This article is in continuation of the previous article on the subject published in the September issue. Blue Economy as discussed in the previous article is of great importance for the development of any country, especially the developing countries.
To develop anything, the first thing we need is to understand and have awareness about its various aspects. Same is true for Blue Economy, the first requirement is to have maritime awareness at all levels of government as well as public. Learning from history and from others’ examples, is a good way to do the right things; as it is said you do not have a life long enough to make all the mistakes and learn from them. We all know that Europeans realized the importance of seas and used it to colonize and dominate the entire world through seas. Despite that even today they feel that they need to do more in this regard. Former European Commission President, Barroso said that “We are still underestimating the seas’ importance to man's life” and the European Commissioner for Maritime Affairs Maria Damanaki said that “We are at the dawn of a maritime era and with about 70% of its surface covered by water, Earth is the blue planet”.
Leaving aside the Europeans, even our neighbor and till recent past a land oriented country like us – China, realized the importance of the seas, when they started to open up their economy in early 1980s.
The first four Special Economic Zones made were all along the sea. These were Shenzhen, Zhuhai, Xiamen and Shantou. Then in the next phase of development again they expanded and created new zones along the sea.
Even after this the next phase was also along the seas and river basins connected to the seas.
China being a communist country, in principle their philosophy is that all citizens should benefit and develop simultaneously. Moreover, Communist Party of China initially had a rural based support. But, despite these factors they took decisions in the greater national interest to develop the country economically. They modified the thought process as suited to their country and came up with the concept “Socialism with Chinese characteristics” and declared that “it is all right if some people get rich first”; meaning thereby that eventually all will benefit. Their wise decisions benefitted their economy tremendously and they are now the second biggest economy of the world and on its way to become the number one economy. We must learn lessons from history as well as from our neighbors. There is a lack of awareness in our country regarding the importance of the maritime sector, despite having a 1,000 plus kilometers coastline and an economically important strategic geo-economic location at the mouth of the Gulf from where bulk of the world’s oil flows through sea lanes close to our coast.
Pakistan’s Maritime Potential
Pakistan has great potential in this field. Let us briefly review some of them. First let us see our location:
Pakistan is located in the North Arabian Sea right at the mouth of the Gulf of Oman just outside the Strait of Hormuz. The location is ideal, especially from the geo-economic perspective. World’s most important sea lanes pass right off our coast. Industrialized world heavily depends on the oil exiting from the gulf. More than 18.5 million barrels of oil pass through the Strait of Hormuz every day. Dependence of some of the countries on the gulf oil is as shown in this table:
Another important region is the energy rich Central Asian Republics (CAR). While they are lucky to be rich in energy, but not lucky to be situated on the coast. Hence they need an outlet, to have an oil pipeline to the nearest sea port for onwards export.
The present oil pipelines are limited in scale and cover just north or west of the Caspian Sea. One goes to Russian port in the Black Sea. The other pipeline goes through Tbilisi to Turkish port of Ceyhan. Both routes are shown in red in the map. These pipelines end up in rather restricted waters and aimed primarily at Europe. Bulk of oil consumption and demand is now from the East. As can be seen on the map, most of the CARs lie on the east of Caspian Sea (shown as a group in green circle). There is a tanker service across the Caspian shown in blue dashes. The map clearly shows that the most suitable and feasible route is to the South to open deep Arabian Sea for onward export destinations, Gwadar being the most suitable port for that.
When we combine this CARs oil with the gulf oil, almost 65% of the global oil will eventually flow off our coast. Thus, maritime economic activities already taking place off our coast and the expected increase in this is not a difficult thing to understand. It is there within our reach for us to benefit from by developing requisite assets and infrastructure and conducive environment for all this maritime economic activity. If we do not benefit from this godsend opportunity, then we have no one else to blame but ourselves.
Let us consider a few aspects of Blue Economy starting with the shipbuilding industry and its prospects for Pakistan.
Pakistan’s Shipbuilding Industry
At the time of creation of Pakistan, we didn’t have any shipyard in our country. In fact, we did not have any dry dock where our ships including naval ships could be repaired and maintained. Dry dock is a facility, a chamber, in which ships are placed on chocks and water is pumped out, thus exposing the entire ship’s hull and facilitating repair and maintenance of parts of the ships which normally remain under water. Our ships including warships had to go to Malta or other places whenever they needed dry docking. The following picture may help understanding:
Realizing its importance, the government launched the shipyard project under Pakistan Industrial Development Corporation (PIDC) in 1952-53 with the assistance of the German government and the project execution was entrusted to a German firm M/s Stulcken Schon. Karachi Shipyard & Engineering Works (KS&EW) was thus officially established in 1956 under PIDC. It was well designed with good facilities at the time. It made commercial ships for Pakistan and friendly countries like Iran, UAE and even China.
However, as time passed, we lost focus and this strategic facility started deteriorating, picking up pace and finally reaching a level that it was considered to be a lost cause. Financially, it was bankrupt, no bank was prepared to give further loan, machinery and infrastructure completely depleted, and work force thoroughly disgruntled, didn’t get salaries for months. Government tried to privatize it but there were no takers.
Then in 2006, new management team was placed with the task to give it a final try to recover it. I was lucky to head this team. Allah Almighty helped and the team’s efforts slowly started to show positive results. Alhamdulillah, KS&EW got turned around. It is now a profit making entity, energetic and highly skilled workforce. It has built ships including Pakistan Navy’s latest frigate PNS ASLAT, many fast attack craft and is all set to start submarine construction very soon, as the contract has already been signed. Turnaround story can be better understood by these two charts:
Today it is one of the few profit-making entities in the public sector of Pakistan and probably an example of how Public Sector Entities can be turned around. Industrial relations between the management and workforce are exemplary. There are no labor unions in KS&EW since 2006-7. The management and workforce jointly work as a team and take the ownership of all activities.
Shipbuilding Potential of Pakistan
Shipbuilding is an economic catalyst. It is a labor-intensive industry. Significant portion of the cost of construction is labor cost. Hence it is very suitable and attractive for the developing countries with large labor force available.
As the world GDP and trade grows, so does the seaborne trade, in fact even more as per ratio as shown in this chart.
From 1950 to 2004, world GDP grew eight times but seaborne trade grew thirteen times. The more the seaborne trade, the more the requirement of ships and shipbuilding and repair. Although it is bit cyclic in nature but in the long term perspective it keeps growing pretty fast.
Another aspect discussed in the previous related article, (but repeating to refresh or recap) worth noting is that before World War II, shipbuilding was primarily in Europe, in particular Britain. After the WWII, when Japanese industrial infrastructure and economy was destroyed and they wanted to rebuild it, they focused on shipbuilding as the hub industry. As their shipbuilding increased, their other related industries like steel, automobiles, electronics etc. also picked up. Japan within a decade became the number one shipbuilder of the world and its economy grew tremendously. Korea followed the same pattern from late 1960s, early 1970s and its economy also grew exceptionally. China followed the same path from around 2000-2001 and we see its economy now being the leading economy of the world. Now more than 90% of the shipbuilding is shared between the three giants, China, Korea and Japan.
When Korea embarked on the shipbuilding path, their labor cost was cheaper than Japan, therefore they had a competitive edge and overtook Japan. When China came in its labor cost was cheaper than Japan and Korea, so had the advantage and became the number one shipbuilder of the world. Shipbuilding is a global industry. Now there is great competition between the three giants. Japan and Korea realizing the difference in their labor cost compared to China, adopted the policy of having shipyards at places where they can have their own management and technology but labor cheaper than China. Thus came the joint ventures and shipbuilding industry of countries like Vietnam and Philippines. Philippines has now become the number four shipbuilder of the world. According to Japan’s JICA and Nomura Research Institute (NRI) report, the strengths of Philippines in shipbuilding include:
▪ Deep seashore
▪ Abundance of labor force, and
▪ Legalized fiscal incentives
If we analyze Pakistan considering these factors, we have the first two and the third is in our own hands. Additionally, Pakistan’s location is really great at the mouth of the Gulf, from where world’s most important sea lanes pass.
It is the world’s most important oil route. Most of the big oil tankers transit through this route. These huge ships need regular repair and maintenance which can only be undertaken when they are empty and when they transit towards the Gulf, off our coast of Gwadar, they are all empty. If we have world class shipyard(s) and requisite assets and infrastructure, Gwadar will be an ideal place for all these ships to have their repair and maintenance done before entering the restricted waters of the Gulf. This can then be upgraded to building these and other types of ships. These activities will in turn promote other related industries of steel, marine and other equipment required onboard ships. Vendor industry and other supply side activities will also grow. Thus, the entire economy will get a boost and it will go a long way in alleviating poverty. Shipbuilding also needs trained labor force. In this regard, the proposal was to have the technical training requirements and modules for training of different types of skilled persons prepared in consultation with the leading shipyard that we go for JV. Then have these training courses conducted in the technical schools all over the country. Then have these personnel rotated to KS&EW for on the job training in shipbuilding. Those who do well, select them and send them to the JV partner shipyard for 6 months or a year as per the advice of the JV partner. Thus by the time new shipyards are ready, our workforce will also be ready almost at the same skill level as the JV shipyard.
Based on these aspects, while as MD KS&EW, I had the honour of giving a detailed presentation on shipbuilding potential, to then President and Prime Minister along with all relevant ministers and stakeholders on August 27, 2007. The vision put up was:
“To make Pakistan a leading shipbuilding country of the region, in line with its true potential and ideal location, thus contributing towards our economic development and poverty alleviation.”
Vision and the proposals to achieve that were all approved and it was desired to initiate all requisite actions soonest. Notification to that effect was issued by the Planning Commission on September 4, 2007 and a policy board in this regard was formed, headed by the Prime Minister. First meeting of the policy board was held on September 8, 2007.
The plan regarding shipyards was to initially build two world class shipyards with two dry docks at each shipyard capable of handling ships up to 600,000 dwt. It was recommended that the first two shipyards be as JV with known leading shipyards of the world. They should make maximum investment, with us providing land and requisite infrastructure support as our equity. (If government desired more equity, the option was open). They should have their own management with Pakistanis as sort of under training, as at the moment, we do not have the expertise to operate such world level shipyards and additionally we need to have world renowned brand names of shipyards to attract foreign ships investors. Later, when we have the expertise and established shipbuilding industry, we can have our own shipyards as deemed appropriate.
Within a few months a lot of progress was made. A PC 1 was approved and funds allocated to set up a dedicated Project Management Cell (PMC) and to engage an international consortium of consultants for financial and technical feasibilities and legal aspects including marketing. 20% payment was linked to the successful financial closure of joint venture. The process from expression of interest to formal proposals and their technical evaluation was completed. All this was completed by March 2008. Thereafter approval was to be obtained from the policy board. Unfortunately, due to change of government etc. the process halted at that and has not seen any noticeable progress despite concerted efforts and perusals with the successive governments. Some movement in this regard has started recently, but in my humble opinion, full realization of its importance, priority and pace needs much more to be done.
All of us are very familiar and excited about CPEC. It is the flagship project of BRI (Belt and Road Initiative) and Gwadar Port is the flagship project of CPEC. Gwadar Port and the ‘sea’ part of CPEC are actually the heart and soul of the whole concept of CPEC. As the name states it is a corridor from China through Pakistan to the sea, to and from where the trade will flow. So, minus the sea part of CPEC, the whole thing becomes meaningless. Thus Gwadar Port and the sea associated with it are so very important. A detailed comparison of Gwadar with other regional ports including those of Iran and the Gulf has been carried out in my book Elements of Blue Economy. Conclusion of analysis is that though at present Gwadar Port is a very small port with rudimentary facilities, which can hardly be compared to other ports but its potential is huge, much more than any other port in the region. Thus, Gwadar Port is just the beginning and has a long way to go, but eventually it will become the leading port of the region with associated economic development that will ensue In Sha Allah. Our enemies know this fact and hence are doing and will continue to do everything possible to derail this development. Stationing of Kulbushan Jadhav, an Indian naval officer and the Indian spy, at Chabahar the Iranian port very close to Gwadar Port and not somewhere upwards or in Afghanistan clearly indicates their designs. He had also said in his statements on being arrested that he had plans to send some boats to Gwadar Port area for terrorist activities. By creating such incidents, the port can get a bad image as being an insecure port area where shipping is not safe. Such things undermine international shipping and other maritime economic activities, which need a conducive environment to flourish. Hence, it is very important to ensure a credible and visible safe and conducive environment not only at Gwadar Port but in the seas south of it. Pakistan Navy has created a special Task Force 88 for this purpose from within its existing meagre resources, maybe there is a need to strengthen it a lot more.
Fishing is the biggest food export industry in the world and a great source of nutrition. At present our fishing industry is in a far from satisfactory state, despite tremendous opportunity. We know that foreign shipping trawlers fish in our area and earn huge profits. Indian fishermen intrude into our areas and fish here. Pakistan Maritime Security Authority (PMSA) vessels routinely apprehend so many of them and handover to concerned authorities. But the temptation is such that they keep coming in our area again and again.
Our sea – the Arabian Sea, has unique oceanographic phenomena. Upwelling and related high primary production are helpful in terms of harvestable fish resources.
The northwest Arabian Sea contains areas of nearly continuous upwelling as well as monsoon-induced upwelling of our coast which results in extremely high productivity.
We are well aware that fishing boats from other countries come and fish in our waters and earn huge profits while we do not have the modern fishing boats to exploit the treasure in the seas. While discussing repair and upgrade of our existing fishing boats, which are mostly wooden and very small in size with minimum required equipment, we proposed a plan for new modern boats. The plan was that while existing boats can keep operating, we should define few sizes and types of fishing boats and their specifications as per world standards. We suggested that a team of all stakeholders, boat owners, crew, fishery department etc. can be formed to decide the specifications. KS&EW can provide the technical representative to help. They can visit various countries if required. The team should decide the types of boats, design, equipment, machinery etc. and standardize those for the future. The government can then formulate regulations that all future fishing licenses will be given to boats of these specifications only. Thus commonality of design, machinery items, equipment etc. will help in the eventual production of these in the country, logistics support, training and so on. It was suggested that the government can then order KS&EW or other suitable entities to build these boats in batches. The government can then lease these boats to fishermen on installments, like the yellow cab scheme etc. The fishermen will earn and pay the due in course of time.
There is a serious problem of management and implementation of policies and regulations as well. Due to lack of knowledge and non-realization of the ill-effects, many of our fishermen use nets, equipment and processes which catch juvenile and sub-adult fishes, causing serious depletion of resources.
A World Bank report entitled “Revitalizing Pakistan’s Fisheries Options for Sustainable Development” published in June 2018 is fairly recent and can be used by the concerned authorities to improve the fishing sector.
Marine and Coastal Tourism
The Pakistan government is promoting tourism a lot, but it is mainly the tourism of our scenic northern areas. No doubt these are beautiful indeed. But, the untapped marine and coastal tourism, the fastest growing segment of world tourism also needs to be explored and exploited. Pakistan’s coast has tremendous opportunities in this field. Quite a bit of it is described in my book Elements of Blue Economy. Some of them will be described here.
Apart from beaches, there are other aspects of tourism opportunities along the coast, like eco-tourism, archaeological sites and religious places. Many of these places have become accessible only since 2004 when the coastal highway became operational. Along with the famous identified structures in Hingol Park area, there are many fascinating features right from Jiwani extending all the way eastward.
Hingol National Park has many features of attractions. One such feature is ‘Princess of Hope’.
Standing tall over the mountain facing the sea, it is so attractive that this name was given to this feature by the visiting famous actress Angelina Jolie in 2010. Another feature close to it is the famous Balochistan Sphinx.
It resembles the Egyptian Sphinx in detail to a great extent. Researcher and writer Bibhu Dev Misra maintains that these are ancient man-made archaeological sites. He has drawn similarities between the Balochistan Sphinx and the Sphinx of Giza (Egypt) and also tried to establish other nearby features such as a temple.
There are so many archaeological wonders waiting to be discovered on the Makran coast of Balochistan, some of whose origins may go back to unrecorded antiquity. There is a need to draw government and international attention to these structures and promote them.
There are many historic sites in the region including Muslim history. Graves of soldiers of Muhammad bin Qasim, the young Arab conqueror are located near Aghore.
Bhambore was a medieval port city strategically located at the mouth of the Indus River. It is a famous historical archaeological site along the coast near Karachi. The history of Bhambore dates back to first century BC. The ruins of the city are east of Karachi towards Gharo along the coast near Karachi.
Exclusive Economic Zone (EEZ) and Continental Shelf
EEZ is sea area off the coast of a country. A littoral (coastal) country has exclusive exploitation rights over all natural resources within this area. EEZ extends 200 nautical miles (370 km) from the baseline. Baseline is a line declared by countries normally joining the seaward protruding points along their coast. All seaward distances are measured from the baseline not the coastline. Then there is the continental shelf. The continental shelf is defined as the natural prolongation of the land territory to the continental margin's outer edge, or 200 nautical miles (370 km) from the coastal state's baseline, whichever is greater. A state's continental shelf may be extended beyond 200 nautical miles until the natural prolongation ends to a maximum of 350 nautical miles (650 km) from the baseline.
For this extension of coastline, the country has to prove it through a technical survey and details of their claim. UN approves it or otherwise.
Pakistan through the dedicated efforts of Pakistan Navy and the Ministry of Science & Technology has successfully got its claim approved.
Pakistan had an EEZ of 240,000 sq km area, with approval of its extension of continental shelf, it has gained another 50,000 sq km, thus making it 290,000 sq km. This in a way is the 5th province of Pakistan, largest after Balochistan and very rich from the economic point of view. We need to preserve it, protect it, survey it properly from the economic perspective, then explore it and exploit the riches that lie in these waters and the seabed beneath it.
The above mentioned aspects are some of the facets of Blue Economy of Pakistan, which remain an untapped source of economic development with great potential. Not all the aspects of Blue Economy have been covered due to paucity of space and even those covered have been given a cursory treatment only. But, hopefully it gives an idea of the potential, which is yet to be explored.
The writer is a retired Vice Admiral from Pakistan Navy. He also remained Managing Director of Karachi Shipyard & Engineering Works. He is a regular speaker at NDU, Staff Colleges and other forums on maritime subjects.
E-mail: [email protected]
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