Pakistan to link Middle East with Karachi, Gwadar soon through ferry service

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General view of the port city of Gwadar on March, 21, 2019. (AN photo)
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Mahmood Moulvi, adviser to ministry of maritime affairs (center) attending meeting of Pakistani and Saudi delegation at Gwadar. (AN file photo)
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Mahmood Moulvi, adviser to ministry of maritime affairs, says foreign interest in Pakistan’s shipping sector is increasing. (Photo courtesy: Mahmood Moulvi)
Updated 23 March 2019

Pakistan to link Middle East with Karachi, Gwadar soon through ferry service

  • Saudi Arabia, Singapore, and Malaysia are interested in shipping lines with Pakistani carriers, Maritime Ministry official says
  • A $1.8 billion bridge would link Karachi Port with Port Bin Qasim under CPEC

KARACHI: Pakistan is in the final stages of starting ferry service linking Middle Eastern ports with Karachi and Gwadar deep-water port as the go-ahead is expected next week, says Mahmood Moulvi, Adviser to Ministry of Maritime Affairs.

“Ferry service will be launched from Karachi port to Dubai, Oman and Bandar Abbas (Iran). We want to facilitate pilgrims by providing them alternate routes,” Moulvi said in an exclusive interview with Arab News.

He added that “the service will be completely in the private sector and the role of government would be of facilitator.”

Pakistan is currently in the process of amending its shipping policy of 2002 to accommodate more players with the aim to make it business friendly. “The amendment process is in final stages and will be approved, hopefully, in a month as the progress is at the advance stage,” Moulvi informed.

The confidence of foreign investors is being restored with growing interest of Saudis, Singaporean and Malaysian investors in shipping lines, he said. 

“Singaporean investors are coming in April to finalize the details for starting vessels. We are asking them to come up with Pakistani flag carriers,”, he added.

“Roughly, we estimate that around $8-10 million per ship investment would be made. We initially expect two ships to come up to test the waters,” Moulvi said adding that “Pakistan will be in position to minimize around $4.5 billion freight cost that is being paid to foreign shipping companies.”

Recently Khalid A. Al-Falih, Minister of Energy, Industry and Mineral Resources for Saudi Arabia and Chairman of the Board of Saudi Aramco, during his visit to Gwadar, expressed kingdom’s interest in investing in logistics. 

“It was our proposal to have joint venture in the oil transportation. We asked them to transport oil in their own tankers because after the completion of oil refinery they would need it on permanent basis,” Moulvi, who was accompanied by the Saudi delegation, said.

Apart from crude oil, Pakistan is one of the major importers of palm oil mainly from Malaysia. During the 8 months of current fiscal year Pakistan has imported 2,052,681 metric tons of palm oil worth $1.24 billion. “We are also proposing Malaysians to come up with palm oil carriers with Pakistani flags. We would pay them in Pak Rupee instead of paying in US Dollar which would reduce the burden on foreign exchange,” Moulvi said.

Pakistan government is also planning to link its two major ports with the help of China under the China Pakistan Economic Corridor (CPEC). “The exact cost of the bridge would be $1.8 billion with $30 million per mile. China wants to bring the project under CPEC otherwise it would be on Built Operate Transfer (BOT) basis. The bridge would consist of a railway track and oil pipeline,” the official said.

China is also interested in building a shipyard in Gwadar while another one is proposed in Karachi, apart from the one already operating. The completion of these shipyards would multiply the shipbuilding activities in the county.

State bank will intervene in currency market in case of major volatility: Dr. Reza Baqir

Updated 28 min 41 sec ago

State bank will intervene in currency market in case of major volatility: Dr. Reza Baqir

  • Says the country is moving toward stability and growth as major economic issues are being addressed
  • IMF likely to approve $6billion bailout program on July 3 in its board meeting

KARACHI: Governor State Bank of Pakistan (SBP) Dr. Reza Baqir on Monday challenged a widespread assumption that his institution would not intervene in the currency market to stabilize the Pakistani rupee since the International Monetary Fund (IMF) required it to adopt a floating exchange rate and the bank had no option but to comply with the stringent condition.
Pakistan’s central bank is legally empowered to regulate the banking sector and conduct an independent monetary policy. Given the rapid decline of the national currency, foreign exchange dealers have asked its management to play its role and strengthen the Pakistani rupee. 
Addressing his first news conference in Karachi on Monday after taking charge as state bank governor on May 5, 2019, Baqir said that neither fixed nor floating exchange rates were in the interest of the country since the first created external imbalances and the second led to manipulation.
A former IMF employee, he added that the state bank would “keep an eye on the exchange market and intervene in case of major volatility through market-based exchange rate mechanism.” He continued that this implied “a two-way movement.”
Pakistan has devalued its currency by about 50 percent since December 2017 when it was traded at Rs105 against the United States dollar.
The governor said that the country was on its way to stability and growth since the country’s new economic team was addressing major issues causing instability through broad financial reforms. “The country has addressed the issues of current account and fiscal deficit. After recent depreciation, the current account has witnessed a substantial decline.”
Pakistan’s current account deficit was $19.9 billion during the fiscal year 2017-18, but it came down to $11.6 billion during the 10 months of the current fiscal year FY19. The central bank expects it to reach the $13 billion mark by the end of the current fiscal year at the end of this month.
“The country is benefiting from the currency depreciation because the current account deficit is declining and exports are on the rise,” he said, adding: “Imports are declining which is good for the promotion of import substitution.”
Last month, Pakistan and the IMF reached a staff level agreement on a $6 billion bailout program after months of negotiations. The IMF board meeting, scheduled to take place on July 3, 2019, is expected to give the final approval for the loan program.
“Pakistan has completed its part of conditions agreed with the Fund,” the state bank governor said without giving further details. “The deal has ended uncertainty and will send positive signals to the world community that Pakistan is now open to support.”
He added that the country had secured financing at a low interest rate. 
Baqir, who previously served in Egypt, hoped his cross country experience would benefit Pakistan. “The state bank has an overriding principle that the it would do whatever is in the interest of the country,” he said.
The bank, he continued, was also “fighting inflation through various monetary policy tools and will keep doing so whatever resources we have at our disposal.”
The governor expressed satisfaction over the economic future of the country, saying “our major opponent is uncertainty which is gradually subsiding.”