Role of logistics system

An efficient logistics system can serve as an important tool for putting a country's economy on a fast growth trajectory in the globalized environment of today.
While inaugurating the Islamabad Dry Port at Margalla Railway Station, Prime Minister Shaukat Aziz has declared that overhauling the logistics system is one of the priorities of his government, as this would give Pakistan a competitive edge by cutting down both the transportation cost and the transit time.
The number of freight express trains from Karachi to upcountry with dedicated locomotives, rolling stock and flatbed wagons is also being raised under a phased plan to double the Railways' share of container service to at least eight percent.
This would clearly inject greater efficiency into the freight transit system. Having decided to privatise all of its the industrial units, and instead of running businesses, the government will henceforth focus on facilitating the private sector to increase productivity so that the country can compete in the WTO-induced liberalised environment.
The Prime Minister has revealed that the cost of doing business in Pakistan is also being curtailed under the government's trade facilitation programme, to generate a more investor-friendly environment, so as to attract a higher quantum of foreign and local investment.
Further, the restructuring of the taxation system has imparted a friendlier face to the Central Board of Revenue, aside from making the tax regime more transparent and business-friendly.
Under the investment and trade facilitation programme, the government is also planning to modernise road networks, Railways, ports, dry ports, air transport system, warehouses etc to gain an edge in the competition for foreign direct investment (FDI), which has so far remained at a disappointing level.
It has been rightly said that "transport is civilisation," as efficient means of transport and communication are of crucial an importance as part of industrial infrastructure for economic development, social progress and political stability of a country.
This clearly calls for a holistic approach by the government. Although substantial progress has been achieved in extending and improving the existing road network in the country, a meaningful headway in expanding the Railways infrastructure has proved elusive.
According to available data, in the past 59 years, the Railways route mileage in the country has been increased only from 4,999 in 1947 to 7,791 in 2003-04, which represents an increase of only 2,792 miles! However, the Pakistan Railways is planning to initiate a phased 960-km track extension project to connect Gwadar seaport with Mastung.
While the road and motorway networks form a crucial part of the transport network, the Railways remains the only mass transit system in the country.
Further, it offers the cheapest freight rates. How and why successive governments, both elected and non-elected, failed to devote adequate attention to undertaking a credible track extension programme, remains a mystery, particularly when the Railways also has a pronounced defence dimension to it.
On the contrary, the road network has since witnessed a considerable expansion, with the total road length in the country at present standing at 181,836 kilometers.
As Prime Minister Shaukat Aziz has pointed out, construction of additional road networks, rail tracks, seaports, dry ports, and warehouses can lead to an economic boom, besides boosting tourism and trade activities in the country.
Meanwhile, the country's credit ratings have also been upgraded, due largely to the drastic fiscal restructuring the government has undertaken to put the economy on an even keel.
However, the downside to the planned 6.5-7.5 percent GDP growth is the rapid inflation that has taken the country in its vicious grip, fuelling concern even among some donor countries and agencies. This will also jeopardise the government's poverty alleviation programme.
The basic ingredients needed to ensure economic recovery include security of investment, a sound infrastructure and an enabling environment to give the investors ample room to operate properly.
The presence of a sound legal and financial system as well as trained manpower are the other ingredients that go into the making of an investor-friendly environment.
There should be no doubt that competition for FDI at both the regional and international levels under WTO regime is going to increase in the decades ahead, as trade liberalisation is going to be the name of the game in the 21st century.
The government's decision to undertake a drastic overhaul of the logistics system is a move in the right direction. What is now required is faithful implementation of the plan.