It is time for the policy
makers to take a deep hard look at the reasons that why the Shipping
Policy has failed
By SYED M.
May 20 -June 02, 2002
For years PAGE has spent tremendous energy, and
time, to convince the policy makers about the merits of building a
strong merchant marine fleet. Time and again it has severely
criticized the performance of state-owned Pakistan National Shipping
Corporation (PNSC), the only shipping line registered in the country.
PNSC is lifting less than 5 per cent of the total
39 million tonnes of Pakistan's seaborne trade annually while the
country is threateningly dependent on foreign shipping companies to
lift the rest of the cargo costing the country 2 billion dollars
annually. With PNSC's depleting fleet and with new induction in the
merchant marine fleet the dependence on foreign shippers and their
service bills would only increase in future.
Finally, on July 10 last year the government
announced the Pakistan Merchant Marine Policy 2001 aimed at
deregulating the shipping sector to provide level playing field to
both the private and the public sector thus encouraging investment in
a sector which somehow has never been accorded the priority that it
deserved all along.
Ten months later today, the policy which offers
such financial incentives as duty free import of ships and a range of
other related port vessels as tugs, dredgers, survey boats, etc., and
income tax break till 2020 has failed to attract any investment, local
or foreign. As reported in the issue number 53 last year, the policy
did attract a group of expatriates willing to invest in the shipping
sector along with local participation. However, the interest did not
materialize in action due to investors' concerns about PNSC's and its
subsidiary National Tanker Corporation (NTC) of resistance to creation
of level playing field by resorting to backdoor tactics to influence
contract for the shipment of crude oil for Pak Arab Refinery Company,
the major importer of crude in the country.
The potential investors were interested to induct a
used crude oil tanker of 85,000 Dead Weight Tons (DWD) in the
Pakistani merchant marine fleet. They were ready to initially invest
between $ 8-10 million to procure a 1981-built container in good
condition and to have it registered under the national flag within as
little as three months.
With no takers, the policy can hardly be expected
to meet other noble objectives, namely, to expand and upgrade Pakistan
flag merchant marine fleet to increase the present share of cargo from
5 per cent to 40 per cent so as to take the maximum advantage of the
UNCTAD parameters, to augment national ship building capacity to meet
20 per cent ship construction requirements of the country, and to
expand ship repair facilities.
This is not the first time that a government has
announced a shipping policy to attract investment in the shipping
sector. The industry was first deregulated in the early 1990s when the
private sector was allowed to bring investment in to the shipping
sector. Once such shipping company, Tri-Star went bankrupt after few
years of operation.
The question is: do the incentives help induct more
vessels into the national maritime fleet. The former government also
announced similar duty free incentives for the shipping industry which
did not bring any fresh induction in the marine time fleet except
allowing PNSC to bring its container vessels, which since their
induction in 1996 were chartered outside of the country, into to the
Observers say that incentives alone will not help
induct additional tonnage in the national maritime fleet unless the
government offers cargo protection to the other operators like the one
it offers to the PNSC. In addition, PNSC is also accorded a
preferential treatment to lift substantial quantities of such captive
cargoes as wheat, iron ore, cotton, rice and fertiliser.
Perhaps nothing else highlights the importance of a
strong merchant marine fleet than the present tension between India
and Pakistan. With clouds of war blowing across the horizon do we
expect the foreign shippers to risk catering to needs of Pakistani
trade if God forbids an eventuality breaks out? And with PNSC owing a
single dilapidated tanker, depending on charter hires to ship rest of
the crude, can be trusted with the supply all important oil in times
like these? Your guess is as good as mine.
The cold response to the Shipping Policy is feared
to further increase an already frightening dependence on foreign
shipping companies in the years to come due primarily to two factors
— the dilapidated state of PNSC's fleet and its inability to meet
the stricter International Security Codes of the International
Maritime Organization in near future.
Perhaps it is also time for the policy makers to
take a deep hard look at the reasons that why the Shipping Policy has
failed to draw the investment despite offering a range of unmatched
financial incentives. This would also help them make any necessary
changes in the policy to better address the concerns of the potential
investors with particular regard to the availability of cargo at par
with the PNSC to really create a level playing field for other