GWADAR (Pakistan) (BLOOMBERG) - For the thousands of attendees, it was meant to be a conference to showcase China's flagship Belt and Road project in Pakistan - the port in south-western Gwadar that gives Beijing access to the Arabian Sea.

In the evenings, the almost 8,000 delegates were wowed with cultural shows and a firework display at the newly opened five-storey Gwadar Exhibition Centre, which was host to about 100 companies last month (January). Yet, what really caught the attention of some investors were the hundreds of Pakistani troops patrolling the roads and guarding high-end hotel lobbies.

"Nobody will come and invest in this climate of fear," said Muhammad Zafar Paracha, director at the Pakistani partner of MoneyGram International.

With national elections due in July, Pakistan's government is keen to trumpet the commercial viability of the deep seaport in the once sleepy sea town of about 200,000 people in a province long racked by separatist insurgency.

To secure Beijing's funding of more than US$50 billion (S$65.8 billion) in infrastructure projects, Pakistan has raised a special 15,000-strong security force.

OFF LIMITS

The port is scheduled to start transshipment on March 7. Yet, for all the fanfare, some question Gwadar's prospects amid heavy security.

Balochistan is mostly off limits to outsiders and there is no visible foreign presence beyond the Chinese. Journalists and visitors are closely monitored by Pakistan's intelligence agencies.

"It doesn't feel like a normal investment location or an enabling business environment if that level of protection needs to be provided," said Andrew Small, who has written a book on Pakistan-China relations and is one of a handful of Westerners to have travelled to Gwadar.

Beijing has become increasingly vocal over the risks in Pakistan.

In December 2017, its embassy in Islamabad warned of imminent terror attacks on Chinese targets. This month, a Chinese manager at Cosco Shipping Lines, was gunned down in an upmarket area of Karachi.

Following the murder, China called on Islamabad to take more measures to ensure security.

"It's our commitment to the Chinese companies or other investors going there to provide security," Pakistan's Prime Minister Shahid Khaqan Abbasi said in an interview. The security situation has significantly improved in Balochistan, he said.

Security challenges come from longstanding grievances of the local Baloch people. Many claim they have been discriminated against by Islamabad, which they say plunders their natural resources and gives little back to Pakistan's least populated and developed province.

More than 2,600 people have been killed or wounded in suicide attacks in Balochistan since 2003, according to the South Asia Terrorism Portal.

SECURITY RISKS

Despite the Chinese influx, "locals get no jobs, nothing", said Hameed Rasheed, a dealer of Honda Motor in Gwadar. Rasheed was also concerned about security in the province after two of his trucks were set ablaze by unknown assailants on a coastal highway in October.

"The main challenges, as I see them, are posed by the security risks of sustaining a large Chinese presence in Balochistan," said Joshua White, a former director for South Asian affairs at the US National Security Council.

"China has demonstrated that it is highly sensitive to threats against Chinese citizens abroad, and even a small number of attacks or kidnappings could constrain the ambitions of China's state-owned enterprises operating in the area."

Nonetheless, some Pakistani companies are investing. Conglomerate Engro plans to build more than US$700 million of wind and solar power plants in Balochistan.

Present at the expo's stands were major Pakistani lenders Habib Bank and United Bank, along with Industrial and Commercial Bank of China.

With more than half a dozen cranes mostly idle, port authorities in Gwadar are also hoping to siphon millions of tonnes of cargo currently shipped through Dubai.

Pakistan's Maritime Affairs Minister Mir Hasil Khan Bizinjo said the government is looking to shift Nato cargo bound for Afghanistan from Karachi to Gwadar.

China is expected to start work in June on a US$1.2 billion port expansion, said Gwadar Port Authority chairman Dostain Khan Jamaldini.

Some locals see the benefit. Muhammad Wasim Baloch has seen sales of his traditional shoes soar in the past year, thanks to Chinese buyers. "Our business has increased about 60 per cent," he said.