BCom Notes Part II Economy of Pakistan Transport and Communications

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Transport and Communications

A well functioning transport and communication system is a critical pre-requisite for a country’s development. Investment in the infrastructure directly affects economic growth through many changes such as allowing producers to find the best markets for their goods, reducing transportation time and cost and generating employment opportunity. In addition, efficient transport and communication systems also have effects and allow adoption of latest production techniques such as just-in time manufacturing.

A strong efficient and affordable infrastructure is a critical element of good investment climate. Transport and Communication are important elements of infrastructure services and are essential in maintaining economic growth and competitiveness. Transport and communication sector in Pakistan, account for about 11% of GDP, 16% of fixed investment, 6% of employment and 15% of the public sector development program.

Transport Includes

1. Roads
2. Railways
3. Air Transport
4. Shipping

Communication Includes

1. Postal Service
2. Telegraph-telegram
3. Telephone
4. Radio Broadcasts
5. Television
6. Information Technology-Computer

Importance

Importance of Transport and Communications

1. Helps in the expansion of internal and foreign trade.
2. Increases employment opportunities.
3. Increases government revenues.
4. Develops unity and brotherhood among the people.
5. Helps in the improvement of law and order situation.
6. Stabilizes the price level.
7. Reduces cost of production of goods.
8. Helps in the expansion of education.
9. Maintains the sound defense of the country.
10. Develops the political awareness.

Importance of Road Transport

Road transport is backbone of Pakistan’s transport system, accounting for 90 percent of national passenger traffic and 96 percent of freight movement. Over the past ten years, road traffic, both passenger and freight, has grown much faster than the country’s economic growth. The 9518 km long National Highway and Motorway network contributes 3.7% of total road network and carries 90% of Pakistan’s total traffic.

National Highway Authority

NHA is making concerted effort to develop an efficient, safe and convenient transportation and communication network to meet the growing needs of the country. It is also encouraging the private sector to complement the efforts in accelerating the development of transport and communications network and for improvement in accessibility and delivering of the services provided, encouragement of tourism and bringing about the qualitative improvements life style of masses in particular. Present highway network is burdened by immense traffic and is not sufficient to meet the demanding requirements. Consolidation, preservation and improvement of existing highway asset are needed. Gradual extension of network is equally important to develop remote areas for better connection between economic and social population centers of Pakistan, instill inter provincial harmony and also improve cross-border transport and personal mobility of masses.

Importance of Water Transport

Importance of Water Transport in Economic Development

Water transport is a cheap of transportation. Capital goods, heavy machinery and bulk raw and finished goods can easily and cheaply be transported from and out of the country to the foreign countries. Its importance can be judged from the following facts.

1. Increase in Economic Activity

If country has a sufficient and sound infrastructure in the form of ports and waterways, the economic activity increases because many ships with tons of goods move in and out of harbors of the country.

2. Increase in Foreign Exchange

Water transport increases the foreign trade, as it increases the imports and exports of merchandise from one to the other parts of the world. International trade flourishes and trading partners are benefited a lot.

3. Decrease in Transportation Cost

Transportation cost reduces too much. Thus goods become cheap which improves the international trade between the various nations of the world.

4. Increase in Government Revenue

When foreign trade increases, it not only benefits general public, but it also becomes a great source of revenue for the government by way of customs duties.

5. Increase in Employment Opportunities

Too many people get jobs in shipping industry, as well as in loading the goods from the ships. Thus directly and indirectly lots of jobs are created. This increase the general welfare of the people of the country.

6. Increase in Foreign Investment

Foreign countries shipping offices are opened and investments in infrastructure facilities are set up, which causes an increase in the foreign investment of the country.

Ports and Shipping

1. Karachi Port Trust

The steady and continuous progress made by Karachi Port Trust has helped boost the national economy. The existing port facilities appear to be inadequate to handle the growing cargo at the port. In order to address these constraints, the KPT has launched a number of projects, which are at different stages of execution. As the new generations of container ships come on board, KPT is taking initiatives to be able to cater to the even higher capacity fifth and sixth generation ships. This involves the development of 10 deep draught berths with the total cost of cost $1087 million.

2. Port Qasim

Port Qasim is fast becoming a major contributor to national economy of Pakistan with an impressive growth in port operations. Cargo handling increased from 16.8 million ton to 19.7 million ton over the corresponding period last year. Port Qasim Authority is currently pursuing a large number of projects for capacity enhancement and industrialization, attracting foreign direct investment and undertaking major infrastructure development to enhance its efficiency.

3. Pakistan National Shipping Corporation

PNSC manages 15 vessels with a total capacity of 6,36,182 dwt. The existing fleet consist of 10 multi-purpose cargo vessels, 4 Aframax crude oil tankers and one Panavax bulk carrier vessel which were acquired PNSC’s own resources. The four Aframax oil tankers are participating in national and regional crude oil trade. PNSC has carried crude oil cargoes for India, Bangladesh and Srilanka. The corporation is continuing with its efforts to add more vessels at a cost about US$150 million out of which US$135 million is being arranged through foreign financing.

4. Gwadar Port

The Gwadar port would be an integral component of trade corridor for Central Asian states, China and the gulf as 60 percent of oil and gas is done through this route. A deep sea port like Gwadar is already attracting global attention and once it is fully developed with all supporting facilities required to handle trans-shipment and trade. Gwadar will become one of the important gateways to prosperity for the people of Pakistan. Some experts even estimate that Pakistan could earn up to US$ 60 billion per annum of transit trade when Gwadar Port is fully developed and operational.

5. National Trade Corridor

In order to create a growth-facilitating infrastructure a major initiative namely the National Trade Corridor has been launched, to revamp the whole transport sector including ports, roads, railways, aviation etc. A framework to develop and improving the North South Corridor has been incorporated in it. The framework takes a holistic and integrated approach to reduce the cost of doing business in Pakistan by improving the trade and transport logistics chain and bringing it up to international standards. The initiative is in line with Medium Term Development Framework. The Government’s strategy to establish a multi-modal transport system is based on emphasis on asset management with consolidation, up gradation, rehabilitation and maintenance of the existing system, enhanced private sector participation in transport and use of modern technology to increase sector efficiency. The strategy aimed at enhancing regional connectivity to improve links to the Central Asian States, Iran, Afghanistan and India. With the development of the North-South and East West trade links, energy and industrial corridors with China, Central Asian Republics, Afghanistan and Iran would also be developed.

Basic theme of the National Trade Corridor Improvement Program is decreasing the cost of doing business through improvements in the trade logistics. Basic thrust would be to get results through short term, long term measures. In the short term, quick results would be achieved with small investments through policy interventions, systematic and procedural improvement, reducing costs and time and eliminating red-tapism. Long term measures include higher investments on infrastructure, deep-rooted institutional reforms to ensure sustainability at conductive environment for pragmatic investment by the private sector.

An efficient and well-integrated transport system facilities the development of a competitive economy and creates vast opportunities to reduce poverty. It also ensures safely in mobility and augments regional connectivity. The National Trade Corridor will also boost the merging trade and business status of the Gwadar port.