Performance of ports

I reiterate what I wrote in my earlier article published in Business Recorderthat deepwater Port Act be enacted and Customs Act be amended to help transshipment, so also the other legal instruments to make it compliant to the international standards before Karachi deepwater port becomes functional, hopefully in 2012/13. 

It amazed me that most of the developing countries have initiated studies, realising that the law plays a significant role in the economic performance of the states and its ports. Having been associated with a study, I was amazed that even the Gulf states now realise that their ports required compliance with the international standards to remain competitive, hence they honoured the agreements or contracts that the ports have entered into through membership in the IMO, WTO and the UN. 

The study is to deliberate on international and national laws as well as the different regulations applicable to the ports of the country to determine the manner and extent that the various laws and regulations influence the economic performance of the different ports of the country. 

I was pleased when after the publication of my article for enacting deepwater Port Act, I was invited by the Chairperson of Karachi Port for discussion. I re-emphasised the importance of enacting deepwater Port Act and compliance of international laws etc, I sincerely hope some headway has been made, which frankly I am not aware of. 

It is well recognised that the legal environment constitutes a factor that effects the operation of business. Several approaches measure the extent and quality of influence that laws have on economic development. One simplistic approach is to consider laws based on books, that indicators of a law are identified and the presence or absence of indicators then explains the influence that the law has on economic performance. It is assumed that the admiralty or maritime law that relates to port operations are the solution. 

Another, but sound approach is to consider the extent that laws are effectively enforced. The presence of laws does not necessarily translate into law enforcement. It is imperative to collect data measuring the effectiveness of the rule of law, the presence or absence of corruption, low levels of contract repudiation and incidence of government expropriation. 

The key players must be monitored so that objectives of the law in supporting port operations are obtained. The presence of high level of corruption hampers the effective implementations of laws, providing barriers to the achievement of economic development of the ports. 

In our case, although we have the obsolete local laws, the enforcement or monitoring is not visible due to poor human resource and lack of professionalism in ports and the ministry both. The comprehension of international regulations and enforcement of law is minimal. 

It was an education to learn during the study that implementation of laws and economic performance is cyclical, it also dawned upon me that there is a strong association between legality and economic development, a linear regression coefficient reflects that for every one percent increase in legality, there is a corresponding four and three quarter increase in gross national products, this was revealed by an economist friend of mine at WMU, Sweden, based on study conducted of legality variables on economic development in forty nine countries. 

Some of our sane elements of the society and the judiciary are right, when they say that there can't be meaningful development, unless the GDP growth is addressed in the land of pure. I fully endorse the view that after seeing the study, shown to me by the economist friend. 

The foreign entrepreneurs even don't agree to arbitration in Pakistan as our act is that of 1940, thus arbitration is carried out as per the English common law and new act of 1996 or as per the Swiss law, thus the investors are reluctant to abide by obsolete law, its poor enforcement and delayed justice. I am hopeful that now the independent judiciary will deliver to gain the confidence of investors. 

It is also true that wealthy nations have resources to afford better legal institutions thus historically the law has served to protect and regulate the economic activities in consideration of private and public interest. According to my economist colleagues and jurists actually industrialisation was spurred by the development of law and legal enforcement mechanisms that protects private business endeavours. 

Law and legal institutions are key to sustained economic growth, as it provides secure atmosphere conducive to the growth and expansion of port operations and port-related business such as shipping activities on an international scale, which means that there is need for laws that protect and regulate the various legal relations between the parties. 

My association as advisor to Karachi Chamber brought to my notice the sufferings of many exporters due to lack of understanding of documentation and infringements of negotiable instrument act, where the bills of lading created complex problem for the trade. We have been continuously pursuing with the government for National Tariff authority to regulate the unscrupulous agents and forwarders, fleecing the trade. 

There appears to be some light at the end of the tunnel now, as the Ministry of Commerce and Ports and Shipping have belatedly comprehended the issues raised by the KCCI. Port operations involve the engagement in a plethora of contracts between the shipper, the shipping companies, the loading and unloading of cargo with port and private terminals, storage of goods in port facilities, the insurance of the cargo being transported. 

The ports are flooded with continuous entry and exit of goods while proposed deepwater port becomes regional transshipment hub. It will bring in the foreigners. As a result, there will be increasing demand for international standards for the safety and security of ports. 

International law is a body of laws applicable and binding upon all states. International law is a normative system and its mechanism provides for common good. The international law, covering ports includes: shipping laws, laws of the sea, conventions on port operations enforced by the UN, WTO, ILO, the ratified 27 conventions of IMO by Pakistan, domestic laws and the regulatory regime. 

I sincerely propose that in order to determine the effects of laws, regulations and security procedures on economic development of Pakistani ports, with the objective of determining the influence of law on the economic performance of ports and also to identify lack of normative systems, as to my experience it is in quandary, thus be identified and addressed. 

The significance of our study should be how to achieve the set goals and targets for our ports. I am sure that the ministry may chart a course, which will be compatible to region and the world. I must admit that my partial submission and association has educated me on the role of legality with economic development of ports and states.