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Engro's PVC project

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May help attract foreign investment in Pakistan

By AMANULLAH BASHAR
Oct 18 - 24, 1999

Despite the global demand of 24 million tonnes of Poly Vinyl Chloride (PVC) and a huge export market of its downstream products worth over billions of dollars, so far, Pakistan's share is of no consequence due to non-existence of PVC production facility at home.

Currently, the total PVC demand in Pakistan is estimated at 70,000 tonnes which is met through imports at a cost of $345 million per annum.

The arrival of "Engro Asahi Polymer & Chemicals Ltd (EAPCL), a joint venture between Engro Chemical Pakistan Ltd and two major Japanese companies namely Asahi Glass Company Ltd and Mitsubishi Corporation with a total capital investment of Rs4 billion is of course a land mark which is expected to open new investment opportunities in the country.

There exists a great potential for growth of PVC downstream industries in Pakistan as, so far, the per capita PVC consumption is hardly around 0.5 kg as against the world consumption of 4.6 kg.

With the commissioning of EAPCL which is expected to go into production by next month, the job openings created by setting up the integrated facilities to produce PVC and by setting up PVC processing units, hopefully would be around 50,000.

The sponsors of the project are also anticipating that the incremental impact of producing and processing PVC on GDP can amount to a potential figure of $1 billion which is a contribution to the national economy worth credit.

Unlike other developing countries where PVC demand exploded due to rapid increase in use of PVC pipes in Construction and Agriculture industries, utilization of PVC pipes of high standards in these sectors has yet to take roots in Pakistan.

Asad Umar, President of EAPCL, while speaking at a well attended seminar on "Market development programme for PVC applications" highlighted various aspects of the project.

He said that the project, being established with a total cost of $80 million, has the capacity to produce 100,000 tonnes of PVC resin per annum.

Against the domestic demand for PVC, which is around 70,000 tonnes, a surplus of 30,000 tonnes would be readily available for export oriented industries. Another significant point is the availability of high standard PVC in Pakistan would also help attracting foreign investment which was so far missing due to non existence of such type of industry in Pakistan. Experts in PVC sector feel that as a result of local production of PVC, prospects are bright for transfer of technology especially from the developed countries like Korea, Japan and other Far Eastern economies looking for cheaper manufacturing base.

Sponsors of the project suggested that in order to increase plastics processing base in Pakistan we should establish plastic processing parks on the pattern of industrial zones. To oversee the performance of these parties a governing body should be set up in collaboration with the private sector while incentives to processors in these should be classified under "priority industries".

It was also suggested that One Window Facility for investors be allowed and institutions like Plastic Technology Centre be opened at various locations including Lahore, Peshawar, Sialkot and Faisalabad.

WHAT IS PVC

PVC resin is a raw material for different plastic products. This raw material is frequently used for producing high quality leakage free pipelines for conveying water, sewerage or effluent, insulating material for electric cables in construction industry, covering for floors, Door & Window Profiles, Toys, Food packaging, Furniture, Automobile industry, Electronics, Medical usage. It is an important on part of the shoe manufacturing industry as the PVC soles and artificial leather are used all over the world by footwear industry.

The project would be pioneer in the sense that so far PVC resin was not produced in Pakistan. The local demand is met through imports from various countries. As a result of this project, the economy would get a relief from immense strain due to out flow of foreign exchange on account of imports on one hand and the availability of this raw material of international standards to domestic industry.

It was highlighted in the seminar that PVC downstream industry had a great potential for both employment opportunities and exports in Pakistan. So far, this sector remained underdeveloped due to lack of general awareness about versatility of PVC and its applications in Pakistan. In order to increase the PVC consumption level in Pakistan, the company is running an exclusive market Development Programme. The sponsors of the project have chalked out a programme focussed on creating awareness for the maximum usage and applications of PVC, by disseminating relevant information through seminars and exhibitions.