INVESTMENT IN FISHERIES
From YOUSAF RAFIQ
Special correspondent, islamabad
Nov 22 - 28, 1999
Some time ago, an expatriate Pakistani living in State of Qatar had planned to invest in Pakistan over US $10 million in the fisheries sector in Pakistan. The Board of Investment did its best to bring the project on line. But strong opposition from the rest of the government bodies and agencies brought the whole Integrated Investment Project of the expatriate Pakistani investor to naught. Given below in the proceeding paragraphs is an account of PAGE investigations that show it was none other but the bureaucratic wranglings that wasted the US $10 million investment.
Shams Gul, an expatriate living in Qatar planned to invest in Pakistan over US $10 million in the fisheries sector. His project proposal was based on following three inter-related components. (i) For coastal fishing 48 fully equipped fishing boats of under 90 GRT were to be imported with fish hold of about 25-30 tones each. (ii) For operating in deep sea, two trawlers were to be imported with freezing facilities on board. (iii) For achieving export of 70 percent of their catch, fish processing plant and other infrastructure facilities were planned at Korangi Fish Harbor.
The Board of Investment circulated 'feasibility report' of the project to Central Board of Revenue, Korangi Fish Harbor, Ministry of Food and Agriculture, and the Fisheries Department, Government of Sindh for examination. According to the Central Board of Revenue fishing trawler is subject to 15 percent ad valorem customs duty. SRO 27(I)/98 extends benefit to the plant, machinery and equipment imported for the sea food industry. As the fishing trawler is neither plant and machinery nor any equipment, the Central Board of Revenue feels that these are not covered under SRO 27(I)/98. Moreover, fishing trawler is already subject to a lower rate of duty. The Central Board of Revenue, therefore, did not see merit in the request of the investor for grant of total exemption on fishing trawler.
The Ministry of Food and Agriculture said that there were 28 trawlers already plying for harvesting demersal fish resources and M/s Forbes and Company can also deploy another 50 such trawlers under the agreement. Therefore allowing another 50 trawlers to this party would result in over-exploitation of demersal fish resources in Exclusive Economic Zone of Pakistan. If the party is interested in harvesting pelagic and meso-pelogic resources them the Ministry would welcome such proposal if it is accompanied by some genuine investment proposal for shore based facilities. The Fisheries Department, Government of Sindh said that licenses are not being issued at present for fishing in the territorial waters, due to hue and cry of artisan fishermen.
Meanwhile, the sponsor imported five trawlers (three under 70 GRT, one under 80 GRT and one under 90 GRT) and approached Government of Sindh for permission to operate in the coastal waters. The Board of Investment, in order to facilitate the investor, requested the Government of Sindh, the Ministry of Food and Agriculture and Sindh Fisheries Department for favorable consideration of this integrated investment project and issuance of five coastal water licenses for the
trawlers. For the import of these trawlers the sponsor had to, besides the cost of the trawlers at the rate of Rs 40 million, pay Rs 2.3 million as import duties etc and incur demurrage at the rate of Rs 15,000 per day in addition to various other incidentals.
After a lapse of quite a few months a decision was conveyed to the Board of Investment, which instead of resolving the issue made the project a total non-starter. The Government of Sindh proposed to divide the Pakistani's Exclusive Economic Zone into three fishing zones that being a total departure from the existing fishing policy. This departure must have the approval of the Cabinet before becoming operative.
Keeping in view the investor's desperate plight, the Board of Investment again took up the matter with the Governor of Sindh with a request to issue five licenses for the already imported trawlers as a 'one-time' special dispensation not only for the investor's stake but for the credibility of our investment regime as well. However, the frequent changes in administrative set up in the Province of Sindh foiled Board of Investment's attempt to facilitate the investor. The Board of Investment also approached SMEDA with the request to resolve the situation. However, it, the SMEDA, did not in any way resolve the problem.
According to the Board of Investment, with all the cold-shouldering of the relevant agencies, obviously, the sponsor cannot go ahead with his integrated investment plan. However, the sponsors liability of five trawlers which are already in Pakistan, needs some settlement. The Board of Investment has strongly recommended that the sponsor may be issued licenses as a special case for these five trawlers to operate in the coastal waters without any further delay.