Shipping sector's potential.

Byline: Syed Khawar Ali Shah

It is difficult to comprehend why a country with a trade of over $70 billion has a minuscule shipping sector. Pakistan has just 10 ships at present and that too only in the government sector.

While the country is facing a major balance of payment problem, an estimated $4-5bn in foreign exchange is spent per annum on sea freight charges alone.

In addition, Pakistani seafarers are finding it difficult to get jobs in sea-going ships. There is an urgent need to correct this anomaly.

Under the United Nations Conference on Trade and Development (UNCTAD) 1964 rule, Pakistani ships can lift at least 40 per cent of export and import cargo.

Trade and shipping go hand in hand. This UNCTAD rule was incorporated by United Nations to improve trade of developing countries as at that time most of the shipping lines were owned by rich countries and they could manipulate trade accordingly.

With assured long term imports of crude oil, refined petroleum, liquefied natural gas (LNG), liquefied petroleum gas, coal and edible oil worth over $18bn, the government has leverage to mandate cargoes to be on a freight-on-board (FOB) basis with Pakistani flag vessels lifting it.

Pakistan National Shipping Corporation (PNSC) does transport crude oil imports of the country. However, with Pakistan State Oil buying refined products and LNG at cost-and-freight (C and F) basis, the advantage goes to foreign shipping lines.

Governments of many developing countries have tried to assist growth of domestic shipping by requiring all imports to be on an FOB basis. But, this affirmative action at times creates hindrances and delays.

This is an option that Pakistan can exercise, but prudence requires that initially a list of selected products be mandated to be brought on Pakistani vessels.

An innovative approach to this issue was adopted by Ethiopia in 2000. All imports transported by sea had to be carried by Ethiopian ships. This resulted in the land-locked country having more ships and seafarers than Pakistan.

The existing 'Pakistan Merchant Marine Policy-2001' gave incentives to ship owners by exempting all kinds of import duties till 2020 but this had no result.

The reasons behind the stagnation are that the private sector is weary of poor government policies and lack of understanding of international shipping conventions by Pakistani authorities.

Inconsistency of polices, cumbersome procedures and the memory of 1974 nationalisation of private...