PROMOTING PRIVATE SECTOR'S SHIP OWNING

CAPT. ANWAR SHAH
(feedback@pgeconomist.com)
July 11 - 17, 20
11

It is a historical fact that before independence, it was Jinnah who realized the impact of shipping in the national economy of state. He sought assistance of Mr. Rustom Fakirjee and Muhammad Ali. They promised by traveling to London and convincing Livanos, Father-in-Law of Onasis and Niarchos to give them three ships on Time Charter. The vessels were S.S. "STRYMOW", S.S. "VEST" in the name of Cowasjee's East & West Steamship Company and S.S. "MOUNT KYLLENE" in the name of Mohammadi Steamship Company, so Jinnah's dream came true on 14th of August 1947, when three ships were flying Pak Flag, thus Jinnah is the father of Pak Merchant Navy as well.

It is on record that first merchant shipping notification No.S.1033 of 6th December 1947 declaring Karachi and Chittagong as part of Registry was signed by M.A. Jinnah, issued by ministry of commerce industries and works. This shows the interest of founding father in shipping industry and its impact on economy.

Charles Napier and Charles Mason were the driving force in 1830 to improve Karachi Port to boost shipping. It was James Walker who designed Karachi Port on 8th September 1856. Private sector entered into ship owning arena at the dawn of independence and in 1973 prior to nationalization, the total strength of Pak merchant fleet was 79 ships jointly owned by mostly private and partly by public sector. The private sector was the driving force and in 1965 National Shipping Corporation was established. The entry of private sector assisted the economy of the nation and catered to the demand of transportation between East and West Pakistan. Precious foreign exchange on freight bill was saved.

In 60's due to industrialization, Pakistani vessels ventured to other regions of the world. Today, Pakistan has 20,000 mariners, who are trained and are inferior to none. We are now left with PNSC with 14 ships in public sector, out of which 10 are 28 years old, so Pakistani merchant mariners are sailing on foreign vessels remitting about USD70 million.

There is a shortage of 40,000 officers world wide, thus we must avail this window as our human resource and median age has a remarkable edge over others. International Maritime Organization has launched go-to-sea program, but we are in deep slumber. We could earn USD0.5 billion by training our human resource as India is earning USD1 billion and Philippine is pocketing a revenue of USD3 billion from seafarers remittance.

The private sector shied away after nationalization in 1973 and all efforts made to induce have only met with part success. It is reliably learnt that a task force has been set up by the government to look into various aspects of economy, however as usual shipping sector has been ignored.

Former prime minister Nawaz Sharif had set up a tasks force on ports & shipping in 1996. I was part of six-member body. We made voluntarily all efforts to make new shipping policy and new merchant shipping Act and entire assignment was completed in 6/8 months, but unfortunately due to lethargy and bureaucratic hurdles, the policy and merchant shipping ordinance was implemented in 2001, being a stale document and by then all entrepreneurs had lost faith and interest.

It was again in 2005, we initiated our efforts to induce private sector by allowing more incentives in policy 2001 in consultation with private sector and were able to induce two vessels in private sector. Most of the impediments were addressed in 2006, including signing of shipping protocol with India, however some demands of private sector were not met. Thus, most of the private sector could not be lured.

There are about 50 ships under flag of convenience owned by Pakistanis based abroad and government must make another effort to bring these vessels under Pak flag to curtail the freight bill and generate employment. The proposed task force may be given TOR to ascertain, what ship owning can do for Pakistan, past and present status, creation of enabling environment, updating legislations, strategic importance of fleet under Pak Flag and understanding the industry and its futuristic role in line with forecast of the industry.

In my opinion, the proposed task force should be assigned to ensure enforcement of carriage of goods by Sea Act and compliance of International Conventions of IMO/ILO/UNEP etc. The private sector demands that ship owning companies in Pakistan should come under a policy of consistent with international practice for ship-owning under other flag states. The financial institutions under guidance of SBP should encourage mortgage of ships under Pak Flag and bankers be allowed foreclosures in case of default. It is also demanded that cargo priority to PNSC as enunciated in the shipping policy 2001 be amended to provide level playing field.

The private sector feels that acquisition of ships should not be treated as imported for home consumption under customs rule and condition of NOC from customs for registration be removed. The private players are also of the opinion that sale and purchase of the ships be considered as an integral part of profit, therefore there should be no capital gain taxes and repatriation of capital grains be allowed, where foreign investment has been made. The demands are quite logical and if task force addresses all above issues and in particular restraining crew unions of their high handedness, it may be possible to induce private sector entrepreneurs under Pak Flag.

We are pining high hopes on the newly formed tasks force comprising of hard core professionals of repute, who may consider giving due importance to the shipping industry as well by making a subcommittee to address maritime industry by requesting maritime experts to do the needful and to fulfill the dream of founder of the nation.