The National Trade Corridor Improvement Progam covers two components. The Planning Commission to establish a National Trade Corridor Management Unit (NTCMU) while Ministry of Commerce to establish Trade & Transportation Facilitation Unit (TTFU). This project will be funded through World Bank (WB)/IDA credit of US $25 million (Rs.1500 million) at an interest rate of 0.75% repayable in 20 years. 70% of actual money borrowed will be as grants. (US$ 1 = Rs.60). NTCM Unit that will work as Secretariat under the supervision of Planning Commission to coordinate, monitor and evaluate the implementation of transport sector projects with concerned Ministries. TTF Unit that will work as Secretariat under the supervision of Ministry of Commerce for trade facilitation. The two initiatives shall be complementary to each other.

NTCIP PROGRAM OBJECTIVE AND PHASES

The development objectives of the NTCIP are to reduce the cost of trade and transport logistics and bring services' quality to international standards in order to reduce the cost of doing business in Pakistan and ultimately enhance export competitiveness and accelerate industrialization. The proposed Trade and Transport Facilitation Project-2 is an integral component of the overall NTCIP.  

BASIC FEATURES AND COSTS OF THE NTCIP PROGRAM.

NTCIP is a holistic and integrated approach which encompasses the public and the private sector, services and infrastructure, reforms and investments, and the various sectors which are responsible for the level of performance of the corridor (highways, road transport, ports and shipping, civil aviation, railways, customs and trade logistics). The strategic thrust of the program involves an extensive consultation and consensus building process with all public and private sector stakeholders, focusing on: (i) quick results through policy interventions, systematic and procedural improvements, and cutting administrative red-tape involving small investments; (ii) longer term higher cost investments (with pragmatic investment assessment from the private sector); and (iii) deep rooted institutional reforms to ensure sustainability.

With a strong reform agenda supplemented by a comprehensive investment program, NTCIP has become essentially the medium term transport master plan for the country. The key policy areas targeted by NTCIP include policies that would: (a) lead to modern and streamlined trade and transport logistics practices ; (b) improve port efficiency, reduce the costs for port users and enhance port management accountability ; (c) create a commercial and accountable environment in Pakistan Railways and increase private sector participation in operation of rail services ; (d) modernize the trucking industry and reduce the cost of externalities for the country; (e) sustain delivery of an efficient, safe and reliable National Highways system; and (f) promote and ensure safe, secure, economical and efficient civil aviation operations and boost air trade. The main elements of NTCIP are described in the Letter of Development Policy and the Policy Matrix to be adopted by the Government.

The consultative process used to prepare the program and the strong ownership at all levels of the Government have been key factors in the progress made since the concept of the program was endorsed by the Prime Minister in September 2005. Customs clearance time has been reduced from 4 days in 2004 to less than one day in June 2006 at the Karachi International Container Terminal (KICT). This has been achieved by implementing a modern computerized customs system that was rolled out in the two other container terminals of Pakistan in December 2006, covering then 80 percent of the country's international trade. 70 percent of imports are now cleared in less than 5 minutes at KICT. Port tariffs in Karachi Port Trust were reduced by 15% in June 2006, following a previous reduction in 2003 and the same reduction by Port Qasim Authority in 2005. Pakistan Railways is giving more importance to freight by operating five additional freight trains per day. As a first step to modernize the trucking industry, the Government reduced import tariffs on new trucks and authorized import of second-hand trucks. Public-private partnerships are increasingly used to finance infrastructure development and improve management of transport infrastructure in container terminals , dry ports, roads and airports.

AGREED TRIGGERS TO MOVE TO SUBSEQUENT PHASES

As part of NTCIP, the Government has agreed to a sequencing of reforms in three phases to be implemented during the next three years. The Policy matrix in lists the key triggers that have been defined for each of the phases and the six sub-sectors that are part of NTCIP, railway, highway, port, trade facilitation, trucking and aviation. 

 

 

 

 

 

 

THE GOVERNMENT's PROGRAM

The objectives and targets of the NTCIP are aligned with the GOP’s MTDF. The strategic thrust of the program involves an extensive consultation and consensus building process with all public and private sector stakeholders, focusing on: (i) quick results through policy interventions, systematic and procedural improvements, and cutting administrative red-tape involving small investments; and (ii) longer term investment (with pragmatic investment assessment from the private sector) and deep rooted institutional reforms to ensure sustainability. 

 

NATIONAL TRADE CORRIDOR IMPROVEMENT PROGRAM

Policy Matrix - List of triggers

Railways:

-DPL1:

(i) PR's Board, Ministry of Railways (MoR) and Ministry of Finance to approve PR's business plan;

(ii) Establish PR Corporation (Corporatization Act approved by Council of Common Interest, new Chief Executive Officer and new Board appointed);

 

-DPL2:

  (i) PR Corporatization Act signed;

 (ii) Roll out IFRS to core operational Units (passenger, freight, infrastructure) and PR as a whole;

(iii) Approve Business Plan for non-PR activities under MoR (workshops, support units, etc);

-DPL3:

(i) Convert Freight Business Unit into a company (owned by Pakistan Railways Corporation) and allow freedom to initiate its own investments in plant and equipment; (ii) Create two sub-units within PBU, covering mail/express/intercity services and secondary/branch services respectively, as a prelude to the introduction of  Public Service Obligations for loss-making passenger services.

Highways:

 Phase 1: NHA's Board, Ministry of Communications and Ministry of Finance to approve NHA's business plan

Phase 2: 

(i) Ensure sustainable financing of NHA;

(ii) Approve Policy and Regulatory Framework for Private Participation in National Highways;

Phase 3: Create separate Road Fund

Ports

Phase 1:

(i) Ports' Boards, Ministry of Ports and Shipping and Ministry of Finance to approve ports' business plan;

 (ii) Sign Statutory Rule of Order terminating KDLB and terminate cess;

Phase 2:

(i) Rationalize KPT and PQA tariff structure and levels based on cost recovery;

(ii) Reduce port staff at KPT by 15%; and (iii) Revise 1974 Act to regulate conditions of employment of dock workers in Pakistan (use of employment contract, access to health services and pension system);

Phase 3: Initiate procedure to enhance private participation in dredging company via tender;

Trade Facilitation

Phase 1: Complete pilot Pakistan Computerized Customs System (PaCCS) at three container terminals in Karachi;

(i) Tender out development of automated commercial community single-window system (PAKET);

Phase 2:

(i) Revise freight transport insurance and financial regulations and practices related to freight-forwarding;

Phase 3: Roll out automated commercial community single-window system nation-wide;

Trucking

Phase 1:

(i) Formal recognition of trucking as an industry by GOP; (ii) Reduction of import duties on imported trucks

Civil Aviation

Phase 1:

(i) Ministry of Finance, CAA's Board and PIA's Board to adopt CAA and PIA's business plan; 

(ii) Adopt an unrestrictive policy stance in respect of safe airlines;

Phase 2:

(i) Restructure or create a new PIA on a strictly commercial basis;

(ii) Designate CAA as the specialist aviation safety regulator and establish the air traffic control service as a self-funding state-owned business and establish each CAA airport as a stand alone government owned business;

Phase 3: Offer airport management to concession through international competition