Sindh – a lu­cra­tive in­vest­ment des­ti­na­tion

Enterprise - - 10 -

Sindh is the sec­ond largest prov­ince of Pak­istan with a pop­u­la­tion of 42 mil­lion. Karachi, the fi­nan­cial hub of the coun­try is the cap­i­tal of the prov­ince. Sindh of­fers tremen­dous in­vest­ment op­por­tu­ni­ties in in­fra­struc­ture, en­ergy, ur­ban de­vel­op­ment, agri­cul­ture (livestock and fish­eries, food and agro pro­cess­ing) and min­ing sec­tors.

The Sindh Board of In­vest­ment pro­vides a wel­come plat­form for pub­lic-pri­vate in­ter­ac­tion, busi­ness part­ner­ships and cat­e­gory match­mak­ing. The Board has iden­ti­fied a num­ber of key sec­tors and projects as pri­or­ity for in­vest­ment.

Agri­cul­ture and Agro Pro­cess­ing projects

The agri­cul­tural econ­omy of Sindh con­trib­utes some 23 per­cent to coun­try’s GDP. Keep­ing in view global food se­cu­rity con­cerns, the prov­ince’s vast agri­cul­tural ca­pac­ity has the po­ten­tial to be­come the re­gion’s food bas­ket. Value ad­di­tion through use of tech­nol­ogy, ef­fi­cient ir­ri­ga­tion sys­tems and mod­ern im­ple­ments can help at­tain this ob­jec­tive. Fol­low­ing agro re­lated in­vest­ment, projects such as the fol­low­ing are ready for take-off: • Mango pro­cess­ing plant • Guava pro­cess­ing plant • Date pro­cess­ing, paste and syrup plant • Con­trolled At­mo­spheric Cold Stor­age Plant (AEPZ) • Drip Ir­ri­ga­tion Plant • E-Beam Ir­ra­di­a­tion Plant

Livestock, Dairy, Fish­eries and Poul­try

There is a huge po­ten­tial in the Livestock, Dairy and Fish­eries sec­tor in Sindh. Pak­istan ranks as the world’s 5th largest milk pro­ducer, with 38.69 bil­lion litres an­nual pro­duc­tion. Out of this, only a small por­tion is pro­cessed. In the con­text of livestock, 28 per­cent buf­faloes, 24 per­cent sheep, 28 per­cent camels and 40 per­cent poul­try pop­u­la­tion in Pak­istan is found in Sindh. The po­ten­tial of Ha­lal meat ex­ports and the ever-ris­ing gap be­tween de­mand and pro­duc­tion of meat and milk makes Sindh a very lu­cra­tive in­vest­ment des­ti­na­tion. The fol­low­ing projects are ready for in­vest­ment in the sec­tor: • Bham­bore Dairy Vil­lage • Ha­lal Meat Park (Abat­toir, Pro­cess­ing, Cer­ti­fi­ca­tion, Pack­ag­ing, Stor­age) • Shrimp Aqua Cul­ture Farms • Metro Dairy Farms • Luar­i­pak Livestock Com­pany (LLC) • Beef Pro­duc­tion Units

In­fra­struc­ture

The grow­ing ur­ban pop­u­la­tion in Sindh cre­ates an ever-in­creas­ing de­mand for ur­ban de­vel­op­ment and in­fra­struc­ture projects. In­fra­struc­ture de­vel­op­ment pos­sesses tremen­dous po­ten­tial to bridge the gap be­tween the ru­ral and ur­ban econ­omy. As a large ur­ban cen­tre, Karachi of­fers at­trac­tive op­por­tu­ni­ties for com­mer­cial ven­tures. The con­struc­tion in­dus­try has shown great progress in re­cent years by of­fer­ing var­i­ous chal­leng­ing projects. The city of­fers fur­ther scope for the fol­low­ing projects: • Ed­u­ca­tion City • Arfa Karim Tech­nop­o­lis • Bus Rapid Tran­sit • Keen­jhar Lake Re­sort • Kha­joor Mandi, Khair­pur • Sukkur Dry Port • Sindh Grain Stor­age

En­ergy

With its proven re­serves of oil, gas and coal, the Gharo-Dhabji wind cor­ri­dor and round the year sun­shine makes Sindh the Re­gional Power House of the fu­ture. Only Thar with 175 bil­lion tonnes of coal re­serves would of­fer 200,000 MW elec­tric­ity for 300 years. The sind cor­ri­dor in Sindh is 60 km wide from Gharo to Keti Ban­dar and 180 km long up to Hy­der­abad with a po­ten­tial of 50,000 MW. The an­nual ra­di­a­tion of 3000 hours in Sindh has an end­less po­ten­tial for so­lar en­ergy. High re­turn en­ergy sec­tor projects for for­eign in­vestors in­clude: • Thar Coal Min­ing and Power Plant • Coal Min­ing, Wash­ing and Brick­et­ing

Plants • Wind Power Project • Run of the River Hy­dro Power Projects • So­lar Street Light Ini­tia­tive

- Muham­mad Zubair Moti­wala, Chair­man, Sindh Board of In­vest­ment

What are the main is­sues of in­dus­try in Sindh?

Firstly, you have to seg­re­gate the prov­ince into two - ur­ban Sindh and the ru­ral ar­eas of Sindh. Both have dif­fer­ent prob­lems, but both have acute prob­lems. These need to be re­solved for the growth of the in­dus­try, for the prov­ince it­self and for Pak­istan. Sindh plays a piv­otal role in the Pak­istan’s econ­omy and I firmly be­lieve that Sindh has the re­sources which can re­solve other is­sues.

In the ur­ban ar­eas, the ma­jor hur­dles to in­dus­try are in the man­u­fac­tur­ing sec­tor. The first is in­fra­struc­ture, where mainly the non-avail­abil­ity of util­i­ties, such as power, gas and wa­ter is the hur­dle. The sec­ond ma­jor prob­lem is the law and or­der sit­u­a­tion. Un­til these two ma­jor prob­lems are not re­solved, we will not get the re­quired growth in Sindh.

Karachi alone pays more than 62 per­cent

‘The textile sec­tor should en­joy a spe­cial sta­tus in terms of in­fra­struc­ture

and util­i­ties’.

of the to­tal taxes in Pak­istan. We ex­port more than 60 per­cent of to­tal Pak­istani ex­ports. We have three vi­brant ports in Sindh, a well-de­fined and well-man­aged in­fra­struc­ture in place. We have five fully or­ga­nized in­dus­trial ar­eas in Sindh, skilled labour force is avail­able and en­trepreneur­ship is at the high­est level in Karachi. More­over, we are putting up more in­dus­tries in Sindh but lately, in­vest­ments have re­tarded. This is, be­cause we are not get­ting gas con­nec­tions, with­out which we re­ally can­not put up any in­dus­try. Our in­vest­ment depart­ment is try­ing to cre­ate a one-roof so­lu­tion and we are do­ing it as far as per­mis­sions and land de­vel­op­ment is con­cerned; we are also ac­com­mo­dat­ing lo­cal and for­eign in­vestors but what about gas?

It is the right of the peo­ple liv­ing in Sindh, the right of en­trepreneurs and in­vestors that un­der the con­sti­tu­tion we are au­tho­rized to use the gas from Sindh, and we can give the rest to other parts of Pak­istan. This is not a de­mand, rather a con­sti­tu­tional right which is be­ing de­nied. We have ac­tu­ally sac­ri­ficed 150 thou­sand jobs in Sindh be­cause 350 mmcf worth of gas ap­pli­ca­tions are pend­ing. Three years ago, we never heard that Pun­jab in­dus­try is closed. But af­ter that there have been so many ir­reg­u­lar­i­ties in pro­vid­ing gas con­nec­tions. Karachi uti­lizes less than 400 mmcf of gas in both the gen­eral and cap­tive in­dus­try, which is hardly 9 per­cent of what the coun­try pro­duces, yet the city con­trib­utes more than 62 per­cent rev­enue to the na­tional ex­che­quer. There is a need to un­der­stand where we are headed. Why are KPK or Balochis­tan not asked to shut down for an­other day? They are

run­ning 24/7. But we are clos­ing down in sol­i­dar­ity with Pun­jab. Con­se­quently, our in­dus­tri­al­ists would lose money and there would be a to­tal chaos. The mat­ter of bank­ruptcy of banks is a grave con­cern too.

On what ba­sis are pri­or­ity in­vest­ment projects in Sindh clas­si­fied?

As part of the Board of in­vest­ment, I have de­cided to work on en­ergy and the ru­ral up­lift of the peo­ple by in­tro­duc­ing some sort of in­dus­tri­al­iza­tion and set­ting up man­u­fac­tur­ing units in the ru­ral ar­eas. We have tried to ac­ti­vate Thar. Ear­lier, we used to hear that Thar coal is no good, but to­day it has ac­quired global ac­cep­tance. Re­gard­ing the qual­ity of Thar coal, we have a com­par­i­son from the best com­pa­nies in the world. Our coal is bet­ter than Ger­many, Greece and other best qual­ity places.

One of our UK-based in­vestors, Or­a­cle, which has taken a block in Thar, ac­tu­ally faced dif­fi­culty in get­ting the fi­nances. In­stead of go­ing to the banks and IMF, they went to the Lon­don Stock Ex­change and floated their shares. They de­clared their plan of go­ing into Thar and men­tioned the profit lines, be­cause we are giv­ing 20 per­cent IRR which is un­prece­dented in the world, 20 per­cent re­turn and 30 years’ tax ex­emp­tion. I was sur­prised about what they were do­ing, but they were over­sub­scribed by 26 per­cent. That’s how we have changed the think­ing pat­tern of the world - that Thar is a re­al­ity where you can make money.

Then, we have worked in wind, hav­ing queues of in­vestors to­day. Also, for the first time in Pak­istan, we are tak­ing bank guar­an­tees. Now we are se­lect­ing peo­ple and giv­ing them land. We have also started work­ing on so­lar en­ergy, which will most likely start next year. We have achieved great suc­cesses in the en­ergy sec­tor, as ev­i­dent by the agree­ments we are sign­ing.

As for the ru­ral ar­eas, we be­lieve that peo­ple there are liv­ing mis­er­able lives, es­pe­cially the women of Sindh. To ad­dress this is­sue, we have cre­ated SEDF (Sindh En­tre­pre­neur De­vel­op­ment Fund). We have ob­tained Rs. 750 mil­lion from the Gov­ern­ment of Sindh, through which we are try­ing to add value to the agri­cul­tural pro­duce. We are try­ing to cre­ate a community cul­ture where ev­ery­body has equal ac­cess and learn­ing about hy­giene. If one is in the dairy busi­ness one can put up a milk­ing par­lour, a hy­gienic way of ex­tract­ing milk and a com­put­er­ized sys­tem to look af­ter the well be­ing of the an­i­mals. Out of SEDF, we bear the bank charges on the loan for the milk­ing par­lour for three years, which can be ex­tended to five years, de­pend­ing on the size of the plant.

We are now work­ing on rice, with re­ha­bil­i­ta­tion of old ma­chin­ery. In ev­ery field, namely aqua­cul­ture, hor­ti­cul­ture, livestock, and fish farm­ing, we are let­ting peo­ple make money. Our mango grow­ers are get­ting GAP cer­ti­fi­ca­tion and we are try­ing to bring mod­ern tech­nol­ogy to agri­cul­ture. Over­all, we are chang­ing lives of the peo­ple of Sindh by let­ting them make more money.

Is the textile sec­tor a pri­or­ity area?

Un­for­tu­nately, that is not the case, but it should be re­ceiv­ing pri­or­ity. Textile is 42 per­cent of ur­ban em­ploy­ment and more than 60 per­cent of ex­ports. Also, in terms of adding value to the agro-prod­uct of cot­ton, it should be placed as the top pri­or­ity. Bangladesh, with­out grow­ing a sin­gle kg of cot­ton, has reached $19 bil­lion in ex­ports. On the pri­or­ity chart of gas al­lo­ca­tion, textile is placed at No. 2 af­ter do­mes­tic and at No. 3 and 4 in terms of in­dus­try.

The textile sec­tor should en­joy spe­cial sta­tus in terms of in­fra­struc­ture and util­i­ties. It is the re­spon­si­bil­ity of the gov­ern­ment to mod­ern­ize the textile units by pro­vid­ing them more ser­vices, util­i­ties and space, but we are not do­ing so. This sec­tor can alone wipe off our cur­rent ac­count deficit and ex­pand the trade ac­count.

What in­vest­ment ad­van­tages does Sindh of­fer com­pared to other prov­inces?

Nearly 72 per­cent of gas comes out of Sindh. More than 40 per­cent of dairy prod­ucts are again from Sindh. The wind cor­ri­dor that can pro­duce 50,000 MW is again in Sindh. Thar coal, the sec­ond largest in the world, of­fer­ing 175 thou­sand tonnes is also in Sindh. Thus, for power pro­duc­tion, I be­lieve that Sindh does not only have the po­ten­tial to be the hub of the coun­try, but for the en­tire re­gion as well. We have the ca­pa­bil­ity to pro­duce 100,000 MW of power, only through Thar coal for 200 years and we are not uti­liz­ing it.

What would be a fair uti­liza­tion of re­sources in Sindh?

Since I am here for more than 3 years, in­dus­tries have been com­ing in and there has been no dis­crim­i­na­tion against any­body. In Sindh ev­ery­body is wel­come. The pol­icy is not bi­ased or un­justly tilted. But in terms of dis­tri­bu­tion of na­tional re­sources, Sindh is at a dis­ad­van­ta­geous po­si­tion. We con­trib­ute about 72 per­cent of gas but get so lit­tle. If Ar­ti­cle 158 is im­ple­mented in let­ter and spirit, Sindh would get much more. If the in­dus­try is uti­liz­ing more than 400 mmcf gas, you can very well un­der­stand that there are pend­ing ap­pli­ca­tions of more than 300 mmcf. If Sindh gen­er­ates more than 60 per­cent of ex­ports and tax­a­tion, then what scale of mar­ket and job op­por­tu­ni­ties we are talk­ing about?

We are a demo­crat­i­cally elected gov­ern­ment. It is the prime re­spon­si­bil­ity of the gov­ern­ment to pro­vide food and shel­ter, but it can pro­vide em­ploy­ment to max­i­mum 25,000 peo­ple. The role of pri­vate sec­tor is im­por­tant in pro­vid­ing jobs and fill­ing the gap. We have the best en­trepreneurs in Karachi, who know the vi­a­bil­i­ties of projects. Un­for­tu­nately, we do not abide by the con­sti­tu­tion and this cre­ates hin­drances. There was a time when peo­ple were flock­ing to Karachi, but now we are lim­it­ing it. We need to un­der­stand that al­ter­na­tives to hy­del power projects in KPK and Balochis­tan are long-term. These should have been started ten years ago. The fo­cus should be on short-term projects in Karachi. Fun­da­men­tal mis­takes were made by the peo­ple in power and if these mis­takes continue, the next gen­er­a­tion would pay for it.

What is the sig­nif­i­cance of agree­ments be­tween SBI and in­vestor coun­tries?

We have con­ducted road shows in China, Malaysia, Korea, the UAE, Rus­sia and many other places. Ev­ery­where, we have signed MoUs and they all have been con­verted into agree­ments. We have signed agree­ments with Three Gorges and United En­ergy. A huge coun­try con­sor­tium is com­ing from Malaysia; we have signed agree­ments in Ha­lal sec­tor with this coun­try. In Rus­sia, we signed agree­ments be­tween St.Peters­berg and Karachi and have been suc­cess­ful with ev­ery coun­try.

Is there an in­te­grated plan in place to de­velop re­quired in­fra­struc­ture?

One gov­ern­men­tal pol­icy I like is that they have floated LOIs to con­vert the old ther­mal power based plants into coal. When Thar comes in and we have trans­portable coal, we can pos­si­bly trans­fer it to these places. We have al­ready im­ported about 6 mil­lion tonnes of coal which is of course cheaper than fur­nace oil. This will be re­placed with our in­dige­nous coal. It is not an ad hoc pol­icy and will re­solve prob­lems over a longer pe­riod. Then, the fed­eral gov­ern­ment is sup­port­ing Thar and wind power, which is a won­der­ful thing. In terms of tar­iff too, I am thank­ful that they have ac­cepted our sug­ges­tions. In Thar, they have given 20 per­cent IRR, which is huge. There is also 30 years’ tax ex­emp­tion and re­lax­ation on cus­tom du­ties for bring­ing in the ma­chin­ery. What­ever the life of the demo­cratic gov­ern­ment, their poli­cies are long-term ori­ented and based on long term so­lu­tions.

Will SBI pro­vide re­lief to the busi­ness community?

What­ever we do is for the busi­ness community. We are at­tract­ing lo­cal as well as for­eign in­vest­ment. My doors are al­ways open and I am ac­ces­si­ble very eas­ily. We will continue to serve the busi­ness community for res­o­lu­tion of their prob­lems.

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