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By Noureen Choudry

The establishment of a Special Investment Facilitation Council (SIFC) is a commendable initiative aimed at attracting international investors across various sectors, including agriculture, livestock, industry, information technology, mining, and energy. In the face of an economic crisis in Pakistan, a proactive initiative was needed from the political and military leadership to implement measures for significant foreign investment.

The council also prioritizes addressing losses in public sector enterprises, which constitute over 6% of the GDP, involving approximately 197 entities. In 2016, the deficit was 0.5% of the GDP, rising to 4% in 2021. Loss-making enterprises, such as PIA, WAPDA, Railways, and Steel Mills, significantly contribute to this financial challenge, impacting over 0.4 million employees with a combined salary and benefits cost of 500 billion rupees.

The steel mill has been closed since 2015 but the employees are still being paid. PIA was so lackluster in the past few days that flight operations had to be halted as fuel was not being supplied due to the unavailability of funds.

The IMF team held talks with the officials of the Ministry of Finance from November 2 to November 15, in which the privatization of loss-making public enterprises, reducing the revolving debt of electricity and gas, while increasing the tax net, especially through real estate and agricultural income, was discussed deeply. They emphasized the implementation of the tax, calling for the revenue target to be brought up to 15 percent of GDP, while present tax collection is up to 12% of the GDP.

The agriculture and livestock sector has the potential to double the production per acre by adopting modern methods, equipment, and technology. Increasing agricultural output will also have a productive impact on the industry. Exports can be doubled in the textile sector alone if the provided raw materials are inexpensive and production costs are minimal.

Similarly, improving the livestock sector can lead to a significant influx of foreign exchange, and a $500 billion global halal meat market is waiting to be explored. Our cattle are raised in a natural environment, so the taste and standard of meat are much better than other foreign competitors, yet the government has not paid this sector the due attention it requires. A lot of work can be done in this sector. Through SIFC, investors from Arab countries can invest generously, and very encouraging results can be obtained.

In the second week of November, A two-day conference was organized under SIFC in which the Director of the Project, Major General Shahid Nazir stated in his presidential address that Pakistan has an area of 9.1 million hectares that can be allocated for agricultural practices. In the same conference, a deal of 1.4 million hectares of land was signed with a foreign company, which will emphasize agriculture and livestock. At the conference, 70 economists, academicians, and corporate leaders including 25 foreign delegates shared their experiences. Although it has not been addressed as of now, work on it has been initiated through SIFC’s platform, the details of which will be out soon.

In the mining sector, Reko Diq and Sandak are two projects in Chaghi, a district of Balochistan, that are anticipated to bring significant benefits to Pakistan, with Sandak in particular expected to be a game-changer. Chaghi holds the distinction of being the largest district in Pakistan in terms of area, spanning approximately 50,545 square kilometers. The region boasts a renowned mountain range and numerous dunes containing natural reserves.

Sandak is abundant in gold, silver, and copper deposits, while Reko Diq represents one of the largest copper and gold reserves globally, with estimated reserves of 5.9 billion tons of ore grading 0.41% copper. The gold reserves amount to 41.5 million ounces, and the projected mining life is at least 40 years.

The arbitration favored the investing companies, imposing a fine of $6.4 billion. Additionally, the London Court of Arbitration imposed a $4 billion fine on another company’s claim.

In 2019, the government of Pakistan established an apex committee to address the issue. A $950 million agreement was reached with Chile’s Intugasta Company, and negotiations with the Canadian company Barrick Gold resulted in the cancellation of the fines. Mark Brashov, the head of Barrick Gold, visited Pakistan with a delegation, finalizing the agreement during a meeting with the Prime Minister.

As part of the agreement, the Saudi Public Investment Fund (SIFC), a Saudi Arabian company, became involved in copper and energy transfer projects worldwide. On November 3rd, an agreement was signed under the SIFC with Barrick Gold for a $7 billion investment. This project is expected to create 8,000 job opportunities. According to the agreement, 50% of the company’s profit will be divided, with 25% going to the provincial government and the remaining 25% to the federal government.

The Saudi company holds a 10% stake in the metals business of the Brazilian mining company “Vale.” To estimate project shares, the government has appointed an international consultant. The project is projected to yield 58% copper, 28% gold, and the remaining percentage in silver annually, with commercial production expected to commence in 2028. It is anticipated that by 2032, the project could yield 800 kg of gold and 19 crore tons of copper.

If these projections hold true, it is expected that the country’s debt-ridden economy will experience a revival, akin to the economic transformation witnessed in Arab countries in the 1970s when oil wealth significantly bolstered their economies overnight. Pakistan could experience a similar transformation.

Revealing the second Sendak project in Chagai, where gold, silver, and copper deposits were discovered in 1901 during British rule, Sendak Metal Limited was established in the 1980s after entering into an agreement with a Chinese company in 1990. In 1995, the development of mining and smelting plants, electricity and water supply infrastructure, and construction of residential colonies commenced.

A trial operation to assess hidden minerals in the mountain ridges and depths began in the same year. Experts estimated reserves of 1,500,000 metric tons of copper and 10,000 metric tons of gold.

By 2008, a 10-year contract was signed with a Chinese company, later extended by five years. During this period, 14,136 tons of copper, 11,033 kg of gold, and 1,706 kg of silver were extracted. The project yielded over 10 crore tonnes of raw materials in 23 years, with two shafts dugthe southern shaft measuring 336 m deep, 100 m wide, and up to 900 m high, and the northern mine almost identical in dimensions. Most copper, gold, and silver deposits were extracted from these mines, while work on a third mine is currently underway.

As of March 2019, the project employed a total of 1,659 individuals, with 1,200 from Chagai, Nushki, and other districts of Balochistan, and 250 being Chinese experts. In 2019, the minimum wage was USD 150, and the maximum was USD 1,500.

While the SENDAC project fell short of its estimated economic goals, REKODAC, being a substantial project, has the potential to significantly impact Pakistan’s economy. If even half of the projected targets are achieved, Pakistan could emerge as a major economic power in the region, especially considering the valuable resource of Thar coal.

Successful execution of these projects could alleviate the country’s reliance on IMF debts. However, it is crucial to simultaneously focus on the agricultural industry, recognizing that revolutionary economic development requires attention beyond mineral resources alone.

Chagai, after the nuclear explosion of 1998, is poised to become the cornerstone of Pakistan’s economic growth. Sincerity and loyalty are imperative to safeguard our national interests in this transformative journey.

The author is a post-graduate in Mass Communication and a team member of Rabita Forum International (RFI).

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