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ECONOMIC REVIEW
Focusing On Infrastructural Development
Not only transportation cost will be reduced but millions of dollars can be earned by offering transit trade facilities to landlocked countries
(by SHABBIR H. KAZMI
)
Focusing On Infrastructural Development
Historically countries having achieved substantial GDP growth have focused on creation of robust infrastructure. The successive governments in Pakistan have failed in revamping the existing infrastructure and creating new facilities. Some experts say if today the country suffers from energy crisis, another ordeal in making is infrastructure crisis.
Pakistan Railways has gone virtually bankrupt, national airline even does not have money for maintaining aircrafts and buying fuel and nearly bulk of the international trade is done through foreign shipping lines. On top of this local and intra-city transport is not only expensive but inefficient. Broken and highly depleted roads create worst traffic jams leading to huge fuel consumption and extremely high wear and tear of vehicles.
While depleted infrastructure is a cause of grave concern, it also offers enormous investment opportunities. These include improvement in intra-city and inter-city transport, construction of farm to market roads, linking three sea ports with rest of the country, establishing efficient dry ports and modern storage facilities. It may b enough to say that nearly 30% of the food, vegetables and fruits is wasted due to inadequate and improper storage facilities. Unarguably, this requires massive investment but certainly unavoidable if Pakistan has to make its economy robust. The added advantage will be creation of new job opportunities for the youth, becoming the biggest percentage of the total population of the country.
While construction of infrastructure projects is likely to create enormous job opportunities, creation of assets could boost the economy. For example, the Lahore-Islamabad Motorway that despite huge cost overruns and completed at an estimated cost of Rs19 billion in the 1990s, was valued for collateral purposes by commercial banks at Rs50 billion 10 years ago. It is now valued at Rs250 billion.
A plan prepared by the Planning Commission envisages enhancing regional connectivity through trade links and energy and transport corridors for China, Central Asian Republics and Afghanistan could yield over US$60 billion a year. This requires making Bin Qasim and Gwadar ports more efficient and competitive. It is often said that Pakistan is gateway to Afghanistan and Central Asia but solution should be found for proper utilization of Gwadar facilities. Two of the most obvious irritants, higher handling cost and poor quality of roads must be resolved at the earliest. Port charges can only be rationalized when its capacity utilization improves.
Focusing On Infrastructural DevelopmentMega cities like Karachi and Lahore need efficient and cost effective mass transit systems. The city roads are congested with private vehicles and small coaches in the absence of any coordinated effort to run large efficient buses. The railway system has almost come to a halt, putting additional pressure on weak and dilapidated road network for freight and passenger transportation.
While the domestic aviation industry has been on a nosedive, enabling the international airlines to prosper, the shipping industry is also incapable of handling country's international trade. More than 80% cargo is carried by foreign ships as the state owned Pakistan National Shipping Corporation (PNSC) operates a small fleet. Thousands of ships visit Karachi, Bin Qasim and Gwader ports every year but the repair facilities are devoid of modern facilities. Port facilities and freights have to be brought in line with international standards if Pakistan has to make use of its ports and coastlines and compete with other countries of the region.
It may not be wrong to say that some of groups with vested interest don't want Gwadar port to become fully functional. This port directly competes with Chabahar port being constructed in Iran and is also supported by road and railway link up to Central Asia via Afghanistan. This alternate access route is being developed to undermine the importance of Pakistan. However, it remains a fact that Pakistan still offers the shortest and most cost effective route to Afghanistan and Central Asian states.
Construction of Pak Arab Refinery along with black and white products pipeline has eased pressure on highways and roads but still huge quantity of POL products is imported. Reportedly Pakistan consumed around 1.5 million tones of energy products during January 2012. The real point of concern is that nearly 60% of the demand was met through imports. It was not because local refineries were unable to meet the demand but because of higher cost of locally produced products and circular debt.
Experts say that at time importing a product makes more sense than buying it locally. This may be because of 'deemed margin' but more importantly to limited product range produced by the local refineries. In the recent past work on three new refineries was initiated but seems almost certain that none will become a reality. This is a massive setback because establishing these refineries would have led to higher value addition and export of those refined products in which the country would have attained surplus production.
Both the proposed gas pipelines Iran-Pakistan-India (IPI) and Turkmenistan-Afghanistan-Pakistan-India (TAPI) have to pass through Pakistan. One of the concerns repeatedly raised by India is that Pakistan can't guarantee security of the pipelines because militant groups often blow up gas pipelines. It may not be wrong to say that the attacks are being carried out by those groups which are supported by the foreign intelligence agencies.
At present Pakistan suffers from acute shortage of electricity and gas but both the problems can be overcome very conveniently. Establishing hydel and coal fired plants can help in bringing gown cost of electricity generation. Gas production in the country can be increased by accelerating exploration and production activities. It is on record that foreign companies are reluctant in operating in Pakistan because of security reasons.
However, experts also say that the reality is not as bad as being portrayed, particularly by the foreign media. They even go to the extent of say that negative news are given more space and time and positive activities are undermined. Therefore, it is the joint responsibility of the private sector and the Government of Pakistan to highlight the success stories. However, removing the security concerns remain the sole responsibility of the government.


 
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