ISLAMABAD: The government is drafting a maritime strategy to facilitate shipping industry including rationalization of port charges, possible incentive schemes, simplification of Federal Board of Revenue’s (FBR) transhipment rules and harmonization of regulations for transshipment industry.
Sources told Business Recorder that the issue of transforming seaports into the regional transshipment hubs was discussed in detail during the last meeting held at the Ministry of Maritime Affairs. Meeting was chaired by the Federal Secretary, Ministry of Maritime Affairs Rizwan Ahmed.
The secretary said that the purpose of the third meeting was to firm up the proposals put forward by the various stakeholders and to harmonize the statutory regulations of various ministries with the ground realities.
Raymond, GM Business Unit, SAPTL presented a comparative sheet for Marine Charges of Karachi Port Trust (KPT) and other regional ports (JNPT, Colombo, Salalah & Jebel Ali) based of GRT 50,000 & GRT 100,000. However, the charges of the said referred ports were grossed up. Accordingly, chair requested that breakup of these charges may be shared, so that areas may be identified where charges could be rationalized to attract transshipment business on Pakistani ports.
Tariq Haleem, President Pakistan Stevedores’ Conference (G) Ltd, highlighted that the idea for transshipment was to attract mother vessels. He apprised that mother vessels were not attracted to Pakistani ports due to exorbitant port charges.
Muhammad A Rajpar, Chairman Pakistan Ship’s Agents Association, Karachi emphasised the need of deeper draught which was pivotal for attracting mother vessel. However, currently, deepening of channel had not been prioritized resultantly, Pakistan had a challenging task of attracting mother vessel for its ports. Further, he inquired about the percentage of transshipment cargo in mother vessels. Raymond clarified that it was difficult to ascertain the specific percentage of transshipment on a mothership from the current data.
Aasim A Siddiqui, Chairman All Pakistan Shipping Association, emphasised that transshipment policy should be formulated holistically. The entire ecosystem for transshipment had to be seen from the perspective rules & regulations, physical limitations, commercial requirements etc. Further, a reasonable incentive scheme may be offered to shipping lines in order to attract transshipment cargo. The other aspect to attract transshipment cargo was to consider feeder vessels also, because without feeder vessels, the mother vessels would not come. Therefore, connectivity between ports was also important. However, if the Government was determined and the Gwadar port became operational in next five years, and the legal and physical impediments were resolved then it would be the port of choice for transshipment. Meanwhile, KPT and PQA would be in better position to attract transshipment cargo.
Adit Rashid, elaborated that for successful transshipment policy, entire supply chain required to be addressed. He, further, elaborated that economies of scale in shipping industry would be key for a successful transshipment strategy. A ship could only come in port when there was sufficient cargo available at the port. The cargo needed to be developed through industrialization as well as through better cargo transfer system.
Khurrum Khan from Pakistan International Container Terminal Limited informed that there are two rates for JRPT (India); one was slightly lesser than rates at KPT, but other rates were 40% above the KPT rates. The rate difference shown in the presentation were significant and same needed to be reviewed. He also explained that the transshipment cargo was not specific to certain vessels. A vessel may carry transshipment cargo as well as other cargo (import & export).
Khurrum Khan, PICT highlighted regulations, which were hampering transshipment. Recent SRO issued by FBR had further complicated business regarding transshipment.
Asim Saeed of Pakistan Ship’s Agents Association (PSAA) informed that the neighbouring country has recently simplified the Transshipment Rules and had addressed all relevant aspects of transshipment and same shall be shared with the Ministry.
Tariq Rangoonwala appreciated the efforts being made by the Ministry to do away with the impediments and hoped that a workable policy would be approved. He, however, highlighted the role of SBP in foreign remittance to Principal Agents and issues of I-Form and E-form.
Chairman Port Qasim Authority (PQA), emphasized that rationalization of port charges could not been considered in isolation — these should be directly proportional to the volume of cargo being handled at various ports; the more the volume of cargo, the less the port charges. The ports having less charges, may have been using huge volumes to keep them competitive in the business environment. He suggested that a Chartered Accountant firm may be engaged to assess the port charges and suggest rationalization of port charges. He also highlighted that the rationalization of human resource may also be assessed.
Representative of State Bank of Pakistan said that several meetings with Pakistan International Freight Forwarders Association (PIFFA) were held on the issues raised by the various participants and same had been submitted before the competent authority for approval.
The meeting decided that all the issues raised by the participants had been recorded and taken up with the FBR for necessary amendments in relevant rules. The SAPTL had made a good effort in highlighting the port charges, however same were composite as break-up in terms of wet, dry and commodities-wise charges was not mentioned. Further, there were some hidden charges vis-à-vis some regional ports. Besides, charges mentioned in the presentation only relate to containers; whereas, the Ministry intended to develop a strategy, which could accommodate all types of cargoes i.e., containers, bulk, liquid etc. Accordingly, it would be difficult for the port authorities and the Ministry to rationalize port charges. Therefore, SAPTL and Muhammad A Rajpar were requested to submit a comprehensive report on port charges — addressing above referred issues, to the Ministry.
A Focus Group of relevant stakeholders (2-3 people) may be formed to address the specific issue of FBR’s SRO. Khurrum Khan, PICT and Muhammad A Rajpar were requested to make a working paper on the issue and sent it to the Ministry.
The Governor State Bank of Pakistan would be requested to expedite the pending SRO vis-a-vis Foreign Exchange Remittance to Foreign Principal Agents and E-Form and I-Form.
Copyright Business Recorder, 2021