Flag protection an economic opportunity.

Byline: Capt. Anwar Shah

Any country, when drafting its maritime policies, is faced with a dilemma that is similar in nature to most other economic matters. These countries have to choose between a protectionist stance and adopt flag protection policies or opt for openness and inclusivity allowing all individuals who choose to enter the market, the opportunity to indulge in free competition.

Although, openness and economic inclusivity clearly has merits and is largely responsible for the sustainable growth achieved by the West, it is not a one size fits all approach. Freeing up an underdeveloped market and opening it up to free market forces, in certain conditions, might yield undesirable results such as lack of local labor development as well as the dearth of essential services which are crucial yet unprofitable.

The opposite is true as well; monopolizing and restraining the market is bound to fare badly, which will eventually result in stigmatizing growth and disincentivizing new investment. However, neither of these two conditions can compare to the third economic malady which, afflicts Pakistan's shipping industry. Non-committal policies of the past, switching between nationalist and private strategies along with the Pakistan's high ranking in the unease of doing business have left the market devoid of stability, the one crucial factor all investors yearn for. A viable and sustainable national fleet in line with Pakistan's economic potential and national security is the need of the hour particularly when considering the recent foreign investment programs jointly being implemented by the Chinese and Saudis.

How we got here

Pakistan has a long history in shipping starting from 1947 when Quaid-e-Azam Muhammad Ali Jinnah asked Mr. Rustom Cowasjee along with Muhammad Ali Habib to assist in the formation of the first Pakistani shipping company which would come to be known as the Muhammadi Steamship Co. Ltd. By the early sixties there were 7 prominent Pakistani shipping companies.

Since those days Pakistan's shipping industry has not come very far. In fact, one can argue that it has devolved to a point where there is only a single, government owned, Pakistani shipping company is active in the market. Much of the misfortunes which have be fallen the indigenous shipping industry since then can be chalked down to two major events in Pakistan's history, namely separation of East Pakistan (read Bangladesh) and nationalization of private shipping companies during the seventies. Pakistan's division led to the end of...