The China-Pakistan Economic Corridor, Iran-Pakistan Gas Pipeline, and trans-boundary programmes under Central Asia Regional Economic Cooperation (CAREC) present some game changing opportunities for Balochistan, Pakistan and the region. However, availability of infrastructure investment alone is not enough. Any sustainable development strategy for Balochistan should also focus on inclusive economic growth, social justice, and protection of environment and natural resources.
To design and implement the programmes and projects, a sustained effort by the federal government and government of Balochistan will be required to improve the current state of social contract and state-citizen relationship. Only a continued dialogue between citizens and public officials will enable both to fulfil their responsibilities towards sustainable development and ensure accountability and trust.
Building the necessary social capital will also require creating stakes of local communities of Balochistan in managing of state institutions and resources. Improvements in capabilities of these communities (through voice and accountability initiatives), more jobs for the poor and better capacities of civil society organisations in Balochistan will increase youth and community engagement.
In this process, some dynamic universities such as Balochistan University of Information Technology, Engineering and Management Sciences and Sardar Bahadur Khan Women’s University Quetta set a good example and should be supported to provide capacity-building to communities and civil society organisations. Similarly, local private sector associations and chambers of commerce and industries in Balochistan may be taken into confidence regarding their stakes in the ongoing infrastructure projects and possible sub-contracting opportunities.
From the government’s side, any initiative to augment social capital will require reform of the federal and provincial civil service, which needs to position itself as a facilitator and catalyst for sustainable development in this province. Furthermore, for economic growth to be inclusive, investment in social sectors and job creation for the poorest of the poor is a must. Increased resource mobilisation through tax revenues and improved National Finance Commission award will be required for increasing spending on social sectors — for example, health, education, clean drinking water, sanitation and social safety nets in Balochistan.
Economic growth will require improving competitiveness of Balochistan’s micro, small and medium enterprises (MSME). These are found producing numerous construction and consumer durables such as electrical cables, plastics, packing materials, rubber, chemicals, wood products, electrical machinery, paper products, sea food and cooking oil. MSMEs can benefit from a) provision of affordable credit, b) fiscal incentives through special economic zones, c) access to affordable electricity and other fuels, and d) improvements in road and rail connectivity between manufacturing units and key markets. The Quetta Chamber of Commerce and Industries has time and again submitted its proposals to the federal government and still awaits response.
The Chamber’s representatives remain of the view that Balochistan province may be treated as a special case owing to its weak underlying economic conditions. Despite having almost non-existent industrial base, no long term customised amnesty scheme was ever announced to bring informal businesses into the formal regime which in turn could have created local jobs. There is precedence from other parts of the world where tax exemption was allowed in regions which had suffered from conflict. In order to prevent tax avoidance, this facility should only be allowed to the local residents of Balochistan.
For promotion of exploration, development and production of Balochistan’s mineral resources in an environmentally sustainable manner, it is important that a) provisions under National Mineral Policy be discussed with local stakeholders in the mining sector, b) temporary and time-bound relaxation in corporate tax rates applicable under income tax ordinance may be allowed, c) effective exemption from taxation on refining or concentration of mineral deposits may be given, d) zero custom’s duty on import of machinery and intermediate inputs, and e) deduction in the determination of taxable income if capital expenditure is incurred, should be allowed.
The federal government needs to arrange, possibly through bilateral and multilateral development partners, improved technology which will ensure lesser wastage during extraction of natural resources. There may be incentives for the local coal miners through a conducive regulatory framework which may enforce the use of a certain percentage of the local coal in the industries which are using coal intensively, for example in power plants.
Institutions such as Pakistan Mineral Development Corporation and Pakistan Stones Development Company will need to actively liaise with relevant public and private institutions in Balochistan to help in raising value chain productivity, capacity of labour force, cluster development and export marketing of mining sector. These measures will boost competitiveness of small scale mining sector entities in Balochistan.
Balochistan’s economy will remain heavily dependant on agriculture and livestock, and therefore, a long-term plan for building capacities of these sectors, particularly fruits and vegetables, fishing and forestry, should be prioritised under public sector development schemes and donor-led programmes. Progressive farming can be encouraged through effective support prices, tax free import of agriculture machinery, rebate in case of export to Afghanistan, Iran and beyond, and subsidised provision of related inputs for micro and small scale businesses in horticulture and pastoral concerns. The business community is of the view that there is a need for public-private partnerships in food processing sector. This will help expand export potential of Balochistan’s economy.
The food security and agriculture production in this province will critically hinge upon water resources. The water sector development can be helped through making Kachhi Canal and related water supply projects a priority. The haphazard installation of tube wells should be avoided in view of critically low water tables, and the existing tube wells may be converted to solar power. The already initiated water sector development schemes under Public Sector Development Programme (PSDP) and Annual Development Programme(ADP) may be expedited through efficient monitoring and timely redress of any delays, and cost and time overruns.
The Board of Investment in Islamabad will need a clear strategy to lure domestic and foreign private sector in Balochistan. One possible area of interest may be the prospect of wind energy with more than seven wind corridors already identified in this province. The Alternate Energy Development Board (AEDB) will need to install meteorological instruments at considerable heights to study the true potential of these wind corridors. Using the wind data provided by various credible sources, it is assumed that the wind potential of Nok Kundi, Hoshab, Washap, Panjgur, Turbat, Mastung, Dasht and Zhob is greater than the wind potential of Gharo and Jhimpir (current locations of installed wind power plants). The attractive tariff rates allowed for wind farms in Sindh can also be extended to Balochistan for strengthening investor interest.
Similarly, there is potential for solar energy of more than 1.2 million MW, according to the Department of Energy, government of Balochistan. In order to encourage the private sector, the government may introduce an incentivised tariff for the projects especially those being developed and operated by domestic private sector and in partnership with local communities. There may also be an incentive for capacity building and mobilisation of the local human resource in such projects.
The livestock manure production in Balochistan provides a significant potential for small captive biogas power plants which can provide not only electricity for closely concentrated groups of households but also cater for needs of cottage industry, besides providing fertilizer for agricultural use. Local pastoral community can be engaged in public private partnerships and incentivised through instalment based repayment of biogas plants.
The ADP can be expanded through domestic resource mobilisation which in turn will require an effort to formalise currently informal sector in Balochistan, reduce the size of undocumented transactions and improve efficiency of Balochistan Revenue Authority, Excise and Taxation Department and Board of Revenue. For increasing efficiency of spending under PSDP and ADP, it is necessary that political intervention in project selection, design and implementation should be curtailed by relevant accountability institutions, and projects once initiated after a cost-benefit analysis on scientific lines, should not face budget cuts during the project cycle. No new schemes should be introduced without the process of project evaluation laid down in the manual formulated by Planning Commission.
The concerns of Baloch traders having business with both Afghanistan and Iran may be addressed on urgent basis. Inadequate banking channels, uncertain payment mechanisms, missing insurance facilities, high tariffs on imports, frequent changes in customs procedures are hurting Balochistan’s potential for transit and commercial trade with the region.
Streamlining trade and general business regulations in Balochistan is closely tied with harnessing the tourism potential of this province. The success of Jhal Magsi Desert Challenge and Jeep Rally needs to be replicated in other parts of the province. The world’s second largest size of juniper forests in Ziarat and Harboi alongside coastal belt, Hanna Lake, and Hazarganji National Park can attract the local tourist in large numbers.
The role of academia and think tanks will be important in highlighting district specific potential of this province. Currently, there are significant data and information gaps even when it comes to estimating economic potential of several large districts in Balochistan. The universities in Balochistan can be supported to develop district-specific growth strategies which could highlight possible opportunities for the private sector. For example the existence of limestone, gypsum and coal in Harnai makes this place well suited for cement production. Similarly, the presence of metal ore in Kalat is appropriate for private sector steel and aluminium production.
By Ahad Nazir, Fazal Bukhari, Shujaat Ahmed, Dr Vaqar Ahmed