by the end of the year. Officials anticipate that with expansion plans under way, the port will become South Asia’s biggest shipping center within five years, with a yearly capacity of handling 13-million tons of cargo. And by 2030, they say, it will be capable of handling up to 400-million tons of cargo annually.

China has in recent months begun calling CPEC the flagship project of its global Belt and Road Initiative, or BRI. The “qualitative change” from an experimental project to flagship project underscores the importance Beijing attaches to CPEC, said Zhao Lijian, the deputy chief of mission at the Chinese embassy in Islamabad.

Out of 39 “early harvest” projects under CPEC, 19 have since been completed or are under construction with a Chinese investment of about $18.5 billion, Lijian told VOA. The progress makes it the fastest developing of all of at least six BRI’s corridors China plans to establish, added the Chinese diplomat.

Riaz Haq said...

THE EXPRESS TRIBUNE > BUSINESS
Pakistan’s construction industry – the hot cake for foreign investors

By Tehreem HusainPublished: October 23, 2017

https://tribune.com.pk/story/1538687/2-infrastructure-building-pakistans-construction-industry-hot-cake-foreign-investors/

The construction industry is playing an important role in economic growth of Pakistan. Recent (provisional) estimates published in the Economic Survey of Pakistan show that the industry grew 9.1% in FY17 and contributed 2.7% to the country’s gross domestic product (GDP).

BMI Research has also provided a healthy growth outlook for the sector, putting it at 11.8% annually from 2016-20 and 9.1% over 2016-25.

The signing of the China-Pakistan Economic Corridor (CPEC) agreement and improvement in the country’s security situation have been the key to giving boost to not only the construction industry, but Pakistan’s image abroad. With China having the first-mover advantage in injecting foreign investment into the country, other countries have followed suit.

The sector has also been an important recipient of foreign direct investment (FDI). This can be judged from the latest figures provided by the State Bank of Pakistan, which show that the construction industry received a net inflow of $35.7 million in August 2017.

How attractive the industry is perceived to be for foreign investors can be gauged from the fact that in the current fiscal year from July-August FY18 the industry has received $55.7 million relative to $1.6 million in the same period of last year.

Locally, investment has also been boosted by government policies such as reduction in duties and taxes on building materials like steel, construction machinery and equipment and computerisation of land ownership records.

Majumdar said...

Brof sb,

I have been following your posts for the last decade about how the big T(har coal fields), the big R(eqo Diq copper mines) and the big G(wadar port) will transform Pakistan. We have seen how the big T and big R have panned out. lets hope big G will shape up to your dreams.

A few points I need to make though:

It is comparable to the capacity of all of India's ports combined annual capacity of 500 million tons of cargo today.

As with most of your information about India, this is dated. India's port capacity is around 1.5 billion MT and in FY 2014-15 it was already handling over 1 billion MT of cargo.

Here's the link:

https://www.maritimeinvest.in/new-port-development

The total volume of traffic handled by Indian ports in FY2014–15 was 1052.1 million tons per annum (MTPA),

It is expected that by 2025, the ports will be required to handle a cargo of 2500 MTPA while the current port capacity in India is 1500 MTPA.


Regards

Riaz Haq said...

Majumdar: "I have been following your posts for the last decade about how the big T(har coal fields), the big R(eqo Diq copper mines) and the big G(wadar port) will transform Pakistan. We have seen how the big T and big R have panned out. lets hope big G will shape up to your dreams."

The massive coal and mineral deposits in Pakistan are there and continue to be worth trillions of dollars.

Thar coal development is in full gear now and Pakistan is beginning to take advantage of coal deposits. I expect other mineral extraction elsewhere including Reko Diq will follow sooner or later.

http://www.riazhaq.com/2016/08/pakistans-thar-desert-riding-cpec.html


As to Gwadar, it again is reality and it's growing everyday as today's VOA report puts it: " An unprecedented Chinese financial and construction effort is rapidly developing Pakistan’s strategically located Arabian Sea port of Gwadar into one of the world’s largest transit and transshipment cargo facilities......And by 2030, they say, it will be capable of handling up to 400-million tons of cargo annually."

400 million tons capacity is massive for a single port in Pakistan by any measure....even if you compare it to total billion tons capacity of all of India's ports today.


https://www.voanews.com/a/pakistan-china-gwadar-port/4084175.html

Majumdar said...

Brof sb,

Thar coal development is in full gear now and Pakistan is beginning to take advantage of coal deposits.

If energy experts are to be believed, Thar coal is of very poor quality and will never be a major contributor to Pakistans energy basket.

I expect other mineral extraction elsewhere including Reko Diq will follow sooner or later.

Maybe. But as things stand today, not an ounce has been extracted and on top of that, because of that one eyed CJP, already billions of dollars of claims are outstanding against Pak.

400 million tons capacity is massive for a single port in Pakistan by any measure

Mundra, owned and operated by ModiGee's friend Gautambhai already has a capacity of 300 + million MTPA and there is a proposal to increase it to 600 million MTPA. The actual cargo handled however is only a shade over 100 million MT. Gwadar is a good development alright but dont expect it to be a gamechanger.

Regards

Riaz Haq said...

Majumdar: "If energy experts are to be believed, Thar coal is of very poor quality and will never be a major contributor to Pakistans energy basket."


It's by choice. Historic low LNG prices make it a more attractive option for Pakistan.

http://www.riazhaq.com/2017/09/pakistan-among-fastest-growing-lng.html


Majumdar:" Maybe. But as things stand today, not an ounce has been extracted"


Have you heard about Saindak? The Saindak Metals Limited (SML) has produced 76,125.994 metric tons (mt) copper, 6.093 mt gold and 9.693 mt silver from the Saindak area, district Chaghi of the Balochistan province, during last five years.

http://www.brecorder.com/2016/12/17/332129/

Majumdar: " Gwadar is a good development alright but dont expect it to be a gamechanger. "

Gwadar port is huge but it won't be a gamechanger by itself. But CPEC is definitely a gamechanger.


http://www.riazhaq.com/2017/05/campaign-of-fear-uncertainty-and-doubt.html


Ghazi said...

Not a chance. Shenzhen was built by the Chinese and they have developed it as a city. Their interest in Gwadar is only the port and the connection to the port. If Pakistan wants Gwadar to be like Shenzhen then Pakistani's need to get off their own backside and build it up themselves. We won't do that - we don't do things like that. We have an attitude of thinking about what baba ji left for me, rather than what i can build.

Riaz Haq said...

Ghazi: "If Pakistan wants Gwadar to be like Shenzhen then Pakistani's need to get off their own backside and build it up themselves. We won't do that - we don't do things like that. We have an attitude of thinking about what baba ji left for me, rather than what i can build."

Pakistani engineers and workers have built much of the Gulf Arab ports and cities like Dubai. They don't shy away from hard work. A lot of the infrastructure in Pakistan is now being built by Pakistani contractors like Frontier Works Organization (FWO). What Pakistanis lack is sufficient capital which the Chinese are bringing as lead investors.

http://www.riazhaq.com/2012/08/faith-in-hard-work-pakistanis-lead-world.html

A recent Pew Survey of 21 countries reported that 81% of Pakistanis believe in hard work to achieve material success. Americans are the second most optimistic with 77% sharing this belief followed by Tunisians (73%), Brazilians (69%), Indians (67%) and Mexicans (65%).

NBRX said...

Good for Pakistan! How is or will the game change? Is GDP growth of 8+, export growth yoy 20%+ macroeconomic parameters changing ?

Sam D said...

Unlike the US Marshall Plan which floated bonds to help fund European economies, a report from Fitch Ratings suggests that China's plan to build ports, roads, railways, and other forms of infrastructure in under-developed Eurasia and Africa is out of political motivation rather than real demand for infrastructure. The Fitch report also doubts Chinese banks' ability to control risks, as they do not have a good record of allocating resources efficiently at home, which may lead to new asset-quality problems for Chinese banks that most of funding is likely to come from.

Having said that if Pakistan does improve its economic fundamentals such as savings rate, exports and GDP debt ratio, its economy may hit a higher growth rate and make CPEC a success. Otherwise the CPEC benefit will be muted.

Riaz Haq said...

Large-scale #manufacturing in #Pakistan sees 11.3% growth in first two months of FY 2017-18

https://en.dailypakistan.com.pk/business/large-scale-manufacturing-sees-11-3pc-growth-in-two-months/


LSM share stands at 80pc in total manufacturing

Large-scale manufacturing (LSM) observed a growth of 11.3 percent during first two months (July-August) of fiscal year 2017-18 on year-on-year basis.

According to the data by the Pakistan Bureau of Statistics, the sector recorded an increase of 13 percent in July. The annual growth target for the LSM is 6.3pc, while it had achieved 5.6pc in previous financial year 2016-17.

In August, the LSM observed a growth of 8.5 percent on annual basis.

In total manufacturing, LSM’s share stands at 80pc, while small-scale manufacturing constitutes 13.7pc. Similarly, the mega manufacturing constitutes 10.7pc of total GDP (Gross Domestic Product) against 1.8pc of small level manufacturing.

As per Ministry of Industries’s data regarding 36 products, these items made 5.44pc of total LSM growth in August. The share of 65 items, whose manufacturing data is provided by provincial bureaus of statistics, recorded at 1.3pc.

The Oil Companies Advisory Committee’s (OCAC) data regarding 11 items stated that theses items contributed 1.8 percent in growth of LSM during the second month.

Riaz Haq said...

#Pakistani woman marries a a man from #China in #Lahore. #CPEC

http://nation.com.pk/06-Nov-2017/pictures-of-chinese-man-marrying-pakistani-woman-go-viral


Some 30,000 Chinese are working on different development projects, including the China-Pakistan Economic Corridor (CPEC), a major cooperation project between the two countries.

Beijing’s infrastructure splurge has helped revive Pakistan’s sputtering economy, and deepening ties between the two nations have turned Pakistan into a key cog in China’s grand plan to build a modern-day “Silk Road” of land and sea trade routes linking Asia with Europe and Africa.

While the first phase of CPEC, as the Pakistan leg of this new Silk Road is called, concentrated on infrastructure projects, the second part will focus on setting up special economic zones and integrating Chinese firms into the local economy to help Pakistan develop its industries ranging from mining to agriculture.

China has also surged to become by far the biggest source of foreign direct investment (FDI) for Pakistan , topping $1 billion in 2016/17, and is betting on its neighbour at a time when many Western companies are still put off by security concerns and corruption.