Majyd Aziz
PAKISTAN is richly endowed with natural
resources and is strategically placed to be a major exporter of minerals. Over
the past many decades, the nation has gradually inched her way to become a
reliable exporter of minerals and, furthermore, the quality of minerals has
been universally accepted as gradually conforming to international quality and
requirement standards. Notwithstanding the myriad mind-boggling logistics,
strategic locations, parochial emotions and sentiments, adherence to obsolete
modes of operations and disregard for quality standards and practices by the
traditional miners, the fact is that Pakistan is well set to make a strong
presence in the global mining trade.
The present combined efforts of miners,
facilitators, transporters, output enhancers, and exporters have resulted into
exports ranging from $ 143 million to $ 224 million in the last four years.
These figures, in general terms, do not reflect the potential, magnitude, or
the demand for Pakistani mineral resources. It can be stated with conviction
that annual Chrome Ore exports can exceed $ 250 million and Barite Ore exports
can jump from the present immaterial figures to over $ 125 million by 2014 if
an enabling and conducive environment is provided by the government.
(Million $)
|
MINERAL
|
2008
|
2009
|
2010
|
2011
|
|
Chrome
Ore
|
161.00
|
75.00
|
151.00
|
102.00
|
|
Other
Ores
|
5.30
|
5.00
|
12.50
|
14.50
|
|
Marble
|
14.00
|
16.50
|
26.40
|
40.30
|
|
Talc
|
7.00
|
7.00
|
17.00
|
42.00
|
|
Gypsum
|
0.14
|
0.16
|
0.35
|
6.80
|
|
Salt
|
0.14
|
0.16
|
0.35
|
6.80
|
|
Barite
|
0.40
|
0.08
|
0.07
|
0.07
|
|
Other
|
1.50
|
1.75
|
3.10
|
3.00
|
PAKISTAN has a limited number of core
items for exports. Over the past decades, the erstwhile Export Promotion Bureau
as well as the Commerce Ministry were fixated on textiles, obviously because
textiles was the mainstay of Pakistan’s export regime and commanded more than
two-thirds of the export revenue. However, the downside of this was neglect of
other sectors that would have surely enhanced the export figures, especially in
those times when every export dollar was crucial for the country.
It is imperative that the Commerce
Ministry, the Board of Investment, the Trade Development Authority of Pakistan
as well as the Provincial Mines and Minerals Departments and Provincial Boards
of Investments need to consult and coordinate with stakeholders to develop a
holistic approach to this sector. Seriousness and practical decisions would
bring about a revolution in this sector resulting in it hitting the $ 1 billion
export figure within a year.
The apparent and intrinsic bottlenecks
and handicaps affecting the substantial upsurge in exports of minerals are wide-ranging
and must be addressed. The prime factor is the antiquated mode of mining with reliance
on manual and obsolete mining methods as well as dependence on animals or
improvised trams to transport minerals from inside the pits to the mine mouth.
Another debilitating factor is a dilapidated road network and in many
instances, a back-breaking ride to the mines. In many areas, there is a long
walk to the mines. Moreover, the unsafe and dangerous law and order situation,
especially in Balochistan and some areas of KPK, further exacerbates the
approach and access to mining areas.
Over the past many years, transportation
of goods, petroleum products, water, agricultural produce, and minerals, both
imports as well as exports, have witnessed a phenomenal rise. At the same time,
movement of goods destined for Afghanistan, either under the Afghan-Pakistan
Transit Trade Agreement or for ISAF Forces, has also increased tremendously.
Moreover, the gradual decline of the railway network has impacted severely on
road transportation. Pakistan’s total fleet of trucks of all sizes and capacity
is less than 350,000 vehicles. These include even those vehicles that are
unsuited for long hauls or are environmentally unfit to traverse the Motorway
network. Many trucks do not ply inter-city but are generally utilized for
intra-city haulage. It has been estimated by experts that Pakistan is short of
atleast 75,000 trucks and it is crucial that efforts be made to attract
domestic and foreign investors in this sector.
It has become a common occurrence that with
the shortage of transportation vehicles, low priority is accorded by
transporters to minerals as compared to other commodities. During the apple
harvesting season, most of the trucks are diverted to transporting apples from
Balochistan and therefore sourcing trucks for minerals becomes a tall order. The
negative situation is further compounded by high cost of fuel, increase in wear
and tear of vehicles, old age of vehicles and unregulated rates of
transportation. Of course, the non-availability of railway wagons due to Pakistan
Railways being in dire straits is a matter of concern. For whatever reasons
known to the Pakistan Railway hierarchy, priority is generally given to the
goods under APTTA while minerals seldom fit in the Pakistan Railways
management’s scheme of things.
The decades of neglect, the acceptance
of low productivity of miners, the lack of motivation of personnel, the
inability of miners to develop training processes for future miners, and the disregard
for modern mining solutions have all ensued into abnormally high cost of labor
at all stages. The shortage of skilled miners at the mines, the haulage of
minerals from mine mouth to trucks by manual workers and, in many instances,
smaller trucks are used to carry minerals from mine mouth to areas where larger
trucks are parked. The labor cost becomes unbearable when the minerals reach
the Port where the dock workers cost, mechanical handling cost, and other carrying
costs front-load the total expenses incurred on labor.
Export of minerals has usually been the
domain of non-miners who have experience in marketing and exporting of
minerals. These entrepreneurs have assiduously endeavored to attain a global
presence for Pakistani minerals. However, the financial burden, as well as the fiscal
cost involved, has almost made it difficult for new entrants and even hampered
the growth of many an exporter. The non-availability of credit from miners,
facilitators, transporters, etc also aggravates the situation.
It should be very well understood that
Pakistan is not the only mineral-producer and that there is tough regional as
well as global competition. Most of the competing countries have encouraged
their miners and exporters through various overt and inherent inducements
including direct and indirect subsidies, fiscal and logistical incentives, and trade
promotion facilities. There is a deficiency of pragmatic governmental support
prevalent in Pakistan, more so because of ignorance of the mining industry and
low priority towards enhancing exploration, mining, and exports of minerals.
This attitude can be amplified by the
fact that various hindrances are affecting the exponential growth in exports of
minerals. It is a matter of great consternation for minerals exporters that a
multitude of difficulties are hampering their determination to enhance mineral
exports. These factors, such as non-availability of freight incentive, withholding
taxes, high Port charges, expensive quality certification charges, law and
order problems, extortion on the highways, and the fact that mineral exports still
not being a priority sector, are not being addressed.
Minerals can definitely become a major
non-traditional export sector provided concerted efforts are made on a fast
track. At this crucial juncture in Pakistan’s trade regime when exports need to
be enhanced to obtain much-needed foreign exchange, to generate employment, to
curb extremism, to improve economic indicators, and to enable the country to be
a potent force in global export marketplace, it is imperative that practical
and attractive policies are framed to attain these objectives.
The acceptance
of following essential incentives could be a starting point:
- 1. Exemption from Withholding Income Tax for a period of three years for mineral exports
- 2. Approval of Freight Allowance of Rs 500 per tonne from mines to ports for a period of three years
- 3. Grant of 5% Preference Support on FOB basis for a period of three years
- 4. Allocation from Export Development Fund and SMEDA for up gradation of mines
- 5. Immediate investment in access roads and other infrastructure
It is hoped that the Ministry of
Commerce and TDAP that have recently embarked on a Strategic Trade Roadmap,
that have taken historic decisions regarding Indo-Pak trade and investment, and
that have been favorably facilitating trade and industry would consider these incentives
as meaningful, workable, and effective and would pilot these proposals through
Economic Coordination Committee of the Federal government for the continued
prosperity of Pakistan.
