World Bank and IDA to provide $25 million to Pakistan to improve the performance of trade and transport system

World Bank and IDA will provide $25 million to Pakistan as technical assistance to improve the performance of the Trade and Transport Logistics System and bring it up to international standards with the aim to reduce the cost of doing business in Pakistan and ultimately enhance trade competitiveness and the country's industrialisation.
According to official sources, Planning Commission and Ministry of Commerce, government of Pakistan will achieve this objective through policy reforms targeted within the framework of NTCIP, investment projects relating to railways, road transport, ports and shipping, aviation, trade facilitation and capacity building/analytical work and increased institutional capacity to develop and implement the changed sector environment. Direct recipients of the proposed technical assistance project are NTCMU, TTFU, National Trade and Transport Facilitation Committee (NTTFC), and respective public agencies (ministries, operating authorities).
In an update project report, Jean-Noel Guillossou, Senior Transport Economist of World Bank stated that the initial beneficiary will be Pakistan's private sector trading community, which will have better opportunities to enhance their competitive position in their international markets and, under competitive pressures, reduce costs to consumers. This should in turn generate additional employment and growth opportunities. Pakistani consumers should also benefit from the resulting reduced costs of imports. Specific targets and their benefits will be set during project appraisal, he added.
Based on lessons learned, he said that GOP and World Bank have agreed on financing NTCIP through programmatic DPLs, specific project investment lending and a technical assistance loan. GOP and the Bank also agreed that a multi-sector policy-oriented operation to support implementation of reforms acting as triggers for specific project investment lending would be most effective.
Jean-Noel Guillossou, Senior Transport Economist of World Bank said that the technical assistance loan will help prepare and monitor reforms through establishment of coordination units within the Planning Commission and Ministry of Commerce and provide additional analytical underpinning and training opportunities.
The project is proposed to consist of the following five components (i) capacity development in the entities directly concerned with the implementation of NTCIP during the period of programme execution (NTCMU), (ii) support for the implementation process of NTCIP through analytical work on trade procedures and trade supporting infrastructure and services needs (including roads, railways, ports and shipping, aviation and energy sub-sectors), (iii) further strengthening of the private sector participation through TTFU and NTTFC aiming to internalise public-private collaboration on trade facilitation through a dedicated project component (building on the Bank funded "Trade and Transport Facilitation Project"), (iv) establish sustainable monitoring and evaluation system to evaluate impacts of NTCIP-including the coordination, monitoring and evaluation of the social and environmental safeguard issues, and (v) manage the external communications strategy for the NTCIP.
He mentioned that the project's five components will finance the institutional set up of NTCMU, TTFU, and national and international consultancy services resulting in underlying studies, research, and training. The funds will be proportionately divided in both units.
In order to ensure effective implementation of NTCIP with particular emphasis on trade facilitation, a five-year stand-alone TA is the most feasible option for maximising sustainability and achieving Pakistan's development priorities for international competitiveness.
Many of the technical assistance and capacity building requirements facing the implementation of the NTCIP are institutional and technical in nature, which is difficult to address in investment operations. Stand-alone technical assistance compared to technical assistance components integrated in investment operations has proven to be most effective when dealing with multiple sectors and agencies. Due to its multi modal nature, ownership and implementation of NTCIP is spread across agencies and sectors under the coordination of the Planning Commission and the oversight of the prime minister's office and NTCIP Task Force, he added.
Jean-Noel Guillossou said that the successful implementation of NTCIP will require strong ownership at the ministry and agency level as well as strong leadership at the level of the Planning Commission (acting as the designated coordinating and management agency of NTCIP) as well as collaboration from the private sector. TTFP-1 has proven that strong leadership and true champions of a project/programme are essential for successful outcomes.
Private sector participation has been seen as a prerequisite to trade and transport facilitation initiatives. Major reforms implemented under the program are seen to reduce the cost of doing business in Pakistan. The relatively under-developed private sector in Pakistan has therefore a major role to play by adapting itself to the changed environment, he added.
He explained that the project loan is proposed to amount to $25 million over a period of five years. During project preparation, partnership and collaboration with ADB, JBIC, UNDP and EC will be further developed.
According to World Bank's study, Pakistan's economy has expanded by over 6.5 percent per annum during the past four years. A wide-ranging programme of economic reforms launched in 2000 has played a key role in the country's economic recovery. These reforms have done much to boost Pakistan's share of total trade in GDP (rising to 30 percent in 2005).
Exports have strongly performed in recent years, growing to about $14.4 billion in 2005, and investment has rebounded. To sustain sufficient momentum for this growth in the coming decade, the government of Pakistan (GoP) is now focusing on reducing the cost-of-doing business and increasing productivity and international competitiveness.
A major initiative has therefore been launched by GoP to improve the trade and transport logistics chain along the north-south 'National Trade Corridor' (NTC) linking Pakistan's major ports in the south and south-west with its main industrial centers and neighbouring countries in the north, north-west and east. Together, the ports, roads, and railways along NTC handle 95 percent of external trade, and 65 percent of total land freight serving the regions of the country, which contribute about 85 percent of GDP.