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I&m #619 2015

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This I&M issue features a Special Report on Indonesia, after a visit arranged by the Consulate General of Indonesia in Karachi. It also contains a superb interview of Mr. Ejaz Ali Shah, MD of PMEX - Pakistan's commodities exchange.

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CONTENTSEditorial 3

I&M Special Feature – Indonesia Republik Indonesia Glimpses - Pakistani Delegation Visits Indonesia Meeting: A.M. Fachir, Vice Foreign Minister of Indonesia 7Meeting: Mohd Aqil Nadeem, Ambassador of Pakistan 9Indonesian Economy 11 Consulate General of Indonesia in Karachi - Solo Country Exhibition 12- Indonesia-Pakistan Cultural Night 12- Flag Hoisting Ceremony and Tree Plantation 13- Indonesian Naval Ship KRI Frans Kaisiepo-368 14 I&M Interview Ejaz Ali Shah Managing Director, Pakistan Mercantile Exchange 17 I&M Special Feature – Ports & Shipping Glimpses -- NCMPR, Bahria University 21Pakistan 2015 – Planning Commissin, Govt of Pakistan 22Port Investment and Container Shipping Markets 26CPEC -- Prof Tang Mengsheng 31Hunan Delegation Visits Balochistan Economic Forum 37 Regional Perspective Indian Ports Sector 39 Events Glimpses: 7th Pakisatan-Japan Business Dialogue Islamabad 50Birthday of His Majesty Emperor Akihito of Japan 51

CONTENTS

Shahid Khaqan Abbasi, Federal Minister, Petroleum and Natural Resources; Arif Habib,

Chairman, Arif Habib Group; Prof S.B. Hassan, President, I&M

Mohd Ali Tabba, MD, Lucky Ce-ment Ltd.; Dr. Miftah Ismail, Chair-man, BOI; Engr. Khurrum Dastagir

Khan, Federal Minister, Commerce; Prof S.B. Hassan, President, I&M

Pakistan Investment Conference, Serena Hotel, Islamabad

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I&M - Five Decades of Pioneering Effortsfor National Economic Development

In 1977 – President of Pakistan, General Zia-Ul-Haq, announced commendation and award for Prof.S.B.Hassan on the occasion of presentation of a comprehensive report prepared and published by Invest-ment & Marketing Intl. (I&M) under the title “Investment

In 1966 - Field Marshall Ayub Khan, President of Pakistan appreciated Prof. S.B.Hassan for compiling a Special Report on First Ocean Going-Vessel “M.V. Al. Abbas” by Karachi Shipyard and Engineering works (K.S.E.W)

In 2015 H.E. Mr. Mamnoon Hussain, President of of Pakistan conferred the “Achievement Award” (Special “Gold Medal”) to Prof. S.B.Hassan on behalf of FPCCI in commendation of his services and contribution to the Economic & Industrial development of Pakistan

In 2011, H.E. Mr. Asif Ali Zardari, President of Pakistan presented a gold medal to Prof. S.B. Hassan, in appreciation of Prof. Hassan’s services to the print media. The award was titled “APNS Life Achievement Award”

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REPUBLIK INDONESIA

lr. Soekarno and Drs. Mohammad Hatta Moh. Husni ThamrinSang Saka Merah Putih

H.E. Joko Widodo President Republik Indonesia New Cabinet of President - Thomas T. Lembong; Luhut Pandjaitan; Soyan Djalil; Pramono Anung; Rizal Ramli; and Darmin Nasution

Arjuna Wijaya Chariot Statue, Jakarta Pakistani delegation visits Pancasila Building National Museum, Central Jakarta

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INDONESIA VISIT

Pakistani Delegation Visits Jakarta, Indonesia for Official Meetings

Salman Hassan, I&M; Salahuddin Haider, Pakistan Observer; Prof S.B. Hassan, I&M; H.E. A.M. Fachir, Vice Foreign Minister; Khan Zafar; Ngurah Swajaya, ASEAN-Indonesia; Mr. Hadi Santuso, Consul General in Karachi

Mr. L.Vh. Tampubolon, National Development Planning Agency H.E. Mr. A.M. Fachir presents Pancasila book to Prof Hassan

Indonesians Visit Masjid Istiqlal, Jakarta Pakistanis enjoy delicious Javanese cuisine

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Pakistani Delegation Visits World-Famous Bali, Indonesia

Beautiful architecture in Ubud village in Bali Mr. Baskoro Aije and Ms. Barkha Pahuja from Indonesian Consulate General, Karachi, were dedicated hosts in Bali

Amazon parrots at the Bird Park in the village of Ubud are bold and friendly

The famous Ramayana dance at the Hindu temple in Uluwatu

INDONESIA VISIT

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It was an honour for a team of Pakistani journal-ists and businessmen to meet with His Exellency Mr. A.M. Fachir, the Vice Minister for Foreign

Affairs, Republic of Indonesia in his office in Jakarata.

Mr. A.M. Fachir is a scholarly and gracious gentleman. He greeted the visiting Pakistanis with great warmth and courtesy, and spared more 90 minutes of his valuable time for a discussion on Pakistan, Indonesia, and inter-national affairs. A.M. Fachir, Vice Minister for Foreign Affairs, is the Editor in Chief of an elegant book recent-ly published by the Ministry of Foreign Affairs, with the title, “Pancasila Gedung”. It means, “The Pancasila Building”. The Pancasila Building is a historical build-ing which served as the site of the parliament in pre-In-dependence Indonesia. Indonesia was under Dutch co-lonial rule, and the parliament was called, “Volksraad”. As the Indonesian independence movement grew stronger, it served as the venue for the Committee for Preparatory Work for Independence (Badan Penyelidik Usaha-usaha Perisiapan Kemerdekaan – BPUPK). In this building, the future President of the Indonesian Re-public, lr. Soekarno, articulated on 1 June 1945 the Five Principles that would become the national ideology, the “Pancasila”.

It was an honour for the visitors from Pakistan to have an opportunity to meet with A.M. Fachir, Vice Minister for Foreign Affairs, and Mr. Ngurah Swajaya, Acting Head, National Secretary ASEAN – Indonesia. We provide below excerpts from the excellent meeting.

Bahasa Indonesia and PancasilaThe progress of Indonesia is the result of the wisdom of

our founding fathers. It was the wisdom of our founding fathers to use Malya language to create Bhasa Indonesia, our national language. The selection of Malya, which was a minority language, shows the respect and importance given to minorities in Indonesia. It is the language that unifies the world’s fourth most populous country – a coun-try comprised of almost 18,000 islands, and inhabited by 350 ethnic groups speaking 750 native languages and dia-lects. Bahasa Indonesia, a standardised version of Malay, is the sixth most widely spoken language in the world (af-ter Mandarin, English, Hindi, Spanish and Arabic).

In 1928, with the country’s nationalist movement in full swing, the Congress of Young People drafted the famous Young People’s Vow (Sumpah Pemuda) declaring “Indo-nesian” the pre-eminent language of Indonesia as well as the language of national unity. In 1945, when the Indo-nesian nationalist movement arose to declare an indepen-dent republic, the Proclamation of Independence, the state philosophy of Pancasila and the Constitution were all ut-tered and framed in Bahasa Indonesia. When the Repub-lic emerged victorious from the subsequent Revolution (1945-1949), the prestige of the language was secured and its development was unstoppable. The guiding principles of Indonesia include tolerance for all religions. We should use local knowledge to resolve conflicts. For example, there is a Bhuddist community in Indonesia that prepared iftaar for the Muslim community to promote interfaith harmony.

Use of Social MediaSocial media is very powerful. It has been used by ISIL

for recruitment of young Westerners in the terrorist move-ment in Iraq and Syria. It depends on how you use it. There are many examples. The campaign of President Obama in 2008 was successful due to use of social media. Another example is the use of social media by youth, which brought Hosni Mubarak down despite being backed by military. If the media wants to educate the younger generation, then use social media for this objective.

“We have emotional attachment with Pakistan. The challenge is to translate this emotional attachment into concrete progress”

INDONESIA VISIT

A.M. Fachir, Vice Minister for Foreign Affairs, Republic of Indonesia

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INDONESIA VISIT

Interfaith DialogueWe organized a forum called Interfaith Dialogue. We

invited some religious leaders from Pakistan. Ahmiddya is banned there, but we have some followers of Ahmadi-yya in Indonesia. We have Indonesian students in Paki-stani madrasas. We can share how the practice of Islam in both countries can enrich the way of dawa. Educational exchange is important. You have some excellence in tech-nology, for example. We can share with you some other expertise, for example agriculture and SME development.

Many people from around the world now say Indonesia could become a model of moderation for Muslim coun-tries. Indonesia should share experience. We promote in-terfaith dialogue. We have regular forums with 25 coun-tries that aer located all over the world.

Last year we hosted UN Alliance of Civilizations. We do it on purpose. We educate ourselves and we share our experience. We empower moderation and we show that Islam is Rahmat-Il-Alameen. It is nothing to fear. Islam means peace. We organized an event in April in Bandung. President Joko Widodo said there is a need to organize a meeting among Islamic countries.

When you travel overseas, you should follow our na-tional rules, and you should follow the rules of the country you visit. It is our national obligation to protect our na-tionals. If they face a problem, it is the duty of our mission overseas to assist them. It varies from country to country. A lot of Indonesians work in Malaysia and Saudi Arabia. We want to send our citizens to work in countries where the rules of protection are clear.

We review countries where there is no protection. We discourage our nationals from going there. The govern-ment of any country respects all religions including Islam. Sometimes, it is difficult to transfer this tolerance to the pub-lic. It is in our common interest and our common obligation to address the issue of Islamophobia. The victim is not the West, but also Muslims, in particular Muslims in the West. We need to promote the best example of tolerance. We are worried about the influence of radical Islam on our students overseas, so President Joko Widodo has decided to establish an International Islamic University in Indonesia.

Priorities of President Joko WidodoThe President is doing as President what he did as May-

or in Solo and Governor in Jakarta. There are three pri-orities. He successfully managed what we call his policy

to issue three cards. Card for those who are poor, for so-cial security; card for access to health services and card for education. He has extended that policy nationwide. We are obliged by our Constitution that 20% of our ex-penditure will be dedicated to education. For economic development, he has cut regulations. He has focused on two things. Indonesia must benefit from being a maritime country. He has focused on connectivity. Land connectiv-ity and sea connectivity. We plan to build 24 sea ports and 15 national airports. With easier connectivity, the econo-my will grow. Power and electricity are not sufficient for

industrial development. We need 35,000MW or more.

International OrganizationsThe Security Council is not representative. We support

the idea of reforming the United Nations, be it the General Assembly or the Security Council, in terms of member-ship, procedure, and right of veto. It does not reflect the current situation. We have been discussing this subject for quite some time. If we don’t have common position, it is difficult for us to achieve reform.

ASEAN is enhancing secretariat to secretariat coop-eration with Shanghai Cooperation Organization. Last month we received a delegation of Shanghai Cooperation Organization. We focused on trans-national crimes and economic cooperation. We have also signed some MOUs.

Thank you for taking some time to visit Indonesia. Af-ter your stay in Jakarta, as soon as you step down on the land of Bali, you will feel different! I must say that you really contribute to our mission to further improve the relations between the two brotherly countries. We have emotional attachment with Pakistan. The challenge is to translate this emotional attachment into concrete progress.

National Development Planning Agency

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INDONESIA VISIT

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The Ambassador of Pakistan to Indonesia, H.E. Mr. Mohammad Aqil Nadeem, kindly spared his valuable time to meet with the visiting

delegation of journalists and businessmen from Pakistan. The Ambassador’s team included Mr. Ali Mehmood,

Second Secretary, Head of Chancery; Mrs. Maria Kazi, Commerical and Press Attache; Mr. Syed Zahid Raza, Counsellor and Deputy Head of Mission. We have sum-marized the thoughts and perspectives of His Excellency and his team members.

Relations with ASEANASEAN is quite an old organization. They are doing

well because they don’t have political problems. From next month, they will become ASEAN Economic Com-munity. In comparison, SARC has different dynamics.

The six countries of this region are members, and they have voting rights. The countries that have political and economic relations with ASEAN countries are full-dia-logue members. The sectoral dialogue partners engage in only a few sectors. Currently, we are also a member of ASEAN Regional Forum, which has 27 members.

ASEAN has separate FTA agreements with six of the ten full-dialogue partners. These countries are China, Ja-pan, India, Korea, Australia, New Zealand. They have abolished almost 90% tariffs. The 6 FTA countries and their 10 full-dialogue partners have started negotiations on regional comprehensive trading partnership. 16 coun-

tries will be tariff-free.ASEAN is an important forum for consultation. We

have tried to increase our footprint in ASEAN. We are a sectoral partner now, and we intend to become full-di-alogue partner. It is possible for geographically distant countries to become full-dialogue partners. For example, Japan and Korea are not part of the region, but they are full-dialogue partners. Pakistan’s trade with ASEAN has increased from $2- $3 billion in early 2000 to between $6 -7 billion now.

It is an economic, political, and security group. If we become a part of this as a full-dialogue partner, then we have many other benefits like setting-up businesses and travel benefits. Mainly, we are looking for political and security benefits.

High Level VisitsWe are working to organize a high-level business

H.E. Mohammad Aqil Nadeem, Ambassador of Pakistan to Indonesia

H.E. Mohammad Aqil Nadeem presents his Letter of Credence to H.E. Le Luong Minh, Secretary-General of ASEAN at the ASEAN

Secretariat on December 01, 2015

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delegation and a high-level government delegation from Indonesia to Pakistan in 2016.

The government of Indonesia is aware of the efforts of the government of Pakistan in the war on terrorism. Re-cently, I met the Defence Minister, as well as the Navy, Army, and Air Force Chiefs. They also have their own concerns. They have information that almost 500 Indone-sians have moved to Syria and Iraq to fight with ISIS, so they are also worried, and we are coordinating our posi-tion. We have a joint working group on counter-terrorism.

Trade Relations with IndonesiaWe can inform Pakistani businessmen about the oppor-

tunities available, but at the end of the day it is the busi-nessmen who need to step forward and take initiative. Our businessmen are fixated on Europe and America. They need to have the vision to look beyond USA and Europe. India has exports of $17 billion and our exports are only $160 million. FTA has been signed, but our businessmen are not showing initiative. Indonesia is close to a $1 tril-lion economy. You can see the quality of the infrastruc-ture here. We are very pleased that a brotherly country is doing very well economically.

Indonesia realizes that balance of trade is in favor of

Indonesia. Coal. However, our trade is increasing We have signed an MOU for rice export. It will be a G to G arrangement. Our fruit export is increasing. This year we expect to reach $5 million mark for fruit. When coal-fired power plants are completed as a result of CPEC, coal import from Indonesia will reach the $3-4 billion mark. Their prices are competitive compared to South Africa.

Our business delegations to Indonesia are few and far

between. We need to change our thinking. It is a huge market and there are endless opportunities. Business should show initiative and take risk to enter the Far East market. I don’t think TDAP was responsible for the suc-cess of Pakistani textiles in Europe and USA. It has to be the initiative of businessmen. We have a capable Com-mercial Counsellor who can conduct market studies for you. Tell us what you need.

Textile ExportsBandung is the textile manufacturing capital of Indone-

sia and Jakarta is the fashion capital. Indonesia Fashion Week and Jakarta Fashion Week happen here. We are in contact with the organizers of Indonesia Fashion Week and they have welcomed Pakistani participation. Indone-sian models can wear the Pakistani dresses. However, our designers appear to be more interested in Paris Fashion Week. They will even go to Hong Kong and Bangkok Fashion Week. They cannot expect a fully-subsidized visit.

The Efforts of DiplomatsWe at the Pakistan Embassy make efforts and because

of our efforts there is some success, by the Grace of Allah. We met trade ministry officials and discussed a ban they placed on Pakistani rice. As a result, there is a possibility of exporting rice worth over $400 million to Indonesia. The ban was a result of poor quality rice exported by busi-nessmen. Overall, institutional efforts are being made by the government to enhance trade. We heard there might be a ban on export of keenu. We arranged visits by Indo-nesia government inspectors to orchards in Sargodha. We wrote to the trade minister and as a result there was no ban and export will begin from next week. Some missions are under-funded and therefore they do not have commercial officers. The Indonesian Foreign Ministry has almost 200 officers. In comparison, Pakistan has only 450. In these circumstances, the diplomatic officials take many respon-sibilities.

Air Links between Pakistan and IndonesiaAir links are commercial decisions. PIA used to oper-

ate till 2002 or 2003, when there were 2 flights a week. I mentioned this subject of air links when I presented my credentials to President Joko Widodo. If Garuda introduces service, it will be will be for the first time.

INDONESIA VISIT

Mr. Hadi Santuso, Consul General of Indonesia in Karachi; Mr. Gautam Naraindas, Pakistan-Indonesia Association, Indonesian Chambers

of Commerce; Prof. S. B. Hassan, I&M; Salman Hassan, I&M

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INDONESIAN TRADE -- JANUARY – NOVEMBER 2015CHARTS CREATED BY I&M DATA SOURCE: Badan Pusat Statistik (BPS-Statistics Indonesia)

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Consulate General of Indonesia in KarachiIndonesia-Pakistan Cultural Night at NAP A, Karachi

Ustad Nafees Khan on the Sitar, Bashir Hussain on Tabla, Ustad Salamat Hussain on Flute, Indonesia Songs by Vocalist Fonney and Special Musical Performance by Mr. Hadi Santuso, Consul General of Indonesia, Songs by NAPA students.

Solo Country Exhibition of Indonesian Products Marriott Hotel Karachi -- November 13 – 14, 2015

EVENTS

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EVENTS

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EVENTS

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Welcome Dinner for Indonesian Naval Ship KRI Frans Kaisiepo-368Hosted by Mr. Hadi Santuso, Indonesian Consul General in Karachi

Pakistan Navy Officers Join Indonesian Dignitaries for a Group Photo:H.E. Mr. Burhan Muhammad, Ambassador (Late); Mr. Hadi Santuso, Consul General; First Admiral Prasetya Nugraha; Lt. General Letjen TNI Lodewijk; Lt. Colonel Ade Nanno Suwardi, Commander of KRI Frans Kaisieopo

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EFU Life Rural Awareness Drive – ‘Choti Rakam Bara Kamal’EFU Life, the leading life insurer in Pakistan with a vision of providing life insurance to all households in the country, has launched a Rural Awareness Drive in Sindh. The initiative ‘Choti Rakam Bara Kamal’ is the first step to reaching the rural parts of Pakistan to educate people on the many benefits of life insurance, and the financial security that it offers to families.

The campaign tagline ‘Choti Rakam Bara Kamal’ is linked with the bigger idea of ‘Life mein kamal karna zaroori hai’ and signifies the affordability of life insurance to a common man and the recognition an individual gets for doing the “kamal” of protecting his or her families future.

A common practice in rural areas is for individuals to take loans for agricultural produce and utilizing that loan to buy agricultural equipment, fertilizers and seeds. Once the harvesting season arrives, the individuals use the money from the crop harvest to pay off loans, and for other shorter term needs like buying new motorbike, tractors, or electronics. Very few individuals take a long term perspective and look at life insurance as a tool for financial security and meeting their life goals, of saving, maintaining standard of living in retirement, investment for their child’s financial planning for needs of education and marriage.

The message ‘Choti Rakam Bara Kamal’ is conveyed through a comedy theatre that connects with the audience in an enter-taining and thought provoking way. The road show is being carried out in over 30 cities of Sindh and will over the forthcom-ing months be going into other parts of Pakistan.

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I&M: Will you share with us your educational back-ground and the development of your professional ca-reer?I have over two decades of diversified experience in

domestic and international markets. Since September 2013, I am the Managing Director of Pakistan Mercan-tile Exchange Limited (PMEX) and also serving the strategic interest of PMEX on the Boards of Institute of Capital Markets and NCEL Building Management Limited. Prior to joining PMEX, I worked for 16 years as

General Manager at Central Depository Company of Pakistan Limited (CDC). As a part of CDC’s founding team, I played a vital role in developing, positioning and nurturing CDC as a diversified service provider in Pakistan. Before joining CDC, I had served in Cordoba Corporation, USA and Fidelity Investment Bank Lim-ited, Pakistan. I also served as the National Chair for International Public Relations Association (IPRA) for the years 2010-11. I graduated from the University of Oklahoma with Bachelor of Business Administration (MIS).

I&M: When was PMEX established and what are the areas of operation of PMEX?

PMEX was formed in 2002 and started its operations in May 2007. It is the country’s first and only demutu-

alized commodity futures exchange, licensed and regu-lated by the Securities and Exchange Commission of Pakistan (SECP).In 2011, the name of the Exchange was changed from

National Commodity Exchange Limited (NCEL) to Pakistan Mercantile Exchange Limited (PMEX) to have a broader mandate, which includes trading in both futures and physical products ranging from precious metals and agriculture to financial products such as in-terest rate futures, indices and currencies.Based on sophisticated infrastructure and state-of-the-

art technology, PMEX offers a complete suite of ser-vices i.e. trading, clearing and settlement, custody as well as back office, all under one roof.

I&M: What is the role of Regulatory Body in Pakistan and how would you compare similar bodies operating in similar economies.

For the successful and smooth operations of an ex-change and protection of all the stakeholders, an active presence of a regulator is a must. In today’s age, regu-lators and corporations are perceived as partners since the core objective of both is common. The organiza-tion’s work becomes easier when the regulator is on the same wave length as it leads to more pragmatic regu-latory framework and ensures smoother implementa-tion. We are fortunate that SECP has been following a proactive and consultative approach and has created the regulatory space for the exchange to grow and pros-per. The guidance and support of SECP is perhaps the primary reason for the recent transformation of PMEX into a more vibrant and robust organization. I&M: Will you kindly evaluate the working of PMEX,

its operations and financial performance since its incep-tion?

Although PMEX started its operations with a limited number of products but over the years, keeping in view investors’ risk appetite and investment horizon, PMEX widened its product mix in order to cater to a wider

I&M INTERVIEW

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Ejaz Ali Shah, Managing Director, Pakistan Mercantile Exchange

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audience and to provide a complete suite of products under one roof to its clientele. At present, PMEX al-lows trading in futures contracts of gold, silver, crude oil, cotton, rice, wheat, palm olein, sugar, KIBOR and red chilli. There are many other products in the pipeline such as Brent crude oil, mill specific sugar, copper and an oil based Murabaha transaction which will allow Is-lamic banks to efficiently deploy their liquidity using the PMEX platform. Recently, SECP has allowed PMEX to induct new

members. I am pleased to share with you that we have received an overwhelming response from prospective brokers all over Pakistan wanting to acquire new mem-berships and start their own commodity trading houses. To ensure nationwide coverage in terms of providing trading opportunities to a broader investor base, PMEX has started a nationwide membership drive covering cities such as Rahim Yar Khan, Sahiwal, Sargodha, Chakwal, Rawalpindi, Hyderabad, Sukkur, Larkana and Quetta. Moreover, large cities such as Karachi, La-hore, Faisalabad, Multan and Peshawar are also being explored to ensure greater participation from all over the country. Keeping in view the need to create awareness about

futures trading in Pakistan, PMEX regularly organizes awareness & training sessions and participates in work-shops & seminars. With all of these initiatives, daily trading volumes at

the Exchange have experienced a considerable jump, showing the potential of the commodities trading in the country. I am delighted to inform you that there has been good progress of late as we achieved a new high of Rs 262.61 billion trade value in August 2015. I am hopeful that with the addition of upcoming products, the daily traded volume of the Exchange will reach fur-ther new highs.

I&M: Do you feel that PMEX requires taking mea-sures to create awareness among stakeholders / pro-spective investors to get into the fold of PMEX?PMEX follows a multipronged awareness strat-

egy comprising of training programs, workshops and seminars. These events not only equip existing/poten-tial market participants and investors with the knowl-edge of the commodity trading fundamentals but also provide hands-on experience of the trading system at PMEX.

Moreover, the Exchange has started publishing quar-terly newsletters and daily & monthly commodity re-search reports, which brief members and existing as well as potential investors about PMEX’s systems, products, latest developments and trading highlights.

I&M: What is the popularity of Mili Ounce?

PMEX is in a continuous pursuit to add new prod-ucts to broaden its product suite in order to cater to the needs of a diversified group of investors. Previously, the Exchange has listed various gold contracts in differ-ent denomination and sizes. However, keeping in view the demand of the market participants, the Exchange has come up with “Milli Ounce Gold” futures con-tract, which has been duly approved by Securities and Exchange Commission of Pakistan (SECP). The Exchange has listed the following four futures

contracts under Milli Ounce Gold:1. PMEX USD Gold 2. PMEX EUR Gold 3. PMEX GBP Gold 4. PMEX JPY GoldThe Exchange has also introduced a special trading

functionality named “Composite Order Trading Sys-tem” (COTS) to trade Milli Ounce contracts. Using this new functionality a trader may take two positions simultaneously in milli ounce contracts with a single click. In other words, if a trader wants to take simul-taneously long position in the PMEX USD Gold and short position in the PMEX EUR Gold, he will place a single order through COTS. The long gold in the first trade and the short gold in the second trade will ‘cancel’ each other, leaving the trader with an open EUR-USD position only.

I&M INTERVIEW

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Mr. Ejaz Ali Shah, MD, PMEX & Dr. Mustafa K. Yilmaz, EVP, Borsa Istanbul

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I&M INTERVIEW

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Since the products launch in June 2015, we have re-ceived an overwhelming response from brokers and clients. Accordingly, the trade volume has grown mani-fold since the products launch.

I&M: Tell us about the upcoming products of PMEX

In order to realize the potential of PMEX and to de-fine its universe of products, we have considered the commodities that Pakistan imports, exports or produces along with products listed on various leading interna-tional exchanges. In this respect, we have shortlisted over 70 products which meet the requirements to have a viable futures contract in our environment. These new products are a mix of Local / Physical Deliverable Fu-tures and International / Cash Settled Futures, which we aim to introduce in the next 5 years. Accordingly, the products which the Exchange is cur-

rently working on are: Brent Crude Oil, Mill Specific Sugar, Copper, Milli Ounce Gold Contracts denomi-nated in Swiss Franc, Canadian Dollar and Australian Dollar, Platinum and Natural Gas.

I&M: Where do you see your company five years from now?

PMEX is a national institution and is amongst the most prestigious institutions of the country. Though it has a short history, the volume of daily trade conducted at the Exchange has often exceeded the value of shares

traded at local stock exchanges, which shows the po-tential that the Exchange enjoys. My vision is to make PMEX a household name by adding products, which are investment friendly to the product portfolio as well as creating awareness of the Exchange as an alternate investment option. Moreover, we will continue to strive to create opportunities for our members enabling them to expand their reach and to provide services to them comparable to the best exchanges of the region.Having said the above, the final frontier for the Ex-

change is to bring the entire agricultural produce of the country on its platform. Although the Exchange is fully capable to handle the trading of agricultural commodi-ties, certain infrastructure, such as warehousing and quality certification, needs to be in place. Once such an infrastructure becomes available, Pakistan economy has a sufficiently large agricultural base and wide sup-port to have a thriving multi commodity exchange.

I&M: Did you get some good ideas when you attend-ed the International AFM Annual Conference?

PMEX has participated in the two annual conferences of the Association of Futures Market (AFM) held in Bali, Indonesia and Krakow, Poland, respectively. These conferences provide the Exchange an opportu-

nity to meet and build bridges with senior executives from various leading international commodity ex-changes, clearing houses, financial institutions and the business community in general. Moreover, these events also provide a forum to become up to date with regards to recent developments in the industry, learn from the experiences of other exchanges and learn best practices.

I&M: Tell us about the workplace culture of PMEX.

There has been a sea change in practically all areas of PMEX operations in a short span of time. Today we are a team that has created and implemented a winning cul-ture having its foundation in candor, integrity, merit, re-spect, transparency and imagination. These efforts are enshrined in the belief that change starts from within. We have therefore created an environment where com-pany’s interest is supreme and protected collectively.

At PMEX, respect and workplace civility is a crucial element of the organizational structure. Employees are

Mr. Tahir Mehmood, Chairman, SECP and Mr. Zafar Abdullah, Commissioner Securities Division, SECP, inaugurated the new office of PMEX on August 28, 2014

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encouraged to show respect and courtesy in communi-cation with each other as well as clients. Similarly, we also believe that collaboration is the key to achieving goals and results, timely and efficiently. Keeping this perspective in mind, teamwork is appreciated and be-ing inculcated across the company to achieve one com-mon goal, Success! Open communication is another new norm at PMEX.

The management has initiated an open forum where employees are briefed about the plans and achieve-

ments of the exchange every quarter and are then en-couraged to share ideas, suggestions and feedback. Last but not the least, the most important element of

the new culture is merit. To grow and prosper, a level playing field is ensured for all employees. From hir-ing new talent to conducting annual appraisals, merit prevails throughout the organization which ensures that the efforts are rewarded and there is a clear demarca-tion between good resources and the ones who need to roll up their sleeves and work on their skills. We are confident that with this new breeze of change,

PMEX will blossom further to its full potential and will show its true colors in times to come!

I&M: Recently you signed MOUs signed with other international exchanges. Tell us about them.

During 2015 PMEX signed Memorandum of Under-standing (MoUs) with three international exchanges, namely, Borsa Istanbul & Izmir Commodity Exchanges of Turkey and Dubai Gold and Commodities Exchange

(DGCX), UAE’s leading derivatives bourse. These agreements will pave the way for PMEX to work in close coordination for the development and enhance-ment of derivatives and financial markets in Pakistan, UAE and Turkey by sharing market information and expertise with each other, introduce programs for cross training of staff and build upon each other’s best prac-tices and experiences. Agreements between PMEX and these exchanges will

facilitate in developing better understanding of Paki-

stan’s derivatives market which is evolving rapidly. I believe these agreements will further consolidate our relationships with other regional markets and provide an important foundation for the development of futures markets in Pakistan. In line with this objective, we also intend to sign similar agreements with other mercantile exchanges of the region as well.

I&M: Any message to readers to take active part in PMEX program and products.

We live in a country that has been blessed with all the bounties that nature could offer. The need of the hour is to channel the enormous talent and energy we have as a nation to harness our potential through positivity and performance to show our true colors to the world. My message to the readers is that keep faith in the coun-try and use the national platform while trading in com-modities rather than doing business with gray market operators as it damages your country and exposes you to unnecessary risks.

PMEX adopts MCB Pay Direct on May 29, 2014, in Karachi.

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EVENTS

National Centre for Maritime Policy Research, Bahria University World Maritime Day - Monday, 21st September 2015 – Karachi

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Development of modern transportation infra-structure 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 be-tween economic hubs (including air, sea and dry ports) and also highcapacity transportation corridors connect-ing 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 in-crease the existing road national network from around 260,000 km to 358,000 km.

Railways – major upgrade of the railway system in-cludes 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; estab-lishing North-South and East-West corridors and devel-oping 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 sec-tor, will be enhancement of the cargo and passenger in-frastructure 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 lead-ing airline.

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

A strategic program of regional connectivity is en-visaged to connect Pakistan through enhanced physi-cal infrastructure development (physical connectivity), effective institutional arrangements (institutional con-nectivity) and business and individual contact (people connectivity). Building enhanced regional connectivity

Modernizing Transportation Infrastructure & Greater Regional Connectivity

One Nation - One Vision

Planning CommissionMinistry of Planning, Development & ReformGovernment of Pakistan

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requires not only the development of new strategies and institutions, but also investment in more effective implementation of existing and future initiatives. Paki-stan is gifted with a strategic location that is well suited to serve as a hub of commercial activity. Transport con-tributes 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 ap-proximately 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 Rail-ways in Pakistan’s passenger and freight transport.

Pakistan has a coastline of over 1000 km and an off-shore Exclusive Economic Zone covering an area of 240,000sq km that remains unexplored.

Two major ports, Port Karachi and Port Qasim, han-dle 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 ad-equately 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 (Chi-

na, 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 Tapping 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 va-riety of financing and ownership mechanisms (for ex-ample, Build- Operate-Transfer) will be utilized. The strategy also recognizes that if infrastructure is to pro-vide enduring benefits, it must be used efficiently and be provided with the resources to maintain it in a prop-er 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 in-clude the development of linkages between the port of Gwadar and the National Trade Corridor, and upgrad-ing the Karakoram Highway to cater for increased traf-fic with China. Work on these initiatives has already begun.

China-Pakistan Economic Corridor In July 2013, China and Pakistan signed a Memoran-

dum of Understanding (MoU) in Beijing in the pres-ence of the Chinese Premier, Mr. Li Keqiang and Paki-stani Prime Minister Nawaz Sharif. The MoU is aimed at enhancing economic regional integration in invest-ment, energy, trade and communication. The aim is to create linkages between the Western Region of China

One Nation - One Vision

Planning CommissionMinistry of Planning, Development & ReformGovernment of Pakistan

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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) be-tween Western China and Pakistan; investment and economic cooperation; exploring sectoral cooperation along the Corridor including agriculture, industry, en-ergy and infrastructure, environment; education, re-search, 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 re-gional developments and become a hub for trade and manufacturing with Gwadar port developed as an inter-national free port.

SAARC & ASEANPakistan will look to diversify its export destina-

tions and instead of depending solely on bilateral trad-ing 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 StatesThe 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, Turk-menistan 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 sig-nificant 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 lo-cation to serve as gateway to Central Asia and attain energy security by connecting to Central Asia.

ECOThe intra-regional trade in the post and pre ECO pe-

riods 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

One Nation - One Vision

Planning CommissionMinistry of Planning, Development & ReformGovernment of Pakistan

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1. INTRODUCTION1.1. The Context for Container Port Planning Ports

around the globe are planning expansions to respond to the g rowth of containerised maritime trade and to the development needs of their hinterland economies. Following the dip in trade induced by the 2007-2008 financial crisis, global volumes are on the rise again (Figure 1), driven by growth in the emerging econo-mies. Growth in trade will be supported by the WTO Trade Facilitation Agreement signed in Bali in De-cember 2013 and expandingcontainer port capacity is again a pressing issue in many locations. Inadequate container port infrastructure can be a severe logistics bottleneck and a constraint on growth. Efficiency and capacity need to increase in step with demand. At the same time port policy makers and container terminal operators have to match capacity to demand carefully to avoid costly overinvestment, a task complicated by rapid technological change in liner shipping markets with the introduction of larger vessels, rising fuel prices and restructuring through mergers and alliances.

Figure 1. Monthly index of world tradeAdvanced and emerging economies, 2005=100

Large-scale port projects have irreversible effects on land use and multiple impacts on the local economy and local community. They affect the way that the re-gional and national economy operates as a whole, not

just in the vicinity of the port, with major impacts on regional transport systems. Port planners make better decisions when these broad impacts are examined as part of the development of a national freight transport and logistics strategy. Private investment in port termi-nals is also facilitated by the certainty engendered by development of such a national freight transport and logistics strategy. Decisions to invest in new container ports need in particular to take careful account of fore-casts of hinterland demand for containerized trade, the broader context of evolving maritime transport mar-kets, competition between ports, the development of port hinterland transport infrastructure, community at-titudes towards port traffic and environmental issues.This report summarises a roundtable on Port Invest-

ment and Container Shipping Markets held in Santiago, Chile in November 2013 that examined the issues that need to be considered before the decision to proceed to costly expansions with long-life spans and a structural influence on the local and national economy. The report benefits from a case study of Chile, where plans for a major expansion of port capacity in the central part of the country are well advanced. Chile provides the detail for an examination of factors critical to decisions on container port investments everywhere:* demand forecasts;* change in liner shipping markets;* hinterland transport capacity;* competition between container terminals; and fi-

nancing of investment.The report is organised in 5 sections that address these

issues in turn.

1.2. Case Study: ChileGeographical location and physical geography make

Chile more dependent on maritime trade infrastructure than many other economies. Chile’s exports account for 38% of GDP compared to an average of 27% in OECD countries. Approximately 95% of Chile’s foreign trade

PORT INVESTMENT AND CONTAINER SHIPPING MARKETS

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is transferred through its ports, with 75% of the total tonnage transferred by three ports – Valparaiso, San Antonio, and San Vicente – located in the central-south part of the country, close to the centre of economic ac-tivity around Santiago and some of the country’s main agricultural areas. Ports in the north and south account, respectively, for the major part of mine and forest prod-ucts. Container transport is concentrated in the three central ports.The national port system uses a landlord model of

port governance, widely applied around the globe. Fol-lowing reform of the national port sector in the 1990s, responsibilities for port development was devolved in 1997 to 10 autonomous local Port Authorities (Em-presas Portuarias), the mandate of which is to ensure good quality infrastructure and efficient port operations whilst maintaining sound finances1. There are also 14 privately owned public-use ports, carrying various cargoes as well as smaller amounts of container traffic (Wilmsmeier 2013).The Chilean landlord port model differs from that

typical in Europe and North America in two ways. Ter-minal operators rather than port authorities are respon-sible for investment in piers and quays and port au-thorities are explicitly excluded from performing cargo handling operations. While port authorities in Chile purchase land for port development, they must conces-sion freight transfer operations and pier infrastructure development to private operators. Sixteen years after the reform, seven out of 10 Port Authorities had con-cessioned at least one terminal.Chile’s rapid economic development is reflected in

container traffic growth and investments are underway to meet forecast demand through extensions to termi-nals and new concessions in the existing ports (Figure 2). Whether planned investment might be delayed, and for how long, by enhancing productivity at the two ter-minals are questions to be considered. Additional pro-ductivity enhancements might delay the need for invest-ment, but with San Antonio’s current berth productivity already the best in South America, the delay may be of short duration2. . With committed facilities potentially reaching saturation in a decade, a major expansion of port capacity is planned. In this context the Ministry of Transport began work on a National Ports Develop-

ment Plan in 2012 to provide long-range vision on port capacity needs and a strategy for landside infrastruc-ture development so that private investments in port terminals are able to deliver the services needed by the national economy. Following an initial examination of four potential locations in the central region – Ritoque, La Ligua, San Antonio and Valparaiso – the two latter ports were identified as potential sites for a large new container port with several terminals. Both sites might be developed in sequence. The options for expansion under consideration by the government and the process of project selection and development of a national port and freight transport development strategy are set out in an accompanying paper (Michea 2013).

In a nutshell, Chile presents a case of proactive port planning as a key to sustained economic growth. Ex-amination of how it might proceed in establishing new capacity, via which type of projects and which aspects of shipping markets and hinterland transport and logis-tics are most crucial to the decision is instructive. Many countries face the need to advance major port expan-sions and the case of Chile offers lessons for a wider audience.In the top 20 ports in the Americas for berth produc-

tivity, San Antonio is currently rated as having a berth productivity index of 43, above that of Manzanillo in Mexico (42) but below that of Lazaro Cardenas, Mex-ico at 65 (page 9, Journal of Commerce (2013). The best practice port in the Americas is Long Beach at 74, showing that there is always room to improve produc-tivity by benchmarking business processes against best in class.

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2. DEMAND FOR PORT CAPACITY2.1. Forecasting Demand Forecasting demand for port services to align con-

tainer handling capacity with the prospects for eco-nomic development requires disaggregation of global container shipping trends from regional and local eco-nomic factors. Local drivers of container traffic can be identified to a greater level of detail. It is useful to examine port regions, incorporating capacity present in the entire region rather than focusing on capacity

limits at single ports. Projections of demand need to be compared with actual, rather than designed port capac-ity as capacity is a function of terminal operating ef-ficiency as well as physical dimensions. Performance measurement and monitoring is essential to making in-formed investment decisions. Development of port ca-pacity and performance indicators is deficient in many parts of the world and should be given priority by all port stakeholders.Port productivity improvements can often reduce the

pressure for expansion in the short to medium term; there are numerous methods by which higher utiliza-tion can be extracted from existing facilities including relatively small investments in container yard handling equipment, investment in new business processes and information technology systems, introducing port gate

arrival reservation systems, introducing financial in-centives to reduce port dwell time, extending the num-ber of gang shifts or adding cranes, and so on. The potential for such productivity improvements can be overlooked in demand projections based on past per-formance and future economic growth but as noted Chile’s main ports appear to have little margin to im-prove productivity without expansion.The prospects for terminals of any size depend on pro-

ductivity and utilization rates. The existing container

terminals in Chile are intensively utilized, with dense operations and high levels of productivity. In the case of Valparaiso, the operational area is 14.62 hectares with an annual yard operation rate of 58.13 k TEU/Hectare. This is achieved via a container handling pro-ductivity that averages 70 moves per hour, twice the average in 2005. Valparaiso averages 2.1 movements per container and 2.6 days dwell time, with 30 min-utes average truck waiting time. The port handles ap-proximately 1 600 TEUs per meter of quay annually; the average figure is more than 1 200 in South-East Asia, approximately 1 000 in Latin America, and less than 800 in Europe and North America (Caprile 2013). This makes Valparaiso an extremely efficient operation and the prospect of accommodating more throughput at current capacity is remote. In the 2013 Journal of

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Commerce port productivity exercise, San Antonio was the only port south of the Panama Canal included in the list of the 20 most productive ports in the Americas (Journal of Commence 2013). The room for improve-ment here is thus also comparatively limited. Accom-modating more traffic in either port requires new ca-pacity.The difficulty of predicting future demand for ports

is widely acknowledged and all long-term projections face uncertainty. Forecasts therefore need to examine alternate scenarios, at the very least to least to test dif-ferent overall rates of economic and trade growth. Of-ten more detailed, plausible scenarios can be identified to gauge the potential impact of specific risks.Producing a range of credible scenarios will identify

the period over which capacity limits are likely to be-come critical (Figure 2) and can give an idea of how robust different projects and development schedules are to change.Scenario testing tended to be ignored in the bubble

economy at the turn of the century, with globalization driving trade on top of economic expansion and con-sequent strong sustained growth in container shipping. Linear, even exponential, growth was expected by many to continue for years. The financial crisis of 2007 and subsequent economic recession exposed the defi-ciencies in this mind set. This problem is not of course unique to the port sector and optimism bias in demand forecasts frequently characterises major transport in-frastructure projects (ITF 2013). The lumpy nature of new port development (large units of capacity brought into service at irregular intervals) makes it particularly difficult to match capacity to demand and can result in prolonged periods of over-capacity. This is a recur-rent issue in northern European ports, exacerbated by long planning and approval procedures. The opening in 2012 of a 2.7 M TEU capacity terminal in the new Jade Weser Port in Wilhelmshaven is the most recent ma-jor increase in capacity and for the moment has limited throughput (Acciaro and McKinnon, 2013). Sometimes demand never materialises. In ten years of operation the Ceres-Paragon 1 M TEU terminal in the port of Amsterdam never handled more than 0,3 M TEU and is now disused. Competition to attract traffic between port authorities that provide quays and piers with pub-lic finance may exacerbate the trend in this range.

Chile belongs more closely to the emerging economies in Figure 1 than the advanced economies in terms of trends in trade growth. It is experiencing rapid econom-ic expansion and has a great deal of potential for further expansion of exports, depending on sustained growth in the economies of its trading partners. Chile has 22 trade agreements with 59 countries – among them Canada, Mexico, the United States, the European Union, China, and Japan – representing 86% of world GDP and 62% of world population. More free trade agreements are in negotiation. 93% of Chilean exports are covered by these agreements. Container traffic in the central region of Chile is forecast to outstrip port capacity as early as 2021. The diversity of Chile’s markets reduces vulner-ability to possible prolonged economic stagnation in Europe but calibration of trade forecasts with scenarios for economic growth in key trading partners might be a useful refinement to current forecasts.Forecasts of demand for maritime transportation ser-

vices are commonly produced with the use of econo-metric models based on correlations and regression analysis that often produces exponential projections. Disaggregated econometric analysis is valuable for understanding the current drivers of growth, product category by product category. It is also valuable for calibrating alternative scenarios. Clearly the potential time over which exponential growth can continue var-ies greatly by market and commodity. Many markets will show signs of saturation over the timeframe for project planning, with demand following an S shaped curve. In aggregate, Chilean container shipping mar-kets are likely to be on the steep part of the curve for some time to come. Moreover, import consumption patterns could change sharply as average incomes rise with potentially large increases in imports of consumer durables and electronics. Potential limiting factors for some key commodities should nevertheless be investi-gated; for example, the availability of irrigation water has the potential to limit expansion of fruit production for export in the central belt of Chile. Imports and ex-ports of non-containerised goods also need to be fore-cast as container terminals often share port space with bulk goods and both absorb hinterland transport capac-ity; in central Chile this includes significant quantities of copper plate for export and imports of milled steel.Other variables that might determine the demand for

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container trade include productivity growth in the do-mestic economy (which has been sluggish) and trans-port and economic integration with neighbouring coun-tries. Some specific developments are worth modelling, including plans for a new railway crossing the Andes from Mendoza in Argentina north of Santiago and a new highway link located about 100 km south of San-tiago, which will provide a faster route through a lower pass than the existing route north of Santiago and will be less prone to closure by snow.

2.2 Specific market segmentsSpecialised container markets have their own dynam-

ics and deserve close attention as they provide opportu-nities for growth and could compete for capacity with existing traffic. Demand for refrigerated containerised (reefer) cargo exports is increasing globally and par-ticularly strongly in South America (Vagle 2013). Ves-sel capacity for reefers has increased correspondingly, with ships serving Brazilian ports holding the record for the number of plugs for refrigerated containers. De-mand from cargo owners and shipping lines for shore-side reefer plugs is similarly increasing. Growth in this demand has been notable in Chile as its exports of fruit and seafood have tripled over the last decade (Wilms-meier 2013). Seasonal produce like fruit is particularly vulnerable to delay from port congestion. For ports that export large quantities of seasonal produce it is also the critical driver of congestion. Capacity and reliability at peak demand periods are the relevant congestion indi-cators rather than average utilisation rates.Reefer cargo in increasing volumes is moved using

transhipment as port operations in transhipment ports in the region have significantly improved their efficiency (e.g. in Panama and Cartagena, Colombia). Still, reefer trade pays a significant premium, and reefer cargo own-ers prefer to avoid transhipment services.Another issue worth exploring is the potential of demand

from underdeveloped segments of the container shipping market. Expansion of the range of goods transported in containers might shift traffic from the non-container seg-ment of the market, i.e. bulkers, to container ports. Chile’s primary export of copper is not particularly suited to con-tainers but there may be other cargoes that will benefit from container port expansion. Assessment of the scope for such modal segment shift is worthy of investigation including review of recent trends in containerisation of

commodities on other trade routes.

2.3 CongestionCommonly, congestion problems appear in ports when

the average terminal utilization of a heavily used facility passes the 70% mark. This may be the result at certain times of the year of seasonality in trade flows. Extended gate opening hours can provide some response to seasonal peaks but, where this traffic represents a large part of the total volume of trade, peak demand is the relevant plan-ning criteria. In Chile, Valparaíso and San Antonio ports already show symptoms of congestion. In 2011, a ratio of waiting time/service time of 16.8% was reported as aver-age for the STI San Antonio and TPS Valparaiso termi-nals, 10% being a broad ‘best practice’ reference figure for the ports. Congestion could clearly become a problem before the capacity and demand curves cross in Figure 2, i.e. before 2021. The emergence of congestion problems has intensified the efforts of planning at both port and na-tional level as it will have increased overall logistics costs for container trades.The cost of congestion and resulting inefficiencies expe-

rienced at the yard and along the logistics chain differ ac-cording to type of cargo, as does the extent that increased logistics costs are associated with increased manufactur-ing costs. However, in all cases these costs are significant and have a vital impact on the decisions of port users. Congestion may lead cargo owners, logistics service com-panies or shipping companies to relocate or completely reorganize transportation activities. If Chile’s central ports were to suffer chronic congestion, traffic would divert to the Concepción Region, 500 kilometres south. This would change landside costs and depending on origin/destination result in longer journeys by truck for some traffic and po-tentially higher costs, implying a loss in competitiveness for Chilean trade.Port planners need to act well in advance of anticipated

congestion. Due to the scale and complexity of major port developments and site-specific engineering challenges, environment permit approvals and maintenance of good port-city relations often require lengthy deliberations.

Discussion Paper 2014 • 03Mary R. Brooks, Dalhousie University, Canada; Thanos Pallis, University of the Aegean, Greece; Stephen Perkins, International Transport ForumParis, France

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Sixty years ago, thanks to a strategic choice made in the history of China-Pakistan relations, two countries with different cultural backgrounds

and social systems were brought together. Since then, China and Pakistan have adhered to the Five Principles of Peaceful Co-existence, respected each other, acted in good faith, shared weal and woe, and supported each

other, laying a solid foundation for the bilateral friendly relationship. Over the last sixty years, China-Pakistan friendly relations have withstood international vicissi-tudes and got rooted in the hearts of the two peoples. Under the attention and care of state leaders from the two countries, China-Pakistan relationship has yielded fruit-ful results. Through the friendly cooperation over

Prof. Tang Mengsheng, born in Xi’an, Shan Xi Province in 1950, graduated from Peking University in China,and holds a Ph.D de-

gree. Now he is a Professor, Director of Center for Pakistan Studies at Peking University in China.He studied Urdu at the Peking University and has worked for more than ten years in Pakistan in different capacities.Since 1979, he has been teaching Urdu at the Department of the Ori-ental Languages and Literatures, Peking University and has written extensively on Pakistani literature. He has written several books in the Chinese language on Pakistani culture, literature, politics, music and religion. Some of these are: ‘A Study of South Asian Sufism and its Role in History’, ‘Study of Pakistani Customs’ and Urdu text

books and books on Pakistan Studies for Chinese students. He has also translated Pakistani literature into Chinese, including ‘Khuda ki Basti’, ‘Folk Stories of Pakistan’, ‘Stories about Mulla Naseer-ud-Din’ and ‘Pakistani folktales’. Prof. Mengsheng has also written many papers and articles on Pakistani literature and culture. These include a comment on ‘Nadeem Qasmi’s Earlier Stories’, ‘Sufism and Urdu Poetry’, ‘Sufism and Literature’, ‘Urdu Language and Pakistani Culture’ and ‘Sir Sayyid and Muslim Culture’.He also writes on current issues relating to Pakistan in Chinese magazines and newspapers. He has exhibited a profound commitment to projecting Pakistan’s culture, literature and political point of view to the Chinese peo-ple and has contributed immensely to the strengthening of relations and friendship between the two countries.He was a Cultural Consul at the Chinese Consulate General in Karachi, Pakistan, from 1997 to 2000In 2003 he was awarded the medal of Sitara-i-Khidmat in March. In 2006 he was awarded the medal of Sitara-i-Quaid-I-Azam.The Author is Director, Centre for Pakistan Studies at Peking University in China.

HOW TO DESIGN THE LAYOUT OF THE CHINA-PAKISTAN ECONOMIC CORRIDORProfessor Tang Mengsheng

“China-Pakistan relationship is a brotherly friendship that has been tested by times of difficulty and forged by mutual trust.”

CPEC

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the last 60 years, the two countries became all-weath-er good friends, acting as an example for the peace-ful co-existence between countries with different

social systems.Entering the 21st century, along with the economic globalisation, the new generation of Chinese leaders shows great foresight and makes the second stra-tegic decision in China-Pakistan relations, which is ac-tively responded to by Pakistani leaders. If the first stra-tegic decision in China-Pakistan relations was based on

political diplomacy and state relations, what accounts for the second strategic decision? As clearly pointed out by Premier Li Keqiang, the deeply-rooted traditional friend-ship has laid a solid foundation for further developing China-Pakistan relations, while the fast-changing times demand higher requirements for advancing the bilateral strategic cooperation in an all-round way. Now, China is at a crucial stage of building a moderately prosperous society in a strong, democratic, culturally advanced and harmonious modern socialist country. To realize the Chi-nese Dream of great rejuvenation of the Chinese nation, we must maintain a continuous and healthy economic growth and upgrade the economic structure, which re-quires us to unleash the dividends of reforms and open wider to the outside world. Opening up to the West is a key option for China. China and Pakistan need to deepen comprehensive strategic cooperation, explore the prag-matic cooperation in all areas and formulate a long-term plan for the China-Pakistan economic corridor project, promote the connectivity between South and East Asia, help to improve people’s livelihood, promote the eco-nomic development in neighboring countries, and set an example for state-to-state cooperation. In other words, China and Pakistan need to strengthen all-round strate-gic cooperation, with an emphasis on improving peo-

ple’s livelihood.In May 2013, Premier Li Keqiang paid a visit to Pakistan and reached an important agreement with Pakistani leaders on planning and constructing the China-Pakistan Economic Corridor connecting Kashgar in Xinjiang and Port of Gwadar in Pakistan from north to south. Located at the juncture of “New Silk Road Eco-nomic Belt” and “Maritime Silk Road in the 21st Cen-tury”, the corridor connects Pakistan to South Asia and the Indian Ocean.Standing at a starting point in the new century, China and Pakistan jointly propose to construct “China-Pakistan Economic Corridor”, which is a dream for both countries and also a strategic choice for China and Pakistan to pursue peaceful development with the support of the two peoples.

I. Constructing China-Pakistan Economic Corridor as a Strategic Choice for China and Pakistan

Economic corridor is a comprehensive and broad con-cept. Based on existing trunk highways and railways in China and Pakistan, the corridor will bring into shape a cross-border network of highways, railways, airlines, fiber-optic cables, and oil-gas pipelines. The corridor project includes infrastructure construction (connect-ing Karakorum Highway in Kashgar to Port of Gwadar, providing a direct access to the Indian Ocean), energy projects (coal power and hydropower projects), as well as economic park projects (for textiles, home appliances and other sectors). With the progress in corridor planning and construction, the corridor will further enrich its con-notation and expand its scope.

1. In terms of geo-strategy, situated in the northwest of South Asia, bordered by India to the east, China to the northeast, Afghanistan to the northwest, Iran to the west and the Arabian Sea to the south, Pakistan is a transpor-tation hub connecting to South Asia, Central Asia, West Asia and Middle East. To some extent, Pakistan as Chi-na’s good neighbour could serve China’s geo-strategies in this region. Actually, as an important part of China’s peripheral strategies, Pakistan has always supported China’s peaceful development, which includes prevent-ing extreme terrorists from conducting secessionist ac-tivities in Xinjiang. This is because Pakistan realises that using its geopolitical position to establish reciprocal co-operation with China could offset its geographic location limitations.In addition, in some ways, the healthy devel-

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opment of China-Pakistan relations could not only con-tain India’s ambitious expansion in South Asia, but also increase China’s bargaining power in dealing with Chi-na-India relations. For Pakistan, there were/are frequent territory disputes and tensions with India, strengthening the friendly relation with China could help to contain the threats from India. Strengthening China-Pakistan rela-tions aims to direct the regional relations towards the peaceful and harmonious development, rather than con-fronting with India.

2.The U.S. announces the withdrawal of its troops from Afghanistan by the end of 2014. It is proved that 13-year Afghan war is an expensive and unwinnable war for both the U.S. and the NATO. However, the U.S. doesn’t want to give up Afghanistan and has always tried to maintain its dominant geopolitical position in this region. The U.S. will try to retain its military influence in this region, even its troop withdrawing from Afghanistan. Thus, the U.S. is seeking to establish strategic relationships with India, aiming to contain China to access the Arabic Sea and the Persian Gulf through Pakistan. In response to Ameri-can’s intention to block and contain China, China should cooperate with Pakistan, South Asia and Central Asia to form a positive geopolitical network and strengthen eco-nomic cooperation with Pakistan, Iran, Afghanistan and Central Asian countries while developing its domestic economy. As such, China could create a harmonious sur-rounding environment for its sustainable development by benefiting the surroundings from the dividends of 30-year reform.

3.The construction of China-Pakistan economic corri-dor will open a new transportation route for developing export-oriented economy in western China, replacing current transportation line across the Strait of Malacca. Firstly, 60% of China’s oil supplies are imported from the Middle East, among which about 80% of oil imports pass through the Strait of Malacca. However, the U.S. controls the Strait of Malacca and thus grips on China’s throat in oil transportation. This is a fact that we have to face. Moreover, Indian navy is also entering the Strait of Malacca and claims that such a move is America’s fur-ther extension to control the offshore thoroughfare in In-dian Ocean. In addition, the territorial disputes in South China Sea islands and Diaoyu Island cannot be solved in a short period of time. Japanese politics is dominated by the rightist groups, while America shifts its focus to the

East. These issues severely threaten China’s offshore en-ergy transportation security. It is urgent to seek new safe energy channels. The Gwadar Port located at the end of China-Pakistan Economic Corridor is not only a shortcut to Africa and the Mediterranean Sea, but also the short-est route between China and the Persian Gulf. This route will be an economical oil supply line. The Gwadar Port is a natural deepwater port, 400 km away from Strait of Hormuz and 72 km away from Iran. If the railways and oil pipelines are completed between the Gwadar Port and Kashgar as planned in China-Pakistan Economic Corri-dor project, China could transport oil from the Middle East and Africa through China-Pakistan railway lines and oil-gas pipelines. Meanwhile, oil could be shipped to China from Iran through the pipelines. This not only shortens the transportation distance, but also sharply re-duces shipping costs. More importantly, it could resolve the predicament of the Strait of Malacca and enhance China’s energy safety.

Secondly, Chinese provinces in eastern coastal regions are developing fast through the reforms and opening up over the last 30 years. However, the central and western regions develop relatively slowly. To promote a balanced development and realise mutual prosperity nationwide, China proposes the strategy to accelerate the develop-ment of central and western regions and implement large-scale development for the western region. Western China is mainly an inland region and far away from the port, which constrains its development. Taking Xinjiang as an example, the cargo export from Xinjiang to the rest of the world needs to go through more than 4,000 km railway across Northern China to Tianjin located in East of China, and then to the rest of the world by ocean lin-ers, resulting in very high shipping cost. The China-Pak-istan railway line planned in China-Pakistan Economic Corridor, namely from Kashgar, Xinjiang to Gwadar Port, Southwest of Pakistan, will provide Xinjiang and Western China with a shortcut to the sea. The shipping distance will be halved, not only saving shipping time but also reducing shipping costs.

The China-Pakistan railway will go through the Kara-koram Mountains, where the geographic structure is complex and the construction of the project is difficult. However, this project is still feasible. It is known that the project is hampered by shortage of funds, rather than road-paving technology. Pakistan is very positive

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about the construction of China-Pakistan railway, and it has made feasible analyses. The Pakistani section of the planned China-Pakistan railway is 662 km from Haveli to Khunjerab Pass via Gilgit, and 415 km from Kashgar to Khunjerab Pass. That is to say, only nearly 50% of railway line needs to be renovated to complete over 2,000 km of railway lines from Kashgar and Gwa-dar Port.

4.Some scholars show their concern about the safety of China-Pakistan Economic Corridor by publishing pa-pers. Insecurity issues do exist in reality. However, it will not endanger the construction of the economic corridor. Safety and economic development are two complemen-tary factors. The construction of the economic corridor will undoubtedly promote the common prosperity and stability in both Pakistan and Xinjiang. As both Pakistan and Xinjiang are Muslim-populated areas, the impact of the interaction between two regions cannot be ignored. Pakistan will directly benefit from the construction of the economic corridor, which will help Pakistan to improve its economic strength, establish social equality, improve people’s livelihood and promote social harmony and stability. Xinjiang is also the largest beneficiary in that the construction of the economic corridor would also promote the economic development and social security in Xinjiang. So, it has every reason to say that the construction of China-Pakistan economic corridor is important for the development and stability of Paki-

stan and Xinjiang. It is an urgent project that needs to be implemented soon.

II. Some Suggestions for China-Pakistan Economic Corridor Planning

Chinese and Pakistani leaders have paid high attention to the China-Pakistan Economic Corridor. The two sides have established the Joint Cooperation Committee on the Long-Term Plan for the China-Pakistan Economic

Corridor. The Committee has held two meetings so far. The Working Groups on Energy, Transport Infrastructure and Comprehensive Planning under the Joint Commit-tee have maintained closecommunication. In future, both sides will steadily advance corridor construction, carry out the relevant constru tion projects (such as Port of Ga-wadar, Lahore-Karachi highway and Karakorum high-way), and implement electric power, new energy and other key cooperation projects. The highway, railway and other interconne tion projects will also be advanced progressively to promote the sustainable and healthy de-velopment of the corridor.

The corridor covers the populated and economically developed regions in Pakistan. In the process of corridor construction, both sides will find out more cooperation opportunities, stimulate more investments, and create more employment opportunities. After its completion, the corridor will stimulate the flow of people, logistics, energy resources, information and funds across two countries and greatly improve the standards of pragmatic

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cooperation and interest integration between two coun-tries. The corridor also welcomes other regions or coun-tries to participate in its construction, so as to promote regional interconnection and economic integration, and benefit the three billion local residents.

1.China-Pakistan economic corridor is an important part of the development strategies of neighbour coun-tries. It is not only crucial to China’s border and energy security, but also significant for China’s strategy, politics and military affairs. Thus, the economic corridor plan shall consider the pursuits of China and Pakistan from the strategic perspective, so as to realize a coordinated development and mutual prosperity. It is worth noting that we need to consider both countries’ economic devel-opment, and China’s neighbour country strategies when setting the objectives of the economic corridor. We need to actively promote the construction of China-Pakistan economic corridor, with an emphasis on China’s border security and stability. We need to strengthen reciprocal economic cooperation, bearing in mind that two coun-tries have varied national interests.

2.Regarding the planning of China-Pakistan economic corridor, Pakistan is highly motivated and takes swift action because the economic corridor is mainly located within the borders of Pakistan, which is directly related to Pakistani industrial layout and economic development. For example, Pakistan has clearly stated that it plans to build eight special economic zones along the economic corridor and invites Chinese enterprises to set up there, helping Pakistan to develop import and export process-ing industries, manufacturing industries, agriculture, and infrastructure construction. Prime Minister Sharif is very concerned about this project. After listening to the reports of the federal planning, telecommunication and railway departments, he emphasized to accelerate the construction of China-Pakistan railway. We could un-derstand Pakistan’s enthusiasm for China-Pakistan eco-nomic corridor. We should also speed up the planning and implementation of the economic corridor because this project is our national development strategy. Hence, we should conduct the planning from the perspective of national development strategy. As to Pakistan’s pro-posal for building eight special economic zones, should we analyse the feasibility and functionality of Pakistani plans and carry out field studies? Is the geographic loca-tion of these special economic zones suitable for China

to smoothly transfer our over-capacity industries? Also, could these special economic zones protect the security of the economic corridor? All these issues need to be considered in formulating the economic corridor plan.

3.Chinese economy is dominated by state-owned and public ownership economy, while Pakistani economy is based on private-owned economy. It is hard to match up with these two different economic systems as they have different interests. Thus, China needs to appropriately adjust its policy, making more investments in Pakistani private enterprises, rather than focusing on state-owned enterprises as before.

4.The “Giving Before Taking” investment policy is proposed. The “Giving Before Taking” is a win-win strategy for mutual benefit. Through a series of diplo-matic policies of “Making Pakistan Prosperous First”, China has promoted and consolidated the brotherly friendship with Pakistan and laid a solid foundation for jointly developing and utilising strategic resources be-tween the two countries. “Giving First” could promote “Making Pakistan Prosperous” and then promote “Se-cure Neighborhood” relationship, and finally realise mu-tual benefit and win-win objective. The detailed sugges-tions are stated as follows:

Support Pakistan to develop its comparatively advan-tageous industries. China could lower the tax on Paki-stani products with comparative advantages and grant tariff reduction or exemption treatment, so as to promote Pakistan to achieve economic growth. The “Giving First” policy aiming to “Making Pakistan Prosperous” shall be implemented firstly. China and Pakistan should avoid the industrial competition as far as possible to fur-ther expand import, relax foreign exchange control and provide low-interest loans. Through establishing enter-prises, contracting projects and labour exporting, China supports Pakistan to develop its comparatively advanta-geous industries, such as mining, agriculture, and animal husbandry industries. Based on the principle of expand-ing common interests, China seeks to a long-term com-mon development with Pakistan.

Lay a solid foundation for Chinese enterprises and Pakistan to jointly develop and make use of its strategic resources by implementing the policy of “Giving First”. China should accelerate the implementation of “Going Global” strategy, encourage and guide Chinese enter-

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in Pakistan and engage in multinational businesses.

5.China needs to strengthen academic research on China-Pakistan economic corridor, providing theoreti-cal and academic supports for implementing national development strategy. Currently, research is insufficient in this area in China, and the research team has not been established yet. Thus, the Chinese government needs to pay necessary attention to and provide required support for this area.

6.It is recommended to set up a visiting group, con-sisting of the relevant personnel from government agen-cies, academic institutions and colleges & universities, to conduct field studies in Pakistan to evaluate cultural and geographic conditions, social and political develop-

ment, actual economic conditions and security situation along the economic corridor, and provide the theoretical basis for the economic corridor planning, so as to ensure the corridor to be constructed in an orderly and healthy manner.

7.It is recommended to establish China-Pakistan forum mechanism to promote the implementation of China-Pakistan economic corridor plan. The forum mechanism could be multi-layered, including official and non-gov-ernment participation, economic and cultural involve-

ment, to carry out multi-layer dialogues and communi-cations in a wide range of areas. The forum mechanism could promote the significance of the economic corridor among the two peoples and encourage them to actively participate in its construction.

8.It is recommended to train talents for the construc-tion of the economic corridor. The economic corridor is a huge project, involving the construction of highway, railway, oil and gas pipelines, special economic zone and port, etc. The construction will last a long time, and thus it is important to train some talents. We hope that rel-evant departments could pay attention to this issue from now on and formulate talent training plan.

Generally, China and Pakistan have established broth-

erly friendship over the last 60 years and shared a high level of mutual political trust. The construction of China and Pakistan economic corridor is a national strategy for both countries. It is in line with the interests of both sides and supported by the two peoples. We believe that the dream of China-Pakistan economic corridor will finally come true and China-Pakistan relationship will be up-graded to a new level under the efforts of Chinese and Pakistani governments, and with the support and partici-pation of the two peoples.

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Maritime transport carries more than nine-tenths of tonnage of world international trade.

The international shipping industry, competitive and dominated by private companies, has delivered to trad-ing nations increasing capacity, generally improving service levels, and declining unit shipping costs. To a cess and extract the maximum benefit from this vital transport resource each nation depends on the perfor-mance of its ports sector; not only on the capacity, qual-ity and price of port services but also their connectivity to hinterlands and to the industrial and consumer mar-kets they serve.

Ports in India, as in many countries, face continued pressure to handle higher throughput, adapt to larger and more specialized vessels, improve productivity, and adopt new technology and information systems that can meet the increasingly demanding service stan-dards expected by shippers, logistics companies and shipping operators.

As in all economic sectors, the success of ports de-pends not only on investment in its infrastructure but on supportive policy and regulatory structures, and on the effectiveness of the institutions that deliver services

to customers. This Report contains an analysis of the current status of India’s ports sector, identifies potential constraints on the ability of ports to meet India’s future development needs, and sets out a recommended policy framework to increase the efficiency and effectiveness of the sector. It abstracts from a number of more de-tailed analyses and Reports commissioned by the Bank and provided as annexes to the main Report.

The Record so Far In the fifteen years to 2011, the value of India’s international merchandise trade grew at an average annual rate of 15.3 percent, (imports by 16.3 percent/year and exports by 14.1 percent/year). This strong trade growth has both contributed to and reflects India’s record of economic growth, second only to China among the major developing nations of Asia. Moreover, India’s share of world merchandise trade has doubled since the year 2000, but it has been from a very low base, and is even now only about 1.4 percent ofworld exports and 2.1 percent of imports. There is clear scope and opportunity for India to increase both its volume and share of world trade.

India has nearly 200 ports of which 12 are classified as Major Ports1 which fall under the jurisdiction of the Government of India (GoI) Ministry of Shipping (MOS) and 187 are non- Reforming the Indian Ports

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Sector Major Ports under the jurisdiction of indi-vidual maritime state governments. India’s ports have met the rapidly expanding traffic task implicit in the na-tion’s trade growth, handling 882 million tons of cargo in 2011 compared to 290 million tons in 1999.

International cargo has grown at a much faster rate (12.4 percent/year) than domestic cargo (3.3 percent/year). Most of India’s important ports experienced cargo increases but within the overall expansion, the non-Major Ports increased their share of traffic ton-nage from 13 percent to 36 percent, growing at a rate three times that of the Major Ports. Collectively the 40 non-Major Ports in Gujarat in particular and the 12 in Andhra Pradesh have expanded and diversified traffic.

Commodity Trends Measured in major commodity groups, containers have quadrupled as a proportion of tonnage from 4 percent to 16 percent since 1992, while coal tonnage increased from 13 to 15 percent of the to-tal. By contrast, Petroleum, Oil and Lubricants (POL) tonnage declined from 41 percent to 37 percent of total tonnage, iron ore from 19 percent to 15 percent and all other cargo from 23 percent to 17 percent. The strong trend to containerization of general freight in India re-flects the strengthening integration of Indian supply chains with the global container transport networks.

Growth and Capacity OutlookThe Maritime Agenda 2010-20 of the MOS foresees

an average growth rate of 11 percent/year for maritime cargo in India in the period 2010-2020, with highest annual growth rates anticipated for coal (18 percent/year), containers (15 percent/year) and other cargo (13 percent/year). In terms of traffic distribution between ports the non-Major Ports are expected to surpass the Major Ports in aggregate tonnage handled, before the end of the decade.

The analysis presented in the Report suggests that if the capacity of India’s ports is developed as planned they will be capable of handling expected merchandise trade volumes at least in the medium-term (to 2020). However, throughput is currently lagging, as per the 2010 MOS projections: in 2011, total traffic tonnage

was 15 percent below forecast. But capacity enhance-ment is also lagging. Despite the current slowdown,

MOS still expects volumes to grow by a factor of some 2.5 between 2010 and 2020.

This is a plausible projection, and if it is to be met it will be critical to overcome evident implementation problems in port and terminal development plans. Per-formance Over the last twenty years, the Major Ports have significantly improved their performance: aver-age vessel turnaround time has been reduced by around 80 percent and berth productivity (average ship-berth-day output in tons) has more than tripled. Contributory factors include more bulk cargoes, containerization of non-bulk cargoes, a greater Executive Summary reli-ance on mechanized systems, and improved manage-ment, including greater private sector participation in terminal operations. Pre-berthing delay has deteriorated marginally, partly reflecting the relatively high verage berth occupancy, the proportion of time that a berth is occupied by vessels, at Major Ports (though there is wide variation between ports). At many of India’s Major Ports, the berth occupancy ratios realized for certain types of berth are beyond the levels considered optimum, and thereby lead to ‘queuing’ and sometimes congestion. More effective use of scheduling agree-ments (the booking of berths for particular periods) can increase levels of non-congested utilization.

There is a wide variation in performance between In-dia’s ports but JNPT (Mumbai) scores well on most per-formance criteria. However, berth and crane handling rates (moves/ hour) at India’s ports are all generally lower than other ports in the region such as Singapore, Port Rashid/Jebel Ali, KhorFakkan and Salalah, though heavy transshipment operations at the comparator ports contribute to elevating their performance statistics.

Nevertheless, Indian ports have headroom for im-provement, which would both boost return on existing investment and (for a period) defer the need for invest-ment in additional infrastructure. But there is no doubt that even with higher berth productivity more invest-ment in container terminal capacity, in pa ticular, will still be required.

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Future Challenges to the SectorDespite a very creditable record of achievement in

increasing both volume and performance over the last twenty years, India’s Port sector is confronted with many challenges to its ability to meet future demand and to meet competition from larger and more efficient ports in the region. Five main challenges are highlight-ed in the Report: ability to handle the largest vessels; transport infrastructure linkages to ports; private sector

participation; port governance structures; and the legal and regulatory framework in which ports operate.

Capability to Handle Large VesselsVessel drafts2 that can be accommodated by India’s

Major Ports are generally limited; none can presently receive fully laden Capesize dry bulk ships (the larg-est ore and coal carriers) of more than 180,000 dwt, large tankers, or container ships of over 8,000 TEU3 carrying capacity. The limitation of draft restricts the opportunities for India’s shippers to gain the transport cost advantages of direct services by the largest vessels. Partly for this reason, India’s ports are facing increased competition for direct shipping calls from major trans-shipment ports in the region which can berth larger ves-sels. Transshipped Indian traffic is then consigned to/from Indian ports by smaller vessels, adding a transport

cost penalty. Reforming the Indian Ports Sector A fully laden Capesize vessel has a draft of 16 to18 meters. Only Chennai (17.4 meters) and Visakhapatnam (16.5 meters) have drafts that come near this at their dry bulk berths. All other ports have at best just enough draft to receive Panamax vessels (80,000 dwt with a draft of 12 meters when fully loaded). In the liquid bulk sector the situation is slightly better: Paradip (at its Single Point Mooring – or SPM), Cochin and Kandla offer drafts over 20 meters and Visakhapatnam and Chennai drafts

of 17.2 meters and 17.4 meters respectively4.The draft issue is particularly serious for container

trades. No major port in India is presently capable of receiving container ships capable of carrying more than 8,000 TEU.

The implication of not having the capability to handle larger container ships could be that much of India’s fu-ture containerized trade might not take place by direct service but instead be carried on transshipment routes using smaller vessels out of ports that can handle the largest vessels. For example, the new South Container Terminal in Colombo (a day closer than Mumbai or Chennai to international shipping routes) is scheduled to start operating in 2014 with 2.4 million TEUs of container throughput capacity and the ability to handle both New Panamax and Triple E super container ves-sels5. Not only in Sri Lanka but ports in the United

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Arab Emirates (UAE) have deeper drafts for con-tainer ships and will compete for the direct container service traffic at India’s ports, which may add both time and international transport costs for India’s trading en-terprises.

Hinterland ConnectivityGood connectivity to/from the ports is an essential

complement to the growing need for port capacity. Hinterland traffic to and from India’s Major Ports is mainly carried by road when measured by tons (though probably more than half is carried by rail when mea-sured by ton-km). Haldia, Paradip and Visakhapatnam carry more than half of tons by rail and V.O. Chidam-baranar, Cochin and Mumbai less than 10 percent. A small amount of port-connecting transport is carried by inland waterways (mainly shipments of iron ore in Goa) and there is significant pipeline transport of POL traffic.

Road transport has greatest competitive advantage for small consignments over shorter distances and for more time-sensitive consignments, particularly in corridors where rail lines are congested. Railways are more com-petitive over most distances for large consignments of bulk raw materials (coal, ores and minerals, crude oil, sand and gravel, grains, etc.), over longer distances for semi-processed industrial goods (oil products, chemi-cals, iron and steel, cement, fertilizer) and for suffi-ciently dense flows of containers to/from ports. Roads. The low capacity and poor quality of roads in many cor-ridors, low truck utilization (on average covering only 300 km/day) and delays at state borders add to hinter-land transport costs. The Government of India, through the National Highways Authority of India (NHAI) and its flagship program, the National Highways Develop-ment Project (NHDP), is working to improve the In-dian road network. The program includes specific port connectivity projects. Likewise, state governments are investing significant amounts in the roads sector, in-cluding port connectivity projects. However, there is no certainty that road infrastructure capacity growth will match traffic growth and road connections to ports can

be expected to become more congested.Railways. Railway sector productivity has increased

substantially in recent years:since 1995, the average freight train load has improved

by 40 percent, and locomotive and wagon productivity increased significantly. However, traffic congestion on main lines has become a serious traffic constraint. In-dia’s railways have been losing market share to road haulage due partly to insufficient physical capacity and partly to poor service quality, exacerbated by the need to fit freight train movements into a busy passenger ser-vice schedule. The key corridors of the Golden Quad-rilateral connecting Delhi, Mumbai, Chennai and Kol-kata and associated lines form 16 percent of the railway network’s route length but carry more than 60 percent of its freight task. The government has therefore ap-proved a comprehensive long-term plan to build Dedi-cated Freight-only Lines (DFCs), in parallel with the existing Golden Quadrilateral routes. The DFCs will allow trains to carry more freight, faster, more reliably and at lower cost, and those ports with good connec-tions to DFCs will be at a significant advantage in terms of hinterland access.

Construction of the Eastern DFC has commenced and construction of a Western DFC is expected to start soon.

Coastal shipping. There is scope for coastal shipping to contribute more to domestic distribution of interna-tional cargo, but progress is hindered by policy con-straints, operational flaws, regulatory bottlenecks and short-sighted customs procedures, each detailed in the Report and Annexes. In particular, the current exten-sion to coastal trades of the stringent regulations on vessel standards and manning levels that apply to

international shipping damages the competitiveness and economic viability of coastal shipping. Major Ports also lack specialized berthing facilities for coastal ves-sels and both Major and Non-Major Ports have defi-ciencies in cargo-handling facilities. The GoI accepts the potential importance of a well-run coastal shipping system and has initiated certain improvements but a comprehensive policy to reinvigorate the industry, based on the specific needs of coastal shipping rather

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than ocean-going trades, is still pending.Unfortunately, it may take at least a decade or more

before an agreement is reached on the main aspects of the policy and the first effective results become visible.

Inland Waterways. India has approximately 5,700 kilometers (which includes 500 kilometers of canals) of waterways suitable for mechanized barge traffic. These waterways consist of a number of separated wa-ter systems, not a national network, and Inland Water Transport (IWT) at present handles only 1 percent of India’s total inland cargo transport. When efficiently operated with large modern vessels, IWT is a safe, eco-nomic, fuel-efficient and environment-friendly form of transport. The main physical limitation on viable IWT on most waterways in India is inadequate naviga-tion infrastructure (deep-draft shipping channels, river training and regulation, locks and sluices, navigation aids, loading and unloading points and other facilities). Most of India’s existing navigable waterways cannot provide all year access to vessels of more than about 300-500 dwt, and provide access to vessels mostly less than that. Larger vessels would be required to deliver a long-term competitive advantage over other modes, particularly compared to railways that carry most bulk traffic in India. In those waterway corridors where mar-ket prospects are promising IWT could contribute more to port-hinterland connectivity if the economic case for the substantial public investment required could be sus-tained. The government’s anticipated two-thirds private sector contribution to India’s waterway development program does not seem feasible6.

However, a series of supportive short- and long-term measures and proposals by GoI may be helpful in en-couraging the barging industry to respond to market opportunities if adequate navigation conditions can be guaranteed the IWAI.

Corridor development. Ports are increasingly viewed internationally as nodes in multimodal transport net-works, rather than independent transport assets, so hinterland connections to industrial and development areas are essential in the development and marketing of ports. The government has in recent years promot-

ed good transport connections between ports and their hinterlands, for example by its ‘corridor initiatives’. The best example of an integrated freight corridor in India is the Delhi-Mumbai Industrial Corridor (DMIC). Developing the transport corridors between the ports around Mumbai and Gujarat and the major production and consumption centers in Rajasthan and around Del-hi are a central element of the project. Integrated with industrial and regional policy, the DFC rail program may provide other opportunities for growth corridors or poles associated, based on improved port access.

Private ParticipationThe GoI has been encouraging private sector partici-

pation in ports since 1996 especially by awarding Pub-lic Private Partnership (PPP) concessions. They have been mainly on a Build, Operate and Transfer (BOT) basis with revenue sharing formulas, and include the construction of berths for cargo handling, container terminals, cargo handling equipment, warehousing and the construction of dry docks and ship repair facilities.

The MOS Maritime Agenda identified some 352 new investment projects in Major Ports for the peri-od 2010-2020 with an estimated cost of Rs. 109,449 crore. Given the limited internal resources of ports and expected constraints on public budgetary support, the private sector is expected by MOS to provide around two-thirds of this capital investment.

In the Non-major Ports a total of Rs. 167,931 crore is planned, of which the Government hopes that 96 per-cent will come from the private sector. India’s trading success in the next 10-20 years will depend heavily on its success in attracting private sector participation and investment to ports.

Certainly, PPPs are being increasingly sought in both Major and non-major Ports and some of the leading ter-minal operating companies in the world have invested in Indian Ports. Nevertheless, progress in implement-ing PPPs so far has generally been sluggish, reflecting both perceived risk and tortuous process. Key risks per-ceived by private investors have been the role of the Tariff Authority for Major Ports (TAMP) in price set

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ting, uncertainty that private investors can enjoy eco-nomic control of the facilities that they provide, and sometimes insufficient periods of exclusivity against the possible provision of competing infrastructure. In terms of process, projects have fallen foul of bureau-cratic delays, uncertainty and indecision, statutory clearance problems, local community opposition, site squatting by concession holders and the opposition of small scale proximate port facilities.

PPP project frameworks must of course protect the users and stakeholders of ports, and also be seen to be implemented, in both substance and process, in the pub-lic interest. But this depends on clarity of principles and simplification of process. The Report suggests possible ways of improving the enabling framework for PPPs. The state of Gujarat has also demonstrated more suc-cess in bringing together public and private resources for the development of ports and related infrastructure facilities, convincing other state governments to use PPP for their port developments.

Even if the impediments to private sector investment are resolved it remains uncertain how fully the central government can rely on the massive level of investment that the private sector is expected to fund. It would be prudent to examine how further internal or public fi-nance contributions might be sourced if private sector contributions do not materialize at the required rate or levels.

Ports Policy FrameworkA reinvigorated policy framework for its ports sector

would better serve India’s trade needs in the changing market environment. Quite apart from the imperative of attracting private investment into port infrastructure, the changing features of global trading patterns and port requirements include: the globalization of manufactur-ing; demand by users for ‘seamless’ supply chains; in-creasing vertical and horizontal integration by transport and logistics companies; increasing vessel sizes driving the emergence of hub and spoke service patterns; more inter-port competition internationally; clustering of ports and associated industrial and logistics activities; technological improvements in vessel handling; and

much more rigorous capture and use of information to manage freight and logistics efficiently.

Port policies that respond to these challenges must be embedded in an integrated national transport strategy coherent with, for example, road, rail and waterway systems and well-selected dry ports and Inland Con-tainer Depots (ICDs). But they must also seek a more effective balance between the role of the market and the role of regulation, the contributions of public and private sectors, and the creation of more commercially effective public port institutions.

The main elements of port reform strategies world-wide are ‘liberalization and deregulation’, ‘corporati-zation’ and ‘private sector participation’. Liberalization and deregulation refer to the reform or partial elimina-tion of governmental regulations that distort markets and hamper market entry, and so enable private com-panies to operate and compete in an area traditionally reserved for public sector monopolies.

Corporatization involves transformation of a public port department or authority into the legal form of a commercial corporation (either under companies or a state-owned enterprises law). Private sector participa-tion includes either the transfer of the ownership or op-erating rights of existing port assets from the public to the private sector, or participation in provision and/or operation of new assets.

The most prevalent mode of port governance reform internationally has been the corporatized ‘Landlord Model’, in which the public sector remains the owner of a port corporation which is a commercially-struc-tured enterprise that manages basic port infrastructure and common areas, services and facilities. Cargo han-dling operations (and other activities like pilotage, tow-age etc.) are then contracted, leased or concessioned to the private sector. The Landlord is typically respon-sible for regulating port activities within that port but is not responsible for economic regulation of ports more broadly (see below). The Port Reform Toolkit published by the Public-Private Infrastructure Advisory Facility (PPIAF) and The World Bank in 2008 provides advice on the concept of the corporatized Landlord Model and more particularly how it can be implemented, including

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resolution of labor issues.The corporatized Landlord Model is now a main-

stream port governance structure worldwide and fast becoming the dominant port model in larger and me-dium sized ports. This is not surprising given that in nearly all productive industries, corporations have proven historically to be the most successful formula so far devised by modern economies for organizing in-dustrial enterprises in competitive markets, even where the companies remain owned by the state.

In the early 1990s, GoI policy favored the corpora-tization of the Major Ports and transformation of their role to the Landlord Model, but even now Ennore Ltd. is the only one operating as a corporatized Landlord port. The current boards of the Major Ports generally oppose plans for corporatization and there are currently no plans for creating another port corporation in a Major Port. However, Indian ports will never be in a position to deliver world-class performance unless they adopt the world’s best-performing institutional structures. Of the different international experiences reviewed, the Australian approach is considered as having particular merit relevant to the Indian situation, and is recom-mended for further consideration by Indian authorities.

Port Economic Regulation and the Role of TA MP The TAMP was established in 1997 under the auspices of MOS to determine both vesselrelated and cargo-related tariff schedules at Major Ports. Its aim was to safeguard the interests of port users while providing a fair return to port operators. The Report discusses spe-cific issues and criticisms of how TAMP has carried out what is clearly a very complex regulatory balancing act. But they boil down to the finding that TAMP regu-lation has almost certainly inhibited the development of Major Ports, particularly in regard to private sector participation, while encouraging the much more rapid development of the non-Major Ports which are not sub-ject to its authority.

This is clearly a market distortion but its solution is less likely to be found in devising better formulae or data for regulatory tariff determination, but rather on questioning why an external tariff setting authority is required at all. Most major public ports in the world set

their own tariffs in line with commercial and market aims, and any pricing regulation is by way of review or approval, not determination by a third party. Between ports, the face of competition is changing: hinterlands are expanding and overlapping (‘from port

to chain competition’) and there are fewer situations where captive conditions warrant tariff regulation. There will be s pacificcircumstance evzs of excessive local market power at Indian ports with regard to spe-cific commodities or locations and these situations re-quire a means of remedy if abused. But the notion that port users in India in general require blanket protec-tion from monopoly power is not overly persuasive in a country served by nearly 200 ports.

Any shift in the role of the public sector, from port services provider to owner of corporatized landlord port would imply the need to consider what form and degree of regulation should be adopted to protect port users’ and public interests. But its main aims should be competition-oriented: ensure that industry entry is not unreasonably restricted; promote conditions for fair competition among competing operators in a port or between ports; oversee mergers; and proscribe anti-competitive practices or abuses of market power.

Information TechnologyInformation Technology (IT) underpinning informa-

tion exchange is essential to port efficiency and com-petitiveness in virtually all of its activities: movement of ships in the port; berth management; corporate and operational management; cargo handling; transship-ment to other modes; customs; phyto-sanitary proce-dures; security and many others. MOS has adopted a series of important initiatives to improve the use of IT. A noteworthy component is the development of a Port Community System (PCS) for both Major and Non-major Ports designed to integrate the electronic flow of information between all the stakeholders, save time and money, offer gains in tracking of shipments and provide service visibility. The creation of an integrat-ed port management system by the Gujarat Maritime Board and the development of the IT Strategy and Pro-gramme Management by JNPT have also set examples

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that all Indian ports could usefully follow.

GoI Ports Policy InitiativesRecognizing the challenges ahead and the deficien-

cies in existing arrangements, the GoI has sought to promote sector reform in a number of respects.

The Draft Indian Ports Bill 2011 is a comprehensive Bill aimed, inter alia, at greater liberalization of the port market, corporatization of Major Ports (either as gov-ernment companies or public limited company) with better qualified boards, and regulatory oversight only of maximum tariffs rather than actually setting tariff schedules as happens now. The Bill would also permit extension in the duration of a private concession for major infrastructure beyond the present 30-year period and up to 99 years, providing a greater incentive to in-vest and innovate. Should the Bill be enacted it would be a major step in port reform, though it has perhaps missed the opportunity to cover other important aspects such as the setting up of a regulatory framework for safety, security and environmental standards.

The Draft Ports Regulatory Authority Bill, 2011 would enable creation of Regulatory Authorities to reg-ulate tariffs for port facilities and services, and moni-tor the performance standards. The GoI would create a Major Ports Regulatory Authority and each maritime state government a State Regulatory Authority oversee-ing its own ports. Regulatory authorities would be em-powered to formulate and notify tariff guidelines, set down the performance norms and standards for port op-erators (public and private), and advise government on issues such as the promotion of investment, efficiency and competition.

A ‘Forum of Regulators’ consisting of the Chairs of the Major Ports Regulatory Authority and the State Ports Regulatory Authorities would discuss and evolve suitable (and presumably harmonized) approaches to the framing of tariff guidelines and performance stan-dards. If enacted, the Bill might create a platform for improved economic regulation, but many of its pro-visions and its contemplated modus operandi appear complex and bureaucratic. Depending on how the regu-latory authorities (individually and collectively through

the forum) choose to use their powers, it could also lead to an overly intrusive and prescriptive regulatory re-gime bearing on both Major and Non-major Ports; in other words, a playing field leveled by saddling Non-major Ports with the same handicaps as Major Ports. In light of states’ opposition, the Bill has been stalled, perhaps permanently.

If so, it is a good time to revisit the issue to seek a simpler regulatory regime and a concept of the regula-tor as umpire, not player.

Land Policy for Major Ports, 2010 and Directives for Land Management by Major Ports, 2012. The policy is to encourage the best use of port land, which must be set out in a port land-use plan approved by the port board. Land within the ‘customs-bound’ area can be al-located by license to activities directly related to sea trade and security, and land outside the customs-bound area can be allocated for other uses (but with a pref-erence for port-related activities). The policy contains various safeguards to ensure legitimate allocation of port lands by competitive tender, with a reserve bench-mark price based on notional market value. The draft Directives for Land Management by Major Ports are mainly further clarifications of the policy application. The GoI hopes the policy will improve the manage-ment and use of land at ports while ensuring legitimate allocation and pricing. It will be crucial in establishing the land-use plan, and awarding time-bound allocations to users, to ensure that sufficient land will be available, when it is needed, for the substantial increases in ca-pacity required.

RecommendationsIn summary, to facilitate trade and economic growth

India needs to develop additional port capacity, invest in large vessel capability and continue seeking im-provements in the efficiency and competitiveness of port and terminal operations and their connectivity with hinterlands. To pursue these objectives the report rec-ommends that:

Sector Governancei. The ports sector be liberalized to encourage compe-

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tition between ports and, where feasible, between ter-minals within ports.

ii. As far as possible, public policies and regulations be harmonized to create a level playing field for Major and Non-major Ports so that the success of each port in attracting investment and traffic will depend upon its comparative market advantages and the success of its owners and managers in exploiting those advantages.

Corporate Governancei. Existing port authorities be corporatized within a

legal framework (e.g. The Companies Act, 1956) and with corporate charters that establish a clear commer-cial orientation while recognizing their public owner-ship and responsibilities.

ii. The corporate governance and management of such

entities be underpinned by independent and profession-ally-qualified boards of directors, merit-based selec-tion of managers, management accountability based on formal business plans, commercial management struc-tures, greater pricing freedom, use of commercial ac-counting and auditing standards, and transparency of operational and financial performance.

Ports Business Modeli. Such port corporations progressively adopt the

Landlord Model, adapted to their own circumstances and port development plans.

ii. They encourage private sector investment and par-ticipation in the port terminal’s activities by lease and/or concession, and also by contracting out some of the port’s own common and support services wherever this is expected to improve efficiency and competiveness.

iii. They give high priority to investment in state-of-the-art information technology and exchange of infor-mation so as to connect all the businesses and other stakeholders using, operating in or affected by the port, and facilitate the smooth and secure flow of cargo through ports and along the supply chain.

Private Sector Participationi. By means identified in the Report and others, pro-

cesses be streamlined to expedite the implementation of PPP projects and reduce the incidence of unforesee-able or unquantifiable regulatory risks.

ii. Tariffs of private terminal operations be normally governed by the provisions of concession agreements allowing that within those provisions flexible rates can be adopted to react to inter-port and intra-port competi-tion.

Economic Regulationi. An independent Ports regulatory body be estab-

lished to promote and protect fair competition, between ports and between competing terminals within ports.

ii. Regulatory determination of tariffs by TAMP be discontinued and the new or transformed regulatory body empowered to review tariff schedules set by ports only against, for example, anti-competitive or market-power abuse criteria.

Hinterland Connectivityi. Hinterland connectivity be improved in line with

guidelines set out in Maritime Agenda 2020 for Major Ports including double-track connectivity to trunk rail network (and to DFCs where feasible) and minimum four-lane highway connections.

ii. Opportunities be sought for expanding the role of coastal shipping and inland waterway transport to re-lieve pressure of hinterland connectivity from road and rail systems.

iii. National and regional transport plans make provision for the integration of port investment with hinterland transport upgrading, and exploiting those axes to create industrial development corridors and growth poles.

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JAPAN

Remarks by

Mr. Akira Ouchi, Consul General of Japan At the Emperor’s Birthday Reception, Tuesday, 1st December, 2015

Honorable Mr. Nisar Ahmed Khuhro, Senior Minister for Education and Literacy,Excellencies, Distinguished Guests,Ladies and Gentlemen,Assalam Alaikum!

On behalf of the Government of Japan, I would like to extend my heartfelt welcome to you all for joining us tonight in celebrating the

82nd birthday of His Majesty the Emperor Akihito of Japan. On the 23rd of December, His Majesty will be 82 years old.

The Imperial House of Japan is one of the world’s oldest monarchies with the longhistory of about 2,700 years. And His Majesty the Emperor Akihito is the

125th Emperor of Japan, the latest in the oldest con-tinuing line of hereditary monarchy in the world.

Their Majesties the Emperor and Empress have trav-eled many countries promoting friendship and goodwill among the people in the world. Their Majesties visited Pakistan in 1962 as then Crown Prince and Princess.

Ladies and Gentlemen,The friendly relationship between the two countries

is mainly centered on economic cooperation. At pres-ent, 77 Japanese companies are operating in Pakistan and 52 are operating in Karachi. The areas of Japanese investment in Karachi range from automobile and mo-torcycle industries, steel mills, chemical industries, pharmaceutical industries to zippers. In January and July this year, Pakistani business missions in the areas of textiles, pharmacy, surgical instruments and sports goods visited Japan. In February this year, a business mission comprising of 29 Japanese-related companies visited Karachi on the occasion of Expo Pakistan. And on November 10 this year, a joint mission of Japanese Government and business communities comprising of 24 Japanese companies visited Islamabad. These en-deavors have been made by the governments and busi-ness circles of the two countries to enhance economic relations between Japan and Pakistan.

In Zaver Hall, some Japanese-related companies in Karachi display their products such as motor cars,

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JAPAN

motor bikes, a bus and a truck, etc. and panels of some Japanese companies and products. I hope you will ap-preciate the display of these Japanese products. I would like to emphasize that the Japanese companies in Paki-stan are greatly contributing to the economic develop-ment of Pakistan. I believe that the key to the promo-tion of economic relationship is the active interaction in the business sector.

Now let me touch upon Japan’s economic assistance to Pakistan. Japan has been extending its ODA to Paki-stan since 1954. The schemes of cooperation range from technical cooperation to grant aid and ODA loans in various sectors. The cumulative amount of ODA from Japan to Pakistan till 2013 is about 6.85 billion US dollars. Japan has a scheme called “Grant Assis-tance for Grassroots Human Security Project” (GGP) to support small-scale development projects to meet the basic human needs of the local people. Japan has funded more than 300 projects in Pakistan through this scheme to date and the Consulate-General of Japan in Karachi has so far implemented 14 projects in the areas

of health, sanitation, water supply and education since 2009. This fiscal year the Consulate-General of Japan plans to implement 3 projects.

Ladies and Gentlemen,The relationship between Japan and Pakistan is not

limited to economic cooperation. Cultural and people-to-people exchanges have also been strengthened. As for people-to-people exchange, the Government of Ja-pan has been extending various invitation programs and scholarships to Pakistani people and students. This year

our Consulate organized such cultural events as Calen-dar Exhibition, Bonseki Demonstration, Japanese Dolls Exhibition, Koto and Shamisen Concert and Japanese Film Festival. This evening, the four Ikebana groups showcase beautiful flower arrangements and Pakistan Bonsai Society exhibits bonsai works. At Zaver Hall, we display cultural goods such as Japanese dolls and toys and we are also showing some DVDs on Japan. The Pakistani youth groups promoting Japanese pop-culture wear Yukata (Japanese casual Kimono) and dis-play their works. So please appreciate them.

And of course, we will serve Japanese cuisine such as Sushi and Tempura later. Japanese cuisine or WASH-OKU was inscribed as UNESCO’s intangible cultural heritage two years ago.

I wish the economic relations, cultural and people-to-people exchange between Japan and Pakistan will be further promoted and I, as the Consul-General of Ja-pan in Karachi, will make every effort to achieve these goals.

Thank you very much, Arigato, Bahot Shukria

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7th Pakistan, Japan Business Dialogue, 5th Pakistan Japan Government DialogueTuesday November 10, 2015, Islamabad.

JAPAN

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