Inducting the private sector in ship owning.

AuthorShah, Anwar

Byline: Capt. Anwar Shah

The respective governments in Pakistan have been making efforts for the revival of the shipping industry since the early 1990s. A number of policy and taxation incentives have been offered from time to time, however, these efforts have remained unsuccessful for a number of reasons. The primary reasons for the failure to attract the private sector are that policies have remain inconsistent and tax incentives have been offered and withdrawn repeatedly on knee-jerk decision making basis.

The 1990s and early 2000s also witnessed damaging unionization of seafarers who did more harm to the shipping sector than any government could have. These unionized crew and officers did a wonderful job of shooting themselves in the foot and destroyed investor confidence completely. The 1960s and 1970s witnessed a preference for Pakistani seafarers globally, however, today Pilipino, Greek, Russian and Indian crew and officers are much preferred over Pakistanis.

It is in this backdrop that the Ministry of Maritime Affairs has recently made attempts for the revival of the Pakistani shipping sector. Realizing that any such revival cannot be brought about by Pakistan National Shipping Corporation (PNSC) alone, the Ministry has rightly laid the grounds for the private sector to participate in local ship owning.

The Ministry has adopted a policy whereby various incentives have been offered to investors to establish private shipping firms and to register their vessels under the Pakistan flag. With the annual shipping bill for imports and exports touching about US$4-5 billion, the field is open for private ship owners to enter this field considering that PNSC caters to

The Economic Coordination Committee (ECC) of the Federal Cabinet, on a summary moved by the Ministry, has recently extended incentives to the Pakistan flag and offered the Pakistan flagged vessels certain protections. These said incentives are not PNSC specific but instead are designed to promote the Pakistan flag whether the vessels are PNSC owned or privately owned, thus not to allow any monopoly for PNSC.

PNSC currently lifts a majority of the crude oil imported by refineries into Pakistan. This shipping is done by way of Contracts of Affreightment signed between the refineries and PNSC without any government involvement.

The contracts have been formalized on internationally competitive commercial basis and with freight paid to PNSC in local Rupees. Inspite of these...

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