Advantage Pakistan – Pakistan Steel Mills

Proposal to Scrap Pakistan Steel Mills and Lease Land to the Government of Singapore for Export Processing Zones

Executive Summary

This proposal recommends the scrapping of the obsolete and redundant Pakistan Steel Mills (PSM) facility, which spans 18,600 acres (29 square miles), and leasing this strategically located land to the Government of Singapore for establishing export processing zones (EPZs). Singapore, faced with a scarcity of land for its industrial and export needs, is seeking opportunities to establish EPZs abroad. This partnership presents a win-win solution, enabling Pakistan to attract substantial foreign investment, optimize underutilized resources, create job opportunities, and integrate into global supply chains.

Key Components of the Proposal

1. Scrapping Pakistan Steel Mills (PSM)

• Current State of PSM:
  Pakistan Steel Mills has been non-operational for years, incurring financial losses, proving a burden for the national economy and under the circumstances its privatization will be a waste of time and resources of the nation, just like a very huge sum was paid to a consultant in the unsuccessful privatization of the PIA, which still has a very viable option (particularly after the recent permission of operating to and from the EU countries) to run the airline professionally, under the government’s control, sans any political interference.
• Scrapping Plan:
  A systematic plan to dismantle and recycle the obsolete machinery and infrastructure of PSM should be implemented. The scrap can be sold domestically or internationally to generate initial revenue. The land will then be cleared and made suitable for industrial development.

1. Leasing Land to Singapore
   In the recent past the Singapore government has agressively pursued the establishment of industrial parks abroad due to its land constraints and the need to expand its manufacturing and industrial footprint. Notably, Singapore has collaborated with Vietnam since 1996 on the Vietnam-Singapore Industrial Parks (VSIPs), a successful initiative with 17 parks either operational or under development across Vietnam. These parks are designed to attract multinational corporations by offering modern facilities and sustainability features, such as smart technology and renewable energy systems. They have collectively attracted billions in investments and created hundreds of thousands of jobs.

Additionally, Singapore has explored similar projects in other countries, including China, Indonesia, and India, by leveraging its expertise in infrastructure and governance to create efficient, self-contained industrial zones.

These initiatives reflect Singapore’s strategic approach to maintaining its economic growth by facilitating overseas industrial zones, which serve as hubs for manufacturing and export while benefiting host countries through economic development.

• Terms of the Lease:
  A long-term lease agreement (e.g., 50-99 years) can be established with the Government of Singapore, ensuring fair compensation and mutual benefits. Lease rates should reflect market values while incentivizing investment keeping in view the added advantage of availability of deep sea Bin Qasim port.
• Purpose of the Lease:
  The leased land will be utilized by Singapore to develop export processing zones, housing industrial plants and production facilities to cater to global markets.

1. Economic Benefits for Pakistan

• Foreign Investment:
  Leasing the land to Singapore will bring substantial foreign direct investment (FDI) into Pakistan, contributing to economic growth.
• Job Creation:
  The development of EPZs will create thousands of direct and indirect job opportunities for Pakistani workers, ranging from construction to industrial operations.
• Export Growth:
  EPZs will help Pakistan integrate into global value chains, boosting exports and strengthening its balance of payments.
• Revenue Generation:
  The leasing agreement will generate consistent revenue for the government, while the scrap from PSM offers an immediate financial return.

Singapore’s Interest and Strategic Alignment

Singapore’s Need for Land:
With limited land area and high population density, Singapore faces challenges in accommodating new industrial facilities. Its search for industrial land in other countries aligns with Pakistan’s need to repurpose large, underutilized assets like PSM.

Advantages of Leasing Land in Pakistan:

• Strategic Location: Pakistan offers proximity to Russia (after establishment of recent rail link with Russia), South Asia, Central Asia, and the Middle East, serving as an ideal hub under CPEC umbrella for Singapore’s export-driven industrial operations with added advantage of an exceptional facility of 100 percent capital amount repatriation, not available even in India.
• Infrastructure Potential: The location can be enhanced with modern transportation networks, including the nearby Port Qasim, offering direct access to global markets.
• Skilled Workforce: Pakistan has a large and youthful workforce that can meet the labor and skilled manpower needs of industrial projects.

Implementation Plan

1. Phase 1: Feasibility and Planning (6-12 months)

• Conduct a comprehensive feasibility study to assess the economic, environmental, and logistical aspects of scrapping PSM and leasing the land.
• Engage stakeholders, including government bodies, environmental agencies, and Singaporean representatives, to finalize the project framework.

1. Phase 2: Scrapping and Land Clearance (12-18 months)

• Initiate the scrapping of obsolete steel mills under internationally recognized safety and environmental standards.
• Sell scrap material to generate revenue and fund the land clearance process.

1. Phase 3: Lease Agreement and Development (1-3 years)

• Negotiate and finalize the lease agreement with the Government of Singapore.
• Facilitate the development of export processing zones by Singapore, including infrastructure, utilities, and industrial facilities.

Key Considerations and Safeguards

1. Environmental Protection:
   Ensure that scrapping operations and subsequent industrial developments comply with national and international environmental standards.
2. Lease Safeguards:
   Include clauses to protect Pakistan’s sovereignty and economic interests, such as:

• Revenue-sharing mechanisms for exports.
• Prioritizing local employment.
• Provisions for renegotiation upon lease expiry.

1. Transparency and Accountability:
   Maintain transparency in all dealings to avoid public backlash and ensure the project garners support from all stakeholders.

Conclusion and Recommendations
Repurposing the vast, underutilized land of Pakistan Steel Mills by leasing it to the Government of Singapore offers an unprecedented opportunity for economic revitalization. By taking swift and strategic action, Pakistan can unlock foreign investment, create jobs, and position itself as a key player in global trade networks. It is recommended to:

1. Approve the scrapping and land repurposing project.
2. Engage with Singaporean representatives to initiate lease negotiations.
3. Establish a dedicated task force to oversee the project’s implementation.

This project has the potential to transform a dormant national asset into a thriving economic zone, fostering long-term prosperity for Pakistan and its people.

Syed Nayyar Uddin Ahmad
+92 321 9402157
Lahore – Pakistan.