During last 3
months only one ship of 10039 (LTD) was imported
By FARAZ SIDDIQUI
Sep 25 - Oct 01, 2000
Pakistan Shipbreaking industry was at the apex,
when more than 100 companies were operating in the country. But during
the last decade the industry came on the verge of disaster and
absolutely collapsed. Gadani shipbreaking yard which was considered
biggest and best shipbreaking centre has come to its feet due to
increase in international prices and high duties and levies.
Talking to PAGE, Pakistan Shipbreakers'
Association said, during its boom period Gadani shipbreaking yard was
earning huge profits and rendering employment to thousands of people
and giving billions of revenue to the national exchequer in the form
of taxes. But now the pathetic condition of industry is obvious from
the fact that during last 3 months only one ship of 10039 (LTD) was
imported. The industry which was meant to provide jobs to thousands of
people is now having capacity only for only 2000-2500 persons. High
tariffs and import duties has rendered our locally dismantled iron
scrap uncompetitive which was cheaper in case of import.
The losses do not end up here, the most noticeable
fact is the rusting and damage of millions worth machinery at Gadani
due to atmospheric blow and sea winds. If the losses are piled up then
figure goes up to billions mark. On the other hand increase in the
prices of old ships from $130 to $160 per tonne has further worsen the
situation which was likely to improve after some steps by the
government, says Shipbreakers Association.
At present the shipbreaking activities at Gadani
are almost inconsequential. In past political involvement of the
governments in the industrial sector also a main cause of deep
recession in shipbreaking industry. In its peak days some political
decisions were taken to protect the interests of steel melting
industry as high duties were imposed which actually turned a profit
generating unit into sick one.
It is important to notify that India and Bangladesh
are leading in shipbreaking industry than Pakistan which is
standstill. In India shipbreakers are purchasing old ships from
international markets at higher rates because India has more
consumption of scrap than Pakistan. Presently India is the leader in
this regard where annual shipbreaking figure has touched the mark of 3
million tonnes, followed by Bangladesh with 1.5 million tonnes. While
in Pakistan shipbreaking industry almost collapsed due to the high
rate of import duties. Despite having the capacity and suitability
Pakistan is lagging far behind which was in the leading position in
Discussing the major problems faced by shipbreaking
industry at Gadani, Association sources said that duty structure
should be rationalized and formulated in order to accommodate with the
international changes in prices. The duty structure in India and
Bangladesh is between 5 to 10 per cent , while locally it is about 40
per cent inclusive income tax on the import of old ships for breaking.
To rescue the shipbreaking industry at Gadani the
duty structure should be revised, the ratio of import duty on old
ships should be at par with the shredded scrap, which is currently
available at $110 to $115 per ton, sources said. In order to revive
the shipbreaking industry government should take immediate measures
like reducing the taxes and provisions of loans from banks to the
shipbreakers. Government should also take notice of the unavailibility
of basic resources and facilities at Gaddani to the workers.
Pakistan's shipbreaking industry is absolutely
capable of meeting the annual demand of steel melting industry and
also a big source to earn foreign exchange for the country. The
industry which had more than 100 shipbreaking companies has come down
to hardly dozen or less during recession. Association showed its
optimism regarding the attitude from present government as it does not
seem to have any political interests. Sources further said that
present government has given importance to this issue in federal
budget by revising taxes on shipbreaking industry from Rs1500 per
tonne to Rs 1000 per tonne. But increase in prices in international
markets has stopped the rapidly changed situation.
Now to end the recession government should bring
down the tariff structure at par with the neighbouring countries and
the ratio of imported old ships should be at par with the shredded
scrap. Higher duty has been the main reason of dropping the revenue
generating unit to an all-time low.
Shipbreaking industry in Pakistan is absolutely
capable to generate revenue, employment and foreign exchange but it
demands high attention and measures from the government.
Rehabilitation of a sick unit does not only benefit a industry itself
but whole country and society. In case of shipbreaking there is no
need to develop basic infrastructure only prudent policies and
plannings can revive back the golden days of shipbreaking industry in