Home Digital Magazine Making Pakistan a Maritime Nation: Minister for Maritime Affairs Syed Ali Zaidi

Making Pakistan a Maritime Nation: Minister for Maritime Affairs Syed Ali Zaidi

Mr. Zaidi explains his vision about Pakistan’s ports and shipping industry, and how can they be revamped and made efficient to support a maritime economy.

Ali

Minister for Maritime Affairs Syed Ali Zaidi was born and educated in Karachi. A successful entrepreneur with vast experience of operating businesses in various sectors. Mr. Zaidi joined Pakistan Tehreek-e-Insaf (PTI) in 2000 and became a member of PTI’s Central Executive Committee in 2003. Mr. Zaidi served as President of PTI Karachi Region until January 16, 2016. Managing Editor, Najma Minhas, sat down with him to understand his vision for the ministry and the nation.

GVS: The ports and shipping ministry has been renamed the maritime affairs ministry. Is this a nomenclature change or does it signify that you intend to look at what your ministry does differently?

Ali Zaidi: Actually, the mandate of this ministry as per the rule book is spread across several ministries. Ninety-five percent of Pakistan’s trade goes through the ports. All energy products including oil, LNG and coal come through the ports. Many of the power plants and the storage facilities are close to or on the ports.

This ministry used to be under the ministry of communications and so was railways and aviation, but globally all of these components come under the ministry of transportation. In America, secretary transportation manages everything. In Pakistan, they have made them independent ministries and I think rightly so because it is too big of a subject for it to be managed under one ministry.

Minister for Maritime Affairs Ali Zaidi and Minister for Petroleum Ghulam Sarwar Khan.

Here, the Ministry of Communications manages the entire road infrastructure. Aviation is a separate subject, Sheikh Rasheed is the federal minister for railways. Then we have ports and shipping ministry which has now been converted to maritime affairs because technically around 350,000 square kilometers constitute the Pakistani water shelf.

It is the size of Sindh and KPK put together – it’s huge. So everything on the water, under the water and on top of the water, all comes under the domain of this ministry. The maritime affairs ministry is a crossover to all the other ministries. One minute I will be talking to the minister of petroleum about an LNG ship that they are having problems docking because the tide is low and I need to figure out a way where the ship won’t get stuck in the mud.

Pakistan’s national flag carrier PNCS once had over 70 ships in its fleet. Today it has only nine. W took nosedive because of wrong policies by ealier governments like that of Bhutto when he nationalized the shipping industry.

The next minute I have to be engaged with the railways ministry on logistics. We are trying to connect the two ports— Karachi Port Trust (KPT) and Port Qasim—together without causing massive traffic jams in Karachi. Behind Port Qasim is the PIPRI freight yard where we are planning to build a new station for all the containers because we are running out of space in KPT.

Increasing the capacity of KPT is not an option as it is in the middle of Karachi and there will be more trucks and containers on the road creating traffic issues within the city. We want to build a freight corridor so that these goods can be moved smoothly across the country.

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GVS: What does the maritime affairs ministry consist of?

Ali Zaidi: There are three autonomous bodies working with us: KPT, Port Qasim Authority, and Gwadar Port Authority. We have the PNSC and the Ports and Shipping as a whole department, which involves registering of boats, framing of policies, deep-sea fishing.

After the 18th Amendment, fisheries became a provincial subject but deep-sea fishing, which is 12 nautical miles outside, is a federal subject and comes under the ministry of maritime affairs.

For example, there is a rig which comes under the ministry of petroleum but I am managing its logistics. All their ships come to our ports and we have to make sure that things run smoothly for them. That’s how we are involved in everything.

GVS: You have said that you intend to make Pakistan one of the top maritime nations. How do you intend to do this?

Ali Zaidi: Pakistan National Shipping Corporation (PNSC) is one of the most important components. I need to build capacity so we can start moving our cargo. We need to increase the size of the PNSC fleet so they can start transporting our goods, whether they are imports or exports.

PNSC which used to have 70 plus ships has only nine now. We took a nosedive because of the wrong policies made by earlier governments like that of Bhutto when he nationalized all the ships. Ships are expensive. They are not like cars that people can buy again easily.

On the other hand, I know a lot of Pakistanis who own ships which aren’t registered in Pakistan but in Panama and Cayman Islands, etc. because it’s very easy to register there. We are working on a flag protection policy because we want Pakistani registered vessels. They will get right of first refusal for goods that are going to be imported/exported in Pakistan.

Gwadar Port

This will not only generate tax revenue but will also reduce foreign currency outflow. Last year, USD4.2 billion was spent only on freight paid to outside shipping lines and that does not include LNG. Add all of that and we cross USD5 billion and we have the prime minister running to the rest of the world to get dollars for the balance of payments.

My point is we should have had our own ships where we would have been paying in rupees. My target is to reduce the USD4.2 billion by 15%, year on year. In five years, I hope to reduce it by 55% or so.

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GVS: How do you intend to increase the number of Pakistani ships?

Ali Zaidi: We are probably going to get two more LR1 [large range tankers], which are motor gas based, which is something that was already in the works before I joined this ministry. But there is a whole policy that we are working on and it is not just about incentives or rebates but other inducements too like tax breaks, etc.

I will be proposing it to the Economic Coordination Committee and the cabinet to encourage people to buy ships so we can start building this industry. I have been told that India has over 1,000 ships and even Bangladesh is ahead of us. Pakistan used to build ships for China and now China is one of the largest shipbuilders in the world and where are we? We are only building navy boats.

GVS: What are the other things on the horizon?

Ali Zaidi: Then comes KPT, which is one of the oldest ports of the region. It’s a beautiful historic building at the end of the city and a gateway to Pakistan. A lot of the KPT land has been encroached upon, which needs to be recovered. I have cleaned up Kemari. When I joined, it was all blocked by parked boats.

We removed all the boats, cleaned up the jetty and clock tower. We are planning to build more docks from where we will hopefully start a ferry service, once we get clearance from the government. People have encroached on huge tracts of KPT land. KPT has been involved in this as the officers let people encroach on it for money.

The most successful model for the ports is the landlord model. The bus terminal in New York is called the ‘New York Port Authority Bus Terminal’. You may wonder what the port authority has to do with bus services.

The New York Port Authority first owned the World Trade Centre; they own JFK and New Jersey airports, several bridges, Wall Street buildings, etc. Hence, ports have a landlord concept; when they were set up they were given land to develop everything else that is connected to the port.

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GVS: Do you plan to take this land back?

Ali Zaidi: Yes, but I don’t want to throw these people in the water. I have a plan; I will build for them first because it’s not their fault; they are poor people. You cannot just bulldoze everywhere. It has been done successfully in Istanbul, Rio De Janeiro, and Egypt. First, you build homes for them in the area and then move forward.

If you have 2 acres of land, you can build 500-600 apartments there, ground plus 9, with a green area and a car parking with gates all around. This is prime property, with water on two sides. This is how you expand the city, you go vertical. You build your hotels, marine towns, etc. there.

You build and rent out where you can. Another thing on the horizon is the planned freight corridor. KPT has a capacity to handle 150 million tons but it only handles 50 million tons. If I increase capacity, it means I increase cargo which will choke the city of Karachi so we cannot expand KPT. However, I have two plans.

Firstly, to build a train line and secondly, to build a freight corridor like the Hong Kong – Macau bridge concept. The freight corridor will start somewhere from KPT and go through the water to Port Qasim.

GVS: What is a freight corridor?

Ali Zaidi: We envisage the freight corridor as a six-lane expressway with a train track in the middle and oil and gas pipelines. So if you want to go to Defense from KPT, for example, you get on the train and get off at Defense. It will be a toll road with a road, rail, and pipeline bridge over the water from KPT to Port Qasim.

This link will create a one-port concept. We will have cargo villages behind Port Qasim. This means I can clean up Karachi and then I can bring in and export a lot more cargo because it will connect Korangi industrial area, Landhi industrial area, and marine industrial area. None of them will have to go through the city anymore.

The cargo villages are being built by the railway’s ministry. My job will be to work on connectivity and logistics only. If we are able to start on the freight corridor, I am hoping I will finish it during this government’s tenure, Insha Allah.

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GVS: Is ship-building one of the strategies?

Ali Zaidi: Ship-building has gone to the Ministry of Defense Production because of the cross-over of ministries. The shipyard went to the Ministry of Defense Production because we were not doing anything and it was going to shut down so the navy helped them by asking them to build their navy ships.

But what does the Ministry of Defense Production have to do with the commercial ships? So we need to now start looking to build regular ships. All of these things are part of the blue economy which is pushing us towards becoming a maritime nation. Remember PSA (Port Singapore Authority) and Dubai Ports, these are global trading hubs.

We are also working on coastal tourism from which we have high aspirations. I am hoping if all goes well and if I am able to pull everything through, in my personal opinion, just the Ministry of Maritime Affairs can pull in close to USD30 billion in Foreign Direct Investment.

GVS: Where is that FDI coming in from? Are you in talks with anyone?

Ali Zaidi: Everywhere. I have been in talks with big houses in China, the USA, and big business houses of real estate and ports in the UAE. In fact, a couple of people in Japan are also interested.

Anything from ship-building to the freight corridor– which is close to USD9 to USD10 billion project–is in FDI because there is a Chinese company that wants to build it. I already have the MoU sitting on my table. it’s with the Ministry of Law for vetting. This is a four-year plan, from the time we start the project.

GVS: A lot of issues that will crop up will do so because your ministry will be dependent on others – such as customs issues, logistics and connectivity issues and so on. How will you ensure that your plans succeed?

Ali Zaidi: We had a presentation with the PM recently. The naval chief was also there and both of us presented our points of view and I thank them for trying to help us because the Navy is concerned with defense and not the economy. We have already covered a lot of areas and now we are figuring out the implementation.

Remember, the government is not a private enterprise; certain approvals are required and the government works very slowly because of its checks and balances. So we are now forming an inter-ministerial committee on maritime affairs. Once we start talking to each other on a regular basis, I think things will move forward. The railway’s ministry will be an important player in the committee.

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GVS: Port development is all about logistics. In majority of countries, railways carry the majority of freight whereas in Pakistan, most of the freight is moved by roads. What are we doing in terms of enhancing the railway linkages to the port?

Ali Zaidi: In KPT, we have already fixed our railways. We can load our trains right here in the ports but the railway’s ministry need to fix their rails beyond KPT to Karachi and beyond. Railways ministry has a plan for laying a new track from KPT, right next to the existing track.

The new track will be a freight-only track. The railway’s ministry is in talks with some Chinese companies to build the new freight track. The freight track can be laid down in 18 months once it is approved. They have the land and just need to lay the tracks.

GVS: Last couple of years we have all heard a lot of hype about Gwadar. Is it going to be the new Dubai?

Ali Zaidi: I think it can be better than Dubai. Gwadar’s biggest issue is connectivity; that is the most important thing. There is a Gwadar masterplan for which we require a lot of land. It needs water. It needs energy because right now all the energy in Gwadar is coming from Iran.

Currently, Gwadar has two authorities looking after development, Gwadar Port Authority and the Gwadar Development Authority. GPA works under the Ministry of Maritime Affairs while GDA works under the provincial government of Balochistan. I have already figured out the different cargoes that can come to Gwadar.

They had no WeBOC [web-based one customs] system for customs clearance in Gwadar which I enforced. I am trying to get them to look at the trade which can be exported from and imported into Gwadar at a cost cheaper than Karachi. Roads are being built, some by GDA and some by CPEC.

GVS: Where is the proposed refinery going to be built? And what are we expecting financially?

Ali Zaidi: The refinery is going to be inside the port authority and is expected to be around USD10 billion. I think they also want to do a PetroChem project which will turn petroleum into a value-added product, in this case even more funds will come in. We have had meetings and discussed ways forward, questions and answers about the framework. I think the Aramco team is going to come next week.

The MoU has already been signed by the Government of Pakistan and the Kingdom of Saudi Arabia. Now the team will come and spend a week or ten days in Gwadar. They will grasp all the work that needs to be done.

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GVS: Have we done any estimates on how much cargo we are expecting to go via Gwadar after CPEC?

Ali Zaidi:  Through in the 1990s when manufacturing became too expensive. Korea then set up its offices in Hong Kong and their factories in China–all Korean manufacturing was done there. So, from cheap labor, they went into skilled labour. China now faces the same issue. They have started to set up their manufacturing bases outside in the region.

So here in Pakistan, we have skilled and affordable labour along with the sea and ports. We have to build the infrastructure around it and that manufacturing will ultimately come to Pakistan but only if we build infrastructure. The Chinese have direct access to the waters now, with the belt and road initiative, of which CPEC is an important component.

Wars have happened for three reasons, trade routes, control of land and women; big dynasties have fallen down because of this, it’s a precedent set by history. In politics, in business and in marriage, you never get what you deserve but you get what you negotiate. You always negotiate from a position of strength. Pakistan’s position of strength is our beautiful coastline.

10% of the oil in the world goes within 10 nautical miles from here. Somebody has to service those ships, then why isn’t our shipyard in Gwadar? Why is there no food security in Gwadar? Where are the cold storages for the Middle East? We produce wheat, where is a wheat warehouse here? We have never thought about these things.

But we are now planning to set up all of these. Once the facilities are built, there will be connectivity, and ships will start coming. I am going to create an environment for private businesses to come and flourish. I have spoken to the Chinese and Saudis about setting up desalination plants and ship-building. Be it FDI or local business, I need to set it up.

GVS: What is your objective for Gwadar for five years?

Ali Zaidi: By the end of five years, I just want the port to be operational and in profit; which means I want regular ships coming in. Right now, we only have one ship that comes in every alternate Wednesday. It has around 15 to 20 containers only. Whereas, even now it should have been at least 3-4 ships a week; for which you need to bring in the right cargo.

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GVS: What kind of cargo do we need?

Ali Zaidi: I have told the Gwadar Port Authority that they need to give a better deal to coal importers, given the amount of coal we import. I have suggested to them to charge x-5 than the current charges in Port Qasim and also to provide importers with storage.

We have so much land that we can offer the coal importers longer storage period in Gwadar which will act as an incentive to them. We have set up a coal power plant in Sahiwal, which makes no sense. It should be on the port because transmitting electricity is ultimately cheaper than transporting coal.

GVS: How are you bringing technology into the industry?

Ali Zaidi: Digitization of the ports is everything. I want it to be completely digitized by the time I am done. If you cannot dream it, you cannot build it. 20 years ago, when I joined PTI, family and friends made fun of me and Imran Khan. But one needs to be focused on their dream. Decide where you want to go and work on getting there.

However, it cannot be an individual effort. I will not get anything out of this – I don’t plan to own ships because I’m not in this industry. Imagine if I can bring in the kind of FDI I want to bring in and build the cargo villages and industrial zones I want to, this is going to go through the roof. That will be my contribution to my people and my country who gave me my identity.

However, unfortunately, there is massive corruption in this ministry. That needs to be tackled aggressively. Within the ministry I want things to be digitized to avoid red-tapism and wastage of time, because files keep getting lost from here to his office, from his office to the establishment division, from there to the cabinet and to the PM office.

If it is all online, everyone can have it on their table on one click. Each file is filled with comments and it is not convenient to see 20 files on a desk all the time which requires a massive amount of printouts for all the relevant people.

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GVS: You have issued a WhatsApp message and an email address. What is the percentage of corruption and its effect here?

Ali Zaidi: Just the WhatsApp message has caused a nosedive in corruption because people are scared of being snitched. And I have found people from within the components of my ministry who have started informing me. But most of the complaints are against customs which doesn’t come under the purview of my ministry.

In China, the total time for a container to be lifted from a ship and taken away in a truck is 12.5 minutes. In a developed world, it’s 6.5 minutes. But in Pakistan, it takes 2 days. Globally, every port operator has X-ray machines but in Pakistan, we do it physically. Why? To make ‘corruption’ money.

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