Shipping in Pakistan: A Review of Policies, Organizations and Management

Introduction

Shipping is defined as the transportation of goods from one place to another place by some means, primarily through seas. As ships are the only source to transport goods through seas, the shipping industry is as old as the first evidence of shipbuilding in the history of human civilization. Today, more than 90% of the world’s trade is conducted through the sea. The world economy depends upon shipping and millions of people are directly employed by this industry. To govern the management and administration of international shipping, several organizations exist e.g. World Shipping Council. In addition to that, each country has its own national policies, ministries and departments to manage all affairs related to national shipping.

Pakistan like the rest of the countries has a collection of organizations and documents that collectively make a shipping policy to regulate all activities at ports in the country. The purpose of this article is to explore the existing policies that guide shipping activities in Pakistan, evaluating those polices, exploring shipping related entities and their management, and making recommendations that bring positive improvements.

Documents and entities related to shipping in Pakistan.

The Ministry of Maritime Affairs is the supreme state institute related to all Maritime domains in Pakistan. Pakistan National Shipping Corporation, and the Merchant Marine Department and all three ports authorities of Pakistan including Karachi Port Trust, Port Qasim Authority and Gwadar Port Authority come under its wings.

There is no such document as National Shipping Policy of Pakistan that exists. There are different ordinances, regulations and policy documents coming from different state departments that culminate to make the National Shipping Policy. Pakistan National Shipping Corporation Regulations came into effect in 1984; and Pakistan Merchant Marine Policy was implemented in 2001; and amendments were made in Merchant Marine Policy in 2019.

Entities related to shipping in Pakistan

Pakistan National Shipping Corporation, Karachi Port Trust, Port Qasim Authrotiy and Gwadar Port Authority are the entities that deal with shipping operations in Pakistan.

All three ports of Pakistan are non-budgeted i.e. they earn and spend their own budget. However, they require government approval through Ministry of Maritime Affairs for all their Operations. It would be interesting to note that PNSC is an autonomous body that is listed is a corporate company on stock exchange. All these entities only take guidance from the shipping policy documents.

Current shipping policy of Pakistan

As mentioned above, no single document such as National Shipping Policy exists in Pakistan on state level. However, Pakistan National Shipping Corporation Regulations, Merchant Marine Policy 2001 and amendment in the Merchant Marine Policy 2019 combine to form the National Shipping Policy.PNSC regulations deal only with the organization and employees and have no direct shipping policies. Crucial points of Merchant Marine Policy and its amendments will only be discussed that deal directly with all shipping management in Pakistan.

Pakistan Merchant Marine Policy 2001

• Objective of this policy is to attract private investment in shipping, create conducive competitive environment, maximize sea trade and its contribution to the national economy through internationally competitive merchant marine fleets.
• Target of this policy is to upgrade merchant marine fleet share of cargo from 5% to 40% by 2020; increase the carrying capacity of vessels to over one million tons; expand ship building capacity to meet 20% of ship construction requirement; enhance ship repair capacity to meet 50% of Pakistani flag carrying vessels.
• Incentive of this policy includes tax exemptions and concessional tax measures.
• All vessels, ships and boats chartered under a Pakistani entity will be exempt from import duties, surcharges and income tax up to year 2020.
• Assures of this policy is to get all legal measure to protect local and foreign investment in the maritime sector. In addition to that, getting financial aid from donor countries in the maritime sector as well as repatriation of profits made in foreign joint ventures.
• Registration under this policy states that to permanently register a ship with the Merchant Marine Department, it must be owned by a Pakistani national person or Pakistani registered corporation. Temporary registration also requires presence of a Pakistani national person or Pakistani registered corporation. Chartered vessel companies may have foreign investment shares, but their management and controlled must be located in Pakistan.
• Trade, cargo and passenger transportation preference will be given to PNSC owned ships and Pakistani flag carrier vessels.
• Selling of a vessel would require a No Objection Certificate from the Ports and Shipping Wing of The Ministry of Communications and Custom Authorities.

Pakistan Merchant Marine Policy Amendments 2019

• The policies of 2001 that were to be continued up to 2020 shall be continued up to 2030.
• Pakistani flag carrying vessels will be given preference at all Pakistani ports.
• No preference shall be given to PNSC in private cargo.
• 40% of all government to government oil imports will shipped through PNSC chartered vessels.
• PNSC shall enter into joint agreements with an international LNG shipping company for the next five years to build its capacity.

Evaluating the shipping policy of Pakistan

The evaluation of any public policy is based on several factors including, its efficiency, consistency, and implementation on ground. Commodore Retired Obaid Ullah was approached on the subject. He is a retired commodore of Pakistan Navy, served as an executive director at PNSC and established Pakistan’s first research center in the Maritime Sector. He commented that the current system of shipping, in terms of policies, is satisfactory. The Ministry of Maritime Affairs only provides policy guidelines, through Merchant Marine policy 2001 and its amends in 2019, to all entities handling shipping in Pakistan.

PNSC is totally autonomous and fully corporate body and rest of them are semi-autonomous. They mostly have private investments and have different organizational structure. It is better to let Ministry of Maritime Affairs deal with them separately in separate capacities instead of applying a uniform policy. He further added that making these entities more autonomous and fully corporate will benefit the country in terms of revenue generation.

As far as the matter of latest budget cuts in Pakistan’s Maritime Budget for the year 2020-21 is concerned, he was of the view that it would not effect the shipping sector significantly. All ports are non-budget and earn their own revenues. All tax and duty exemptions on shipping as per policies will not be affected by budget changes. However, any infrastructural development will be hindered by low budget. For example, building infrastructure for new births or new shipyards.

Recommendations

Based on the evaluation of the national shipping polices, following recommendations are suggested.

• Current documents of shipping policies are satisfactory in dealing with all entities that manage shipping.
• PNSC and port authorities may be made more autonomous and corporate to make fast decision making to grab profitable opportunities.
• Maritime budget may be increased to develop new infrastructure at ports to increase trade and shipping.
• Encouraging private sector to invest in shipping. No significant private entity has yet emerged to claim the quota specified for private sector for shipping in Pakistan.

Conclusion

In conclusion, the shipping policy of Pakistan has basic outlines for carrying out necessary shipping functions.

Pakistan National Shipping Corporation, Karachi Port Trust, Port Qasim Authority, and Gwadar Port Authority are all the organizations that manage shipping activities in Pakistan under the wings of Ministry of Maritime Affairs (previously known as Ministry of Ports and Shipping) The current shipping policies are working satisfactorily by providing guidelines for these entities which are non-budgeted. semi-autonomous, semi-corporate and earn a handsome amount of revenue.

Even though the shipping entities are non-budgeted, increasing the Maritime budget for infrastructural development is crucial. Furthermore, private sector requires more encouragement from government to take advantage of the quota and incentive given to it and increase competition in the shipping sector in Pakistan.