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Blue economy: Pakistan’s untapped potentials

Islamabad

July 19, 2020

Blue economy is an emerging popular concept which revolves around safeguarding the world’s oceans and efficiently using of water resources for sustainable growth and development. The concept at its core refers to promote usage of ocean resources for economic growth, social inclusion, and the preservation of livelihoods while at the same time ensuring environmental sustainability of the oceans and coastal areas. It encompasses many activities including renewable energy, fisheries, maritime transport, coastal tourism, waste management, and climate change risk management. In addition, various emerging new sectors including marine chemistry, ocean engineering, ocean power and biomedicine have taken their place in the blue economy which no doubts in return creates enormous employment opportunities and wealth creation for any coastal state. World economists have estimated an asset value of $24 trillion to the ocean economy and as of now it’s delivering something between $4-500 billion each year in terms of the dividend to humanity. However, an important challenge of the Blue Economy is to comprehend and better manage the many aspects of oceanic sustainability, ranging from fisheries to ecosystem health to pollution.

Being an important maritime state in the Indian Ocean region (IOR), Pakistan is progressively apprehending the marvels of the Blue Economy. The country is blessed with over 1000 km long coastline and the Exclusive Economic Zone (EEZ) covering about 240,000 Sq. Km. In addition, extension of continental shelf (50,000 Sq. Km) was also approved by United Nations Commission on the Limits of the Continental Shelf (UNCLCS) in 2015. Pakistan’s maritime sector is financially and technologically intensive and requires substantial investment for building, operating and turning it into economically profitable. Its present-day maritime revenue projection stands at $183 million which is far behind our neighbors including India and Bangladesh, whose estimated projection stand at $5.6 and $6 Billion respectively. Pakistan’s coastal areas are rich in bio-productivity and bio-diversity as they provide huge breeding grounds for commercially important fisheries including carbs and shrimps with a potential resource worth of more than $2 billion annually. Despite vast fish export potential, Pakistan’s fishing sector only contributes 0.4% percent to country’s GDP however, this year this sector has witnessed a growth of 0.6%. This again signifies how little we are growing despite having immense potential in this realm which in turn is hampering our growth prospects in the long run.

Another hurdle that remains in regards to our blue economy is the underutilization of its potential. CPEC is a hall mark project that harbingers friendship between China and Pakistan. The corner stone of this partnership is the geo-strategically placed Gwadar Port. Due to its strategic positioning, this port over time has become the bedrock of Belt and Road Initiative (BRI) - a mega structure initiative for connectivity through land and sea lanes. In this paradigm, the economics surrounding Gwadar port plays a significant role and it is extremely pertinent that we as a nation and policy makers pay special attention. Gwadar can play an instrumental role in transforming Pakistan’s economy via transshipment alone. In the annals of history it has been realized that shipping is the cheapest mode of transport. Today 80% of the global merchandise in volume is been carried through sea, which amounts to around 10 billion tons. Pakistan in this realm can play a very major role which can help harness its broken economy. The encouraging aspect for Pakistan is the high Liner Shipping Connectivity Index (LSCI). The LSCI represents how good the connectivity is between ships and ports around the world. Pakistan stands at 34.06 points, which is a healthy number and is better than Bangladesh, though behind India which stands at around 54. China is leading the race with an index of 151.91. This is where Pakistan should reap benefits and develop its transshipment industry and expand its operations. Considering the additional distance ships have to travel to reach Gulf Countries from the Indian ocean, hence, Gwadar has the potential to be developed into a full-fledge regional hub and a trans-shipment port in the future. Shifting of ship traffic from Dubai to Gwadar could make it among the top-5 transshipment hubs globally. UAE handles over 21mn TEUs (20 ton equivalent units) each year. This signifies the opportunity that lies ahead for Gwadar. Being a tax free port coupled with no port congestion, after full development, Gwadar can leverage these points for profit.

In addition, various under construction CPEC mega projects should be completed within the projected dates in order to get the true economic benefits. The projects namely, Gwadar East-Bay Expressway, Construction of Breakwaters, Dredging of berthing areas and channels, Development of Free Zone, Gwadar International Airport, and Gwadar Smart Port City Master Plan after completion will extensively add on to our blue economy by entrenching massive trade connectivity and tourist inflow. Linking Gwadar Port and Free Zones with the network of National Highways will ensure the smooth logistic transportation of import, export and transit goods, expanding the net potential of CPEC.

Furthermore, the shipbreaking industry of Pakistan namely Gadani used to be one of the largest shipbreaking industries in the world during the 1970s but now it is placed at number third after India and Bangladesh. If this industry is revived back and utilized to its full potential, it can have the capacity to contribute more than $10 million to GDP annually. Another most important industry which shows great promise is coastal tourism. The tourists around the world are being attracted towards beautiful places especially the sea coasts with vast biodiversity and attractive beaches. With regards to Pakistan, the coastal tourism only contributes around $0.3 billion despite having a $4 billion potential. Another indictment for Pakistan is our ranking on the “Travel and Tourism Competitiveness Report” published by the World Economic Forum, which places Pakistan at an abysmal 121st position out of 140 countries. It remains the least competitive country throughout South Asia in travel and tourism.

Though this is not stopping South Asia’s coastal zone from being rich in biodiversity and as a region growing 8% of the world’s mangroves, which is a great tourist attraction. Furthermore, tourists are attracted by the climate, sandy beaches and immense bio diversity of the region. However, unfortunately as aforementioned points indicate only Maldives has been able to reap benefits from its coastal tourism industry substantively. If we look at some numbers for indication purposes, on an average around 65000 Pakistanis visit Thailand annually, 6000 high end resorts in Maldives and around 50000 visit in a year. Last year there was an increase of 0.8% people that visited Dubai, taking the number to more than 16 million according to the latest figures issued by the Emirate’s tourism body. Another report titled “Cultural Heritage and Museum visits in Pakistan” prepared by the Gallup survey highlights important facts as well. Firstly, from 1.6 million visits in 2014 to 6.6 million visits in 2018, a 317% increase in visits to cultural sites show how propensity to travel has increased over time, mostly due to the increase in per GDP capita of our people. This should mean then that the beautiful coastal areas of Pakistan, if developed, could witness a surge in coastal tourism as people are definitely looking for a way out for recreation activities. Hence, this clearly shows what path we as a nation need to take just like other states are encompassing the benefits of coastal tourism and harnessing their economy. This is where the gap lies for Pakistan’s blue economy which should be harnessed so that the economy can be revived.

Moreover, Pakistan’s mangrove area being the sixth largest in the world holds an annual value of about $20 million which can be extracted from mangrove dependent industry. Whereas, Pakistan National Shipping Corporation which handles about 99% import of gasoline products holds a very small number of cargo vessels that only carries 7% of cargo to the world, while the remaining 93% is handled by foreign companies which produce foreign exchange of about $1.5 billion annually. Such economic figures can contribute to overcome the economic instability of the country and put back the national economy on the success track. To optimally benefit from the country’s maritime sector, there is a need for an integrated National Maritime Policy to effectively capitalize the ocean based dividends.

Need of an hour is to formulate an effective national compliance mechanism and synergize the institutional efforts to tap the ‘Blue’ economic potentials of Pakistan. Moreover, CPEC is a significant platform to play a pivot role in this regard as it has already put forward plans for the activation of ocean based activities in a bid to explore the incredible maritime avenues. Pakistan should also embark upon boosting its economy while focusing on maritime infrastructure, technology for offshore resource development, a strong fisheries and marine leisure sector (tourism), environment issues etc. All the required financial and technological support should be geared up for building, operating, and making economically profitable industries. These are compelling reasons for Pakistan to endorse and internalize the concept of a Blue Economy in policy, bilateral relations as well as international transactions.