By Pakistan’s maritime sector is facing a staggering annual loss of Rs5 trillion, which is approximately $18 billion, largely due to inefficiencies and underutilized resources. A significant portion of these losses can be attributed to Pakistan’s major ports, including Karachi Port Trust (KPT) and Port Qasim Authority (PQA), which are operating at far below their full potential. KPT, for example, is utilizing only 47% of its 125 million-ton capacity, and PQA is using just 50% of its 89 million-ton capacity. This underutilization of resources results in a loss of around Rs3.19 trillion annually.
Additionally, Pakistan’s maritime sector suffers from widespread tax evasion and trade malpractices, which contribute significantly to the financial drain. Tax evasion alone leads to a revenue shortfall of about Rs1.12 trillion each year, while fraudulent activities like fake billing further drain the sector of Rs313 billion annually.
The misuse of Afghan Transit Trade also exacerbates the situation, costing the country Rs60 billion per year. Pakistan also faces issues like trade restrictions and the lack of value-added services, which contribute further to the economic losses. Restrictions on transshipment result in an annual loss of Rs70 billion, and the absence of warehousing and value-added services costs the economy Rs196 billion. These issues collectively impede the country’s ability to fully capitalize on its strategic location and maritime resources.
Despite these challenges, Pakistan’s extensive coastline of over 1,050 kilometers and its exclusive economic zone, covering more than 240,000 square kilometers, offer substantial untapped economic potential. With the ongoing disruptions in global shipping due to the Red Sea crisis, Pakistan has a unique opportunity to become a key player in international maritime trade. Global port operators like Maersk, DP World, and Hutchison Ports have already shown interest in investing in Pakistan’s maritime infrastructure, which could help unlock the sector’s full potential.
To address these challenges and reduce the enormous losses, several reforms are needed. Policy changes to enhance port utilization and improve operational efficiency are critical. Investing in modernizing and expanding port infrastructure, strengthening regulations to curb tax evasion, and promoting value-added services like warehousing are essential steps. By tackling these issues, Pakistan could reduce its maritime sector losses and significantly improve its position in global trade, turning its underperforming maritime assets into a major economic engine.
