A comparative analysis of maritime budget of Pakistan with different South Asian countries

In an article published for Maritime Study Forum a think tank for maritime studies, I praised policy makers on notifying the year 2020 to be the year of blue economy. It showed that finally we were heading in the direction that we should have gone long ago. However the budget for 2021 altered dimensions to some extent. Maritime Affairs division's budget got reduced by 1bn to Rs. 2.6 bn from Rs. 3.6 bn last fiscal year. This piece shall try to elucidate the impacts this policy will have on the maritime realm plus it will give a comparative analysis between Pakistan and its South Asian neighbors.

Pakistan is located at a very strategic location which carries out more than 95% of its trade through sea via its ports at Karachi, Port Qasim and Gwadar. This pertinent point adds to the potential of maritime economy of Pakistan, but also signifies its geo-strategic and geo-military importance. Maritime sector throughout the world requires both financial and technological uplift to reach its potential. What more, to make it profitable one need to inject enough capital to reap its long term benefits in years to come. Once the investment is made and required infrastructure is in place, maritime sector requires adequately skilled manpower to turn the sector into a profit milking machine. This is precisely what our eastern neighbors India and Bangladesh have done with such dexterity. Currently, Pakistan does suffer from sea blindness, however, last year with PM Imran Khan’s notification regarding the declaration that 2020 would be the year for blue economy things were poised towards moving in the right direction. However, consequent developments in the form of the current budget things look as bleak as before and we stand at the verge of losing a potential competitive edge against other South Asian States. Pakistan’s current maritime potential projection stands at 183 million dollars which saw a minuscule growth of 0.6% this year. This is far from ideal if we compare this with that of India which stands at 6 billion dollars, while that of Bangladesh is around 5.6 billion dollars respectively.

Moving forward, if we analyze different segments of this sector we can see how neglected they have been and this budget could have been an ideal platform to start the blue economy dream for Pakistan.

The fishing industry or aqua culture plays an important role in Pakistan’s economy and employs more than 500,000 fisherman directly, whereas, 1 million people are employed in ancillary industries. Moreover, there are around 20,000 fishing boats in the coastal areas of Pakistan which operate in shallow waters as well as in offshore areas. However, the capacity that Pakistan has is more than 500 million dollars. Moving forward our shipbreaking industry has suffered the same fate as well. In the 1970s Gadani was considered one of the most efficient shipyards which took only two or three weeks to breakdown a ship, the same ship however took almost couple of months to be broken down in Bangladesh and India. Unfortunately due to government neglect, only one company called the Karachi shipbreaking firm works at Gadani. If the shipbreaking yard at Gadani is utilized to its full potential it has the capacity to generate around 10 million dollars for Pakistan. Tourism is another industry that is severely neglected through this budget, especially tourism in the coastal areas. Though, our policy makers are adamant to promote this sector of the economy but policies pertaining to coastal tourism promotions seem to be far away. This neglect is costing us around 4 billion dollars, meanwhile contributing an embarrassing sum of 0.314 billion dollars considering the size of our coastal area. Last but not the least the transshipment industry again has been over looked despite Gwadar being a tax free port. Gwadar has the potential to be developed into a full-fledge regional hub and a trans-shipment port in the future. Shifting of ship traffic from Dubai to Gwadar could make it among the top-5 transshipment hubs globally. UAE handles over 21mn TEUs (20 ton equivalent units) each year; this signifies the opportunity that lies ahead for Gwadar. Being a tax free port coupled with no port congestion, after full development, Gwadar has leverage over other regional ports.

Moving forward we will now dissect our regional neighbors and their respective maritime policies. According to the ministry of shipping in India, around 95% of trade is carried through the sea which amounts to 70% by value. The important thing to highlight is how the Indian government is supporting the maritime sector as a whole. The Indian government is encouraging FDI up to 100% for port and harbor construction with a facilitated 10 year tax holiday to upcoming entrepreneurs in this sector. The main objective is to encourage upcoming enterprises to develop, maintain and operate ports, inland waterways and inland ports to spur the Indian economy forward. Moving towards the budget that the government of India has outlaid for this sector is an astonishing 11.8 billion dollars. This subsequently has led to the following achievements.

• Major ports turnaround time now stands at around 64.69 hours.
• There has been five times more growth in major ports traffic.
• The profit of Indian maritime sector has grown tree times in the past five years alone.
• Operating margins for shipping sector alone has increased from 23% to 44%.
• Cargo capacity at major ports from FY15 to FY19 has grown from 872 to 1514 million tons.

Moving towards Bangladesh, again we can observe how respective governments despite their immense limitations have paid importance towards this pertinent realm. Bangladesh’s economy indicators lag behind Pakistan in various domains, however, this limitation of theirs has not deterred them from investing in the maritime domain and subsequently reaping immense rewards. The ocean almost contributes around 6 billion dollars annually to its economy, with their recent research suggesting that it has potential for a lot more. The Gross value addition (GVA) for its country in the maritime domain stands at a whopping 3.3 percent of the overall economy. This success has been achieved with the help of mechanized boats and industrial trawlers that can catch fish up to 70 kilometers from their shoreline. Though, the total shoreline is around 660 kilometers, hence the rest remains untapped. Another aspect that shows the seriousness of the government towards this domain is that Bangladesh has taken a 240 million dollar project from the World Bank to develop its coastal area and marine fishing capabilities. It is definitely a right step for Bangladesh as it will harness their blue economies potential and will allow them to tap the untapped resources in the aforementioned realm. It is understood that World Bank will work with Dhaka in areas such as coastal tourism, oil and mineral resources and fisheries. What more, it is also providing funds worth TK 99 million under technical assistance (TA) project. Moreover, the government is particularly interested in wooing the private investorsto invest in oil and gas exploration, especially in the deep sea. A proposal is floated by the government that if a private business invests around 150 million dollars to 200 million dollars, the government will take a stake in its drilling as to lower their risks.

All of these developments combined can give us a well-documented idea how serious the government really is towards harnessing its blue economy.

The synergy of ocean economy and global economic expansion is all in all evolving by harnessing sea-bed resources. Different opportunities in areas of renewable energy, seaports, shipping and trans-shipment, marine biotechnology, deep sea bed explorations and aquaculture are rearing its head out to government around the world. Thus, overcoming the challenges and chalking out a sustainable pathway towards a healthy blue economy holds the key for long term economic growth of any country.

Hence it is easy to see where our priorities are placed and in what domains we are severely lacking as a nation. We do talk about blue economy but we do not implement those plans when it comes to making policies or moving towards the right direction. India and Bangladesh in the past few years have evolved as a nation and in particular harnessed their maritime potential. The main moot point is that we need to allocate more funds for this essential sector if we want to secure our economy as a whole. Till the time adequate resources are not diverted towards this sector we cannot reach our economic potential in the maritime realm.