New policy: Pakistan offers loans, tax exemptions to boost local shipping companies

Pakistani vessels pass by container ships being loaded with cargo at the port of Karachi, Sept.8, 2003. (AFP/File)
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Updated 08 August 2020

New policy: Pakistan offers loans, tax exemptions to boost local shipping companies

  • The policy offers tax incentives, low-cost financing to revive the country’s shipping industry
  • Private companies demand open competition for import of petroleum cargo instead of monopolizing it through state-owned corporation

KARACHI: Pakistan’s new shipping policy aims to reduce $5 billion freight bill that the country pays to foreign companies to transport import and export cargoes, officials announced on Friday. 

Federal Minister for Maritime Affairs Ali Haider Zaidi and Adviser to Prime Minister on Commerce and Investment Abdul Razak Dawood unveiled the amended shipping policy in Islamabad that offers incentives to the country’s own vessels by provided them “priority berthing at all Pakistani ports.” 

“This is business-friendly policy,” Zaidi said, adding that it would reduce the freight bill Pakistan paid annually. 

The country nationalized its industries in the 1970s, including the shipping industry by merging all companies with the Pakistan National Shipping Corporation (PNSC). Experts believe that the industry could not be revived after that policy decision. 

“This industry is vital since it operates during emergencies and high risk situation as well as peace time. As we rely on international shipping lines for our trade, we lose foreign exchange which can be saved if we develop our own local shipping industry,” said Zaidi. “It is the need of the hour to revive this industry since we lag way behind our regional competitors like Bangladesh.” 

Abdul Razak Dawood, Pakistan’s de facto commerce minister, hoped that local entrepreneurs would view this as an opportunity and benefit from it. 

“The State Bank of Pakistan will extend loans at three percent markup rate for buying vessels and registering them in the country,” Mahmood Maulvi, adviser to the Ministry of Maritime Affairs, told Arab News. “Refinance will be allowed for purchase of ships and vessels.” 

Under the policy, new shipping companies would be exempted from federal taxes until 2030. 

“No federal taxes (direct and indirect) shall be levied to the detriment of Pakistan Resident Ship Owning companies during the exemption period,” the policy document seen by Arab News read. 

However, the transportation of hydrocarbon cargoes will be the sole responsibility of PNSC. 

The shipping sector stakeholders termed the policy as a “good initiative” and called for its implementation in letter and spirit. 

“It is good that the government has realized that Pakistan pays $5 billion of freight bill to foreign shipping companies,” Aasim Siddiqui, chairman of All Pakistan Shipping Association (APSA) told Arab News. “Our association has been lobbying for the last three years for incentives to be given to private sector since we have the potential to create more employment opportunities by attracting the cargo that is transported by foreign vessels.” 

“But it is not enough to release a focused policy,” he continued. “We also need a robust legal framework for its implementation since an oversight of these incentives is also needed. Besides, it is very important to monitor the policy in consultation with the stakeholders.” 

He demanded that instead of monopolizing the import of petroleum products through the PNSC, the government should invite bids from the private sector. 

“Maybe private companies can give you better rates than the PNSC,” he added. 

Pakistan to establish 18 markets on Afghanistan, Iran borders to boost trade, curb smuggling

Updated 18 September 2020

Pakistan to establish 18 markets on Afghanistan, Iran borders to boost trade, curb smuggling

  • Under the plan, the government will set up 12 markets along the border with Afghanistan and six along the Iran frontier
  • Prime minister approves setting up two border markets in Balochistan and one in Khyber Pakhtunkhwa by February next year

ISLAMABAD: The Pakistan government has decided to set up markets along its borders with neighboring Afghanistan and Iran to boost trade opportunities, foster peace and check smuggling, the commerce ministry said on Friday.
Main crossing point into Pakistan for both goods and people from Iran and Afghan also serve as major smuggling routes.
“The border markets will help create job opportunities and establish a peaceful relationship with the neighboring countries,” Aisha Humera Moriani, joint-secretary at the Ministry of Commerce, told Arab News.
Under the plan, the government is establishing 18 markets: 12 along the border with Afghanistan and six along the Iran frontier.
In a meeting on Thursday, Prime Minister Imran Khan approved setting up two border markets in Balochistan and one in Khyber Pakhtunkhwa province as a pilot project, to be functional by February next year.
Moriani said the markets would contribute to local development and help the government address “smuggling and boost legal trade across the border.”
Pakistan is fencing its borders with Afghanistan and Iran to check cross-border militancy, illegal movement of people and smuggling, which is a major source of income for people living along border towns and villages.
Sardar Shoukat Popalzai, President Balochistan Economic Forum, said the government should have built “common markets” along the Afghanistan and Iran borders with the mutual consent of the neighboring governments to maximize benefits for people on both sides of the borders.
“The government has not released a feasibility report, if there is any, of these markets as to how are they going to help the local population,” he told Arab News.
Popalzai said Balochistan border areas were sparsely populated and establishment of a few shopping terminals would “hardly make any difference in the lives of the people.”
He said cross-border smuggling was a major source of income for people living in the frontier areas of Balochistan and Khyber Pakhtunkhwa, so “this requires a lot more effort than mere setting up of markets to check this undocumented economy.”
Zubair Motiwala, chairman of the Pak-Afghan Joint Chamber of Commerce and Industry, said the government should establish cold storages and warehouses in the border markets to boost the export of perishable and other items to the neighboring countries.
“The taxation system on the exports and imports of different items through the land routes should be well defined to encourage businessmen and locals to boost the legal trade with Afghanistan and Iran,” he said.