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Industrialization must make a comeback; Need to diversify exports

Industrialization must make a comeback; Need to diversify exports

Interview with Mr Khalid Tawab (Sitara-e-Imtiaz) – Chairman, Tawab Group of Companies

PROFILE:

Mr Khalid Tawab is Chairman of Tawab Group of Companies which is renowned for the manufacturing of paper, board and steel. He has served as Senior Vice President and Vice President of Federation of Pakistan Chambers of Commerce & Industry (FPCCI) and Karachi Chamber of Commerce & Industry ( KCCI). He is also an honorary Consul General of Mozambique since 1989. President of Pakistan awarded him Sitara-e-Imtiaz in 2009 in recognition of his outstanding public services. His company got two times FPCCI Export Awards and one time International Asia Award due to the highest exports. He is philanthropist and trustee of Aiwan-e-Tijarat-o-Sanat Hospital.

PAGE: DO YOU THINK INDUSTRY HAS FLOURISHED MANIFOLD IN PAKISTAN SINCE THE INDEPENDENCE IN 1947?

KHALID TAWAB: Yes, industry of Pakistan flourished in the decade of 1960s when government adopted import substitution policy. At the time of independence, there were negligible industries in Pakistan and during 1950s, the industries contributed 6.9 percent of GDP, which now has increased to 21 percent in GDP. The process of industrialization was stuck up in 1970s due to nationalization policy. Moreover, the law and order situation, high cost of doing business, taxation policies, low infrastructure development, technological backwardness etc are the current issues, which have affected the industrialization process. If we analyze the role of industry in economic development, we can see that investment in manufacturing sector is the real investment, which not only contributes to the economic growth but also eliminates poverty and unemployment.

PAGE: HOW WOULD YOU COMPARE THE PROGRESS OF PAKISTAN WITH THE NEIGHBORING COUNTRIES OVER THE PERIOD OF SEVENTY YEARS?

KHALID TAWAB: Historically, the economic growth rate of Pakistan is higher than the economic growth rate of India, Bangladesh and China and our per capita income was higher than the neighboring countries. In the nineties, due to weak policies and political instability, the economic growth of Pakistan declined while our regional countries like India and Bangladesh policies improved competitiveness with innovation strategy.

Moreover, the war against terrorism also affected the sovereignty and priorities of Pakistan. Pakistan has lost US$123 billion in war against terrorism. At present, the export of Pakistan is showing a declining trend while the exports of regional countries have increased. There is a need to diversify our exports by moving progressively to the exports of steel, electronics, chemicals, and other engineering goods.

Asian economies like Taiwan, Hong Kong, and Korea started with the sharp increase in the exports of textile and then gradually shifted to the capital intensive production of electronics and other light and heavy engineering goods. Market access and compliance issues are also needed to enhance exports of Pakistan. In WTO, Pakistan comes in developing nations and market access is given to the least developing nations like Bangladesh. Due to this facility, Bangladesh increased its exports and also used market access facility. Moreover, the policies of regional countries also support in economic growth particularly exports growth.

PAGE: ARE WE FAR BEHIND IN INFRASTRUCTURAL DEVELOPMENT WHICH IS THE MAIN CAUSE OF SLOW ECONOMIC GROWTH?

KHALID TAWAB: Infrastructure plays a crucial role in economic development of country. Infrastructure includes both physical and financial infrastructure. Our financial infrastructure is very strong but physical infrastructure need improvements.

The China-Pakistan Economic Corridor (CPEC) is also collection of infrastructure that will connect Gwadar port with China and the net worth of this project is currently US$62 billion. The project will provide road route for trade with the Central Asian countries and other region. Due to CPEC, Pakistan has been recognized as the ‘Best Country for Infrastructure Development in South Asia in 2016’ by the emerging markets, a publication of the World Bank in recognition of its massive progress in the field.

PAGE: YOUR VIEWS ON THE FUTURE OF PAKISTAN:

KHALID TAWAB: The future of Pakistan is very bright provided we utilize our resources efficiently. The World Bank and different institutions have projected that Pakistan will likely to become member of G20 by 2030. Currently, the economy of Pakistan is moving upward but their trickle down effects are not transferred in lower income group. We need to do a lot for improving the economy and achieving of G20 potential because these potentials depend on transformation of the economic structure from factor-driven to innovation-driven economy which in turn depends on the ability to create an environment conducive to development of a competitive private sector, the strengthening of institutional framework and structural reforms. Moreover, China-Pakistan Economic Corridor will also give opportunities to Pakistan to connect with Central Asian Economies and Europe.

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