PILLAR VII:: MODERNIZING TRANSPORTATION INFRASTRUCTURE AND GREATER REGIONAL CONNECTIVITY

1.Increase road density from 32 km/100 km2 to 64 km/ 100 km2, and share of rail in transport from 4% to 20% .
2.Increase annual exports from US$ 25 billion to US$ 150 billon.

"Transport contributes about 10% to the GDP and accounts for over 6% of employment in the country"

Development of modern transportation infrastructure plays a pivotal role in economic development and attracting investments. Pakistan Vision 2025 seeks to establish an efficient and integrated transportation system that will facilitate the development of a competitive economy. Key related targets are to ensure reduction in transportation costs, safety in mobility, effective connectivity between rural areas and markets /urban centres, inter-provincial high-speed connectivity, integrated road/rail networks between economic hubs (including air, sea and dry ports) and also high capacity transportation corridors connecting major regional trading partners.

Some of the specific targets include:

Roads – raise road-density to a level of 0.45 km/sq.km, which will increase the existing road national network from around 260,000 km to 358,000 km.

Railways – major upgrade of the railway system includes increasing speed from 95 km/h to 120/140 km/h; doubling tracks of the main line sections; increasing line capacity with a modern signalling system; establishing North-South and East-West corridors and developing linkages through road and rail to Central Asian States, China, and other neighbouring countries and development of a separate freight corridor on railway tracks. Pakistan Railways will be made more profitable and will be the quality service provider for passengers and freight.

Aviation – a key objective related to the aviation sector, will be enhancement of the cargo and passenger infrastructure and handling capacity at important airports to meet the delivery needs of a modern global supply chain. Further, a revised civil aviation policy will be formulated. National Flag Carrier will become a leading airline.

Shipping and Ports – Pakistan's seaports will require significant additional investments to upgrade their facilities and infrastructure to meet global efficiency and cargo-handling standards and shipping services shall be made competitive.

A strategic program of regional connectivity is envisaged to connect Pakistan through enhanced physical infrastructure development (physical connectivity), effective institutional arrangements (institutional connectivity) and business and individual contact (people connectivity). Building enhanced regional connectivity requires not only the development of new strategies and institutions, but also investment in more effective implementation of existing and future initiatives.

Pakistan is gifted with a strategic location that is well suited to serve as a hub of commercial activity. Transport contributes about 10% to the GDP and accounts for over 6% of employment in the country. The sector consumes 35% of the total energy annually and accounts for approximately 15% of the Public Sector Development Projects (PSDPs).

Road transportation today represents the backbone of Pakistan's transportation system, accounting for 96% of all passenger and freight traffic in the country. This highlights the current minimal participation of the Railways in Pakistan's passenger and freight transport.

Pakistan has a coastline of over 1000 km and an offshore Exclusive Economic Zone covering an area of 240,000sq km that remains unexplored. Two major ports, Port Karachi and Port Qasim, handle 95% of all international trade, and 14 dry ports cater to high value external trade. Gwadar Port will be built as a leading port in the region to serve as a gateway to the China- Pakistan Economic Corridor.

Further, our transportation network has not been adequately equipped or balanced to reflect rural/urban, sectoral and regional needs. These shortcomings are reflected in the estimated cost to the economy of about 4–6% of the GDP.

Pakistan's Exports to Regional Countries – During 2013 our exports to 21 regional countries represented 33% of our total exports. Three of these countries (China, UAE and Afghanistan) accounted for 23%, while our exports to the other 18 countries represented a mere 10% of the total.

Opportunities for Realizing Regional Connectivity Potential

Apping the potential identified above will require a considerable amount of capital investment. In view of the limitations on the Government's own resources, public-private partnerships, employing a variety of financing and ownership mechanisms (for example, Build Operate-Transfer) will be utilized. The strategy also recognizes that if infrastructure is to provide enduring benefits, it must be used efficiently and be provided with the resources to maintain it in a proper state of repair. The government will therefore devote attention to provide rational pricing policies, such as setting appropriate user charges. The strategy also covers roads and highways outside the North-South corridor. Two important projects include the development of linkages between the port of Gwadar and the National Trade Corridor, and upgrading the Karakoram Highway to cater for increased traffic with China. Work on these initiatives has already begun.

China-Pakistan Economic Corridor

In July 2013, China and Pakistan signed a Memorandum of Understanding (MoU) in Beijing in the presence of the Chinese Premier, Mr. Li Keqiang and Pakistani Prime Minister Nawaz Sharif. The MoU is aimed at enhancing economic regional integration in investment, energy, trade and communication. The aim is to create linkages between the Western Region of China and Pakistan by establishing communication links and developing Economic and Trade Corridors that would facilitate economic activity along the corridors. The plan includes physical connectivity (via roads, railways, fibre optic cables, oil and gas pipelines) between Western China and Pakistan; investment and economic cooperation; exploring sectoral cooperation along the Corridor including agriculture, industry, energy and infrastructure, environment; education, research, culture, tourism and media as well as people-to-people cooperation.

The China-Pak Economic Corridor (CPEC) offers a unique opportunity to Pakistan to integrate with regional developments and become a hub for trade and manufacturing with Gwadar port developed as an international free port.

SAARC & ASEAN

Pakistan will look to diversify its export destinations and instead of depending solely on bilateral trading partners will focus on pluri-lateral and multilateral trade agreements in the SAARC & ASEAN regions. However, a major challenge for this move is Pakistan's limited export basket. Two commodities, cotton manufactured goods and leather goods comprise more than 67% of Pakistan's exports. Hence it is in Pakistan's interest to diversify its export goods and try to strengthen regional trading block.

Central Asian States

The Central Asia Regional Economic Cooperation (CAREC) is a partnership of 10 countries (Afghanistan, Azerbaijan, Kazakhstan, Kyrgyz Republic, Mongolia, Pakistan, People's Republic of China, Tajikistan, Turkmenistan and Uzbekistan), supported by 6 multilateral institutions, working together to promote development through cooperation, leading to accelerated growth and poverty reduction.

Pakistan will take advantage of CAREC, as CAREC helps Central Asia and its neighbors realize their significant potential by promoting regional cooperation in four priority areas: transport; trade facilitation; energy, and trade policy. In new emerging global and regional alignment, Pakistan will take benefit of its strategic location to serve as gateway to Central Asia and attain energy security by connecting to Central Asia.

ECO

The intra-regional trade in the post and pre ECO periods remained dismal primarily because of the non-availability of secure connectivity. Pakistan expects better prospects from the ECO in the medium-term given the changing geo-political changes in the region and increasing realization in the region for economic cooperation. Pakistan has already started cooperation talks with other regional partners. The government is engaged in talks for cooperation in the areas of energy with some ECO members and the scope of economic cooperation will be broadened in the medium-term.