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Long-term investment and growth policies are must for export prospect

Long-term investment and growth policies are must for export prospect

Interview with Mr Khalid Tawab – Chairman, Tawab Group

Profile:

Mr Khalid Tawab is an economics, finance and international trade expert. He is a prominent businessman and former Minister of Commerce & Industry Government of Sindh and former Senior Vice President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI). He has also served as Vice President and Chairman of various Advisory Committees & Senior Vice President of Karachi Chamber of Commerce & Industry.

The Government of Pakistan conferred the award of Sitara-i-Imtiaz on him in 2008 for his services. He has visited various countries in order to accomplish Pakistan government’s objectives to enhance economic and trade relations especially with the African countries, China, Malaysia, Iran, United States, Mozambique, Egypt, Oman, Poland etc. He is an active member of Iron and Steel Association of Pakistan. He has been the member of number of official working groups on economic, finance, trade, industrial cooperation and economic corridor and presently is the member Board of Governors of various national public/private organizations. He is the Chairman of Tawab Group which is in paper manufacturing, steel, real estate and securities.

Pakistan & Gulf Economist had an exclusive conversation with Mr Khalid Tawab regarding economy. Following are the excerpts of the conversation:

The industrial growth has positive and significant impact on the overall GDP. Many countries including Taiwan, China and Korea are the best examples of positive relationship between industrial growth and GDP. Industrial sector has also studied impact on export and import with respect to the balance of payment. Pakistan is an energy-deficient country. Pakistan has a vast industrial base, which contributes a large portion in the economic growth and employs a large population directly and indirectly. Shortage natural gas to the industries that use extensive amount of natural gas in their production as raw material and heating source, for example, cement, cotton cloth, cotton yarn, glass, nitrogen fertilizer, phosphorus fertilizer, paper and board, sheet iron and synthetic fiber and billet iron, reduces their growth and contribution in the economy.

Due to electricity crisis in Pakistan industrial growth has been declining. In order to enhance exports, the government needs to announce long-term investment and growth policies to enable the industry to undertake new investment decisions for technology up-gradation and value-addition, which will result in not only the generation of more exportable surplus but also new sustainable jobs. The local industrial sector has pleaded to the government to withdraw increase in gas prices as it will make locally-produced products uncompetitive in local and global markets and will lead to thousands of jobs losses. Electricity and gas tariff including other input material for industry should be competitive to boost industrial production at a cost that it could compete in the global markets.

 

We have to increase our exports and we should be competitive in the international market. The Government of Pakistan is actively seeking investment in onshore and offshore exploration activities, development of explored wells and construction of gas pipelines.

Pakistan midstream and downstream sectors also offer business opportunities. Sindh has two major Oil and Gas bearing regions (1) Sindh Monocline commonly known as Badin Block Area; (2) Outside Sindh Monocline, which includes Sukkur Rift Zone, Mazarani Fold Zone, Khirthar Depression and Karachi Depression. Districts including Badin, Tando Muhammed Khan, Hyderabad, Tando Allahyar and Thatta are also part of Badin Block Area. According to a newspaper report Badin Concession Block has 12 Oil and Gas fields and 307 wells majority of them being in district Badin. In spite of huge production of Oil and Gas, the larger part of rural Sindh which produces this wealth of resources is far behind in development indicators. Imports become expensive when rupees depreciates or weakens.

Adequate and reliable power supply is a key to achieving sustainable economic growth. Presently, out of a population exceeding 208 million, only around 70% have access to electricity. Demand has outstripped supply of electricity and the country is presently facing power shortages of approximately 6,000- 8000 MW during peak demand time. The present electricity demand-supply gap, coupled with consistent growth in demand, clearly indicates the fundamental need and market for enhancing the country’s current power generation capability. Over 60,000 MW hydel potential exists in northern areas of Pakistan. 175 billion tons total potential of Thar Coal is estimated which is equivalent to:

  • 50 billion TOE (more than Saudi Arabia and Iran oil reserves).
  • 340,000 MW potential for wind energy.
  • 2.324 million MW potential for solar thermal & photovoltaic systems.
  • 105trillion cubic feet of shale gas reserves.
  • 9 billion barrels of shale oil reserves.
  • 4.2 billion cubic feet per day of gas production.
  • 70,000 barrel per day oil production.

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