Provinces forging economic ties with foreign nations

"Given its size and other favourable factors, Punjab is taking the lead in initiating and forging economic ties with foreign nations." File Photo

There seems to be no legal or constitutional bar on the four federating units to directly deal and develop economic ties with foreign governments but all proposals are subject to approval by the federal government, according to information available here. A proposed deal or project is subjected to rigorous scrutiny at Islamabad in case a sovereign guarantee is required from the federal government.

Given its size and other favourable factors, Punjab is taking the lead in initiating and forging economic ties with foreign nations. It has struck deals with six countries including Turkey, China, Iran, Australia, India and Germany in multiple fields covering energy sector, irrigation, agriculture research, technology transfer, solid waste, management, communications etc.

Sindh has also recently initiated movement in that direction. It has clinched deals with two countries and a few multilateral agencies for rebuilding and rehabilitation after the floods last year. The provincial government has initialled agreements with Iran and Turkey and was said to be in the process of engaging some more countries including Italy and China for the development of the province.

Balochistan signed a deal with Oman for village electrification during the last regime. Probably because of challenges of the ongoing war on terror over the last decade, Khyber Pakhtoonkhwa has been left behind. However, the smaller provinces did receive some grants directly from multilateral donors for social sector projects.

The information gathered from different sources in the four provincial capitals indicate that the efforts of the three smaller provinces to directly deal with f! oreign c ountries is looked with some suspicion in Islamabad.

The relevant federal departments sit on our proposals and often it takes a lot of assertion and persuasion to get their nod, a senior member of the economic team of Sindh told Dawn.

Currently, at least two proposals are with the Economic Affairs Division awaiting approval to enable Sindh to proceed with its plan of partnership with interested countries, he added.

The impression that smaller provinces are discriminated against by the federal government is not true. The federation draws its strength from federating units. The less-developed areas get a preferential treatment in Islamabad to bring them at par. Why would anybody block provincial initiatives of economic partnerships? asked a federal secretary over phone from Islamabad.

Another officer at Economic Affairs Division, however, accepted that sometimes the cases referred for approval were delayed.

Yes, when investors ask for sovereign guarantees of the federal government, we have to weigh the proposal and run feasibility tests before giving approval. However where such conditions do not exist, we have no issues, another retired senior officer in Islamabad told Dawn.

We in Balochistan made an effort to directly engage neighbouring nations for cooperation in areas of mutual interest but the federal government did not let it happen. It thrust its will to either act as an intermediary or represent the provincial government in all such deals with or without the consent of the provincial administration, complained an ex-secretary of finance of Balochistan.

The province gets a paltry two per cent royalty from Saindak gold and copper project. You know about the controversy surrounding Reko Dik gold and copper mines exploration contract. The matter is sub-judiced. Another example is that of Duddur zinc and lead project where the province holds a miniscule share of 12.5 per cent in the total return. Pakistan Mineral Development Corporation has 12.5 per cent share a! nd the r est goes to the company involved, another source in Quetta told Dawn.

Who says it is fair? In my view Islamabad interferes unnecessarily in the affairs of provinces, a conduct that led to alienation and brewing discontent in smaller provinces, said a source in Peshawar over telephone.

Balochistan has a sizeable land trade with Iran, Afghanistan and China but the province has not been allowed to strike trade deals. KP enjoys traditional links with Afghanistan but no formal economic relationship has emerged from this interaction, another senior member of provincial economic team of KP told Dawn from Peshawar.

Some businessmen contacted in Punjab were happy over the recently concluded deals between the province and certain foreign countries.

I am happy that the provincial government is focused on economy that I believe in the end decides the destiny. Our trade deals directly with other sovereign nations show their confidence in Punjab as an attractive destination for their investment. It also reflects their appreciation of governance in the province that they consider credible and mature, Chaudhry Saeed ex-president, Federation of Chamber of Commerce and Industry said.

We are working on several proposals and will make sure that they materialise soon. If need be, I will go to Islamabad to move the relevant files, Qaisar Bengali, advisor to the Chief Minister Sindh told Dawn.

Some experts uncomfortable with owning their comments observed that Punjab has a natural edge over others because of its size and the pace and the quality of its development.

In the post-National Finance Commission and Eighteenth Amendment period, the position of provinces has been further strengthened.

It is now up to the respective governments to chart out strategies, identify sectors and interested nations and carve out business relationships, a senior bureaucrat who participated in the negotiations that culminated in NFC deal told Dawn.