The Blue Economy of Pakistan: An Untapped Potential

The term Blue Economy originated in 2012 from the Rio+20 Conference of the United Nations on Sustainable Development and Growth referring to leveraging the coastal and marine resources for economic benefits in line with sustainable economic growth and environmental conservation. The need for diversifying sources of sustainable economic growth and development is felt more than ever before across the globe as complex, interdepended, and pressing challenges like climate change, resource-conflicts, social unrest, and simmering discontent among people owing to prevailing injustices endanger the very structures and institutions developed for the security and protection of people and Pakistan is no exception to this.

Reassuringly, however, the newly adopted National Security Policy of Pakistan places economic security at the core of national security to ensure the well-being of its citizens. Indeed, it is a testament to the growing and shared realization among the policymakers and common populace that Pakistan as a state and nation may find it impossible to survive or thrive and gracefully sail through these challenging circumstances without a strong and sustainable economic base. Granted, the NSP prudently and wisely places economic security at the heart of national security as the panacea for a plethora of traditional and non-traditional challenges afflicting human well-being and security. Yet we still have to walk the talk if we wish to overcome our pressing socio-economic issues.

In this regard, the United Nations 2030 Agenda for Sustainable development underscores the symbiotic relationship between sustainable economic growth and Blue Economy via SDG 14. The World Bank defines Blue Economy as: “Sustainable use of ocean resources for economic growth, improved livelihoods, and jobs while preserving the health of ocean ecosystem.” It refers to the wide recognition of seas and oceans as the main drivers for economic development with great potential for innovation and growth. Therefore, to honor its international obligations for SDGs, Pakistan is integrating SDGs into its domestic development agenda, reflecting its appreciation of the blue potential.

In this context, the need to understand and implement the idea of ‘Blue Economy’ acquires utmost importance. If history is any guide, those nations which turned to oceans and developed their maritime sectors and naval forces emerged militarily strong and economically prosperous. Thus it can be plausibly argued that ‘turning blue’ is no longer a question of choice but a strategic and economic compulsion for Pakistan in the face of global cutthroat competition for access to and control of major maritime trade routes. This is least surprising given that the maritime sector is the bedrock of our national economy as 95 percent of trade and 100 percent of our oil/coal imports are transported via the sea route.

Therefore, it is vital to consider how Pakistan can best benefit from its maritime sector and what are some of the challenges that prevent it from fully realizing the untapped potential of its maritime sector? In this regard, maritime historians have identified some pre-requisites for a country to emerge as a maritime power including but not limited to 1) Geography, 2) Resources, dedicated to maritime tasks and forces, 3) A strong maritime tradition and community, 4) A maritime mindset and governance borne out of dependence on the sea. A cursory look at the history of Pakistan’s approach to the maritime domain reveals that due to sea-blindness, the country has not adequately invested in the development of some of the aforementioned pre-requisites thus resulting in the underutilization of the maritime potential for economic growth and development. It is noteworthy that geography plays a crucial part in charting out a viable maritime strategy and Pakistan’s geo-strategic location at the confluence of civilizations and vital regions makes it one of the most naturally favored states in terms of the benefits that it can reap from the sheer volume of maritime trade taking place in its maritime domain. Being an important maritime state in the Indian Ocean region (IOR), Pakistan is gradually realizing the benefits of the Blue Economy.

The primary institution currently undertaking shipbuilding, ship repairing, and general heavy engineering activities to address the needs of national maritime stakeholders comprising of Pakistan Navy, Karachi Port Trust, Pakistan Maritime Security Agency, and Port Qasim Authority is the KS & EW. The institutional capacity enjoyed by the KS & EW is skilled human resources, and multipronged technical assets and infrastructure. The borne capacity of KS & EW is two graving docks (up to 26000 DWT), three shipbuilding berths (up to 26000 DWT), and two Quay Walls (General Purpose Berths). It is worth noting that apart from enhancing the capacity of existing KS & EW, the establishment of new shipyards along Pakistan’s coasts would be a vital source for national economic development and poverty alleviation.

The country is blessed with a 1050 km long coastline besides an Exclusive Economic Zone of 290000 sq. In addition, the extension of the continental shelf (50,000 sq. Km) was also approved by United Nations Commission on the Limits of the Continental Shelf (UNCLCS) in 2015. However, Pakistan’s maritime sector is financially and technologically intensive and requires a 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 projections stand at $5.6 and $6 Billion respectively. Moreover, 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 more than $2 billion annually. Notwithstanding the vast fish export potential, Pakistan’s fishing sector only contributes 0.4% to 0.6 % percent to the country’s GDP. This again signifies how little we are doing 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 as the flagship project, harbinger of prosperity and friendship between China and Pakistan has the potential to help develop our maritime domain. The cornerstone of this partnership is the geo-strategically placed Gwadar Port. Due to its strategic positioning, this port over time has become the bedrock of the Belt and Road Initiative (BRI) – a megastructure 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 policymakers pay special attention. Indeed, Gwadar is pivotal 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 the sea, which amounts to around 10 billion tons. Pakistan in this realm can play a very major role which can help in generating much-needed revenues. 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 develop its transshipment industry and expanding 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-fledged 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 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 will hugely contribute 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. Tourists around the world are naturally attracted to beautiful places, especially the sea coasts with vast biodiversity and attractive beaches. With regards to Pakistan, 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.

Blue Economy of Pakistan offers a wide range of maritime sectors peculiar to the geostrategic and economic realities of the country. It includes conventional maritime industries, namely fisheries, coastal tourism, maritime transport, etc., and newly emerging areas of aquaculture and marine biotechnology, deep sea-bed mining, resource extraction, oceanic renewable energy, and maritime tourism. The construction and operationalization of Gwadar Port have enhanced the scope of maritime transport in Pakistan.

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 industries. Whereas, Pakistan National Shipping Corporation which handles about 99% of the import of gasoline products holds a very small number of cargo vessels that only carry 7% of cargo to the world, while the remaining 93% is handled by foreign companies which produce a foreign exchange of about $1.5 billion annually. Such economic figures can contribute to overcoming 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 dire need for an integrated National Maritime Policy to effectively capitalize the ocean-based dividends.

Pakistan’s maritime sector is currently experiencing substantial growth due to favorable policies and investments to transform Pakistan into a marine state. Pakistan’s recurrent shift towards the blue economy is seen over the years as 95% of trade is carried out through sea. GMP of Pakistan’s blue economy is estimated to be $1.5 billion, restricted to limited sectors including fishing, mangroves, shipping, shipbreaking, and ocean trade. In October 2017, Pakistan restructured the Ministry of Ports and Shipping as Ministry of Maritime Affairs to expand the research and development in Maritime Sector.

A report published by the World Bank suggests that it is a golden opportunity to launch a ‘Blue Revolution’ in the country. It will prioritize sustainable growth and management of marine resources for economic and social benefits. Balochistan has a rich potential of fish resources and contributes to 35% of the total fish catch. Indian Mackerel on its coast has found a market in South Asia, resulting in a boost in exports. Balochistan’s government has also allocated a significant budget in the maritime sector to provide fisheries with interest-free loans.
Moreover, Pakistan is home to the sixth-largest area of mangroves in the world. Pakistan’s mangroves forest is spread over an area of 160,000 hectares. Mangroves are an important aspect of the blue economy and contribute to 4 billion dollars in exports. Under the ‘Ten Billion Tree Tsunami Project’, Pakistan will plant 43.5 million mangroves to improve the economic livelihoods of fishers residing in the coastal areas and to promote sustainable economic growth. Likewise, Pakistan’s offshore reserves include the Indus basin, the 2nd largest reserve in the world. Oil companies have started joint drilling near Karachi Indus G-Block (Kekra-1). The Petroleum Division of Pakistan is overseeing drill stem tests to determine reserves of gas and oil.

The blue partnership under the CPEC project is massively contributing to the growth of the maritime sector with an increase of funds and investment of the coastal belt in the country. The development of Gwadar Port, which is the largest deep seaport in the world, has the potential to become a global economic hub in the future. A new shipyard is under construction in Gwadar, and the development of Kati Bandar port is taking place in Sindh. Pakistan declared 2020 as the ‘year of the Blue economy’ and has included blue economy in the 2025 vision goal of the state, which will pave the way for ocean industries such as ship-making, ship-breaking, tourism, and so on. CPEC prospects are attracting foreign investment in the maritime sector of the country. Saudi Arabia has proposed the desire to construct a 10 billion dollar oil refinery port in Gwadar. The Saudi Energy Minister Khalid al-Falih says: “Saudi Arabia wants to make Pakistan’s economic development stable through establishing an oil refinery and partnership with Pakistan in the China-Pakistan Economic Corridor.”

Furthermore, the construction of Gwadar as a transit and transshipment port under CPEC has further augmented Pakistan’s maritime potential as a key player in Indian Ocean Region. Pakistan has huge potential in terms of maritime fisheries but due to growing coastal and marine pollution, inefficient mechanisms to supply quality fish to the market, and climate change, Pakistan’s Blue Economy remains largely underdeveloped at best. To realize the benefits of this huge untapped potential, Pakistan needs to ensure favorable policies and substantial investment to achieve the objectives of the Blue economy.

Blue Economy of Pakistan offers a wide range of maritime sectors peculiar to the geostrategic and economic realities of the country. It includes conventional maritime industries, namely fisheries, coastal tourism, maritime transport, etc., and newly emerging areas of aquaculture and marine biotechnology, deep sea-bed mining, resource extraction, oceanic renewable energy, and maritime tourism. The construction and operationalization of Gwadar Port have enhanced the scope of maritime transport in Pakistan. Most significantly, maritime transport industries that offer great opportunities for investment in Pakistan are Port Development and Coastal Urbanization, tourism, Shipbuilding, Ship-breaking/recycling, and Transshipment companies.

In the nutshell, Pakistan is naturally favored and endowed with huge natural resources. To fully realize this potential, Pakistan needs to fill the gap between education and maritime research. In this regard, the School of Maritime Sciences is a positive development that can serve the purpose of enhanced maritime awareness and knowledge. The need for an integrated National Maritime Policy cannot be overemphasized as the country is gradually but steadily turning to the Oceans for sustainable economic growth and development.

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About Amna Malik 61 Articles
Author is the President, Center of Pakistan and International Relations (COPAIR) and Editor-in-Chief of ‘Mélange int’l Magazine’ and ‘ The Asian Telegraph’.