On March 1, 1986, the then chief minister of the North-West Frontier Province (now Khyber Pakhtunkhwa), Arbab Jehangir Khan, chaired a meeting in Mardan. In attendance were 40 members of the Gadoon-Amazai jirga [tribal elders and representatives], who were there on behalf of the poppy-growers of the region.
In the meeting, which was also attended by the provincial police chief, the chief minister informed the Gadoon elders of the federal government’s decision to ban poppy cultivation, recalls septuagenarian Ghafoor Khan Jadoon, a former poppy-grower from the area who attended the meeting almost four decades ago.
“We were informed of this when the poppy was ready for harvesting and the farmers had completed the preparation required for the crop, as in previous years,” Jadoon tells Eos. The chief minister told the tribal elders and representatives gathered there that the federal government, under Gen Ziaul Haq, had earmarked Rs4 million in total to be distributed among poppy cultivators and, in turn, they were expected to voluntarily destroy their crop, continues Jadoon.
This was disconcerting for the people of Gadoon-Amazai, spread over roughly 215 square miles and with a distinct identity from other parts of Mardan, Swat and Abbottabad, the districts that had administrative jurisdiction over its seven different union council. It also shares boundaries with district Haripur, Mansehra and Buner. The Gadoon mountainous terrain links with Tarbela Dam and the mountain region in Buner.
What was once envisioned as a thriving industrial estate to replace poppy cultivation and provide alternative livelihoods to poppy farmers, the Gadoon-Amazai Industrial Estate has turned into a story of lost opportunities and economic despair…
It was no surprise that the jirga unanimously rejected the offer, as the poppy harvest allowed the locals to easily fulfill the financial requirements of their families.
“Poppy was the solitary source of our livelihood,” says Jadoon. “The local people’s expenditure for the entire year is linked to opium production, and it was difficult to grow anything else in the rocky landscape of Gadoon.”
![An industrial unit that has been shut down with the ‘available for rent’ sign at
its entrance](https://i.dawn.com/primary/2025/01/679544770f2ed.jpg)
THE PUSH FOR POPPY
The Gadoon-Amazai area, located along the slopes of a mountain ridge locally known as ‘Mahaban’, had witnessed intensive poppy cultivation in the seventies and eighties. The reasons included a government ban on poppy cultivation in the ‘settled’ areas and a steep rise in the demand for heroin production, which pushed up opium prices. Heroin is processed from opium which is derived from the seeds of the poppy.
The US support to the Afghan mujahideen [‘freedom fighters’], who were fighting Soviet occupiers in Afghanistan, had also resulted in the expansion of opium production. It had covert support of the US Central Intelligence Agency (CIA), with growers in Afghanistan and around the border areas linked to heroin processing labs in Pakistan and markets in Europe and the US. The poppy proceeds would prove instrumental in sustaining the Afghan resistance for the decade it would take to force a Soviet withdrawal.
In the Gadoon-Amazai area, a lack of other sources of income due to a lack of infrastructure and development meant that farmers started growing the lucrative crop. According to a report published by the United States Agency for International Development (USAID) in the 1980s, a high proportion of the estimated 30,000 acres of cultivable land in the Gadoon-Amazai area was under poppy cultivation.
A BLOODY SHOWDOWN
With Pakistan the staging ground for US-backed resistance forces battling the Soviet-backed Afghan government, the country became key to US strategic interests. The biggest beneficiary of this honeymoon period was the regime led by Gen Zia, which would turn down a $400 million aid package from the government of outgoing US President Jimmy Carter in 1980, labelling it “peanuts”. The arrival of Republican Ronald Reagan, who was US president from 1981-89, would see an upsurge in US aid to Pakistan, including a mammoth $4.2 billion package.
Zia had banned poppy cultivation in 1979, two years after seizing power, although enforcement was limited. In 1982, Zia told the media that poppy was grown in the tribal districts and that cultivation could not be eliminated until developed countries helped Pakistan address the economic needs of the farmers.
With aid flowing in from the US, and the US under Reagan also officially opposed to illegal drugs production around the world, Gen Zia ordered a crackdown on poppy farmers. On March 8, 1986, a week after the jirga meeting, law-enforcement agencies launched a poppy-destroying operation. The army was also deployed and cannons were fixed on the hilltops.
According to Jadoon, around 10,000 people — including growers — resisted the operation. “The jirga members had decided a day earlier, in their meeting at Gandaf village, that they would remain peaceful and no one would be allowed to come out with a gun or resort to violence,” narrates Jadoon.
However, the situation resulted in clashes, with protesters raining stones on the law enforcers. At least seven protesters and one member of the Frontier Constabulary lost their lives in the clashes. Authorities also arrested around 140 protesters, including tribal elders, and imprisoned them in Haripur’s Central Jail.
When the prisoners came to know about the death of the growers and the arrest of tribal elders, protests erupted. Sensing danger, the jail authorities had to shift those arrested in the Gadoon operation to a different prison.
![A closed industrial unit in GAIE](https://i.dawn.com/primary/2025/01/679544770db58.jpg)
THE ACCIDENTAL ESTATE
It was the bloody showdown between poppy growers and law enforcement agencies on March 8, 1986, that forced the then government of Prime Minister Muhammad Khan Junejo to draw up a plan for the Gadoon-Amazai Industrial Estate (GAIE). Initially, Rs10 billion were earmarked for the project — with the estate spanning an area of 1,116 acres — to stop poppy growing in the Swabi district.
The establishment of the GAIE in 1988 was as much accidental as it was inevitable. The government wanted to ban poppy cultivation and jirga members wanted to provide an alternative source of earning to the locals. The government agreed and initiated activities for the setting up of the estate, with the intention to provide a viable alternative to poppy cultivation. What followed was a slew of generous incentives and packages as well as expertise, such as agriculturalists, to guide the locals regarding what crops could be grown on their mountainous land.
The estate had another boost a year later, in June 1989, when the government of PM Benazir Bhutto passed an order providing financial incentives to manufacturers. These incentives included relaxation on taxes, low interest rates on loans and exemption of duties on imported machinery and raw material. The incentives were meant to not only strengthen the estate, but also make it attractive to investors across Pakistan. The GAIE also shored up KP’s feeble industrial base.
“As a result, 325 industrial units were established in the area, with the investment of Rs53.836 billion, providing job opportunities to 14,843 people,” wrote academics Faiza Nawaz, Muhammad Fawaz Azam and Naheeda Noor in their paper ‘The Dilemma of Gadoon Amazai Industrial Estate, KP’, which was published in the Journal of Economics and Sustainable Development in 2015.
During 1991 alone, according to the paper, 111 industries went into operation, while various others were under construction. The activities resulted in direct employment for 15,000 people and indirect employment for 25,000 others.
![](https://i.dawn.com/primary/2025/01/67954476ec33e.jpg)
GAIE’S DOWNFALL
The incentives offered to GAIE did not go down well with industrialists in Punjab and Sindh, who perceived this ‘industrial revolution’ in the north as a threat to their businesses in the country’s heartland and south. They vehemently opposed the duty-free import of materials and machinery, claiming that the incentives would damage similar industries in other parts of the country.
This was despite GAIE not being the first industrial estate to be granted such incentives. Two other examples of tax-free industrial estates are Chunian in Punjab and Nuriabad in Sindh. There were also accusations that the imported duty-free raw materials for the GAIE were sold in the markets of Lahore and Karachi.
As a result, the Nawaz Sharif-led government repealed the incentives in May 1991.
Within a year of the withdrawal of incentives, 133 units closed down, including a bulk of manufacturing plants. A few turned into ruins, while the provincial Sarhad Development Authority took over 88 acres of various units due to unpaid arrears.
After the withdrawal of generous incentives, entrepreneurs were no longer interested in the GAIE. Being a far-flung industrial zone, it is not easy to bring raw materials and spare parts from Karachi or to send manufactured goods to the national market. The industrialists in Gadoon said that the transportation of goods became a headache because of the numerous checks at various places. Those who had already set up units in GAIE slowly and gradually closed down their industries and shifted machinery to other industrial zones, with better locations.
Meanwhile, multiple efforts to convince the government to reinstate the incentives fell on deaf ears.
Liaqat Ahmad Khan, a former president of the Sarhad Chamber of Commerce and Industry, had a ghee unit in GAIE. He tells Eos that various delegations of industrialists tried to convince both the federal and KP governments to save and strengthen GAIE, which was a source of livelihood for thousands of ex-poppy growers, but to no avail. “All the commitments and pledges made to us turned out to be false,” he says.
Fazal Amin, who once headed the Gadoon Chamber of Commerce and Industry, recalls his meeting with the late federal finance minister, Sartaj Aziz, in 1997, in which they discussed the declining status of the estate. “The minister just shrugged his shoulders and told us: ‘No, no, there is a lot of theft in Gadoon,’” he narrates to Eos.
This apathy has resulted in the GAIE’s current situation: from its peak of 164 operational units in 1994, it is down to only 57 units operating today.
LOST REVENUE AND HOPE
A number of units had to shut down after failing to clear their dues to the Water and Power Development Authority (Wapda). As the situation turned alarming, the deputy commissioner of Swabi had to impose a blanket ban on the dismantling and shifting of machinery without clearing Wapda dues and obtaining permission from his office.
Even when the government imposed the ban, the industrialists continued the shifting, under the pretext of repairing machinery or by bribing officials.
Fazal Rahim Jadoon, who owned a steel mill, says he would pay Rs80 million in monthly power and gas bills. “With my unit shutting down, I have lost money,” he tells Eos. “But so has the government, including in lost revenue and from the unemployed workers that we had to lay off,” he adds.
Another company, reeling under the hefty power bill, opted to go solar to stay afloat. Iftikhar Khan, general manager at a mat manufacturing unit, tells Eos that they spent Rs20 million to install a solar system.
Officials at Wapda confirmed to Eos that the department had lost out on revenue, with one official saying that it was down to a quarter of the Rs400 million they were collecting “not too long ago.”
The establishment of a duty-free industrial estate at Muzaffarabad in Azad Jammu and Kashmir also harmed GAIE prospects. It expedited the exodus of industrialists, with locals claiming that, after the removal of the excise check post in the area, the government provided an opportunity for the industrialists to shift their machinery to other estates, which badly harmed GAIE.
Members of the Gadoon Industrial Association (GIA) tell Eos that the KP government has recently initiated work on an industrial estate in Malakand, with plans to provide it with inexpensive power from the Malakand-III hydel project. In September, the provincial chief minister, Ali Amin Gandapur, even told industrialists to shift their industries to Malakand.
However, as one industrialist who attended the meeting points out, the Pakistan Tehreek-i-Insaf government’s hopes of attracting investors to Malakand by offering incentives is misplaced. “They fail to understand that even operational industrial units in the province are confronted with risks of closure, due to increasing incidents of militancy and a lack of a result-oriented industrial policy,” the industrialist tells Eos on condition of anonymity.
The contraction of the GAIE, as it teeters on the verge of collapse, is a cause of concern, particularly considering its potential to provide jobs in an area with very few sources of income. It does not help that the governments at the centre and in the province have failed to assure industrialists or provide a mechanism for a revival of industry in KP. Instead of being assured of the provision of power and facilities, the industrialists are being advised to relocate.
This is being done with absolute disregard of the actual purpose of the GAIE, which was established to provide locals with an alternative to poppy cultivation.
Muqaddam Khan is a staff member based in KP. He can be contacted at journalistsb@gmail.com
Published in Dawn, EOS, January 26th, 2025
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