LEVEL-PLAYING FIELD NEEDED TO ENCOURAGE INVESTMENT IN SHIPPING
Interview: Capt. Haleem A. Siddiqui, Chairman Marine Group of Companies
May 28 - Jun 03, 2007
Capt. Haleem A. Siddiqui, Master Mariner (UK), Chairman Marine Group of Companies, while discussing the overall situation of port and shipping sector in Pakistan, has strongly recommended for providing level-playing field to both the public and private sectors in order to accelerate the pace of investment in the country's shipping industry.
Talking to Pakistan and Gulf Economist (PAGE) Capt. Haleem said that Pakistani investors don't get their ships registered under Pakistan flag due to various reasons such as discrimination between public and private sectors. The private sector ships were declared as second-class carrier as the first choice of lifting cargo is offered to public sector despite the fact that PNSC does not have enough fleet strength. It is using third party carriers, though the current management is doing well yet the level playing field is the key to attract private sector investment in this important sector.
Actually, the investors have to think in terms of economic viability; you cannot go everywhere under Pakistani flag. Even you cannot lift the Pakistani cargo under Pakistani flag as the first priority is given to the public sector; why investors will come into business in such circumstances, he remarked.
Pakistan has recently entered into an agreement with India. The pact, allowing the ships of the two countries to lift cargo from third country port, is a good development especially for Pakistan's shipping industry because Pakistan can have a considerable market share. Though India has a good strength of fleet yet the trade volume of that country is so huge that its fleet cannot cater to the need and provide a space for Pakistan to get its share, he said.
As far as financial support from the banking sector is concerned for shipping industry, first we have to prove that shipping is a commercially viable business only then the financial sector would come forward in this sector. At present about 90 percent of cargo is being carried by foreign flag carriers, which means that a huge foreign exchange is being drained out on freight charges. This sector is so far untapped and has great potential for investment. However, the question again arises for providing level playing field to all stakeholders irrespective of their status - whether public or private or even foreign investors should be treated at par, he said
In fact, benefits should not be focused only to public sector; due to this discrimination between public and private sectors many Pakistanis have got registered their ships outside Pakistan.
In fact, shipping business is meant to serve the world trade, it is not a local business by nature. When you come in shipping trade you become the part of global trade. Once a vessel goes to ocean, it takes months to return home as it goes from coast to coast which is the demand of the trade.
While discussing the performance of ports in Pakistan as compared to regional ports, Capt. Haleem said that every port has its own demand, which is related to trade volume of the respective country. When we look at the trade volume of India, it is much more than Pakistan, hence there is no comparison between the two countries as far as the trade volume is concerned. If we look at other ports in the region like Dubai or Salalah they are actually serving the regional trade.
The outlook of Gwadar is more attractive as compared to Karachi, provided it is developed in the real sense. Gwadar has the potential to deliver much more than Karachi. For this we first have to develop the port and the required infrastructure. "You are required to develop port facilities and infrastructure to satisfy the ship owners and calling ships.
Gwadar is currently in its initial stage; we have no water, electricity, roads, housing, schools, colleges and airport, road and rail links. Unless these facilities come up, the required skilled manpower will not be available for that port. So it will take time to have all these facilities, which help accelerate port operations. However, Gwadar port has the potential to become a busy transshipment port when all the required infrastructure facilities are made available.
Capt. Haleem Siddiqui said that in 1992-93 he had proposed to develop Gwadar port but the idea was neglected due to political reasons, now the government has initiated serious efforts yet the collective efforts are still needed to bring things like airport, roads, residential areas, schools, colleges, etc through making coordinated efforts.
Capt. Haleem recalled that a cold storage was developed in Gwadar for small fish industry but processing and export facilities were not in place. Resultantly, that marvelous facility could not be availed despite a lapse of 15 years because there was no road or rail link with Karachi to bring fish catch to Karachi.
Hopefully, when this port becomes fully operational then we could use that storage facility in the real business terms. That cold storage was build 15 years back and was inaugurated by Benazir Bhutto, after that Nawaz Sharif also inaugurated the same cold storage, however, it could be utilized due to lack of infrastructure, thus losing an economic advantage.
Gwadar port has been built but it is not yet connected with the rest of the country. It would not go commercially operational and beneficial unless all required infrastructure support is provided.
He suggested that before going for building up more ports such as Sunmiani or KT Bunder, we have to improve the existing ports as well as enhance our export surplus. For example KPT and Port Qasim still have surplus space to be utilized. Our two ports still have room for development to meet the demand of the country, he observed.