The current level of East-West traffic, including transit traffic using Pakistan as a land bridge between India and Iran, is low, said Asian Development Bank study report. Report observed that the intra-regional trade in South Asia is weak and the region is considered the least integrated in the world.
Currently, much of the trade between India and Pakistan is routed through Dubai. Direct trade would avoid such detours and efficiency losses. India's rapidly growing economy may have a 'pull' effect not only on the economies of its direct neighbours but also on countries that would use the Pakistan East-West corridor for trade with India.
According to report, Pakistan has experienced strong economic growth since the beginning of the century, reaching a peak of 8.4 percent in fiscal year 2005 and 6.6 percent in fiscal year 2006.
The outlook is for continued strong growth, based on the assumption that Pakistan will continue to implement the macro- and micro-economic policies necessary to sustain and accelerate economic growth. Although the textile sector still dominates exports, recent export growth has been marked by increasing diversity, particularly in manufactured goods. While imports of consumer goods have also increased, their share of total imports dropped from about 15 percent in fiscal year 2001 to about 10 percent in fiscal year 2006.
In terms of value, about 60 percent of Pakistan's imports originate from Asia. The People's Republic of China is the dominant source of non-oil imports and represents some 10 percent of total imports by value. Imports from Europe constituted about 19 percent of imports in fiscal year 2006, while imports from North America declined to about 7 percent. Recorded imports from neighbouring countries, including Afghanistan, India, and Iran accounted for about 4.2 percent of the total.
While Pakistan's seaports are the closest for Central Asian countries, transit traffic from Central Asia using the Peshawar-Karachi corridor is negligible and accounts for only 1.5 percent of Pakistan's total merchandise trade.
For its current high level of economic growth to be sustained, Pakistan must diversify its economy and become more globally competitive. The Government's National Trade Corridor Improvement Program (NTCIP) is a holistic approach to reduce the bottlenecks inhibiting trade and exploit the strategic location of Pakistan as a land bridge to Central Asia and the hinterlands of the People's Republic of China.
In order to facilitate this goal, The ADB report mentioned that the improvements in road connectivity and efficiency are essential. The ADB pointed out that the transport sector contributes about 10 percent of Pakistan's gross domestic product (GDP). It is dominated by road transport, which carries 91 percent of passenger traffic in passenger-kms and 96 percent of freight traffic in ton-kms. Road transport services are mainly operated by the private sector enterprises with the small share of government-owned goods handled by a public sector agency.
Overall demand for road transport has increased rapidly in recent years. Gains in traffic on the road network have been at the expense of the railway network. Extensive investment in railways and restructuring of the industry will be needed for the network to become a viable alternative to road transport. In the meantime, the demand for road transport will continue to increase.
The total road network is about 260,000-km, of which 11,400 km are national highways, 92,500 km are provincial highways, and 150,000 km are district or urban roads.
The National Highway Authority (NHA) is responsible for national highways, including limited-access motorways, partial-access expressways and unlimited-access highways that constitute the arterial road network system. About 7,000 km of the national highway network are two-lane, undivided roads.
The NHA has prepared a comprehensive plan to 2015 to upgrade the national road network and extend the highway system. The cost of implementing this plan is Rs 480 billion ($8 billion), of which about half is expected to be funded by external assistance.
The plan provides for the improvement in 6,500 km of existing roads and the construction of 2,500 km of new expressways and motorways. Parallel plans to improve 7,600 km and construct 4,500 km of provincial roads and special-area roads are also proposed in the Medium-Term Development Framework (MTDF).
The ADB report disclosed that the road maintenance investment budget increased from Rs 2 billion in 2000 to Rs 7 billion in 2006 (about 22 percent per year). This investment improved the pavement international roughness index from 8.9 in 2000 to 4.7 in 2006.
Commenting over the "Analysis of Key Problems and Opportunities in Road Sector", the ADB report pointed out that travel on roads is severely constrained by non-motorised and slow moving motorized traffic. As a result, transportation is inefficient, travel and delivery times for goods are uncertain, and transport costs are higher than they should be. Road safety is also compromised. The existing roads must be improved and new roads built to segregate traffic.
The Pakistan government intends to double the road density from 0.32 km per square km/km2 in 2006 to 0.64 km/km2 2030 (Vision 2030). The NHA has a development budget and a maintenance budget. Development funds are in the form of government cash loans and are currently Rs 25 billion per year, which is below Rs 40 billion per year needed to satisfy the government plan for highway construction and meet the needs of the growing economy.
It has a Road Asset Management Directorate, which has achieved positive results in planning and implementing road maintenance. For fiscal year 2007, the funding requirement for the national highway network and motorways was estimated at Rs 14 billion for periodic maintenance and rehabilitation, with an additional Rs 3 billion for routine maintenance, ADB report mentioned.
The ADB study revealed that the available total budget for the year was under Rs 7 billion, and a maintenance program was prepared according to this budget. Annual maintenance, repair, and operational expenditures for existing motorways and national roads are funded from several sources: government grants (about Rs 1.4 billion), road tolls net of collection costs (about Rs 4.5 billion), and miscellaneous income from right-of-way leases, police fines for traffic infringements and overloading, and advertising for the current year. Without maintenance, these roads will require more expensive improvements in the future, ADB report added.
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