Framework for Economic Growth, Pakistan - Planning Commission

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International conference on “Framework for Economic Growth, Pakistan”Session 6: Connecting to CompeteSpeaker: Amer Z. DurraniSector Coordinator for Trade Logistics, Transport, and Customs, World BankBefore I start on the topic of connectivity tocompete I was thinking that what was thething in this conference which impressedme? What would be my answer if someoneasks me that how was the conference?Before I answer these questions allow me togive you a Romanian quote that “In today’sfree market nothing seems visible until it isscandalous, and nothing is scandalousenough to be memorable”. So I hope that itwill be a very scandalous growth workshopand would remain in our national andcollective memories.Before I start I would like to explain thatwhat actually connectivity means in the waythe growth strategy presents it. We talkedabout connectivity in term of transport. Wealso talked about connectivity in physicalterms i.e. to take people and goods from oneplace to another. Transport actually providesconnectivity as a utility of place. In realterms connectivity can be physical orvirtual. In case of connectivity it isimportant that whether it is virtual orphysical connectivity it should have accessand mobility.Connectivity is linked with utilization andprovision of services. Like road is there butwe are not using that. In urban and crossborder terms connectivity is also important.It is also important in cross border andinternational border context. Just ten tofifteen years ago it required to physically goto banks to deposit utility bills which nowrequire less than thirty seconds doing thesame job. To think of virtual connectivity isfast replacing the need to physically move.While talking of connectivity we also talkabout internet and mobile revolution.Internet contributes about 4% to GDP.Connecting people and goods behind theborders (internal) is also very important. 70million tonnes of goods move across ourborders every year out of which 98% movesthrough two ports in Karachi. In terms ofcargo the given volumes move five timesinside Pakistan.Impediments to connectivity includetechnology and we have not been able to useit properly. Affordability is also important -like use of taxi is expensive. Externalconnectivity is something that not onlycontributes to trade but also to regionalstability. We are working basically intraditional textile goods and with themarkets which are far way. It takes 27 dayslonger to take citrus to Spain from the pointof production to the point of use. We need toexplore new markets which have value bothin terms of distance and value for us.Transport and logistics system is performingpoorly and costing economy 3% of GDPannually which is about 480 – 550 billionrupees a year, and cause direct and indirectlosses to occur in the following ways:- Highways, trucking and railways sectorcontribute a loss of Rs. 254-323billion/year,- The ports and shipping sector contributelosses of Rs. 60 billion/year, and- Poor trade facilitation and logistics costsRs. 167 billion/year.There is 30% loss of the farm produce totake to another area. Container dwell timesat Pakistani ports are back to 9-11 dayswhich is 4 times that of developed countriesand 3 times that of East Asia. Customs68
International conference on “Framework for Economic Growth, Pakistan”clearance alone takes 4-5 days which is 1.25hours in Singapore. In trucking sector ratesfor high value commodity traders are higherthan India and Brazil. Rail carries less than 5% of freight in Pakistan and again taking14–28 days to deliver up country (1800 km)which is 4 to 7 times slower than in Chinaand United States. There was a studyconducted in 2006 by a Swedish firm onlogistic sector efficiency. The studybenchmarked Pakistan against Korea andMalaysia and compared public logisticsector efficiency with private sector. Thestudy pointed out that by bringing efficiencyin public sector logistic we can bring about14 rupees of efficiency.Major internal logistics challenges inPakistan are:- Domestic Transport,- IT Development, and- Contemporary in-house logistics.Pakistani firms are very inefficient in manyareas and still go to the government forsubsidies. While talking about internalconnectivity we find that half of the ruralPakistan is not ‘mobile’. Women carry thetransport burden. Following is the positionof access and mobility in the country:- 15% communities still lack basicmotorable access,- 53% communities have paved access,- 48% communities served by regularpublic transport services,- 45% of communities with basic accessstill lack regular public transport,- Un-served village communities have totravel 4 km (30 minutes) on an averageto reach public transport.Looking at cities we find that 21 millionpedestrian trips are generated in Lahore andyet we have not heard that government ismaking anything special for them. Coverageof broadband is a good story in Pakistan, butit is not being delivered to the wider public.Key to competitiveness is not easy. AsDeputy Chairman said earlier that everyonesays that solutions are out there and it is notrocket science. I challenge that it is far moredifficult than the rocket science and alsodifficult than what nuclear scientists doingin Pakistan. With cost of fossil fuel goinghigh internal connectivity is getting difficult.We need to talk about key institutions.Increasing effectiveness and fixinginefficiencies means handling multiplestakeholders and processes. We shouldallow other people to run Railways and giveautonomy to provinces. Connectivity withGawadar needs to be developed. Why can’twe do an experiment like metro cab?Internet connectivity is another challengeand government needs to start serving usinginternet.***69
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