Balochistan: A new hub for B2B trade, FDI

Balochistan, the largest province of Pakistan, holds immense potential to become a thriving hub for Business-to-Business (B2B) trade. With its abundant natural resources, including minerals, oil and gas, as well as its strategic location providing access to the Middle East, Central Asia and South Asia, Balochistan has all the ingredients for success. However, despite these advantages, the province has remained underdeveloped due to a lack of investment in infrastructure and industry.

To transform Balochistan into a magnet for private foreign direct investment (FDI) and establish itself as a B2B trade hub, several measures can be taken.

Balochistan can draw inspiration from the success of free trade zones in China and the UAE. These zones offer attractive incentives to businesses, such as tax breaks, streamlined procedures and access to world-class infrastructure. Balochistan can create similar zones tailored to the specific needs of its businesses.

Here are some concrete examples of how Balochistan can attract private foreign direct investment (FDI):

1. Mining zone: Provide tax holidays for 5-10 years to mining and mineral extraction companies. Grant duty exemptions on the import of equipment and machinery. Streamline licensing and environmental approvals.

2. Energy zone: Impose zero customs duty on the import of components for power plants and LNG terminals. Waive transmission charges for supplying to the national grid initially. Expedite clearances.

3. Ports/logistics zone: Offer land leasing at concessional rates for warehouses, cargo handling and transport hubs. Provide tax credits for infrastructure development. Fast-track approvals for storage facilities and container yards.

4. Manufacturing zone: Reimburse 50-100pc of capital expenditures in the initial years. Lower utility rates for industrial units. Grant tax exemptions on raw material imports.

5. Agriculture zone: Subsidies on water pumping and solar infrastructure, income tax holidays for agro-processing units and credit facilities at low interest rates should be implemented.

6. Tourism zone: Refund 50pc of GST on new hotel bookings for five years, waive import duties on tourism-related goods and establish a fast-track visa on arrival system.

As a general rule, Balochistan must prioritise improving its infrastructure and connectivity. This includes construction of roads, railways and airports, as well as enhancing the power supply. Additionally, Balochistan should streamline the visa and work permit processes to facilitate business operations.

To foster a favourable business climate, Balochistan needs to reduce bureaucracy, enhance transparency and ensure a level playing field for all enterprises. The government should strive to simplify the procedures for starting and operating businesses within the province. Balochistan should actively promote itself to potential investors by participating in trade shows and conferences. Furthermore, the creation of a comprehensive website highlighting investment opportunities in the province is crucial. Collaborating with embassies and chambers of commerce in other countries will also aid in promoting Balochistan as an attractive investment destination.

It is worth mentioning that Balochistan is rapidly emerging as a promising business hub for GtoG (Government to Government) investments. Saudi Arabia has already taken the lead by signing a Memorandum of Understanding (MoU) to invest a staggering $15 billion in a refinery project, which is expected to generate over 200,000 job opportunities. In a latest development, Saudi Arabia has extended its support by offering an additional $8 billion investment in the mining sector of the province. The ongoing progress at Reko Diq further adds to the positive outlook.

Chinese investments in various sectors, including the development of state-of-the-art infrastructure such as the Gwadar Port and airport, have already revolutionised the landscape of Balochistan. This transformation positions Balochistan as a potential rival to renowned destinations like Dubai and Chengdu.

Furthermore, these investments hold immense potential in strengthening Pakistan's relations with Gulf countries. The anticipated surge in Gulf investments in Balochistan is driven by the Gulf nations' desire to diversify their economies. Pakistan, with its vast market, youthful population, strategic location and thriving sectors such as mining, IT, energy and infrastructure, stands out as an attractive investment destination. Balochistan, in particular, stands to benefit tremendously from these developments, with the potential for B2B transactions reaching an estimated $50 billion annually.

By implementing these incentives and measures, Balochistan can attract the necessary investment to drive economic development and job creation. The government should prioritise creating an environment conducive to business operations, characterised by fairness, transparency and reduced bureaucratic obstacles. These efforts will attract private foreign direct investment, generate employment opportunities and contribute to the overall economic growth of Pakistan.

Jan Achakzai is a geopolitical analyst, a Balochistan politician and a former media and strategic communications advisor to GOB. He tweets @jan_Achakzai