'Gwadar Industrial Estate zone set for reforms,' says GIEDA MD

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'Gwadar Industrial Estate zone set for reforms,' says GIEDA MD

27 Jan, 2017

Building on the Gwadar visit, BR Research recently met Fareed Hasni, Managing Director, Gwadar Industrial Estate Development Authority (GIEDA). The conversation surrounded issues related to GIEDA's scope of work, developmental activities, plans, policies, and future outlook. Below are edited excerpts from the conversation.

BR Research: Please take us through the journey of GIEDA from its conception to recent years.

Fareed Hasni: The government of Balochistan announced GIEDA in 2005 and made land allotments of around 2000 -2100 acres. But soon after it was formed, people stopped coming to Gwadar because of the worsening law and order situation.

GIEDA is a government authority and the law allows it to spend and earn on its own. Our source of income was developmental activities, but around Rs 2-2.5 billion were stuck as people had defaulted on payments at that time. The value of our plot is Rs 1.5 million per acre, and the down payment is Rs 0.1 million. People used to only pay Rs 0.1 million and never paid a penny again.

So as soon as I joined, I wanted to fix this problem to be able to start developmental activities. Those who could not pay the remaining amount were not awarded plots. The board also agreed and gave us the policy approval and we cancelled around 800-900 such allocations.

BRR: How many plots were allotted and how many were cancelled out of them?

FH: The government had allotted around 2100 plots at that time, and around 800-900 were later cancelled. And when we started cancelling, people realised that they had to start paying, which they eventually did. So by the end of 2015, the situation improved.

Now we have started developmental activities, we have been making reservoirs and link roads; the rest house is also being repaired. By the end of 2017, we would try to get in the industrialists, so they can start their work. We have electricity there, but the only issue is lack of water. However, various companies have decided to set up water plants.

BRR: Is GIEDA also responsible for infrastructure facilities, and what are the timelines for infrastructure projects to be up and running?

FH: Infrastructure, such as water, power, and sewerage is our responsibility. There is no such defined time lines, but we are going to do it in a phased manner.

BRR: But what's the plan and vision?

FH: If I tell you, that I'll be completing something by a certain year, and if there is a delay in the process, then I won't be able to meet my target. So there is no specific time period for this.

BRR: How do you plan to go about building infrastructure?

FH: We will do it simultaneously, and in around two years, we will be in a position that the industries would be able to set up shop there. We have hired a consultant for development, and they will give us an estimate soon.

We have the master plan ready. There is one industry that is being set up there, so we will try to provide that company with an access to sewerage and basic infrastructure on an urgent basis.

BRR: We visited that site but we didn't see any machinery, nor any spade work; we were told that no one had even visited that site for about six months.

FH: No, it's not like that. The site is for the plant of Zeal Pak Cement and it will take 12 to 18 months for the work to be completed.

We have two plans, one is of 500 acres which will be funded through federal funds, and another one of 50 acres will be through our funds on an immediate basis. This will allow up to 30-40 industries to be set up there. The proposal for this has already been discussed in Gwadar. The 500 acres plan will be done later from CPEC funds.

BRR: What is the annual revenue of GEIDA?

FH: I am afraid I cannot discuss these things since these are a secret.

BRR: But do you not think the public has the right to know? GIEDA is a public body after all.

FH: I can only tell you that we are in a good position and we are capable of accommodating 30-40 industries at the moment.

BRR: Do the industries approach you themselves or you make a conscious marketing effort to tap them?

FH: We approach them; we invite them and also take them to site visits. We took a delegation of electronic and print media there just recently to show them around.

I myself went to the CM Balochistan and got the approvals for Zeal Pak Cement. They didn't want to come initially, but we convinced them. We got a 5 acre plot for them through the CM, and gave them assurance.

In the beginning, people were afraid to travel here due the conditions, but now we have built roads and conditions have improved.

BRR: Do you have any industry clusters in mind? For example, motorcycle, air-conditioner, refrigerator, cement, leather etc.

FH: We are entertaining whoever comes to us, so that they should at least make a start. In the 2005 plan, we had kept 5 acre zones, so whatever fits in the cluster can be a part of that zone. We recently attended a conference in Singapore and got an idea for these clusters from there. We will be implementing it on the 3000 acres in the next phase.

BRR: When someone buys a plot in GIEDA, do they share business plan with you? If so, then what kind of business plans has been submitted?

FH: Yes, business plan is a requirement. So far most plans relate to steel, date processing, and fishing industry.

BRR: Where is the additional 3000 acres and when will that be allocated?

FH: We aren't sure about it, but we have requested for it.

BRR: What are the monthly development charges collected from the people? Is it on the basis of acres?

FH: No, the amount of Rs 1.5 million includes those developmental charges. But for example, if an industry comes in and asks for water etc, we calculate the cost to be incurred and charge accordingly.

We are trying to raise the price of the land, as the previous rate was set in 2005, and in 2017 the price should be increased. I believe, the new rates will be finalized in the next two months.

BRR: But you said the land has been sold, and none is remaining, so why increase the price now?

FH: There are people who still haven't paid the full amount. We will tell them, that had they paid earlier, we would have done our developmental work and the cost of which would have been way less.

The 900 plot allocations were those that had not paid even one of the eight due instalments, except for the down payment. We will write letters to them to pay or we will cancel the deal, we have already taken the approval from the board. Once we cancel, we will sell those plots to new people.

BRR: Usually in industrial zones, within two years of buying the plot, you have to set up your industry/business here, and if you don't do so, heavy penalties are imposed. Does this happen in GIEDA as well?

FH: Our law allows us to do so but we don't impose penalties. Initially our plan was to cancel such plots. But we refrained initially, because of the law and order situation. Now, that the conditions are better and people have started to come in, we will be getting stricter regarding this.

BRR: Has any cut-off date been decided after which you will start cancelling plots?

FH: No we haven't yet, but if the conditions stay the same way, then we will go ahead with this.

BRR: Are the cut-offs designed in the policy?

FH: Yes, you have to pay your instalment in two years, and then set up your industry within 18 months. Otherwise, we will take the possession of the land back.

BRR: Does only the Government of Balochistan have the authority to set this cut off that you must set up the industry within two years?

FH: No, we have the authority, we see this on a case to case basis and take the matter to our board. Let us not forget that we have already imposed a huge penalty on those 900 people before.

BRR: Have the Chinese investors shown any interest in GIEDA yet?

FH: Yes, there was a delegation and they said they want 500 acres to set up a stainless steel industry, but we only have 1-2 acres for local investors. So we told them to give us in writing and we will approach the government, but they didn't come back to us.

BRR: Do you think that things will get better in two years from today?

FH: Yes, if the work gets done at this pace, things will get better. You have seen that the construction of the airport is under process, and as soon as work on the port start, things will change for the better.

We want the government to give us concessions when it comes to taxes. GIEDA is not a tax free zone, but if it is made into one, more investors from all around the country will be interested in investing.

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