Imagine having to go into unarguably the biggest infrastructure and transport corridor project in the history of the cou
Imagine having to go into unarguably the biggest infrastructure and transport corridor project in the history of the country without a transport and logistics policy in place. It seems unfathomable, but trusts the Pakistani governments to do just that. For years, subsequent governments have attempted (and failed) to come up with a transport policy. Some estimates suggest the sector contributes nearly 10 percent to the GDP—and in fact, back in 2012 when a draft of one such policy was prepared (and shelved), it was argued that poor transport and infrastructure management led to a loss of 4 percent to the country’s GDP. That was six years ago.
Transport and logistics was part of the 11th five-year plan announced by the PML-N government and integral to the vision 2025. Of the $46 billion CPEC investments, nearly $12 billion were envisaged toward infrastructure schemes—that is 30 percent of the total amount. In the budget 2018-19, nearly Rs16 billion expenditure—20 percent of economic affairs—has been allocated towards the transport and construction sector, while Rs316 billion are budgeted under PSDP for the various transport and communications project (30 percent of total PSDP) including those under National Highway Authority. The total estimated cost for the projects under this head is estimated to be Rs3 trillion. Needless to say, that is a lot of expenditure dedicated towards an area that does not have a policy instrument in place.
Some media outlets are reporting a transport policy has been formulated and approved, though it has not been released for public consumption. In February 2017, the Planning Commission under Ahsan Iqbal kicked off a 2-year technical assistance project to formulate a National Transport Policy and Master Plan with assistance from Department for International Development (DFID) of $15.4 million; planned to be administered by the Asian Development Bank (ADB). The policy was said to be an “action plan” to upgrade the transport sector along its various sub-sectors including road, rail, air, maritime, pipelines, waterways, urban transport and multimodal logistics; and more importantly harness the involvement of the private sector in relation to them.
The latter is critical. Conversations with the private sector suggest that they are seldom consulted. There is a general ambiguity in how much involvement they can expect in CPEC related trade and logistics activity, which has limited the scope of domestic investments. In case of setting up of an advisory committee, the policy should recommend at least half the members to be from the private sector.
Moreover, the policy ought to carve a roadmap to a seamless coordination between the private sector and related government bodies and ministries. However, dealing with multiple ministries will continue to be a huge deterrent to growth of this sector and how effectively it can cater to the new demand created by regional connectivity. In an interview with BR Research, Babar Badat told that logistics and transport related companies have to deal with seven different ministries including the Ministry of Communication. He suggested the formation of a Transport Ministry that would be the “focal point for the transport of cargo by road, rail, air, warehousing and everything connected with freight transport”.
The lack of fair competitive environment is also a major concern. The favourable treatment of government towards public organisations like the National Logistic Cell (NLC), which is awarded major contracts by the government or the Pakistan Post Office (PPO) that is set to move beyond courier services to providing complete supply chain solutions will thwart competition in the sector.
The direly needed Pakistan Courier and Logistics Regulatory Authority Bill, 2018 was recently passed by the National Assembly to regulate the sector but private sector companies alleged that they were never consulted. Only two out of the 11 members on the board will be from the private sector, according to the bill, with PPO being granted permanent spot, which is a conflict of interest since it is in competition with private firms in the same business.
While the policy is a little late on arrival, it must not be late on the implementation side and must go hand in hand with the creation of a conducive regulatory and legal environment, which is where the real hard work goes in. It should uphold the principles of fair competition, if the involvement of private sector is indeed its dominant aim. And it should be supplemented by a maritime and a trucking policy; the latter of which has been designed but is stuck somewhere in the P-block unable to find its way out.