Bureau Chief, Islamabad

Aug 13 - 19, 2007

The Higher Education Commission of Pakistan (HEC) has recently taken a major initiative by preparing a plan of action for placing Science of Technology at the center of an industrial strategy with overriding aim to develop a fast growing, international competitive and export driven industrial sector in Pakistan. The plan "Science & Technology based vision, strategy and Action Plan for socio-economic Development of Pakistan".

Dr. Atta-ur-Rehman Chairman HEC personally made a presentation of his plan to the prime minister and his team last month. The Prime Minister approved the strategy and the Plan of Action with his appreciation for the efforts of Dr. Atta-ur-Rehman and his dedicated team for preparing this highly needed plan of action. Action on this plan will stand soon.

This correspondent visited offices of the commission in a bid to meet the extremely busy Dr. Atta-ur-Rehman, but he was out of the country for 10 days. I could contact one of his deputies and co-author of the plan and obtain copy of the plan of action approved by the prime minister.

The plan "Science & Technology Based vision, strategy and action of Pakistan" is based on the research report jointly conducted by the HEC and Pakistan Institute of Development Economics. The report prepared after in-depth study and analyses of major productive sectors of he country and a detailed consultative process that involved frequent interaction with industry leaders, academicians, and senior policy makers. The strategy and plan of Action prepared by the HEC identifies the causes of our backwardness, key issues and challenges, sets out strategic objectives and targets and spells out detailed action plan to realize the desired goals.

According to the Executive Summary of the Voluminous report and the plan of action to over come our short comings, there is overwhelming evidence that countries that have invested heavily in science and technology have succeeded in achieving rapid and sustained economic growth. In this era of globalization and competition, Pakistan needs to acquire scientific and technological capabilities to maintain a competitive edge in the global marketplace. The vision presented in this document places science and technology at the center of an industrial strategy whose overriding aim is to develop a fast growing, internationally competitive, and export-driven industrial sector that helps in poverty reduction through the provision of adequate employment opportunities to the growing labor force.

The two major themes that cut across this report are: (i) Human Resource Development, and (ii) Research and Development. The report recommends a number of measures for the development of human resources through education and training as well as for promoting research and development. These include: strengthening existing institutions; establishing new institutions with emphasis on emerging technologies; training professionals and workers in line with market demand; creating effective linkages among academic institutions, research centres, and industry; providing incentives to the private sector to invest in human resource development as well as to carry out research and development; and establishing technology incubators and specialized technology parks.

The report carries out an in-depth analyses of the major sub-sectors of all the three productive sectors of the economy agriculture, industry, and services and within each sub sector identifies key issues and challenges, sets outs strategic objectives and targets, and spells out a detailed action plan to realize the vision.

Agriculture is the largest income and employment-generating sector of Pakistan's economy. However, it continues to suffer from low productivity crop yields on an average farm are lower by 31-75 % than the yields on progressive farms, while the latter's productivity is 25-57 % less than the technology potential realized at the research stations. The major reasons for such gaps are lack of seed varieties, resistance to pests and diseases, low genetic potential, drought and high temperature stress, soil nutrient mining and salinity/water logging, unbalanced and use of low quality inputs and inputs use low efficiency on the one hand, and lack of quality control, low value addition and high post-harvest losses on the other. The losses in agricultural output due to salinity/water logging are more than 21 billion rupees per annum, and post-harvest losses for fruits and vegetables alone are up to 49 billion rupees every year.

A sustained growth rate of five to six per cent in agriculture is imperative to ensure a rapid growth in national income, macroeconomic stability, improvement in distributive justice and a reduction in poverty. Exploiting the unachieved potential of all the sub-sectors of agriculture, diversifying agricultural production towards high value crops, and conserving land and water resources can realize this. A higher level of investment in agricultural research and development (R&D) activities supported by favorable policy instruments, human resource development, and necessary physical and institutional infrastructure can prove a catalyst towards achieving enhanced productivity and the desired growth rate.

The textiles and clothing sector is the mainstay of Pakistan's economy. With a 24% share in the value-added of the manufacturing sector, the textiles sector employs 38% of the workforce in the industrial sector, and constitutes roughly 70% of total exports. The textiles sector is facing a number of challenges including a low technological base, lack of research and development, lack of trained manpower, low quality standards, concentration in low value-added products, and too much reliance on cotton. To address these challenges and to facilitate the transformation of the textiles sector into a strong, dynamic, and internationally competitive industry led by the private sector, the public sector must create an enabling environment through a business friendly regulatory framework, appropriate incentives to the private sector, institutional support and provision of quality infrastructure.

Key elements of the proposed action plan for the textiles sector include: improving the regulatory and policy framework; human resource development through improving the HRD institutions and encouraging the private sector to invest in skill enhancement; promoting research and development through strengthening of the existing institutions and establishing new institutions in the areas of garments, knitwear, sample development, and CAD/CAM centres; technological up-gradation; rewarding value addition; ensuring quality standards; and establishing common facility centres.

Leather and leather products play a significant role in Pakistan's economy. The leather industry is mainly export-oriented and has a potential to grow rapidly provided measures are put in place to encourage value addition as well as to improve product quality. Environmental pollution is a major issue and non-compliance with environmental standards could hamper Pakistan's exports. There is a need for national environmental legislation to curb the growing tannery effluent problem. The tanneries could benefit from R&D in order not only to cut down on polluting effluents, but also to recycle many of the discharges. In addition, effluent treatment facilities need to be established in order to limit the environmental damage caused by the direct dumping of untreated effluent.

The benefication and development of new materials is critical for economic growth and competitiveness. Recent advances have changed the complexion and use of materials in many industries, particularly in the areas of defence, electronics, engineering, transport, energy and sport. Though Pakistan has a strong mineral base as compared with many developing countries, it has not been able to extract maximum potential benefits from its mineral base.

The report recommends a number of measures for the development of materials utilizing the indigenous resources, beneficiation of minerals, and development of new materials especially the composites. These include: acquisition of technology exploiting domestic reserves of iron ore for the production of steel; establishment of mini steel mills utilizing this technology at various sites like Nokundi, Kalabagh and others; establishment of research centre for copper and other precious metals; establishment of a centre for the development and improvement in refractory bricks like magnesite refractory bricks; promotion of research on gypsum; GRP/FRP development centre for the development of composite materials; establishment of an institute for theoretical research on materials; opening up of departments for advanced studies in materials in various universities; establishment of centres for the development of polymeric and photonic materials; establishment of geo-data and geo-mapping centres; and research and development for the exploitation of resources of gemstones.

The chemical process industry is crucial for industrial development. Almost all the Manufacturing sectors depend on the inputs, which are produced by the chemical industries. The industry is complex and is highly capital and technology-intensive. Whereas some chemical industries including fertilizers, polyesters, pure terephthalic acid (PTA), poly vinyl chloride (PVC) and some basic chemicals have been developed, most of the chemical industry in Pakistan is still in the initial stages of development. For the establishment of a fully integrated chemical industry in Pakistan, it is imperative that a naphtha cracker is set up in the country. This facility is critically important for the indigenous manufacturing of a large number of chemicals and pharmaceuticals.

Whereas Pakistan has attained a high degree of self-sufficiency in the formulation and packaging of finished pharmaceutical products, the basic manufacturing of ingredients is very small. About 90% of active ingredients are imported. Pakistan needs to develop capacity for the essential ingredients especially where local resources are available. The key elements of the 25 action plan for the development of the pharmaceutical sector include: introduction of a diploma course in pharmacy technology in the faculties of pharmacy; establishment in each province of a fully equipped laboratory to undertake basic research in the field of pharmaceutical drugs and medicine for disease prevention; establishment of R&D centres in pharmaceutical and drug discovery and experimental therapeutics; establishment of testing/certifying laboratories approved by the WHO; and establishment of manufacturing laboratories for fabrication and manufacturing of basic equipment required in pharmaceutical industry.

There is a need to diversify into fast growing sectors like engineering and electronics. Engineering industry is one of the most dynamic industries in the world having great potential for growth. The main strategic focus in the engineering sector is on bridging the widening technological gap with the developed countries by providing conducive environment including the required technological, financial and physical infrastructures, and creating a seamless integration with emerging trends of global production systems. The most important step for the promotion of engineering sector in Pakistan is to allocate more resources to technical education, the lack of which has been identified as one of the reasons for the limited progress in the engineering sector. There is also a need to develop design engineering capabilities, databases and infrastructure, create testing laboratories and instruments, and initiate public -private partnership in projects leading to innovation of new products and processes.

The electronics industry is one of the world's fastest growing industries. It is a key enabler of growth and innovation, underpinning many important industries including Automotive, Information and Communication Technologies (ICT), Consumer appliances, defence, biomedical appliances and other scientific equipment and devices. Despite its huge growth potential, Pakistan has significantly lagged behind in the development of its electronics industry. The electronics activity in Pakistan mostly consists of repair and assembly of electronics equipment. Electronics manufacturing and design activities are largely non-existent, not least because of lack of core competencies in electronics, including highly qualified manpower and R&D capabilities. Electronics is a highly innovative field where new developments are taking place at a very fast pace. In this scenario, countries like Pakistan that have yet to make a mark in the field of electronics have to go a long way before an electronics industry that is capable of attaining international competitiveness can be developed. The objectives of a development strategy for the electronics sector are to: build on the existing capabilities in electronics; attract FDI in electronics sector to facilitate the transfer of technology; strengthen the capability in assembly and testing of electronic components; develop and enhance value-added in the industry by moving into activities such as research and design; and support the development of indigenous supply chain.

For the electronics sector to emerge as one of the key drivers of growth in Pakistan, a coherent action plan is needed whose key elements include: creation of a business-friendly environment that is conducive for both domestic and foreign investment in the electronics sector; human resource development especially in the emerging areas of Digital Signal Processing (DSP), Optics, Digital Communications (DC), and Microelectronics; development of indigenous R&D capabilities; establishment of VLSI design and training centres; and development of specialized technology parks with quality infrastructure to support the concentration of high-tech industries.

The goals of the industrial vision cannot be realized without an efficient energy sector. The supply-demand analysis shows that even with modest economic growth, the current rate of change in supply will result in power shortages in Pakistan, adversely affecting the growth process. Therefore, Pakistan needs to concentrate not only on the expansion of energy sources but also on improving efficiency of resource use. For expansion of power supply it is important to increase the supply of power from traditional sources like hydel, thermal and nuclear and from other sources like building micro/mini hydel power units, solar and wind power units. For hydel power supply WAPDA has proposed a number of projects. The first option is Bhasha Dam/Kalabagh Dam. However this will increase the supply of energy in the long term. In the short run, thermal power units can help to reduce power shortage. However, the cost of thermal power generation is high. With the rising price of furnace oil it may not be possible to supply power at a lower cost. Since coal can be an important input, thermal power generation through development of clean coal technologies and beneficiation techniques is proposed. Construction of mini-hydel plants, wind power plants and solar power plants can increase the power supply in remote areas and thus contribute to their economic development.

Industrial development and expansion has to be complemented by a dynamic and efficient services sector including telecommunications, information technology, and financial and transport services. The telecommunications sector has made significant progress in recent years; however the country still lags behind many of the comparable economies in terms of fixed line density (number of fixed phones per 100 inhabitants), mobile penetration (number of mobile subscribers per 100 inhabitants) and Internet usage. Pakistan must develop and maintain a high quality telecommunication infrastructure for the provision of affordable world-class telecom facilities. The major recommendation include: an enhanced role of the private sector in the provision of telecom services; formulation of procedures for easy access to bandwidth; expansion of broad band connectivity; formulation of a comprehensive national plan for laying of optical fiber; and investment in R&D for introduction of new technologies with network solutions.

Information technology (IT) has assumed great importance in the knowledge-based economy. The government has accorded high priority to the IT sector. The main initiatives include the addition of facilities for computer education and training at affordable rates while ensuring quality of education, enhancement of internet infrastructure and the provision of efficient internet services at reasonable rates, establishment of software technology parks and data networks, incentives for software exports and computer hardware manufacturing, enhance arrangements for marketing of software overseas, and the provision of a legal cover to the electronic transactions enabling implementation of e-commerce.

The software industry in Pakistan has enormous potential to grow from its current size. The worldwide IT services market is growing at the rate of eight per cent in real terms and expected to reach about US 910 billion dollars by 2010. Of this, about 54 % will consist of hardware maintenance, IT management and other services. Software development is primarily a human resource dependent industry, and therefore there is a need to adopt measures to enhance the number and quality of professionals in this field. Strategies have been proposed under several focused areas including IT education, e-governance, and targeted IT human resource development.

A well-functioning financial system that efficiently channels funds that can be invested to most productive uses is essential for industrial development and growth. Recognizing the importance of financial reforms in the process of industrial development and economic growth, a series of measures have been adopted in recent years with a view to removing various distortions in the financial system, minimizing government's interference in the banking system, and strengthening the prudential regulations. While these measures have led to an improvement in the financial system, much more needs to be done to transform the financial sector into an efficient and market-driven financial system.

Pakistan must continue the reform process with particular emphasis on: ensuring autonomy and competence of the regulators and promoting professional management at all levels of decision making in the financial institutions; implementing the privatization process efficiently and prudently so that 90 % of the banking assets are in the private hands; restructuring and strengthening non-banking finance companies to make them an integral part of financial services industries; further enhancing the institutional capacity of the State Bank of Pakistan (the central bank of Pakistan) and, Securities and Exchange Commission of Pakistan (SECP) in becoming effective regulators and supervisors of the financial system; automating the existing manual systems (banking operations); and developing local and wide area networks, connecting various departments and offices across the country.

The role of construction and housing sector in economic growth of a country is quite significant. The sector has important forward and backward linkages to a large number of industries. Housing is a major component of the construction sector, which responds to change in population, change in income, and availability of other profitable investment options. In Pakistan, there is a huge gap in the supply and demand for housing: currently there is a shortage of 5.5 million units. The report discusses the role of science & technology and research and development in quantitative and qualitative improvements in the construction and housing sector. The suggested action plan includes acquisition of technology for improving the quality of building materials, opening of a department of architecture at the higher level of education, establishment of a centre for standardization of construction materials, research and development on improvement and commercialization of high quality construction materials, and provision of other facilities and infrastructure. For the increased availability of affordable housing for the poor development of construction material like ferro cement for low cost and mass housing is recommended. This is a low cost technology and it is developed and used in other countries. Pakistan can import the technology and commercial production of the material can be useful for achieving the objective of Housing for All.

An efficient and good quality transport system contributes to economic growth by lowering domestic production cost through timely delivery of raw materials, facilitating market integration, and helping to strengthen competition. Major issues in the transport sector are: inadequate physical capacity; inadequate maintenance system; poorly targeted investment priorities; operational and financial inefficiencies of the public investment; and lack of private sector participation. The rational allocation of inland freight traffic between rail and road network, privatization of railway's operation in selected sections and inclusion of private sector in development of roads, airlines, ports and shipping, and inland navigation can help in improvement of the efficiency of the sector.

For safe and efficient transportation network a number of measures are proposed including: modernization of the maintenance system; introduction of user charges; human resource development through training in transport management and maintenance standards; enhanced participation of the private sector in transport projects. The report recommends then revival of Karachi circular railway, and introduction of light rail transit system in Lahore as part of measures to improve urban transportation.