April 23, 2007	Monday	Rabi-us-Sani 05, 1428

A World Bank report says that Pakistan’s economy loses billions of dollars through its mismanaged and malfunctioning transport system, which enhances the cost of exports and makes them less competitive abroad. It also results in delayed export deliveries.

The World Bank has offered financial help to Pakistan for formulating a national transport policy. The Asian Development Bank has also offered $1.67 billion help for transport and communication development.

Meanwhile, the government is also planning extensive transit trade programme with its neighbours to become a centre of economic activity in the region. This has become urgent following the inauguration of the Gwadar port and the Free Trade Agreement with China. At the same time larger exports have become necessary because of the $10 billion deficit in the first nine months of the financial year.

The Transit trade policy is largely to promote trade with Afghanistan and Central Asian states. That does not include India in the East, although India has been demanding proper transit facilities for trade with Afghanistan.

Now that the South Asia Free Trade Area (Safta) has come into operation and Afghanistan has become a member of the Saarc, both India and Afghanistan will press for full transit trade facilities. The members of the Saarc following the 14th Saarc Summit have committed themselves to honour the Safta in letter and in spirit. And the transit trade facilities between Afghanistan and India will become a part of that arrangement which Pakistan may have to honour.

The transit trade facility is extremely useful to China as it can get imports through Gwadar much quicker and at a lower cost than getting the same through China`s Eastern coastal ports. The distance from Kasghar to an East Asian port is 3500km, but from Gwadar to Kasghar it is only 1500km.

Prime Minister Shaukat Aziz has given priority to the transit trade policy and asked the Chairman of the Central Board of Revenue to formulate such policy expeditiously. He had held a meeting on the national corridor transport programme with the relevant officials.

He wants new freight trains in plenty and a large number of new trucks in the private sector. He seeks a radical reconstruction of the highways to facilitate the process and reduce the delays. He has called for a draft of a road freight industry policy. He wants most of the freight movements to be shifted to the railways and the railways to be totally modernised and expanded. He seeks a general manager for the railways with ample international experience. He also wants a separate freight department with its own experienced general manager who will manage the freight only through trains.

The prime minister proposes to permit import of old trucks with multi axels which are not more than five years old. The government, he says, has set apart Rs35 billion for ports, road and railways. More funds will be available through external aid, he adds.

He envisages a new role for banks and insurance companies in this new enterprise. They have to adopt the latest practices from the West in this regard.

Surprisingly a new transit trade policy is being sought to overhaul the transport system without first of all formulating a national transport policy. The policy, instead of being formulated by the government or the Planning Commission, is being formulated by the Asian Development Bank subject to finalisation by the government. The draft policy has been returned to the bank by the government as it does not accommodate the needs of all sectors in the transport and communication system. That may be finalised by June, says minister for communications and transport Shameem Siddiqui.

It appears to be more of a case of putting the cart before the horse but we are familiar with such upside down priorities and when we are in a hurry to do big things quick such mistakes are inevitable.

Meanwhile, Afghanistan is reported to have wanted to manage its transit trade via imports through Karachi by itself instead of leaving it to Pakistan. Official reaction to that is not available.

As far as President Musharraf is concerned he sees a far larger role in the economy of the region for Pakistan. He sees Pakistan as a major regional hub for trade, tourism and communications. He also wants it to serve as a communication hub for Central Asia. Western China and other regional countries and generate extensive economic activities at a time when Pakistan’s deficit in trade with China is $1.72 billion. The need of the hour is larger exports to China and that is possible only if Pakistani export prices are lower and far more competitive.