Pakistan does not fully utilise deep seas business

By Staff Reporter | The News Mar 21, 2023

The country is currently embroiled in a cat-and-mouse game with opposition leader, Imran Khan, who seems to have gained the upper hand in his battle with state institutions.

However, there are other pressing issues that the country must address, such as expanding domestic opportunities for earning foreign exchange. One such business that could help achieve this goal is the development of the shipping industry.

Despite its prominent coastline and geostrategic significance, Pakistan has failed to capitalise on the potential of its deep seas shipping business. With ports at Karachi, Qasim and Gwadar, the country conducts more than 95% of its trade by sea. It transports over 15 million barrels of crude oil from the Gulf States to the Pakistani shore every day.

However, the country’s Exclusive Economic Zone (EEZ) is limited to a maximum length of 350km (290,000 square meters) due to the median line principle which establishes the EEZ perimeter at 200 nautical miles from the coasts baseline. This means the EEZ barely covers the distance between Karachi and Lahore, leaving everything else outside of the EEZ.

Pakistan is missing out on a great opportunity to earn up to $15 billion annually by not developing its deep seas shipping business. To further expand the EEZ, the country should consider other concepts, such as the continental shelf principle. Doing so would open up a world of possibilities for Pakistan, allowing it to reap the benefits of its strategic location and capitalise on its potential maritime economy.

In order to protect its exclusive right to explore and utilise the resources within its Exclusive Economic Zone (EEZ), Pakistan must significantly expand its EEZ. This is essential for maintaining access to global trade lanes and safeguarding its fisheries, as well as for improving its marine security and safeguarding its economic interests in the area.

However, Pakistan has yet to capitalise on the potential of deep sea shipping to boost the local food industry and produce $10–$15 billion in exports. This is due to the lack of infrastructure and access to deep sea ports, as well as the cost of setting up and maintaining such activities. Furthermore, the nation lacks the equipment and knowledge required to run deep sea commercial ships and the ports needed to dock them.

In order to make deep sea shipping a viable option, Pakistan must invest heavily in training and infrastructure development, as well as in the vessels themselves. This would enable them to compete with the likes of Dubai Ports World which has a portfolio of 78 operating marine and inland terminals supported by over 50 related businesses in 40 countries across six continents.

Within the UAE, Dubai Ports World has a clear advantage over Port Rashid and Jebel Ali in terms of competitiveness due to its more effective operations and ability to provide aggressive pricing. This has enabled it to become a major player in the global ports market, thanks to its significant investments in R&D to remain competitive.

Additionally, its strong connections with foreign clients and suppliers, as well as its low cost structure and efficient operations, have given it an edge over other ports. Unfortunately, in Pakistan, key decision-makers are often subject to corrupt practices and rent-seeking behavior which can impede the development of ports.

Furthermore, the lack of stringent laws and regulations to protect businesses from rent-seeking individuals, as well as the instability and insecurity of the ports due to inadequate infrastructure and security measures, are major deterrents for international corporations looking to establish or run a business in the country.

Lastly, governments have not been successful in creating an environment that is conducive to foreign investment, as they have failed to provide the best incentives and policies to attract such investments.

Investors have been hesitant to invest in Pakistan due to a lack of foreign investment which has had a detrimental effect on the local economy. Without foreign investment, local companies are unable to expand and create jobs, hindering economic growth and lowering living standards.

Furthermore, successive governments have failed to develop the infrastructure of the ports, leaving them outdated and unable to attract foreign businesses. This has caused the nation to miss out on potential economic opportunities, as many multinational corporations are unwilling to invest in ports that lack the necessary machinery and infrastructure.

The ports are also unable to handle the volume of vessels they receive due to inadequate infrastructure and equipment. Older systems are unable to accept larger ships and cannot keep up with the speed of foreign ships, resulting in increased expenses and wait times for shipments. These are just a few of the major obstacles Pakistan has faced in unlocking its marine potential.

There is a real concern about terrorism, piracy and other criminal activities that could jeopardise the operations of ports in such a setting. Moreover, it is incredibly difficult for any private company to operate efficiently and productively due to bureaucratic red tape and corruption. To ensure that enterprises have a clear path to success, the government must intervene by streamlining administrative processes and offering incentives to international investors.

The government must also create a culture that supports the deep sea industry, as this is just as important as providing incentives and infrastructure. Without the necessary leadership and vision, Pakistan will not be able to realise its potential as a major player in the shipping industry. By resolving these issues, the nation can benefit from increased foreign investment, higher employment growth and capital inflow.

In nutshell, to achieve success, policy makers must develop regulations that will incentivise investors, provide tax breaks and eliminate the bureaucratic roadblocks that make it difficult to launch and operate a shipping company. Investing in labour training and education will ensure the industry has the skills and knowledge necessary for the shipping industry to thrive. Such regulations will attract investors who can provide the capital needed to purchase the necessary equipment and hire the personnel required to run a successful business.

By investing in education and training, the shipping industry will be able to produce a knowledgeable and competent workforce capable of meeting the demands of the sector.

Currently, the government maintains stringent regulations over the shipping industry and the entire world benefits from the sector. Without government’s wide-speared oversight and help, no industry can thrive and prosper as we learnt in Dubai and Singapore examples. In other words, it is only possible to unlock the potential of this sector if a new economic system is designed, incorporating the Chinese, Singaporean or Emirati business mindset. It’s time to take action.

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