A Good Op­por­tu­nity Lost

Enterprise - - Editor's Desk -

For some time, not much has been heard about Balochis­tan’s much­hyped Reko Diq gold and cop­per min­ing project. The story did sur­face again re­cently though only to re­veal the con­tin­u­ing stand-off be­tween the for­eign min­ing con­sor­tium and the Balochis­tan gov­ern­ment. The iden­ti­fied de­posits of cop­per and gold at Reko Diq continue to re­main where they have been for mil­lions of years – un­der the rock and gravel – and the con­di­tion of the peo­ple of Balochis­tan re­mains as poor as it has al­ways been. Had bet­ter coun­sels pre­vailed at the gov­ern­ment level, the eco­nomic ben­e­fits of the Reko Diq project, which were pro­jected as be­ing sub­stan­tial for the prov­ince, would have been on tap by now. To start with, in the Pak­istan Gov­ern­ment’s present penury con­di­tion, the an­nual bud­get of Balochis­tan at least would have in­creased ex­po­nen­tially through in­jec­tion of 25% profit share in the project, plus 2% roy­alty and other taxes.

A look at the project’s im­pact on the so­cio-eco­nomic fab­ric of Balochis­tan re­veals a tremen­dous de­vel­op­ment po­ten­tial for the whole re­gion. The Reko Diq mine de­vel­op­ment phase, span­ning over 4 years, would have di­rectly em­ployed a work­force of over 11,000. Once com­mer­cial op­er­a­tions had kicked off, the num­ber of di­rectly em­ployed work­ers would have av­er­aged at 2,500. The com­pany expected to em­ploy no less than 70% of the work­force from Balochis­tan over an op­er­a­tional pe­riod of 5 years; this would have in­creased to 90% af­ter 10 to 15 years.

The min­ing com­pany would also have made sig­nif­i­cant in­vest­ments into train­ing and ca­pac­ity build­ing of the lo­cal work­force and would have in­vested in a long-term so­cial in­vest­ment plan as well. Since min­ing is one of the main sec­tors marked by the World Bank in its 2008 Balochis­tan Eco­nomic Re­port, the for­eign in­vest­ment would have led to de­vel­op­ment in the com­mu­ni­ca­tion net­work, cre­ation of more em­ploy­ment op­por­tu­ni­ties, ac­cess to ba­sic health and ed­u­ca­tional fa­cil­i­ties, lo­cal trade ac­ti­va­tion and community up­lift. Gwadar, which was se­lected as the ship­ping port for the project, would also have re­ceived the much-needed boost from global freighters and com­mer­cial traf­fic.

Balochis­tan has the po­ten­tial to be­come an im­por­tant min­ing des­ti­na­tion, pro­vided it of­fers friendly min­ing laws, com­mer­cially en­abling reg­u­la­tions and fair com­pe­ti­tion. The pow­ers that be in Balochis­tan could have shown fore­sight and warmly wel­comed the global min­ing play­ers for an eco­nomic ar­range­ment in which all part­ners would be win­ners, namely, the gov­ern­ment, the global in­vestor and, most im­por­tantly, the hap­less peo­ple of this back­ward prov­ince.

Gov­ern­ments around the world have re­al­ized that in­vest­ment and op­er­a­tions of a com­mer­cial mag­ni­tude are best suited to the en­ter­pris­ing pri­vate sec­tor. As it is, the for­eign di­rect in­vest­ment sit­u­a­tion in Pak­istan has de­te­ri­o­rated quite dis­mally over the past few years. In such cir­cum­stances, the loss of such a project as Reko Diq can be termed as sui­ci­dal pol­i­cy­mak­ing, if any­thing. The ob­jec­tive of pub­lic well­be­ing is ef­fi­ciently achieved when gov­ern­ments pro­vide favourable con­di­tions to in­vestors. This is fur­ther re­in­forced by im­ple­ment­ing reg­u­la­tions that fa­cil­i­tate com­pet­i­tive de­vel­op­ment of the econ­omy. How long will Pak­istan continue to lose op­por­tu­ni­ties just be­cause its poli­cies are short-sighted and not in­vestor-friendly?

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