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Umer Khayam

The writer is a distinguished scholar with an MPhil in International Relations, during which he secured a silver medal. Currently, he is pursuing a PHD in the same field at the University of Peshawar, furthering his expertise and research in Pak-Afghan relations.

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Hilal English

Harboring Opportunities: The Socioeconomic Benefits of Gwadar Port Development for Pakistan and the Region

June 2024

Gwadar Port, initiated in 2002 under PSA and later managed by COPHC from 2013, strategically connects China to the Indian Ocean, boosting trade and geopolitical influence. Its development has spurred economic growth in Pakistan through projects like the Gwadar Special Economic Zone and New Gwadar International Airport, enhancing regional connectivity and partnerships.



Gwadar holds immense promise for Pakistan and the surrounding region, serving as a gateway to economic prosperity and enhanced connectivity. This research explores its strategic significance, geographical advantages, and potential impact on trade dynamics, highlighting Gwadar Port's pivotal role in driving economic growth, attracting foreign investment, and fostering regional cooperation. Through a comprehensive analysis of its socioeconomic implications, this article aims to provide insights into the transformative potential of Gwadar Port development for Pakistan and the broader region.
The construction of Gwadar Port was initiated in 2002 when its authority was handed over to the Port Authority of Singapore (PSA). The initial phase of the port was completed in 2006. Later, the completion of the port building was initiated in 2007. The Government of Pakistan handed over the construction to China Overseas Port Holding Company (COPHC) in 2013.
Impact on Pakistan
Strategic Impact

Globalization and integration through trade are additional positive impacts of Gwadar Port on Pakistan. Increased sea trade among countries can boost economic and political integration, enhancing globalization and economic ties. The consequent interdependency of countries to boost trade has increased Gwadar Port's regional importance. For this, social and diplomatic integration between all the stakeholders is key. The picture above indicates a way to trade and integrate countries through Gwadar Port.
Economic Impact
Gwadar Port operations have significant economic impacts on Pakistan's economy. The increased value of the port promotes trade integration among all stakeholders. Gwadar Port provides a means for Pakistan to enhance its trade capacity by targeting international markets such as Indonesia, China, Malaysia, and Thailand. Moreover, it serves as a crossroads for the Organization of the Petroleum Exporting Countries (OPEC) nations, potentially ensuring a stable supply of oil from the Middle East. Containerization at the port has increased by 12.6 percent, evidencing a boost in trade.
Gwadar Port has heightened economic competition between Iran and Pakistan. The growing importance of proposed transit routes through Gwadar Port has diminished the significance of Chabahar Port. However, Iran views Gwadar Port as a way to boost its local market. Consequently, Iran has focused on trade participation through Gwadar Port by providing energy support to port operations. This has a positive impact on Pakistan's energy sector. Pakistan views this as a welcome step by Iran to strengthen bilateral economic ties.


It serves as a crossroads for the Organization of the Petroleum Exporting Countries nations, potentially ensuring a stable supply of oil from the Middle East. Containerization at the port has increased by 12.6 percent, evidencing a boost in trade.


Key Developments in Gwadar Port and Future Prospects
Gwadar Port and the China-Pakistan Economic Corridor (CPEC) provide a way forward for both countries. The port operations have resulted in the geographical proximity between China and Pakistan. Fostering and boosting economic ties between both countries will directly and indirectly bring stability to Pakistan.
Gwadar Special Economic Zone
By establishing the Gwadar Special Economic Zone (GSEZ), Pakistan will soon experience commercial development. The country can effectively utilize Gwadar for a certain period through special economic zones (SEZs). SEZs have enabled Pakistan to form an economic strategy framework across all zones to ensure effective economic outcomes. The creation of SEZs has increased the chances of inclusive and exclusive trade. A key impact is the establishment of tax-free zones and the creation of jobs, which will boost local growth.
Gwadar Special Economic Zone Phase 1
Gwadar Port SEZ Phase 1 (GSEZ1) has a large area with over 60 acres of land. Phase 1 has already been completed with many operations. The key development of GSEZ1 is that it provides a way for different enterprises to register. The number of total small and medium enterprises (SMEs) registered has already reached 46. Similarly, GSEZ1 provides transit support to Afghanistan. In this case, Afghan transit cargo has initiated its operations since January 2020, resulting in more than 2000 tonnes of goods already being handled at the port for international trade. The key impact is that it allows the port administration and Pakistan to collect transit tax from different SMEs if applicable.
Gwadar Special Economic Zone Phase 2 
Gwadar Special Economic Zone Phase 2 (GSEZ2) has a capacity five times larger than Phase 1. The development of Phase 2 offers Pakistan's economic sector and local market a significant boost in the coming years. Started in 2021, GSEZ2 is predicted to generate USD 10 billion in economic activity annually.
Gwadar Port has provided Pakistan with a fast track to economic development. The initiation of 10 mega development projects, including Phase 2 of the Gwadar free trade zones, has increased the importance of these endeavors. All the projects are crucial for the country's economic growth. For example, the water desalination plant in Gwadar is expected to permanently resolve the area's freshwater issues, safeguarding local communities and providing safe, fresh water.
New Gwadar International Airport
Another key development of Gwadar Port is the completion of the New Gwadar International Airport (NGIA), with an estimated cost of USD 246 million, which will enhance transportation services and international trade (Source: CAPA). The airport's sustainable nature makes it a green airport to preserve its environmental implications. It covers a total area of 4300 acres. This project will provide international travelers and local business officials a way to increase business opportunities.



Gwadar Port Technical and Vocational Institutes
Furthermore, the formation of technical and vocational institutes in Gwadar is another key development of Gwadar Port. Increased trade from China and CPEC has led to a foundation for the Pakistan-China Technical and Vocational Institute in Gwadar, with a cost of USD 10 million. The Sino-Pak Technical and Vocational Institute has state-of-the-art equipment and other required machinery to impart professional technical and educational expertise to local people. The target labor areas are Balochistan and Gwadar, which are used to develop local communities. These technical and vocational institutes provide crucial opportunities for local people, especially the youth, to become beneficiaries and contribute to CPEC projects. 
East Bay Expressway
East Bay Expressway is another key development of Gwadar Port which connects it directly with the motorway links and networks and provides direct access to transportation from and to Karachi, Lahore, and towards China. This initiative enhances the transportation system in major trade cities in Pakistan. Under the Gwadar Smart Port City Plan, all transportation and infrastructure facilities will be upgraded, transforming the port and its surroundings into a modernized city. This will surpass the existing transportation facilities by providing a time-saving and secure flow for containerized vehicles.


The development of Phase 2 offers Pakistan's economic sector and local market a significant boost in the coming years. Started in 2021, GSEZ2 is predicted to generate USD 10 billion in economic activity annually.


Recommendations
The following are the key recommendations for effective outcomes of Gwadar Port operations:
▪   To overcome the topographical conditions, managing energy supply requires technical expertise. Gwadar Port’s operational management must acquire international standard experts to manage gas pipeline issues at a high altitude of 15000 feet. Once Gwadar becomes self-sustaining in energy consumption, it can reduce all energy costs and enhance Pakistan's internal energy situation. 
▪  The depth of Gwadar is considered an ongoing issue due to changes in the geostrategic and environmental patterns. Initially, the port was considered to be 18 meters in depth. However, presently, it has decreased to 11 meters. The key implication of this issue is that it prevents large cargo ships from actively using this port. However, the Gwadar administration can increase the port's depth by releasing international tender to cope with the issue.
▪  It is highly recommended that the capacity of roads and trains be enhanced to avoid shipment delay issues due to the high traffic volume in Lahore, Karachi, and Gwadar. Gwadar administration must connect a direct train system with the port to avoid all possible barriers. Similarly, the Himalayan mountains are considered a natural barrier that increases transportation costs for China and Pakistan to reach different parts of the world. It is mandatory to propose a training project for passing through these mountains, i.e., tunnels, to ensure break-free transportation. The outcome can affirmatively enhance trade traffic on this route.  
To conclude, the development of Gwadar Port represents a pivotal stride towards economic prosperity and regional integration for Pakistan and its neighboring countries. With strategic implications, economic advancements, and transformative projects like the Gwadar Special Economic Zone and the New Gwadar International Airport, the port's trajectory underscores a promising future of growth, connectivity, and strategic partnerships.


The writer is a distinguished scholar with an MPhil in International Relations, during which he secured a silver medal. Currently, he is pursuing a PHD in the same field at the University of Peshawar, furthering his expertise and research in Pak-Afghan relations.


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Umer Khayam

The writer is a distinguished scholar with an MPhil in International Relations, during which he secured a silver medal. Currently, he is pursuing a PHD in the same field at the University of Peshawar, furthering his expertise and research in Pak-Afghan relations.

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