Country Update Mapping of Transport Sector: Key Figires, Structure, and the Current National Regulations

OCTOBER 2018 ● MSMEs CONNECTION PAKISTAN

Introduction Phase 2 The Government of Pakistan conceived The Country Update Note under the theme growing national connectivity through a road “Mapping of a specific service sector: key network. High population growth in the figures, structure, and the current national following decades precipitated urban regulations” will be prepared to service the expansion, and also brought about changes to fourth Forum meeting under the Geneva- zoning laws. Demand for private modes of MSMEs Connection project. For Pakistan, transport rose considerably during this period, CUTS Geneva has specified the mapping of the and public sector transport became Transport Sector, its’ key figures, structure uncompetitive over the course of time. and the current national regulations in place concerning the sector. The study uses a mix Phase 3 methodology. The analysis is based on desktop research, supplemented with interviews with The National Transport Policy of 1991 relevant government officials such as transport recognized the emerging role of the private experts from Planning Commission and sector. This policy incentivized private sector National Highway Authority. investment in mass transit road vehicles such as vans and buses. Initial public sector Historically, we may look at the history of investments such as the Awami Bus Service transportation as three distinct phases: met with little success, and waned out.

Phase 1 Recent Developments

Mass transit and freight in colonial era Pakistan Transportation constitutes 22 percent of the was dominated by rail, especially for longer services sector, and contributes around 10 distances. These were complimented by trams percent to the National GDP. Around 6 percent in urban areas. After partition, planners of the work force is employed in the continued to emphasize rail connectivity, until the 2nd Five Year Plan in 1960.

transportation sector1. There are around 2,500 (NTP, 2017) will continue to identify gaps companies working in freight forwarding and inhibiting the sector. The transportation sector logistics. These provide a vast array of in recent years has deteriorated drastically. In specialized services such as warehousing, 2007, the World Bank’s (WB) Logistic custom clearance and so forth2. Performance Index (LPI) ranked Pakistan at 68th globally. By 2018, it was 122nd out of the More recently, policy has shifted towards 164 countries compared3. The overall quality4 addressing gaps in the sector. The National of transport services and related infrastructure Trade Corridor Improvement Program (NTCIP, has witnessed a decline. 2005) was aimed at addressing trade integration and infrastructure challenges. The Medium-Term Development Framework (MTDF, 2005-2010) aimed towards making the Modal Review sector internationally competitive. Road Rs. 16 billion was allocated to the sector in the most recent Federal Budget. 30 percent of Roads account for 92 percent of passenger development spending was allocated to travel and 95 percent of freight traffic5. The bulk communications, and transportation projects. In of commercial traffic is concentrated on terms of foreign investment, a mixed trend can national highways, which constitute be observed in Figure 1 whereby the FDI in approximately 4.5 percent of the national road transport sector reached the highest in FY network6. The median cost of road freight in 2009-10. Pakistan is considered amongst the lowest in 7 Figure 1: Foreign Direct Investment in Transport Sector the world . High tariffs on the import of freight vehicles are a major barrier to modernization and capital efficiency. Recent investments in road infrastructure are centered on China-Pakistan Economic Corridor (CPEC), which is Pakistan’s component of the Belt and Road Initiative. Increasing imports in 2017-18 Source: Board of Investment (BOI). Amount in mil’s of dollars suggests increased demand for transportation sector related capital. Table 1 The most recent National Transport Policy indicates the passenger and freight traffic

1 ‘Vision 2025’ (2014). Ministry of Planning and transport related infrastructure; c) Ease of competitively Development, Government of Pakistan. priced shipments’; d) Competence and Quality of 2 Data from Pakistan International Freight Forwarder Logistics Services; e) Ability to track and trace Association (PIFFA). consignments; and f) Timeliness of shipments reaching 3 WB LPI, 2018 and rankings data since 2010. destinations in time. 4 The World Bank (WB) measures six different 5 Economic Survey, ADB and Planning Commission dimensions before awarding points. They are a) statistics. ‘Efficiency of Clearing Process’ by border control 6 ‘Sectoral assessment summary-Transport’ agencies, like Customs; b) ‘Quality of trade and 7 Road freight transport sector and emerging competitive dynamics’, p.10.

through various modes (in percentages)8. The to 10-12% of the road share in coming 2-3 share of air in passenger and freight traffic is years. In the long-term it is targeted that the rail less than 0.5 percent while road dominates in freight share should be between 22-25% in both categories. order to make the railways a revenue earning organization. Table 1: Passenger and Freight Traffic Passenger Traffic % Freight Traffic % Year Road Rail Air Year Road Rail Air Air 1998-2003 91 9 < 0.5 1998- 96 4 < 0.5 2003 2009-2010 92 8 < 0.5 2006- 95 5 < 0.5 The three major operators in market of air 2007 transport are: Pakistan International Airlines 2011-2012 95 5 < 0.5 2009- 96 4 < 0.5 2010 (PIA), Air Blue and Shaheen. These are 2015-2016 97 3 < 0.5 2016- 97 3 < 0.5 complemented by smaller scale, relatively new 2017 entrants like Air Indus. Domestic commuter 2017-2018 95 5 < 0.5 - - - - traffic over the last decade has remained

stagnant at around 6.5 million passengers per Rail year12. It may imply that commuter demand has been absorbed by road based transport. State Railway accounts for 2 percent of total freight owned PIA is the largest operator with a fleet of business, and 5 percent of commuter traffic. 37 aircrafts. PIA’s operating expenses in 2016- Recent efforts to revive a demand for rail seem 17 stood at Rs. 121,863 million, with operating to have failed their intended purpose. New revenue of Rs. 88,898 million, indicating an wagons were added to the Rail Fleet during the operating loss of about Rs. 32,965 million. previous government in spite of a significant drop in commuter traffic9 from a peak of 25,621 According to a management report submitted at in 2007 to 20,288 in 201510. Further, most of its the Supreme Court of Pakistan, PIA’s total passenger and freight traffic is concentrated in liabilities now stand at Rs. 406 billion against few large urban centers, which limits the assets of Rs. 111 billion13. Data related to PIA business potential lurking in peri-urban and and some of its indicators is presented in Table non-urban destinations. As evident from Table 3 (see Annexure-A). 2 (see Annexure-A), passenger traffic declined from 68.8 million passengers to 52.39 million Maritime over the period. Similarly, total freight carried There are currently 4 ports in Pakistan. Karachi (millions of tons) registered a decline of -4.61 Port and Port Qasim are fully operational. percent (from 5.89 to 5.63 million tons), and Gwadar port is partially operational. A fourth, gross earnings increased by 70 percent, from Keti Bandar is under construction. Karachi Port Rs. 11,938 million to Rs. 40,065 million11. handles approximately 60% of all Pakistan’s According to an expert at the Transportation seaborne traffic, with 39 million tons of cargo in and Communications section of the Planning 2016-17. This includes nearly 2 million TEU Commission, rail freight share would increase (Twenty-foot equivalent unit) in container traffic.

8 Data obtained through government sources, 10 ‘Railways, passengers carried (million passenger- independent research and World Bank. PIA’s km)’. percentage is less than 0.5 percent in both freight and 11 Calculated from information provided in Economic passenger traffic and hence is not visible in the figure. Survey 2017-18, Statistical Appendix, CH 13. 9 ‘Pakistan Railway adds 1405 modern wagons for coal 12 NTP. loading’. 13 ‘PIA debt hits 406 billion, running only on government support’.

Port Qasim (also in Karachi city) handled 27 International Convention for carriage by air, the million tons of cargo, including approximately Kyoto Convention for Simplification and 1.2 million TEU in 2016-1714. Harmonization of Customs Procedures, and the convention concerning International Carriage Approximately one percent of total cargo was by Rail, etc.17 handled at Gwadar port15. Gwadar port which is being developed under the CPEC has been Burgeoning trade relationships have proved a projected to be handling 13 million-tons of catalyst for reform in the sector. The Pakistan cargo within five years, making it set to become Customs, has upgraded its online clearance the largest port in South Asia16. The Pakistan platform (WeBOC) to meet clearance Naval Shipping Corporation (PNSC) is the sole regulations under TIR Carnets. This allows operator of large cargo ships, having a goods transit through Karachi, Taftan, Chaman, monopoly on freight trade. Data related to major Sust and Torkham18. maritime indicators is presented in Table 4 (see Annexure-A). A substantial part of trucking industry, despite official regulations, remains part of the informal sector and unregulated. Financing new trucks and vehicles remains a difficult endeavor, and The Policy-scape government limits the import of vehicles (through tariffs). Some of the most significant regulatory Most recently, the Parliament passed ‘Pakistan documents governing transportation services Courier and Logistics Regulatory Authority Bill currently include the National Maritime Policy 2018 (PCLRA) to regulate the sector by (2002), National Trucking Policy (2007), establishing the Pakistan Courier and Logistics National Aviation Policy (2015), Automobile Authority. The PCLRA, contains 11 members of Development Policy (2016), National Trade and which nine are government officials. There is Transportation Facilitation Strategy (2016), and hardly any presence of stakeholders from key the Pakistan Railway Strategic Plan (2017). segments of the sector, meaning that their practical experience and insights are absent in In August 2015, Pakistan became a signatory policymaking. Developments in transport sector to ‘Convention on International Transport of regulations are given in the appendix (see Goods under Cover of TIR Carnets’, which Annexure-B). formalizes and harmonizes administrative requirements/procedures related to road Belt and Road Initiative - CPEC transport. This provides access to Central Asian and Chinese markets. A follow-up With a total financing reaching to $60 billion, guarantee agreement was signed in January CPEC- a major component of the Belt and 2017, paving the way for closer integration with Road Initiative-is arguably the most ambitious the global transit system. project for Pakistan in terms of developing transport infrastructure. $6,100 million is Pakistan is also a signatory to Montreal invested in road transport, while $3,690 million

14 ‘Transport and communication’, Economic Survey 17 A detailed list of regulations and works in progress 2017-18. can be found at NTTFC, especially presentation by its 15 Imports only. See Statistical Appendix to Economic Secretary Mr. Umar Wahid. Survey 2017-18, CH 13, Table 13.1 D. 18 ‘Pakistan needs to update regulatory framework for 16 ‘China turning Pakistani port into a regional giant’. trucking industry under CPEC’.

is expected to be invested on upgrading clusters in urban areas is sub optimal, hindered Railway19. The National Highway Authority by escalating economic costs caused by traffic (NHA) is pursuing 17 projects specifically congestion, road damage and limited devoted to this initiative20. alternative to road travel23. This limits the scope of growth in freight transport, and thus business Other transport and logistics projects including potential. The latest transport policy equates dry ports, Gwadar deep sea port, Fiber-optic the development transport services with connectivity, inter-city mass transit, etc., are improvements in socio-economic variables like being pursued in order to align the overall poverty and inequality. transport infrastructure with the larger goals envisaged under the CPEC. However, the The absence of a competitive, productive success of CPEC transport initiatives will transport sector results in an annual loss of 1.2 depend upon removal of the inefficiencies and to 1.4 percent of GDP in the form of lost income problems that plague the transport sector in opportunities, as predicted by a General Pakistan. Equilibrium Model based computation24. An estimate by the government of Pakistan in 2007 According to an economic correspondent, the revealed that the trucking sector, which carries CPEC has so far remained limited to the public about 95 percent of the total freight by roads, sector, and so far has not triggered private costs the economy $2.2 billion per annum in the sector investment. form of additional fuel and subsidies ($1.2 to $1.5 billion), additional costs to road users ($0.52-0.61 billion), and $0.44 billion in infrastructure deficit25. The Cost Inefficiency The poor state of connectivity in the rural areas The World Bank (2013)21 estimated economic is partly reflected in the losses accruing to trade losses due to inefficiencies between 4-6 and business. The Economic Survey of percent of GDP every year. Of the estimated Pakistan estimated that almost 30 percent of 200,000 vehicles associated with freight the rural agricultural produce is wasted due to carriage, the majority is owned by individuals, deficient road and infrastructure network, built 26 and individual ownership typically does not largely upon obsolete transport vehicles . The exceed five vehicles. Corporate fleet operators problems associated with the transport sector account for only a handful of the market, and led to a decrease in revenue by 1.4 percent per none provide a complete supply chain annum per km (in real terms) over the last two solution22. Gaps in connectivity raise the decades. transportation cost and greatly limit Pakistan’s According to an official at the National Highway capacity to participate in the global supply Authority (NHA), present regulations are chain. deemed ineffective in facilitating transportation The domestic connectivity with industrial sector, and that corruption has become a major

19 ‘China-Pakistan Economic Corridor: Transport & 23 ‘Transport sector: inefficiencies cost economy 4-6 Logistics Sector Growth Potential in Pakistan’. percent of GDP per annum: World Bank report’. 20 Economic Survey 2017-18, p.189. 24 ‘Transport sector: inefficiencies cost economy 4-6 21 ‘Greening growth in Pakistan through transport sector percent GDP per annum’ reforms- Strategic environment, poverty and social 25 Ibid. assessment’. 26 Economic Survey 2013-14, p.195. 22 ‘Logistics industry lacks clarity over CPEC’.

obstacle in implementation of regulations. The government must consider revising the Another official from the NHA noted that the tariff regime inflicting the transportation sector, government must pay special attention to the and facilitate the trade of vehicles across transport sector considering size of population Pakistan’s borders by removing non-tariff and economy. barriers.

The shipping sector is not immune from The government must also consider removing problems. High port costs and tariffs are seen distortions in the transportation services market as a detriment to trade and container traffic. by eliminating current subsidy programs. Issues like clearance time for on-shore container cargo and congestion at terminals Government regulations should be devised to create unnecessary hassles. The depth at minimize barriers to entry and exit in the operational ports is limited to 10-12 meters market. which prevents efficiency in terms of using bigger container ships27. Shortage of space Homogenous Policy limits the scope of achieving economies of Centring national policy on the enhancement of scale through more container and freight traffic. a specific sub sector in the transport services The shortage of space and clearance backlog market will tend to limit the number of available can result in extra costs incurred by the service options, and increase vulnerability to importer. At this moment, ship owners incur an supply shocks. By directing public funds estimated $26 per ton extra in terms of cargo28. towards arbitrary goals, the government All of the above feed into the overall costs of distorts the market, and drives out long term doing business, setting back the size and scope high efficiency players out of competition. of domestic trade possibilities as well as Pakistan must consider privatization eroding Pakistan’s competitive advantage arrangements for state owned operators to when it comes to foreign trade. improve sectoral efficiency. This should provide space for investments to flow towards the most economically viable mix of solutions. This should benefit short term growth and support Recommendations for long term market stability. Future Policy Making the most of the belt To fully benefit from CPEC, the government Market Openness must extend special incentives related to the project to all potential domestic and At this time, policy must focus on reducing the international investors, and not exclusively to economic cost of transportation over the long Chinese investors. This exclusion discourages term. An artificial shortage of transportation investment, and slows down the pace of capital has been brought about by protectionist development along the belt. The government policies. Following measures are needed: must consider improving the state of private property rights especially in the section of the Streamlining the import process for commuter belt running through Baluchistan. Due to and freight vehicles will help to overcome this limitations of public funding, the government of shortage, and enhance the sector potential. Pakistan should consider using provision point

27 ‘Sectoral assessment summary-Transport’, p.1. 28 ‘Lifeguarding our drowning ports’.

mechanisms to fund secondary road infrastructure connected to the belt.

Within Cities

In the area of urban transportation, a significant improvement is required in the management of traffic. Policy should focus on maximization of the potential of existing road infrastructure and available transport capital. Demonopolizing urban mass transit infrastructure such as the Lahore, and Islamabad Metro bus project could greatly enhance the capacity, affordability and efficiency of transportation services in those cities. A road use fee structure incentivizing travel during low congestion hours would greatly reduce inner city traffic bottlenecks.

Reducing the Cost of Travel

Almost half of the cost of fuel is taxes and levies charged by the government. Eliminating this extra burden on consumers will increase the demand and the use of transportation services, and drive growth in the sector significantly.

Demonopolizing the import of fuel would have the effect of reducing average prices, and should also reduce the burden on the government forex reserves.

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Annexure-A: Data Tables

Table 2: Major Railways Indicators Freight Freight Gross Gross Wagons- No. of Passengers- Freight Carried- Earnings Earnings- Freight Percentage Passengers Percentage Carried Percentage (Millions Percentage Year Wagons Change (mil) Change (Mil. Tons) change Rs.) Change 2000-01 23,893 68.8 5.89 11,938 2001-02 23,460 -2 69 0.29 5.9 0.17 13,346 10.55 2002-03 23,722 1 72.4 4.70 6.18 4.53 14,810 9.89 2003-04 21,812 -9 75.7 4.36 6.14 -0.65 14,635 -1.20 2004-05 21,556 -1 78.18 3.17 6.41 4.21 18,027 18.82 2005-06 20,809 -4 81.43 3.99 6.03 -6.30 18,184 0.86 2006-07 19,638 -6 83.89 2.93 6.42 6.07 19,195 5.27 2007-08 18,638 -5 79.99 -4.88 7.23 11.20 19,973 3.90 2008-09 17,259 -8 82.54 3.09 6.94 -4.18 23,160 13.76 2009-10 16,499 -5 74.93 -10.16 5.83 -19.04 21,886 -5.82 2010-11 18,468 11 64.9 -15.45 2.61 -123.37 18,740 -16.79 2011-12 17,611 -5 41.9 -54.89 1.3 -100.77 15,444 -21.34 2012-13 16,635 -6 42 0.24 1 -30 18,071 14.54 2013-14 16,179 -3 48 12.5 1 0 22,800 20.74 2014-15 15,452 -5 52.9 9.26 3.6 72.22 31,924 28.58 2015-16 15,164 -2 52.19 -1.36 5 28 36,582 12.73 2016-17 16,085 6 52.39 0.38 5.63 11.19 40,065 8.69 Source: Various Economic Surveys and Author’s calculations.

Table 3: Major PIA Indicators Available Available Operating Operating Available Seat Available Tonnes Operating Expenses Operating Revenue Seat (Mil. (Percentage Tonnes (Percentage Expenses (Percentage Revenue (Percentage Year Km) Change) (Mil. Km) Change) (Mil. Rs) Change) (Mil. Rs) Change) 2000 18,692 2631 42,033 39,228 2001 17,756 -5 2541 -3.54 43,242 3 43,608 10.04 2002 15,776 -13 2242 -13.34 38,057 -14 43,674 0.15 2003 17,259 9 2473 9.34 42,574 11 47,951 8.92 2004 20,354 15 2973 16.82 55,872 24 57,786 17.02 2005 20,816 2 3,103 4.19 67,076 17 64,074 9.81 2006 22,092 6 3,369 7.90 79,164 15 70,587 9.23 2007 20,313 -9 3126 -7.77 76,415 -4 70,481 -0.15 2008 18,528 -10 2934 -6.54 120,499 37 88,863 20.69 2009 19,859 7 2933 -0.03 98,629 -22 94,564 6.03

2010 21,219 6 3091 5.11 106,811 8 107,532 12.06 2011 21,726 2 2973 -3.97 135,023 21 116,551 7.74 2012 19,850 -9 2859 -3.99 133,930 -1 112,130 -3.94 2013 17,412 -14 2471 -15.70 129,588 -3 95,771 -17.08 2014 16,537 -5 2396 -3.13 114,944 -13 99,519 3.77 2015 16,666 1 2436 1.64 108,478 -6 91,269 -9.04 2016 19,201 13 2798 12.94 121,863 11 88,998 -2.55 Source: Various Economic Surveys and Author’s calculations.

Table 4: Major Maritime Indicators Karachi- Cargo (000 Percentage Port Qasim- Cargo Percentage Gwadar- Cargo Percentage Year Tons) Change (000 Tons) Change (000 Tons) Change 2000-01 25,981 - 13,588 - - 2001-02 26,692 3 13,317 -2 - - 2002-03 25,852 -3 15,109 12 - - 2003-04 27,813 7 14,123 -7 - - 2004-05 28,615 3 19,437 27 - - 2005-06 32,270 11 21,573 10 - - 2006-07 30,846 -5 24,350 11 - - 2007-08 37,192 17 26,424 8 63.6 - 2008-09 38,732 4 25,030 -6 1,496.50 95.75 2009-10 41,420 6 25,606 2 1,261.80 -18.60 2010-11 41,431 0 26,168 2 476 -165.08 2011-12 37,875 -9 24,025 -9 1,426.00 66.62 2012-13 38,850 3 24,801 3 507.6 -180.93 2013-14 41,350 6 25,725 4 649 21.79 2014-15 43,422 5 30,114 15 438.9 -47.87 2015-16 50,045 13 33,321 10 50.6 -767.39 2016-17 52,493 5 37,358 11 80.4 37.06 Source: Various Economic Surveys and Author’s calculations.

Annexure-B: Developments in Transport Sector Regulations

Category Goals Accomplished

Electronic submission of forms enabled

Custom officials get specialized training to handle these kinds of forms

Adopted in all custom’s stations across Pakistan under WeBOC. Aimed at integrating operations under ‘One Window’ policy. Goods Declaration Certificate of origin authorized by Chamber of Commerce and Industry.

Commercial invoicing for exporters

Important documents related to ship’s general declaration, crew list, Crew’s effect declaration, Passenger’s list and ship’s store declaration all standardized into one form under IMOFAL Convention obligations.

Ship Clearance Software for submission of these forms and specially trained crew for easy submission of forms.

Trading locations in Pakistan now properly coded in accordance with UNLOCODE.

Implemented ISPS Code of IMO at all ports of Pakistan and on Pakistani ships carrying cargo to meet international security requirements.

Worked with NLC and port authorities to install scanners for security and anti- smuggling purposes.

International Trade Studies carried out on improving border crossings and cargo handling facilities at international airports, and submitted suggestions for improvement to the government.

Establishment of NTTFC official website

Provided Marine Fisheries Department with guidelines to implement required procedures/ protocols and standards in accordance with international levels.

Studies carried out on post-harvest Mangoes and identified deficiencies in cold Improving export of storage, refrigerated transport and processing. Guidelines provided to relevant perishable stakeholders for improving systems. commodities Active coordination with all concerned departments regarding implementation of international food safety standards and requirements.

To facilitate the trading community and businessmen, trainings with the help of Pakistan Banking Institute (PBI) held in order to apprise participants of the requirements under ICC Uniform Customs and Practices (UCP 600), for issuing

Letters of Credit without mistakes.

Faculty hired at PBI for training various stakeholders in new developments/ laws/ regulations related to the transport sector. Trade related financial procedures Electronic exchange system implemented in collaboration with State Bank, commercial banks and Customs department for easy sharing of e-forms, thus fastening the process of form clearance.

Standard trading conditions, minimum qualification and code of conduct implemented in order to improve quality.

National course for freight forwarders designed and approved. Trainings held for Freight forwarding freight forwarders in collaboration with FIATA.

Main role in designing and advocating the newly adopted ‘Pakistan Courier and Logistics Regulatory Authority Bill 2018 (PCLRA).

Source: National Transport and Trade Facilitation Committee (NTTFC).

Annexure-C: Response of Relevant Public & Private Stakeholders

Note: The focal persons from following organizations chose to remain anonymous. Questions/Organizations Transport & National Highway National Highway Economic Communication Section Authority (Finance) Authority (Accounts) Correspondent (Planning and (Express Tribune) Development Commission)

1) In the near future, do you Yes, in the context of Yes, Freight transport I think conventional It will depend upon see freight transport shifting improved will probably shift from road freight along with the reconstruction gradually from financing/budgetary road to rail network. railways will dominate of the rail predominantly road freight allocations in the last 5 years Air transport is mostly transportation in infrastructure, towards rail/air transport? and focused on the rail used for light weight country ahead. As since the existing What about long-term? infrastructure and its items domestically, economic connectivity infrastructure is not Reasons? operations on the BOT/PPP otherwise railway among world sufficient to meet mode. It is expected that rail dominates. With countries is increasing the cargo needs. freight share would increase change of government, and the importance of Due to short air to 10-12% of the road share railway network is fast transportation will distance, the in coming 2-3 years. In the expected to make be a key to success. In possibility of air long-term it is targeted that momentous progress in Pakistan’s cargo is not very the rail freight share should the time to come. It has perspective, the China high. be between 22-25% in order an edge over other Pakistan Economic to make the railways a modes of transport Corridor (CPEC) revenue earning being comparatively which is part of organization. cheaper and hustle free. regional economic integration provides ample potential to this area. The economic activities generated by this mega project will strengthen the railways and road transportation.

2) Are the present Regulation/sops/rules/laws Not too much effective. There are bottlenecks The regulations are regulations effective in are there. However, there is Effectiveness and in the regulations and not hurdles to the addressing inefficiencies or always a room for efficiency are two their implementation transport sector issues of the transport betterment and review after pillars of success especially in the development. The sector? every 3-5 years to achieved in calling transport sector. key issue is the accommodate the something to be in Government has to fiscal constraints to requirement and new better state. Corruption pay special attention to develop the rail international laws and is major hurdle in the transport sector links. technologies. However, implementation of considering size of major issue lies in the regulations fairly. population and implementation side, which Local transport economy. It is needs focus and authorities’ issues imperative that an eco- improvement. fitness certificate to friendly transportation transport vehicles on system is need of the

receipt of payment in hour. Pakistan has to personal bank account. revisit its Driving licenses are transportation policy awarded based on considering its present nepotism and bribery. needs and issues. Fair and centralized Government should system is a need of bring educated brains today with proper with modern counterchecks. technology to reform this sector.

3) Has Pakistan updated its Pakistan is in the process of The answer is a big no. Being signatory is not Not aware. procedures/systems in line improving its systems and Reasons behind non- the end of with signed conventions, laws with international laws conforming with responsibility but it is like Carnet ITP? If not, as they are entering into international standards just beginning to where lies the fault? CPEC and other framework are lack of political will change. Pakistan agreements with and incompetency of needs to align its neighboring countries our institutions policies according to including Afghanistan and responsible. the needs of the CARs. country while considering international conventions as well. Presently, no nation can advance in isolation.

4) Are large scale transport No, it is not the case. A Yes, but to some extent. CPEC investment No that is not true. related projects solely number of large CPEC financing is divides in many The federal dependent upon CPEC infrastructure projects are helping Pakistan to segments and government has financing? also being funded through build and upgrade its transport sector is one long been funding local resources and with road infrastructure of the major portions railway expansion some other donors/partners network. It will but it is not true that all project through the like ADB and JICA. facilitate and uplift our major projects are a PSDP. transport network part of the CPEC. health. Pakistan itself finances so many economically as well as strategically important transport- related projects. Government of Pakistan besides constructing new roads is also managing maintenance of the larger road network.

5) Is it true that large-scale Railways in the long haul is Yes. It is actually the It is true that The Sahiwal power government projects, like economic and efficient in case. Large-scale government is plant is the first of power plants and terms of delivery time and government projects engaged in completing its kind project that Motorways are the primary involves very low risk. In have a number of massive projects of is established far

source of spurring freight any case whether we built auxiliary benefits that different sector such as away from the port traffic? How much effect do motorways, the freight includes spurring energy, transport, city. There is no private sector projects have forwarders will prefer freight traffic. infrastructure etc possibility for on spurring freight railways in future. which will certainly establishing such transport? shape the freight scale project far off traffic. Government the shores. should bring public- However, the Thar private partnership so mining and coal private sector can be projects could encouraged to make become a sustained decision conducive for source of earning private investments for the railway and businesses. cargos.

6) What effect has CPEC This is too early to say since CPEC will boost Basically CPEC is The CPEC has so had upon getting the private the infrastructure especially investment of private aligned with China’s far remained sector to invest in transport road projects only involve sector in transport ambition of One Belt limited to the sector? Has there been any construction and during sector. Many road One Road to augur public sector. It has significant improvement in construction period no such infrastructure projects regional economic not triggered the private sector participation involvement of private are being built on integration. The major private sector and investment in transport sector is utilized. After the Public Private aim of CPEC is to investment. projects? construction of necessary Partnership i.e. BOT improve economy by infrastructure and Basis (Build-Operate- bringing private sector development of Economic Transfer). A number of in the economic Zones and Industrial estates, Chinese auto activities of the storage and handling depots, companies entered into country. Pakistan is the private sector can come joint ventures with constructing many in and enjoy the fruits of Pakistani companies to crucial CPEC projects CPEC. make and assemble in transport sector on auto vehicles in Public Private Pakistan. It is one of the Partnership basis. But big achievements of there is more potential local investment to bring private sector mindset linked to in this segment to get CPEC. benefits.

7) Any initiatives at federal, Yes, especially in KPK It is a bit disappointing It is true that transport There are no such provincial government level (Peshawar) and Karachi a while imaging role of section has always efforts. to incentivize replacing aged number of mass transit lines Government in been neglected since transport with newer on Hybrid technology and revolutionizing decades. The older and versions? train (light rail transit) obsolete transport unsound vehicles were schemes are under system. Government always allowed to consideration in design has not set any priority move freely on roads. phase. to introduce practical But now there is reforms in old aged change when road transport versions. network has been changed. The National Highway and Motorways Police took some policy measures to

incentivize the faulty vehicles running on Motorways but there are still loopholes in the system that needs to be corrected. Proper checking with punishment must be implemented across the country. The reform program must consider physical conditions, atmosphere, driving license and driver’s health also.

8) Are industrial sectors in Yes, but the infrastructure Yes, They have to. When the country’s Yes, the existing Pakistan properly connected needs improvement and Industrial sector of road network was hubs of the to road and other transport major rehabilitation. Pakistan is not properly built, it catered the industrial activities networks? connected to transport need of those times but are connected network at optimum the situation is now through road level. Discrepancies entirely changed and projects. exist in our value chain economic activities network that needs to are widely be properly addressed commenced on priority. throughout country (though needs much improvement). The need of an effective transport system is essential to properly provide connectivity to different industrial sectors of the economy. Pakistan has undertaken various development projects in this respect to improve the connectivity in country such as PKM, Hakla to DI Khan, E- 35 etc.

9) What steps are being Especially in the major 10 billion tsunami tree It is a fact that no So far, Pakistan has taken to ameliorate the urban cities of Pakistan, all plantation project has government in past not taken any problem of air pollution in the new mass transit system been started by newly paid attention to the air significant steps, as Pakistan? being propped or in design elected Government of pollution in country. It it thinks that the stage or already constructed Pakistan. Its scope is opened eyes of general emission levels are are as such to reduce air expanded to all over public when the far lower than the

pollution in the cities by Pakistan. It will surely country was hit by permissible limits. introducing new technology tackle our air pollution natural calamities in means. problem. Introduction 2010-11 and 2012. of Euro-II and eco- Economy suffered friendly auto vehicles billions of dollars loss in Pakistan is a very and lost basic good initiative taken up infrastructure. Now by private sector. the government is determined to start ten billion trees plantation all over the country to mitigate CO2 effects.

10) Any step towards Approval of new “National Many steps have been Recently, government Not aware. implementing intra-model Transport Policy” in May taken to make delivery has tried to improve transport? 2018 and development of fast and convenient. transport system in Master Plan for the whole Intra-modal transport country but it country which is under way has been implemented remained unsuccessful with the help of ADB/DFID in Pakistan at a small in achieving the full is one of the major scale mainly due to potential of Intra- breakthrough towards affordability issue. modal Transport. implementation of Although, private intermodal structure of sector is engaged at transport. quite low scale but there is ample potential especially for public sector to introduce Intra-modal transport.

11) The government created No idea. Yes, government took Of course, legislation Not aware. the ‘Pakistan Courier and fairly good initiative to is the major Logistics Regulatory regulate this roughly component in Authority Bill 2018 to regulative oligopoly achieving your set regulate the industry and industry. But it proved targets. No nation can establish PCLRA. Was there not to be so substantial achieve its dream of a need for it? Any updates in facilitating the peace, prosperity and regarding its work and masses. It seems to be economic power effectiveness? just limited to without proper documents only. legislation. Introduction of Pakistan Courier and Logistics Regulatory Authority Bill 2018 would provide guidelines to the people and businesses connected to it.

This country update note is authored by PRIME CUTS International, Geneva is a non-profit NGO Institute (Policy Research Institute of Market that catalyses the pro-trade, pro-equity voices of Economy). CUTS’ country updates aim to inform the Global South in international trade and negotiators and policy makers about stakeholders’ development debates in Geneva. We and our perspectives on the ground related to a particular sister CUTS organizations in India, Kenya, Zambia, issue. Readers are encouraged to quote or reproduce Vietnam, and Ghana have made our footprints in material from this paper for their own use, provided the realm of economic governance across the due acknowledgement of the source is made. developing world.

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