Effectiveness of Revised Merchant Marine Policy and Long-Term Financing for Shipping Sector in Pakistan

Abstract

In the contemporary globalized world, a strong national shipping sector and healthy state of national flag carriers is the reflection of a thriving economy. In case of Pakistan, unfortunately, the number of national flag carrier is just 11 ships; whereas, the contribution of private entrepreneurs is almost nil. There is an enormous growth potential for shipping industry in Pakistan which needs to be harnessed through enabling policies, processes and regulatory framework. In this context, Pakistan Merchant Marine Policy (MMP) 2001 was formed which was amended by the Federal Government in November 2019, extended till the year 2030 and launched in July 2020. Moreover, the State Bank of Pakistan (SBP) has issued the rules for ship financing under Long Term Financing Facility (LTFF) in July 2020. A question arises regarding the effectiveness of MMP and financing instruments. This study has examined the revised MMP 2001 document and the SBP’s LTFF for the Shipping Sector, by employing qualitative method. Based on analysis, this study has identified that the existing policy and legal framework has several issues due to which active engagement of private sector couldn’t be achieved and always remained a big challenge for shipping sector of Pakistan. MMP 2001 is fragile as it lacks the legal status enjoyed by an act of the parliament / ordinance and the provisions are subject to the Cabinet / ECC decisions made from time to time. Capacity gap is also among key challenges at the level of MoMA to address shortcomings in policy and legal framework through meaningful consultation with stakeholders. Channeling of finance through MoMA causes procedural delay while MMP does not promote ease of doing business for private investors. However, the documents are beyond the capacity of being amended and need to be drafted afresh including; MSO 2001, MMP and LTFF. It also argues to have an active role of a think tank or an academic institution to assist MoMA on long-term basis.