We remain in deep slumber sleeping on pillow of “MoU” only

Dear Mr. Prime Minister,

AoA.

Each and every word of the below mentioned article titled New “axis of reform” by Captain Anwar Shah is worth reading for you and all your policy advisors.

Best Regards,

Syed Nayyar Uddin Ahmad

New ‘axix of reform’

June 29, 2014
CAPTAIN ANWAR SHAH

Asia’s, three economies are suddenly experiencing a burst of change that could alter the growth trajectory for the worlds’ most populous region. We are going to see the birth of a new “axix of reform”, one which could revive the global economy. The month of May recorded Indian export of 28 billion USD compared to 24 billion USD last year and imports were 39 billion USD, reducing the trade deficit. Indian Ports of Kandla and Cochin handled 70 million ton each imp/Exp against our total 70 million ton Imp/Exp from our two ports.

China’s XI Jinping, India’s Narendar Modi and Japan’s Shinze Abe are simultaneously sketching out vague – but – promising plans to revitalise their rigid economics. It is not a co-ordinated process – more of a serendipitous coincidence, driven by a dire need for change in all three nations. Still, the possibilities are enticing. A truly dynamic and innovative Asia would raise living standards for billions and fresh hope for a world wondering where all its big growth engines went. India and China trade is 80 billion USD, likely to triple, where as our trade with China hinges at 6 billion USD, tilted in favour of China. China is said to be helping India to explore 80 billion tons of untapped mineral resources. Bangladesh too has signed agreement with China to develop deep water port near Cox Bazar to boost their economy. Interestingly Bangladesh has 21 billion USD reserves..

With Asia’s giants forming a new group from “BRICS” to “CIJ”, they are in grip of reformers, prospects have certainly improved. Not only India and China now led by men that have spelled out so ambitious reform agenda, removing red tapes and firing slow civil servant golfers, but so in Japan, with abenomics ticking away background too “whilst the challenges and macro structure of China and India are different, if both leaderships deliver a long awaited reforms, the resurrection of the “Chindia” reconstruct may provide a surprisingly compelling boost to the emerging markets story, at just the point when many in the markets have dismissed the opportunity. The South Korean Leadership is committed to wholesale turn around, whilst we remain in deep slumber sleeping on pillow of “MoU” only.

If leaders may deliver by combined efforts, it may offer a tremendous boost to world economy. The need for change is broadly accepted across their populace excluding us.

It will also offer a striking counterpart to the USA and Europe, where reform fatigue rules debate from Washington to Brussels. Now West will learn from Asia and its growth reality China is bent upon holding 7.5 percent GDP Growth, whereas Modi may face tough resistance from civil servants who are slow and said to be corrupt and not receptive to innovation or change axis of reform is worth watching, as it may become growth driver of the world economy.

The Middle East is in serious turmoil as Iraq is heading for new demography as Libya, Syria etc. Capacity in the seaports and airports in the Middle East is growing faster than regional trade, potentially jeopardising the viability of billions of dollars worth of new investment in transportation infrastructure. Gulf countries investment in logistics based on logic of carrying out niche as trading posts between Africa and Asia. Dubai Jebel Ali Port accounts half of the regions seaport capacity, but many other gulf countries are copying Dubai template thus capacity will increase from 40 million TEU to 100 million TEUs incoming decade, the trade is not growing by 10% to fill the increased capacity at gulf ports. The capacity planning in Middle East is dysfunctional, not co-ordinated and mismanaged. The risk of over-capacity in Middle East is so imminent, as deep water port of Colombo built and operated by China Merchants will induce most of the Indian trade from Middle Eastern hubs. The over-capacity in Middle East gulf of states is at serious risk as investment in ports have long gestation period, and if remains unutilised, the Gulf States like Koreans may use the new capacities for entertainment not for logistics.

The new deep sea port of Colombo is able to berth and service the new mega size Class-E and Class EEE container ships with carrying capacity of 13000 to 18000 TEUS. The growth in Asia will support movement of containers on super ships for the sake of economy of scale and Colombo being on main East and West route, all mother ships will call, thus feedering to Indian and other regional ports. The Colombo Port handles 70 percent transshipment cargo and handles only 30 percent captive cargo and presently handling 7 million plus TEU likely to attain 10 million. Indians are worried due to feedering cost from Colombo thus may opt for barges being pushed by tugs for feedering to shallow draught ports on Indian coast thus copying the Mississippi river as pattern of pushing barges, cutting the cost.

Sadly Pakistan’s ports only handle captive cargo except some transit cargo to Afghanistan. The delayed Pakistan deep sea water port may be functional by 2015 due to lacklustre attitude of Karachi port management, it was conceived in 2006 to be completed by 2009, but now it may be partly functional by 2015. We are planning energy by using coal, the only Pakistan bulk terminal of marine services group, which too is delayed may handle 5 million tons, against our prospective requirement of 15/20 million tons of coal. Gadani Port is still to take off to cater our coal handling. Sadly despite handing over Gwadar to new concessionaire, nothing is visible on the ground, even no road link via Surab to National highway. We see many inaugurations but sadly ground reality is different. Why can’t we make efforts to induce land-locked Central Asian State cargo to our ports and become hub of land-locked countries? I feel our planners may seriously ponder on transshipment cargo rather captive cargo only. PNSC is the only silver lining in our maritime industry making profit being in public sector. Planning Commission is well advised to take serious note of growth in Asia and work seriously to get a slice out of it, so that our youth may find new avenues as population continuous to grow. Let us target min 6 percent GDP growth and pay full attention to our Maritime Sector for accelerating and giving a kick start to our economy. It saddens me, when I read growth studies in Asia, excluding Pakistan.

(The writer is adviser to Karachi Chamber of Commerce and Industry)

Copyright Business Recorder, 2014

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