INVESTMENT IN SHIPPING INDUSTRY
By SYED M. ASLAM
Dec 31, 2001 - Jan 06 , 2002
The Pakistan Merchant Marine Policy 2001 was announced by the government on July 10 this year. The main objective of the policy is to deregulate the shipping sector providing equal opportunities to both the private and the public sector and a free and conducive environment for investment.
The policy seem to have attracted a group of expatriates willing to invest in the shipping sector along with local participation. The Karachi-based local partner of the group, who ask not to mention his name to avoid unwelcomed querries, shared his concerns with PAGE.
Perhaps nothing underlines the merits of having a strong national merchant marine than the indications of hostilities by neighbouring India and the threats of eventualities which it has resorted to in recent weeks. Over the years, PAGE has consistently advocated for the importance of having a strong merchant marine fleet and the continuous miserable decline of the state-owned Pakistan National Shipping Corporation.
The executive summary of the policy expressed the similar views saying that the Pakistani maritime fleet and support services is miserably inadequate to meet the challenges. It added that Pakistan's present annual trade is 39 million tonnes, only 5 per cent of which is lifted by the PNSC.
The heavy dependence on foreign shipping lines casts shadows not only at the continuous flow of seaborne trade in case of perceived or real eventuality particularly if viewed in the present situation, but also bleeds the economy. Pakistan spends about $ 2 billion a year on shipping which makes it second top expense after defence.
Interest to invest in the shipping industry, particularly in the prevalent scenario, is a welcome sign indeed. The concerns of potential investors offer an opportunity to help address to their satisfaction to help them bring the much needed tonnage in the national maritime fleet.
The local participant of the potential expatriate investors calling the policy 'perfect' also thanked PAGE for being the 'mover' behind the formation of the policy. "All of the recommendations made by PAGE in 1997 were included in the policy and I appreciate the efforts."
However, he said that the 'perfect' policy needs to be immaculately implemented in the letter and spirit. "While I am much pleased with my meetings with high-placed officials in the relevant departments and ministries and have been encouraged by their positive response. However, I can not say the same about the PNSC and its subsidiary the National Tanker Corporation (NTC).
"There are indications that they may jeopardize any potential investment encouraged by the policy one of main objective of which is the creation of a level playing field in the maritime sector. For instance, clandestinely entering a 10-year contract with Pak Arab Refinery Company (PARCO), the major importer of crude oil. It would be unwise to ignore a happening like this by the concerned quarters such as the Ministry of Petroleum and Natural Resources and should not have been allowed to happen in the first place."
Asked just what kind of investment and vessel the group is interested to induct in the national fleet under the Pakistani flag, the source said that if all goes well they are interested in bringing a used crude oil tanker of 85,000 Dead Weight Tons (DWD). "We are ready to initially invest between $ 8-10 million to procure a used 1981-built container in good condition and have it registered under the national flag as little as three months subject to the removal of our concerns such as above.
The source said that the potential investment will create about 30 jobs on the ship and many other direct as well as indirect jobs in Karachi. The investment would also help retain funds within the country and to help reduce drain of foreign exchange. In addition, it will help expand and upgrade the strength of the national merchant marine fleet. "Most of all the government would not have to bail out the PNSC financially, which has happened in the past and may happen once gain, by doling out huge public funds which can be diverted to one of many better uses."
Salient features of the Merchant Marine Policy-2001
To create an environment conducive for the growth of the maritime sector by providing equal opportunities to both the public and private sector. To create a free environment for investment in the maritime sector. To promote efficient related service industries, institutions, ports and harbours.
The key targets
To expand and upgrade Pakistan flag merchant marine fleet to increase the present share of cargo from 5 per cent to 40 per cent meeting the UNCTAD parameters. To augment national ship building capacity to meet 20 per cent ship construction requirements of the country. To expand ship repair facilities.