It is heartening to see the vital subject of the maritime economy gain some recognition in our national planning discourse as my presence here shows. After all, it was barely an year ago that a member of the Planning Comission had confided in a meeting that none of the 13 indicators that the Commission had identified for zooming in incorporated anything even remotely connected with any maritime activity. I still won’t start off my talk, as is generally the norm when discussing maritime matters, by decrying our so-called sea blindness, a term reportedly coined by Professor Eric Grove. The hype surrounding Gwadar has ensured that one maritime entity at least has been catapulted into the forefront of the public consciousness. But seen in the broader context of a blue water economy, is that all there is to it? Strategically located along the northern reaches of the Arabian Sea and blessed with a 1000 km long shoreline, Pakistan possesses all the credentials of evolving into a significant maritime power. My presentation today revolves around circumventing the artificial barriers standing in the way of realising our aspirations.
The mistake we so often make is in judging maritime issues in terms of entities like ports, ships and shipyards rather than activities or processes that fuel the national economy. We also tend to forget that our entire coastal belt, most of it pristine, acts as a land-sea interface. Ever since the Rio Earth Summit in 1992, it has been formally recognised that the coastal zone, in which both terrestrial and oceanic forces are at work, deserves to be treated as a separate entity for the purpose of integrated and sustainable planning. The concept of Integrated Coastal Zone Management should thus be embedded in our planning and execution process.
Permit me at this stage to introduce an increasingly popular term, ‘Maritime Domain Awareness’, which in effect pertains to the ‘effective understanding of anything associated with the maritime domain that could impact the security, safety, economy or environment. But what exactly constitutes the maritime domain? Reflecting the wide range of activities and linkages that it embodies, this domain encompasses ‘all areas and things of, on, under, relating to, or bordering on a sea, ocean or other navigable waterway, including all maritime related activities, infrastructure, people, cargo and vessels and other conveyances’.
When we stop to consider that the sea constitutes more than 71% of the world’s surface and that around 80% of the world’s population lives within a 100 kms of the sea and if these facts alone sink in, it will no longer be difficult for us to understand as to why the global maritime industry is arguably the largest and most all-encompassing sphere of human activity.
Let me drive this point home further through an established sequence of linkages:
a. First and foremost, some 90% of world trade by volume is carried out via the sea and out of this trade, as much as 90% is carried out in container carriers alone.
b. Secondly, a large number of vessels are needed for various purposes: cargo is handled by container vessels, crude carriers, refined products carriers, chemical carriers, LNG carriers, breakbulk cargo carriers and general cargo carriers; offshore oil rigs for exploration and drilling; marine scientific and oceanographic research is carried out through dedicated vessels; then there are fishing vessels of all types, cruise liners which fuel a huge recreational industry, Offshore Patrol Vessels for upholding the sanctity of our maritime zones and warships for defending our national security interests at sea.
c. Thirdly, these ships have to be manned by trained seafarers, creating job opportunities that are well-paying and much in demand.
d. Fourthly, these ships have to be constructed in commercial yards, which is another profitable enterprise. These ships also need periodical maintenance and repairs, which in concert with ship conversions is again a lucrative activity.
e. All these ships, on completion of their useful life, also need to be disposed off and the most beneficial way of doing so is to recycle them which apart from job creation also results in the generation of a vast amount of cheap raw material.
f. Now these ships have to be berthed in order to load and offload their cargo and hence the need for ports. The importance of a port is not rooted in its ability to handle cargo alone, but in being capable of providing all manner of integrated, value-added and customised services.
g. The availability of industrial zones, logistics centres, free trade zones, multi-modal transportation facilities and shipping offices within the port area enhances its importance.
h. Fisheries and Aquaculture the world over both through prime and associated fields is a rich source of proteins, livelihood and revenue.
i. Coastal tourism likewise, which is greatly in demand, is capable of furnishing unlimited employment opportunities and contributing significantly to the regional economy.
j. As businesses multiply, such thriving maritime activities give rise to ancillary services such as marine insurance, banking, brokering, vessel classification, arbitration and consultancy, which add to the robustness of the sector.
l. Such effusion leads to the formation of maritime clusters which helps in developing a sound knowledge base through skill-sharing, creating business opportunities for maritime related activities and expanding employment.
m. Usable offshore mineral deposits like iron, manganese nodules and crusts and offshore hydrocarbons particularly gas hydrates, which possesses all the trappings of evolving into a very useful source of energy, hold great promise.
n. Three things are a constant in our coastal area: heat from the sun, offshore winds and ocean currents; and all these sources, if properly harnessed, can prove to be useful reservoirs of renewable energy. In addition, ocean thermal energy, utilising the temperature differential between the surface water and the lower layers, can also be a clean source of power generation.
Almost all countries derive benefit from the sea in one way or another, many depend on it for raising their living standards, while for a few like the Netherlands, embracing the sea is linked to their very survival. This is the country which has built impregnable dykes to keep the ocean out from almost 27% of its territory that is below sea level and yet houses 60% of its population. It also hosts the largest, most innovative and most efficient port in Europe’s competitive environment. So if we face problems in managing floods, managing pollution, limiting seawater intrusion and raising the efficiency levels of our ports, this is the state to look up to.
Pakistan is admittedly a coastal state, but the question of where exactly have we faltered in our quest for maritime ascendency deserves careful thought. Part of the answer lies in the pages of history: self-sufficiency of the area that constitutes today’s Pakistan in all of life’s bare essentials kept it away from the trade flourishing along the coast washed by the Indian Ocean since the past five millenniums. The port of Karachi was only developed by the British in the mid-nineteenth century when trade in Punjab’s cotton became profitable as American exports dwindled in the face of its ongoing civil war. The other part of the answer can be gauged from two of the principal conditions enunciated by Alfred Thayer Mahan that influence a nation’s seapower, namely character of the Government and character of the people.
However, instead of plunging into despair, the need of the hour is to calmly plan to grimly face the maritime challenges of the future by getting our nautical bearings right. We may do well to remember that the maritime domain constitutes a world of its own, in which lessons learnt on land may not be directly applicable here.
For a very long time, seafaring nations were guided by customary international law or bilateral treaties till a comprehensive UN Convention on the Law of the Sea, arrived at through a broad consensus, was opened up for signature and ratification in 1982. UNCLOS ’82 formally bequeathed to all coastal states, including Pakistan, a number of maritime zones extending outwards from a coastal baseline, all with their own share of responsibility. So while looking to its potential with hope, we can ill-afford to ignore the obligations that come with it.
The meteoric rise in maritime activities over the past few decades in particular has resulted in the International Maritime Organisation painstakingly crafting and periodically updating maritime conventions governing every aspect of maritime life to create a safe, environmentally sound and conducive workspace. The responsibility for ensuring that the standards established through these conventions are adhered to fall on the state in all capacities, including that of a Flag State and a Port State.
Another vital aspect worth remembering is that simply building more ports and shipyards or procuring more ships will not ipso facto convert Pakistan into a maritime power. What matters more is whether these emblems of maritime greatness are being effectively utilised and whether the levels of efficiency and productivity achieved are commensurate with the world average at least. A better understanding of the maritime environment and corresponding market forces helps in making the right call at the right time. It is equally important to have one’s finger on the pulse of a volatile and fluctuating market in order to derive accurate conclusions prior charting a well deliberated course of action. So while we can selectively quote an example of China having more than 1600 shipyards, but we would neglect to mention that hardly 4% of them bagged new contracts in 2013, and that too at a time when the the profitable Chinese yards had succeeded in obtaining nearly 40% of global orders during the first half of the same year.
Another useful lesson to remember is that while there is no harm in any organisation trying to project a positive picture of itself, it is never a good idea to get so enamoured with the narrative that inadequacies standing in the way of optimising one’s full potential stand ignored. Post nationalisation PNSC has had a bumpy trajectory with more downs than ups. Since the past decade or so, however, its profitability graph has been steady owing to some major policy decisions taken: curtailing the power of the labour unions, trimming the manpower fat, switching from liner services to tramping, replacing high-maintenance old ships with relatively newer ones and venturing into the domestic crude oil carrying business. Reduced ship prices owing to a downturn in the industry also worked in its favour. We mustn’t however lose sight of the fact that PNSCs continued success has primarily been enabled by sacrificing competitiveness at the altar of the right of first refusal to the detriment of potential private entrepreneurs and indeed the country itself. Smart business tactics they may be but they tend to inhibit the Corporation’s ability to compete in an open field. Let’s also take the example of the four tankers procured by PNSC to meet domestic crude oil needs. Though each of them has a deadweight carrying capacity of over 105,000 tons, they all are constrained to carry just 60% of this load due to port-related problems. The local refineries are thus picking up the tab for this inefficiency and passing it on to the consumers.
Similarly, while recognising that the ports of Karachi and Bin Qasim have been turning in profits for quite some time, we may also do well to remember that this success has been on the back of captive cargo alone, or in simpler words, by handling that cargo which is forced to pass through these ports. The adoption of the landlord concept ie leasing of selective berths on BOT basis is another contributory factor. Pakistani ports unfortunately figure amongst the bottom 20% both in terms of efficiency as well as in the ‘ease of doing business’ index. Profitability, as opposed to provision of optimum services at competitive rates, thus takes centre stage.
Although there is significant demand for ship building and repairs from amongst the multitude of ships that regularly transit the Gulf, Karachi Shipyard’s turnaround has only come about at the expense of the defence exchequer, while consistently failing to bag any outside order. Most countries are admittedly protective about their defence industry because it helps retain a core capability and allows downstream industries to flourish. KSEW, however, despite decades of experience, is still not able to construct any vessel type from the drawing board to Sea Acceptance Trials on its own. Its inability to compete financially can be judged from the fact that in a recent order for the construction of six Offshore Patrol Vessels for the Maritime Security Agency, only the last two will be constructed locally. KSEW has amply demonstrated its technical skills, but needs to be encouraged, nay prodded, into developing a full spectrum capability from marketing through sales to post induction maintenance support.
Again, though our fish exports have crossed $300 million, the sustainability of our fisheries sector is being adversely impacted by illegal fishing practises, rampant overfishing and loss of fish sanctuaries. Our ship-breaking industry figures amongst the top three in terms of ship tonnage dismantled, but the techniques employed are environmentally insensitive and labour exploitative, because of which none of the EU registered ships are finding their way here.
So how could a generous dose of maritime orientation assist us in any material particular? Firstly, it will help us keep in touch with maritime developments taking place around us and to initiate timely steps to meet the purport of the international maritime conventions and protocols coming in force. Despite transformational changes occurring in the maritime domain in terms of curbing illegal activities at sea, enforcing security measures, improving standards of training and watch-keeping at sea, encouraging sustainable fisheries, reducing ship emissions and minimising marine pollution, the only two pieces of domestic legislation that we have been able to come up with so far are the Territorial Waters & Maritime Zones Act of 1976 and the Carriage of Goods by Sea Act of 2010. The former is a basic piece of legislation which has remained unchanged despite UNCLOS ’82 coming into force. The latter legislation came about because of the hue and cry made by the exporters who warned of the likely grievous consequences if we failed to reform the outdated British era legislation of 1925. Even the much older KPT Act of 1886 is begging revision. There are likewise no Admiralty Courts, no prize courts, no salvage courts, no courts for marine arbitration and no expertise in maritime law either.
Secondly, it will enable our responses to be in line with our aspirations. Let me illustrate this by way of an example, that of the prestigious port of Gwadar. This port has been touted as an earth shattering global phenomenon which is supposedly giving nightmares to countries like the US, India, Iran and UAE. Amongst all the hype surrounding Gwadar, the fact that the port has not undertaken any profitable transaction since the completion of its first phase more than a decade back has seemed to escape everyone’s notice. So while we stand fixated with Chabahar and the port of Dubai, as Jebel Ali is colloquially referred to, the rise and rise of the Omani ports of Salalah and Sohar remains far from our thoughts. The port of Salalah has become a major regional gateway port and transshipment hub and has added a further feather to its cap by recently hosting a 19000 TEU carrying behemoth, which is even beyond the current capacity of any of America’s 361 odd ports. The port of Sohar, whose construction had started at almost the same time as Gwadar, is now a major transshipment hub for the Gulf, next only to the UAEs Khor Fakhan, with major shipping and logistics companies vying with each other to extend their businesses there. Dubai’s Jebel Ali is being consistently voted as the most efficient port in the Middle East and its industrial zone currently hosts more than 7100 firms from 110 different countries.
The point is that Gwadar has to compete with these thriving regional ports rather than the other way round. Let alone compete, the port of Gwadar is still not commercially viable as yet. If we want to use it as a transshipment hub, we have to ensure that the channel and berths are sufficiently dredged to handle an 8000 TEU vessel at least. And if we want to use it for transit trade, we should have simultaneously created a road and rail network till the Pak-Afghan border at Chaman and perhaps beyond. Gwadar’s forte actually is the direct and most convenient connectivity that it provides with China’s western regions, but even in this it is being upstaged by its fellow Pakistani ports of Karachi and Bin Qasim, which are likely to feature both motorway and upgraded rail links till Havelian within the next two to three years. Unless these deficiencies are addressed, the next ten years would see Gwadar exclusively being used by Chinese companies for meeting Chinese requirements within Pakistan.
Thirdly, it will help us better understand why some maritime entities flourish while others flounder. In a nutshell, it has to do with situational awareness, capacity issues, competitiveness, market forces and timing.
Fourthly, it will endow us with the ability to conceive and execute maritime projects in a smooth and seamless manner, minimising thereby any unforeseen hiccups along the way. Let’s take the case of the Karachi Deepwater Container Port Terminal, also heralded as a game changer. Scheduled for completion in 2009, it is now well over schedule, and even if it attains partial functionality by the end of the year as promised, KPT would be hard pressed to recoup its huge investment anytime soon, by virtue of having skirted rather than addressed the obvious project related problems.
The primary problem we are confronted with now is how to make up for lost time and go about overcoming our known weaknesses in a systematic manner. The first step is obviously capacity building at all tiers of the maritime hierarchy. This process can commence by initially training a limited number of professionals in selected disciplines at the World Maritime University at Malmo or any of the other foreign maritime universities. A National Maritime University can subsequently be set up to utilise these trained individuals to further train more maritime professionals as per our current and future requirements.
The next step is to create a one-stop shop geared to address all maritime queries posed by maritime stakeholders and port users. The best way to do so is to upgrade the existing Directorate General Ports & Shipping into a broader National Maritime Authority, capable of meeting the myriad maritime responsibilities a coastal state is saddled with.
The following list will give us an idea of the magnitude of these obligations:
a. Prevention of marine pollution through adherence to MARPOL 73/78 and coordinating anti-pollution efforts.
b. Ensuring sustainable fisheries by protecting fish sanctuaries and preventing IUUF.
c. Ensuring timely imports by sea of major commodities( currently being managed in isolation by various ministries).
d. Ensuring seaworthiness of Pakistan-Flagged vessels through periodical surveys and certification.
e. Ensuring proper training and examination of all categories of seafarers in terms of STCW 2010.
f. Oversee the engagement, certification and welfare of seafarers.
g. Coordinate dredging work in all local harbours.
h. Ensure that purport of ISPS Code is followed to ensure safety and security of ships and ports.
i. Ensure that all Pakistan-flagged vessels maintain a Continuous Synopsis Record(CSR), an Automatic Identification System(AIS) and a Long Range Information & Tracking System(LRIT) and that all seafarers carry identification cards in accordance with the ISPS Code.
l. Maintaining a maritime distress and safety communication network and coordinating Search & Rescue Operations.
m. Maintaining the network of marine aids to navigation.
n. Coordinating offshore activities like Marine Scientific Research, generation of wind energy and exploratory cum drilling work on extraction of oil, gas and minerals.
o. Promoting industrial linkages.
p. Contributing to international maritime conventions and ensuring their implementation through suitable domestic legislation.
q. Ensuring coordination amongst all maritime stakeholders and during all maritime activities.
r. Ensuring that dangerous goods are properly handled.
s. Ensuring registration, survey and certification of fishing and other miscellaneous vessels.
t. Ensuring environmentally safe recycling of ships and prevention of hazardous practises.
Now since all maritime activities are linked in one way or another, an effective coordinating mechanism at all tiers becomes inescapable. The National Maritime Affairs Coordination Committee(NMACC) is currently the apex policy formulation and decision making forum, though it’s functionality is exceedingly limited in nature and scope because of obvious underlying factors. Coordination at all other levels was conspicuously missing till 2012 when PN took the initiative to set up a Joint Maritime Information and Coordination Centre(JMICC) in which many other public sector stakeholders are represented. This foundation needs to be further built up upon to enable all maritime activities to be streamlined. Let us take the example of Singapore, a port state whose very existence is linked to the safety and security of the Strait that straddles it. It has in place a Maritime Security Committee(MSC), a Maritime and Port Security Working Group(MPSWG), a Maritime Security Centre(SMSC) and a Maritime Security Task Force(MSTF) which ensure effective coordination, info management and timely responses through cross-ministerial and interagency linkages.
Insofar as the potential of the maritime domain is concerned, the sky is the limit. Chinese maritime economy alone is estimated to generate close to $1000 billion. Global seaborne trade has been valued at $16.5 trillion by the WTO. An estimated 664 million containers were handled last year in the world’s box ports. 1083 global shipbuild orders of vessels over 20,000 dwt were placed in 101 yards in 2015. A full 12% of the world population relies on fisheries for their livelihood and let alone huge in-country consumer demands, the export value of world trade in fish amounted to $148 billion in 2014, more than that of rice, coffee, sugar and tea combined.
The only way to harness it is to completely overhaul our existing maritime administrative, managerial and regulatory system which is plagued by a lack of knowledge, imagination and efficiency and suffers from stagnation, complacency and inaction.
And now to recap the salient recommendations:
a. Capacity building to be undertaken at all tiers of the maritime hierarchy, by first training the trainers in foreign maritime universities prior setting up a National Maritime University ourselves.
b. A semi-autonomous National Maritime Authority needs to be set up to meet the myriad maritime obligations of a coastal state, a flag state and a port state, as well as to act as a one-stop shop for resolution of issues troubling the maritime fraternity. This Authority should preferably replace the existing Directorate General Ports & Shipping which has outlived its utility.
c. Coordination mechanisms at all tiers needs to be improved upon, with both vertical and horizontal linkages being developed.
d. A culture of competitiveness and excellence be encouraged amongst the public sector entities to prevent them from becoming parasitical.
e. Our domestic maritime legislation should keep pace with all relevant international maritime conventions and amendments thereto.
f. Quality standards should be established for evaluation, monitoring and audit purposes.
g. In all maritime activities, the regulatory function being of paramount importance should be performed by autonomous non-partisan bodies.
h. A port regulatory body charged with rationalising tariffs, sanctioning new berths and ensuring that requisite efficiency levels in terms of cost incurred per ton of cargo are maintained, should be instituted.
i. Port management accounting be made into a regular feature.
j. Non-hazardous and environmentally safe methods of ship recycling be ensured.
k. The fisheries sector be effectively managed by keeping IUUF and other unsafe practises in check and by conserving aquatic ecosystems.
l. Appropriate facilities and conditions be created to encourage domestic coastal tourism.
m. Marine pollution be curbed by introducing effective waste management systems to prevent sewage, industrial effluents, hospital/toxic waste and agricultural nutrients being liberally dumped into the sea.
n. Adherence to all international conventions, MARPOL 73/78 in particular, by all vessels traversing our coast or berthed in harbour, be ensured.
o. Marine Scientific Research be seriously pursued.
p. All illegal activities at sea be kept in check.
q. Preventive and disaster management measures be timely undertaken.
r. Coastal Zone be developed and managed as per an Integrated Coastal Zone Development Plan.
s. Adherence to International Ship & Port Security Code be ensured.
t. Maritime clusters and marine ancillary services be encouraged.
u. Training and welfare aspects of seafarers be given the attention they deserve.
v. Admiralty style courts be set up for dealing with issues like piracy, poaching, maritime debt, marine pollution and salvage.
It should not be forgotten that the entire maritime edifice rests on the foundation of security. As our maritime interests multiply and our maritime dependence increases, so does the corresponding need to afford protection and prevent malpractices in our maritime zones. Permit me to conclude by quoting from Andre Gide: “Man cannot discover new oceans unless he has the courage to lose sight of the shore”.
Note: The above is the script of a talk delivered at the National Conference on Elements of National Power organised by the Federal Ministry of Planning, Development and Reform at Islamabad on 08 December 2016.