ISLAMABAD: Pakistan’s Maritime Affairs Minister Junaid Anwar Chaudhry on Friday called for a swift launch of the country’s first service, immediate reforms in licensing procedures and financial facilitation for operators to ensure affordable sea travel and boost maritime connectivity.

Pakistan has been mulling routes for a ferry service it plans to launch to connect its southwestern Gwadar port with the Gulf region, according to the country’s maritime affairs ministry.

Five privately-owned firms submitted their proposals, showing growing interest of the private sector, as officials reviewed technical and financial aspects of ferry operations last month.

Highlighting broader benefits of sea travel, Chaudhry pointed out that ferry services could provide an affordable and reliable travel solution for pilgrims aspiring to visit Iran and Iraq.

“Beyond tourism and business, this service can greatly facilitate religious travel. We can offer pilgrims a new, secure, and cost-efficient option for their journeys,” he was quoted as saying by his ministry.

“Every year, 700,000 to 1,000,000 Pakistani zaireen (pilgrims) travel to Iran and Iraq. If even 20 percent opt for ferries in the first three years, that’s 140,000 to 200,000 passengers annually, representing significant economic potential.”

The development comes amid Pakistan’s efforts to capitalize on its geostrategic location to boost transit trade as it slowly recovers from a macroeconomic crisis under a $7 billion International Monetary Fund (IMF) program.

The country also plans to cut container dwell time at its seaports by up to 70 percent to improve trade competitiveness and ease congestion, while it last month reduced port charges for exporters by 50 percent at the second largest Port Qasim.

During a briefing by Ports and Shipping Director-General Alia Shahid on Friday, Chaudhry directed digitization of the ferry licensing process and its integration into the Pakistan Single Window platform, similar to existing ship registrations, to remove bureaucratic bottlenecks.

He specifically ordered the reduction of the current six-month license issuance period to just one month.

“There’s no justification for a half-year delay. We must eliminate red tape and act decisively,” the minister said.

He called for exploring flexible financial models for ferry operators to attract private sector participation.

“We must assess whether a bank guarantee, insurance guarantee, or a hybrid model is most viable,” Chaudhry said. “Our aim is to support not hinder entrepreneurs who wish to invest in this sector.”

Pakistan is currently holding consultations with stakeholders, including private operators and regional maritime authorities, regarding the ferry service, according to the maritime affairs ministry.

A pilot launch is expected in the coming weeks after the finalization of feasibility studies and regulatory frameworks.

“If implemented effectively, this service could become a vital new transport link across the region,” Chaudhry added.

KARACHI: A senior Pakistani finance official said on Friday the government had decided to roll back a recently imposed digital tax on foreign retailers in an effort to promote e-commerce in the country.

The Federal Board of Revenue (FBR), the government’s tax collection body, reversed this week a set of measures introduced in the federal budget that were aimed at regulating cross-border online purchases and affected international firms like China’s Temu, Shein and AliExpress.

These included a five percent fixed tax on digital platforms and a sharp reduction in the duty-free threshold for imported parcels, slashing it from Rs5,000 ($18) to Rs500 ($1.8).

“The government plans to continue expanding the e-commerce sector by keeping the market open to international players,” Finance Adviser Khurram Schehzad told Arab News.

The move has sparked backlash from local retailers, who argue that the policy puts them at a disadvantage.

“The removal of the five percent levy on foreign goods is likely to negatively affect domestic sellers, including small businesses and established retailers,” Asfandyar Farrukh, Chairman of the Chainstore Association of Pakistan (CAP), said.

According to CAP, foreign platforms, primarily those belonging to China, are sending as many as 30,000 parcels daily to Pakistani consumers, up from just 1,000 two years ago. Internal courier company data shared by CAP shows this as a nearly 2,900 percent surge in parcel volumes.

Farrukh also questioned the timing and motivation behind the policy reversal, linking it to Pakistan’s recent trade negotiations with the United States.

“The government’s decision to withdraw the digital proceeds levy appears to have been heavily influenced by the US trade deal,” he said, pointing out that American tech giants such as Google and Meta were also affected by the tax and are now exempt.

“The five percent levy should have been maintained on foreign goods, even if removed for services, where it arguably didn’t apply.”

Still, Farrukh acknowledged parallel budgetary measures, such as the reduction in the duty-free threshold and stricter customs enforcement, may temper some of the impact.

“Authorities are now more vigilant in ensuring that foreign e-commerce goods aren’t under-invoiced to evade taxes at import,” he added.

Economist Shankar Talreja echoed some of these concerns.

“This tax withdrawal encourages the use of imported products at the cost of domestic manufacturing,” he said. “It promotes a trading culture rather than production.”

Talreja, who heads research at Karachi-based Topline Securities, added the domestic industry is losing competitiveness as local products are taxed through sales and income levies, while foreign goods bypass the same regulatory burden.

He agreed with the CAP chairman about the circumstances of the tax withdrawal.

“The government, according to reports, reversed the tax under pressure from trade talks with the US,” he said.

Pakistan’s retail sector includes about five million shops generating an estimated Rs20 trillion ($71 billion) annually, but only 10 percent of this comes from the tax-compliant formal sector that CAP represents.

Temu did not respond to Arab News’s request for comment. Shein and AliExpress could not immediately be reached.