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Pakistan’s Blue Economy

Protracted Opportunities and Challenges

Introduction
With an increased economic interdependence of the countries in this era of globalization, different avenues have been persistently explored and tapped so as to spur economic growth. Blue economy is one such avenue and a novel idea in this context. ‘Blue Economy’, a term first coined in 2012 at the United Nations Conference on Sustainable Development – or Rio+20 – which took place in Rio de Janeiro, Brazil on 20-22 June 2012, holds vast potential to support economic growth of a country by utilizing marine and oceanic resources. It refers to protecting and safeguarding the world’s ocean while exploiting the marine, or blue, resources. It encompasses the seas, lakes, oceans, coastal strips, and so on. Moreover, fisheries, tourism, ship building and breaking, offshore platforms, climate change, ecosystem and transportation, etc. are considered important areas for sustainable blue economic growth. With ever-increasing innovation in technology and trade, countries having coastal lines enjoy a leverage to exploit their geographic locations. Besides, blue transportation plays an important role in the world trade. Being relatively economical than other sources, it has proved to be a catalyst in the process of globalization.
With its prized geostrategic position, Pakistan can translate its potential into becoming a key player in Indian Ocean Region. The country has around 1050km long coastline, along with Exclusive Economic Zone of 240,000 sq. km, and another additional continental shelf area of 50,000 sq. km. This important geo-strategic position gives its ports a sui generis significance concerning maritime trade. In addition, the construction of Gwadar port as a trans-shipment and transit port under China-Pakistan Economic Corridor (CPEC) has further developed Pakistan’s potential of maritime trade.
Furthermore, the construction and operationalization of Gwadar port has expanded the scope of maritime transport. It offers an alternative trade route to Central Asian countries as well as Afghanistan and China. Notably, maritime transport industries can offer great opportunities in the form of foreign direct investment; in tourism, coastal urbanization, port development, ship-building and breaking and trans-shipment companies. However, in a post-Covid-19 world, characterized with a momentous economic slow-down, diversifying the economy beyond land-based sectors of investment remains challenging but paradoxically remains an imperative sphere to elevate the economic growth of Pakistan.
Hence, Pakistan’s ocean and blue resources endow it with a great potential to be exploited while keeping up the international best practices of inclusive and sustainable growth peculiar to the conditions of the country.
Blue economy of the world
Oceans are vital to the world’s economy. They cover around 72 percent of the surface of the Earth and about 40 percent of the world’s population lives within 100 km of coastal areas. Most of the world’s largest developed cities are located along the coastal areas. While more than 80 percent of the global trade by volume is carried via sea routes – they are also a source of employment for millions of people – oceans also regulate the climate and weather. As per careful estimates, the marine economy contributes $1.5 trillion to the world’s total GDP of around $85 trillion. And, more than 350 million people around the world are directly linked to fisheries sector. Moreover, it is estimated that, by 2025, about 34 percent of crude oil production will be coming from offshore sources. Aquaculture provides 50 percent of fish for human consumption. Besides, according to a WWF report ‘Reviving the Oceans Economy: The Case for Action—2015’, the total worth of the oceanic resources is $24 trillion.
From the environmental perspective also, oceans are critical as they absorb around 30 percent of the carbon dioxide emissions; thus, they decelerate the global warming. They are also the source of producing 50 percent of the oxygen we breathe. Moreover, about 50 percent of all international tourists travel to coastal areas. And, in some developing countries, particularly Small Island Developing States, tourism contributes for over 25 percent of their GDP.
Opportunities and Challenges
Pakistan is faced with myriad economic woes; and a near-existential development is inevitable.
Being a lower-middle income country and having multiple governance issues, Pakistan’s economy has lurched from one financial crisis to another. Economic growth has been unstable, hovering around 3.6 percent annually, less than the South Asian average of 4.9 percent in the last decade. This state of affairs has resulted in growing unemployment and poverty. However, according to Pakistan Institute of Development Economics (PIDE), the country’s economy has the potential to achieve a sustainable growth rate of 8 percent per annum. The country is the 5th most populous in the world, with its population growing over 2 percent a year. This situation can pose a set of new challenges, together with food insecurity. The inability to mobilize revenues and worrying state of balance of payments further add to the country’s economic woes. Almost all the problems of the country – and their solutions too – are linked, directly or indirectly, with poor economic conditions. With an abysmal economy, the country is struggling to achieve sustainable development and economic growth. Amidst all this, the country cannot depend only on conventional resources to meet the future demands of a burgeoning population. Hence, it is important for Pakistan to unlock the potential of non-traditional areas. Investment in the marine and coastal resources can help the country to meet food, transport and energy demands together with fetching direly-needed foreign reserves.
Moreover, blue economy can attract local and international tourists. According to the Maritime Study Forum, it is estimated that developing coastal areas of Sindh and Balochistan for tourism purposes can generate $5 billion per annum. These areas, as of now, hardly generate $50,000 annually. The geographical location of Pakistan confers on the country an immense potential to generate revenues through trans-shipping but, due to neglect of decades, this could not materialize, though other coastal South Asian countries are taking advantages of their blue resources.
Pakistan’s maritime revenue stands at $183 million whereas Bangladesh and India generate $6 billion and $5.6 billion, respectively.
Fisheries sector of Pakistan is also under- performing. The country’s fish exports stand at around $350 million whereas these, conservative estimates suggest, can be easily enhanced to $2 billion annually. According to Food and Agriculture Organization (FAO), total fish production of Pakistan accounts for only 3.7 percent of the combined production of Bangladesh and India. On the other hand, fish exports of India and Bangladesh are 26-folds and 10-folds, respectively, higher than those of Pakistan.
In addition, with 21.5 percent share in the breaking of vessels worldwide, the ship-breaking sector of the blue economy shows satisfactory performance, according to the Review of Maritime Transports, 2019. However, it has far more potential than the current position of revenues. The ship-breaking yard in Gadani can generate $3 billion annually which, at present, is around $100 million.
Pakistan also needs to expand the fleet of local vessels. Pakistan National Shipping Corporation (PNSC), with its 12 vessels, earned an after-profit tax of Rs2.2 billion during the FY21. A former PNSC executive director, Commodore (r) Syed Muhammad Obaidullah, recently said at a webinar, “Pakistan can save around $5-6 billion annually merely by using the PNSC as the mainstay of its international maritime trade and allowing the national flag-carrier to buy more oil carriers and tankers to increase its capacity of transporting liquid freight.” Any development in this regard will definitely ease up pressure on the external front of the economy and help save foreign reserves.
Conclusion
Blue economy of Pakistan proffers a myriad maritime sector that is full of economic potential. Ranging from traditional maritime industries; fisheries, coastal tourism, maritime transport, etc. to fledgling areas of deep sea mining, oceanic renewable energy, maritime tourism, aquaculture and marine biotechnology, the country can actualize the long-neglected yet very significant sector to turn the economic fortunes of the country. Political will, coupled with prioritizing and a comprehensive strategy, would be required in this regard.

The authors have pursued BS at the Department of Government and
Public Policy at National Defence University, Islamabad.
They can be reached at: asadullahnoonari999@gmail.com
muzammilawan83@gmail.com