Transport and communication sectors affect ‘doing business’ and workers productivity. Thus, the efficiency and ubiquity of these sectors – which constitute nearly a quarter of the overall Services sector in Pakistan – is important for economic growth. However, the latest Economic Survey shows that a lackluster growth of 3.4 percent in these sectors had a major role in holding back the Services sector growth at 3.7 percent in the ongoing fiscal year.
Mass transit schemes (e.g. Metro Bus System) are expected to be announced in the federal budget, while the provincial budgets will likely remain heavy on public spending on roads and bridges. The government, however, must also focus on public sector transportation & logistics entities which are hemorrhaging the treasury through massive equity injections, loans and guarantees.
For instance, Pakistan Railways has been making losses since 2009, and no amount of federal bailouts have been able to revive its fortunes. Buried under overage infrastructure, soaring operating costs and administrative inefficiencies, the organisation has been a silent witness to reducing passenger traffic, shrinking routes and tracks, and a withering cargo freight movement.
Besides a change in inefficient management, PR could use the private sector in running freight trains and dry ports, which may bear fruit like some recent initiatives in passenger train. Moreover, the large number of real estate properties the organisation has been clinging on to should be disposed of on market rates to invest in core business.
The affairs at the Pakistan International Airlines are hardly satisfactory as the airline continues to fare poorly on many aviation indicators. In February this year, the government had to approve Rs49 billion bailout package for the PIA, but it may come back for more. Reportedly, the PML-N government is creating a separate Aviation Division to look after PIA and the CAA. It remains to be seen what plan of action is adopted.
But the public sector is not without positives. The Economic Survey reports that Pakistan National Shipping Corporation, which handles 99 percent of country’s crude oil imports, is in decent profits and is financing a fleet expansion from internal resources. The public money spent by the National Highway Authority on highways and motorways seems well-spent. Pakistan Post has been innovating in social cash transfers and pension payments.
The largely deregulated telecommunications has been in rather good shape. The Economic Survey states that teledensity reached a phenomenal level of 71.9 percent in March 2013, thanks to cellular teledensity of 68.4 percent. The sector’s taxation contribution was an all-time high of Rs133.4 billion in FY12. However, telecom sector is on a standstill due to delays in introduction of 3G network technology which is deemed essential for the revival of investment and job-creation in the sector.
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Snapshot: Pakistans Transportation Infrastructure
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Roads (Km)
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High type Low type Total
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182,900 80,515 263,415
Railways
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Route (Km) Freight Wagons Passenger carried (mn)*
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7,791 16,635 31.42
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PIA (CY12)
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Route (Km) Airplanes Available Seats
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448,120 39 19,849
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Cargo handled at KPT and PQA (mn tons)*
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Export Import Total
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14.00 33.37 47.37
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Source: Pakistan Economic Survey, 2012-13 * 9MFY13
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