National Trade Corridor Improvement Program
Performance of the transport system in Pakistan has not been up to mark, with high economic losses from congestion and poor quality roads and a mismatch between supply and demand for transport services and supporting infrastructure. The logistics constraints are impeding competitiveness of the country’s trade and industrial development. The conventional system towards documentation clearance, movement facilitation and electronic data interchange has yet to be modernized to international levels. These inefficiencies are resulting in increasing the cost of doing business, constraining economic growth, reducing export competitiveness, and hindering social development. According to one estimate, inadequate and inefficient transport system is imposing a cost to the economy in excess of Rs.220 billion annually or 3.5% of the GDP.
- In order to cope with the situation a major initiative namely the “National Trade Corridor” has been launched to revamp the whole transport sector including ports, roads, railway, aviation etc. and a framework to develop and improve the North South corridor has been formulated. 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 key standards. The initative is in line with MTDF. The MTDF strategy also includes establishment of a multi-modal transport system; an emphasis on asset management with consolidation, upgrading, rehabilitation and maintenance of the existing system; enhanced private sector participation in sector development and institutional capacity building, with research and development and use of modern technology, procedures and processes to increase sector efficiency. The strategy also takes into account the regional and domestic scenarios, particularly with respect to rail, road and shipping sub-sectors, enhancing regional connectivity to improve links with the Central Asian States, China, Iran, Afghanistan and India. With the development of the North-South and East West trade links, energy and industrial corridors with these states would also be developed. The strategic thrust of the programme involves an extensive consultation and consensus building process with the public and private sector stakeholders, focusing on: (i) quick results through policy interventions, systematic and procedural improvements, and cutting administrative red- tapism involving small investments; and (ii) longer term, higher cost investments (with pragmatic investment assessment from the private sector) and deep rooted institutional reforms to ensure sustainability.
- To implement the framework, the Government of Pakistan set up a National Trade Corridor Task Force (NTC Task Force) on 18-8-2005 headed by Deputy Chairman, Planning Commission with Federal Secretaries of the Divisions of Revenue, Communications, Railways, Ports & Shipping, Defence, Petroleum, MINFA and Industries as its members under whom nine sub-committees for implementation of the NTCIP have been constituted. A core group comprising Planning Commission, World Bank, ADB and JBIC has also been formed. These development partners have endorsed the NTC initiative and agreed to provide financing for the projects. Since the launch of the NTCIP, seven meetings on NTCIP initiatives under the chairmanship of Prime Minister and thirteen meetings of NTC Task Force under the chairmanship of Deputy Chairman, Planning Commission have been convened so far. The last meeting under the chairmanship of Prime Minister was held in March 2007 while that of NTC Task Force in December 2009.
- The World Bank as major contributor has responded to Government of Pakistan’s request to support these initiatives through a mix of budgetary support and investment operations aimed at streamlining procedures, improving services and upgrading physical infrastructure. The World Bank’s financing program consists of a series of Development Policy Loans (DPLs); specific sub project investment lending; and technical assistance loan, to assist with the implementation and monitoring/evaluation of the NTCIP over the next 5 to 6 years. The Bank is also providing analytical support to develop the framework to guide sub-sector policies (for railways, the road transport industry, ports, air transport and trade facilitation), including pricing, regulation and enforcement, medium term budgetary frameworks, restructuring and progressive commercialization of public entities and strengthening of institutions (National Highway Authority, Pakistan Railways, etc)
- To provide interface between Planning Commission, concerned Ministries and development partners for introducing reforms and investment projects to implement NTCIP, an umbrella PC-l for the Trade and Transport Facilitation Project-2 costing Rs.1500 million, jointly prepared by Planning Commission and Ministry of Commerce, was approved by the ECNEC on 30.11.2006. The World Bank is providing 100% financing for the project under IDA Credit of US $ 25 million, at an interest rate of 0.75% (with the maturity of 35 years, including a grace period of 10 years). Under the PC-I, cost of conducting various sectoral studies would be met. For smooth implementation of the project two units namely National Trade Corridor Management Unit (NTCMU) in Planning Commission and Trade & Transport Facilitation Unit (TTFU) in Ministry of Commerce have been established with necessary staff and the PDs
- The NTCMU is mainly performing the role of a coordinating body for collecting and disseminating the technical and other necessary information amongst all the concerned ministries. Basic task assigned to the NTCMU is to coordinate the numerous infrastructure studies with regard to improvement and modernization of infrastructure network of country including National Highways, Railways, Ports & Shipping, Aviation, Inland waterways and other related sub-sectors. The concerned ministries would take lead in the preparation of ToRs for the studies, selection of the consultants, and contract management of these studies to be conducted by national/international consultants of repute. Funding disbursement to all the consultancies would be made through the NTCMU after review of the studies by World Bank and Planning Commission.
- The Financing Agreement with the World Bank was signed on 27-5-2009 which became effective on 24-8-2009 with provision of USD $ 19 million to Planning & Development Division and USD $ 6 million to Ministry of Commerce for implementation of the project. An allocation of Rs. 82.0 million (all FEC) has been made in PSDP 2010-11 for procurement of the approved studies. An expenditure of Rs.31.023 million stands incurred till 30-6-2010. Since many of the activities/studies were not included in the inception stage due to non-availability of information and later have been added on the request of various ministries, the PC-I is being revised keeping the cost in dollars as same.
- An efficient and well integrated transport system facilitates the development of a competitive economy and poverty reduction, while ensuring safety in mobility and enhancing regional connectivity. All these efforts are expected to help increase Pakistan’s exports around USD 250 billion by 2030. This program would not only target the trade facilitation and infrastructure development, it would also serve for developing an Energy and Industry corridor in future. Pakistan can establish exclusive industrial zones for Chinese and other Central Asian entrepreneurs near the industrial cities of Karachi, Lahore, Faisalabad and Peshawar. These would be identified and their viability established.
- Energy is a key factor for Pakistan because of its quickly expanding economy. Public private sector cooperation in this area can serve as the engine of growth. Pakistan at present and for future needs all kind of energy sources i.e. Fossil Fuel, Coal, Oil & Gas, Hydro, Alternate like solar, wind energy and nuclear energy. China is one country who has shown interest to develop an Energy Corridor and it has been deemed appropriate at highest level that Karakoram Highway should be used as an Energy Corridor from Gwadar to China. China imported energy from the gulf which took a long route to reach the east coast of China. The route from Gwadar through the Karakoram Highway to China would be 1/10th of the route through the Malacca straits. China could use the port facilities at Karachi and Gwadar. Oil and Gas storages would be developed at Gwadar for transportation to China through Pipe lines.
Pakistan can offer warehousing at any Pakistani Port to help China export its goods to different parts of the World. China in turn can establish export oriented concerns in Pakistan. Under the NTC initiative, study to develop the Energy corridor would also be taken up.