Pakistan faces annual loss of Rs5 trillion in maritime sector

• Misuse of Afghan Transit Trade also a reason for losses.
• Revelation made in report of a high-level task force.
• The report has been presented to the prime minister.
  

ISLAMABAD: Pakistan faces an annual loss of almost Rs5 trillion (Rs5,000 billion or $18 billion) in the country’s maritime sector because of under-utilised ports, tax evasion, malpractices, fake billing, misuse of Afghan Transit Trade and lack of value addition.

An informed government source, while referring to the report of a high-level task force, told ‘The News’ that under-utilised ports cost the exchequer of Rs3.19 trillion, tax evasion in the maritime sector calculated around Rs1.12 trillion, Rs313 billion is lost because of malpractices and fake billing, Rs70 billion is missed because of restrictions on trans-shipment (process of moving goods from one port to another or to destinations like Central Asia and China), Rs196 billion is not collected because of lack of warehousing and value addition while misuse of Afghan Transit Trade leads to Rs60 billion loss each year.

The task force report, already presented to the prime minister, lamented that despite immense potential and geo-strategic advantages, Pakistan has not been able to exploit the real potential.

It is said that none of the country’s ports figures in the top 60 ports of the world. The current ranking of Karachi Port Trust is 61 and that of Port Qasim Authority is 146th, said the source.

Demand for port services in Pakistan has risen by 3.3% per annum over the last 10 years. KPT is the busiest port in the country but is only utilising 47% of its total capacity (125 million tons). It contributes over 60% of the country’s imports and exports, whereas tax collection in the last five years ranges between Rs660 billion to Rs1,470 billion.

PQA is the second busiest port handling 35% of the country’s cargo. However, only 50% of the total capacity is being utilised (89 million tons) whereas the tax collected from the port in the last five years ranges between Rs690 billion to Rs1,140 billion.

The Gwadar Port Authority’s (GPA) current capacity after completion of phase one is 2.5 million tons which is expected to increase up to 400 million tons by the year 2045, post completion of phase three of the port.

The report, according to the source, says that Pakistan’s coastline can be its economic backbone. It is said that besides other reasons, the “Red Sea” crisis also presents a unique opportunity for Pakistan's maritime sector to exploit the geo-strategic advantage.

The same has been recognised by global giants such as Maersk, DP World and Hutchison Ports — offering investment in maritime and related sectors to secure their financial interests while channelling trade through Pakistan.

According to the report, globally there are around 1.9 million seafarers working to facilitate global shipping. Pakistan has been providing seasonable numbers of trained seafarers in the past, but has declined over a period of time.

Referring to the immense potential in diverse domains along the coasts of Makran and Sindh, the task force even suggested that sites of spectacular beaches, historical locations, archaeological spots, ancient religious sites etc can generate huge revenues, even from the tourism perspective, if developed properly.

The report also talked about Pakistan’s exclusive economic zone of more than 240,000 sq kms officially recognised by the UN. This zone is rich in ocean seabed resources including oil, gas, minerals, etc.

The exploration and integration of these resources into the national economy merits a deliberate and long-term plan along with key human resource, infrastructure and continuity of policies.

Originally published in The News