By Dr. Khawaja Amjad
Apr 17 - 23, 2000
The Government of Pakistan is in the process of developing and
releasing Industrial Policy. Popular demand is that it should not only be a comprehensive
one but should also be based on long-term perspective. These twin challenges are of vital
nature and are crucial for laying solid foundations for the economic development of
Ten strategic guidelines
While we wish the present Government the best of luck, we offer the
following suggestions for a positive response by the Government in terms of our input:
Mission Statement: The Government must ask the Ministry of
Industries to release Mission Statement relating to Industrial Policy.
Draft of Industrial Policy: The draft of proposed Industrial
Policy should be released and publicly discussed by stakeholders. The input should be
collected and then reflected into a national consensus before implementing the same.
Industrial Development Growth Targets:
Targets for a period of 3
to 5 years should be set in respect of growth of industrial sector. These targets should
be properly monitored for ensuring proper implementation.
Industrial Sectors: A vital question is in respect of nature and
types of industrial units to be established. While the law of demand and supply determines
the establishment of industrial enterprises, many keep inquiring about the directions to
which industrial units should be established. Considering backward and forward linkages,
import substitution and export potential, our recommended package of sectors in which
industrial units should be set up are suggested below:
a. Light Engineering
c. Leather goods
e. Meat Processing
f. Dairy Industries
g. Marble Processing
h. Fruits and Vegetables
Foreign Investment: Direct Foreign Investment (DFI) has served
as an important driver for growth of economic development all over the world and specially
in East Asia. While congenial environment is the crying need, we ought to try
country-niche to attract DFI. Every previous government in the last ten years has been
publicly announcing an annual target of US $ 2 billion for the attracting foreign
investment. However, our research reveals that annual average for the last nine years was
US $ 485 million. Foreign investors remained shy due to several reasons including lack of
proper law and order, discontinuity of concessions/rebates, non-availability of long-term
policy etc. The present Government has adopted the policy of China niche in DFI. China
Continental, Inc. announced on January 31, 2000, that they intends to invest US $ 1
billion in Pakistan. The scope of the project of setting up a fully integrated venture is
expected to include the following:
a) Establishing a modern dairy farm with a large
capacity to house livestock.
b) A strong bio-engineering team to carry out genetic
research, breeding and herd management of superior livestock.
c) Development of farming systems through
agro-engineering and the genetic propagation of superior livestock and its ancillary
products to assist other farms.
d) Introducing the most advanced technologies in dairy
processing, packaging, storage and distribution facilities by acting as consultants in
setting up dairy processing plants to convert the raw products into higher-value-added
products including high quality milk powder, milk, cheese and cream.
e) Modern facilities and technologies which will
enable the processors to handle large processors to handle large volumes of dairy products
in modern and highly automated factories.
f) With the local governments constructing dairy
facilities in the international airport and harbour to ensure the proper storage and
timely distribution of the dairy products.
g) The infrastructure projects may also include the
construction of toll roads and domestic airports, which will link cities, major towns,
international airports and harbours within Pakistan.
Small & Medium Enterprises (SMEs):
SMEs have played a
productive role in promoting employment, accelerating exports, ensuring sustainability in
growth, adding variety to industrial goods composition and paving the way for social
stability. These must be given proper attention and credit allocation must be done on
mandatory basis. This will ensure poverty alleviation and will narrow the gap between
haves and have-nots.
Micro Credit: Micro enterprises growth has been considered as
vital for accelerated economic development in the world. These have made productive
contributions and deserve full support for their development. It is high time that due and
appropriate attention is given to this crucial area and banks and development finance
institutions should play their positive and constructive role of extending micro credit.
The Grameen Bank experience of Bangladesh has earned a high respect and has been
instrumental in associating 2.3 million persons with overwhelming majority of women in
socio-economic development of Bangladesh and with positive results in poverty alleviation
efforts. Several countries have replicated this experiment and we need to share this
successful experience in Pakistan.
Sick Industrial Units: The Government has taken the right step
to establish an institution to carefully study and then tackle the sick industrial units
numbering over 4500 in Pakistan. As against casual and personalised approach of the past,
this is the right direction for a confident and practical solution to the problems facing
sick units. A proper Chairman with credible experience and excellent insight into sick
units has been nominated and steps may now be initiated in the following directions:
a) Injection of proper funds for working capita needs.
b) Change of management.
d) Association of management consultants for remedial
measures to ensure turnaround.
Privatization: The process of privatization should be
transparently undertaken to off-load public enterprises and transfer these to private
sector. Priority list should be prepared and Privatization Commission should be encouraged
to initiate accelerated efforts to privatize the state owned enterprises. The Government
must redefine their role and concentrate on strengthening law and order and become
facilitator for business growth.
EPZs: In each divisional headquarters of each province, Export
Process Zone should be set up with freedom to operate and with no interference from
Government functionaries. Pakistani expatriates be motivated to invest in EPZs and pave
the way for export led growth in Pakistan.
There is a need to give a serious thought to developing a strong and
attractive industrial policy for Pakistan with the objective of accelerating industrial
growth which can have the following advantages:
1. Strengthen backward linkages.
2. Translate the benefits generated from forward
The author is Dean, Executive Programs, Punjab College of Business
Administration and Chairman, Seminar and Conference Committee of the Institute of Cost
& Management Accountants of Pakistan.