Pakistan’s maritime industry faces major challenges, leading to an annual loss of almost Rs5 trillion (Rs5,000 billion or $18 billion) due to underused ports, tax evasion, malpractice, fraudulent billing, exploitation of the Afghan Transit Trade, and insufficient value addition.
A report from a high-level task force delivered to the Prime Minister emphasizes these issues and reinforces the pressing need for reforms to unleash the sector’s vast potential.
Key Areas of Loss
The task force report identifies several critical areas where Pakistan’s maritime sector is losing revenue:
- Underutilized Ports: Rs3.19 trillion loss due to inefficient use of port capacities.
- Tax Evasion: Rs1.12 trillion lost annually.
- Malpractices and Fake Billing: Rs313 billion lost.
- Restrictions on Trans-shipment: Rs70 billion was missed due to limitations on moving goods to Central Asia and China destinations.
- Lack of Warehousing and Value Addition: Rs196 billion not collected.
- Misuse of Afghan Transit Trade: Rs60 billion lost annually.
Current Port Performance
Despite its strategic location, Pakistan’s ports are underperforming on the global stage:
- Karachi Port Trust (KPT): Ranked 61st globally, KPT handles over 60% of the country’s imports and exports but operates at only 47% of its total capacity (125 million tons). Over the last five years, KPT’s tax collection has ranged between Rs660 billion and Rs1,470 billion.
- Port Qasim Authority (PQA): Ranked 146th globally, PQA handles 35% of the country’s cargo but utilizes only 50% of its capacity (89 million tons). During the same period, tax collection from PQA ranged between Rs690 billion and Rs1,140 billion.
- Gwadar Port Authority (GPA): Currently operating at a capacity of 2.5 million tons, Gwadar Port’s capacity is expected to expand to 400 million tons by 2045 after the completion of its third phase.
Geo-Strategic Opportunities
Pakistan’s coastline holds immense potential to become the country’s economic backbone. The ongoing Red Sea crisis presents a unique opportunity for Pakistan to leverage its geo-strategic advantages. Global maritime giants like Maersk, DP World, and Hutchison Ports have recognized this potential. They offer investments in Pakistan’s maritime and related sectors to secure their financial interests and channel trade.
Tourism and Economic Zones
The task force report also highlights the untapped potential of Pakistan’s coastal regions, including:
- Tourism: Spectacular beaches, historical sites, archaeological spots, and ancient religious locations could generate significant revenue if developed properly.
- Exclusive Economic Zone (EEZ): Pakistan’s EEZ, which spans over 240,000 square kilometres, is rich in ocean seabed resources such as oil, gas, and minerals. Exploring and integrating these resources into the national economy requires a long-term plan, skilled human resources, infrastructure development, and consistent policies.
Approximately 1.9 million seafarers facilitate international shipping globally. While Pakistan has historically contributed to training seafarers, their numbers have declined. Reviving this sector could provide employment opportunities and strengthen Pakistan’s maritime industry.
The report emphasizes the need for immediate reforms to address inefficiencies, curb tax evasion, and maximize the utilization of port capacities. By leveraging its geo-strategic location, investing in infrastructure, and promoting tourism and resource exploration, Pakistan can transform its maritime sector into a cornerstone of economic growth.
