Growth performance of manufacturing sector remained pathetic,
particularly large-scale manufacturing shows almost zero growth during fiscal
year 1999-2000. Manufacturing Sector with 17 per cent contribution in the Gross
Domestic Product (GDP), plays a very crucial role for the development of
country. During last decade specially large scale manufacturing sector slowed to
an average of 4.7 per cent in the first half and further to 2.5 per cent in
second half of 1990s, according to the economic survey 1999-2000.
Statistics show that over all manufacturing sector has grown
by 1.6 per cent as against 4.7 per cent of the corresponding period of last
year. Our manufacturing sector comprises of large-scale manufacturing and small
scale manufacturing, statistics depicted zero per cent growth in large scale
manufacturing during July-March 1999-2000 which was 2.7 per cent in
corresponding period of last year which reflects an alarming situation.
Drastic decline in the level of sugar production by 24 per
cent was the major reason behind the stagnation in the growth of industrial
sector as sugar immensely contributes to the manufacturing sector. Statistics
show that sugar has been the driving factor regarding its impact on over all
sector for instance the large scale manufacturing grown by 7.4 per cent in
1997-98 but without sugar the growth was zero. Excluding sugar manufacturing
sector shows a growth of 6.4 per cent during first 9 months of current fiscal
Food, beverages and tobacco showed a substantial decline of
18.2 per cent with 24 per cent decline in sugar, 6.2 per cent in cooking oil,
8.4 per cent in blended tea and cigarettes shows decline of 11.2 per cent. 24
per cent decline in sugar, 6.2 per cent in cooking oil, 8.4 per cent in blended
tea and cigarette shows decline of 11.2 per cent. The other group is automobile
shows declining trend by 19.2 per cent jeeps and cars (23.5per cent), light
commercial vehicles(43.2per cent) and motor cycles show 3.8 per cent decline.
The performance of other major large scale organizations remained progressive
during last fiscal years and these are expected to be at rising level in future.
These include jute industry, fertilizer industry, vegetable ghee, cement and
public sector industries.
As we discussed earlier that sugar industry and automobile
sector remained in doldrums which adversely affected the manufacturing sector at
large. Sugar industry particularly in this concern, drastic decrease in sugar
production necessitated import of sugar this year. Recent statistics show that
rising trend in the export of sugar had damaged the local sugar mills
businesses. Finance Minister recently in a meeting of economic advisory board
expressed some concern over the fact that the major reason for the zero growth
in a manufacturing and industrial sector was decline in sugar production.
The role of small scale manufacturing sector can not be
overlooked in this regard because Small and Medium Enterprises (SMEs) play a
very crucial role for the development of the country and economy. In Pakistan,
it almost provides 80 per cent of employment in manufacturing sector and
generates one fourth of export earnings. Non-availability of credit caused
hampering this sector, government has recently announced micro-credit banks in
order to facilitate the small investors with easy availability of credit. Punjab
Small Industries Corp, Sindh Small Industries Corp, NWFP Small Industries
Development Board are involved in the promotion of SMEs.
The production value of all industrial units under control of
Ministry of Industries has shown an increase of 7 per cent as compared to
corresponding period of last year. The major contributors in this regard are
State Engineering Corp(SEC), Pakistan Automobile Corp(PACO), National Fertilizer
Corporation(NFC) which show an increase in production value. While Pakistan
Industrial Development Corporation (PIDC) showed 54 per cent and State Cement
Corporation of Pakistan(SCCP) showed 18 per cent decline in production value.
Excluding Pakistan Steel, net sales of state owned industrial units is expected
to increase by 12.7 per cent by the end of current fiscal year. During last year
only NFC, PACO and PERAC are expected to mark profit in this year while rest of
them is likely to incur loses.
Overall statistics of the fiscal year 1999-2000 shows that
public sector investment in industrial sector remained slow with a 0.6 per cent
growth as compared to private sector investment in large scale manufacturing
with sharp increase of 30.6 per cent. An overall increase of 20.4 per cent was
witnessed in industrial investment or capital formation in the manufacturing
On the other hand official resources also depict that during
first month of the current financial year sharp decline has been registered in
the export of manufactured goods. Negative trend was prevailing in most of the
value added item of exports. Even downward trend was prevailing in most of the
textile manufactures last month. Cotton yarn topped the list by reaching 19.69
per cent in July 2000 as compared 18.58 per cent in July 1999.
Manufacturing sector demands special consideration for its
growth and survival due to its significance for the development of economy and
capital formation. Specially government should announce comprehensive policy and
relief packages to sugar industry like textile sector to revive it and to
improve the over all growth performance of manufacturing sector, large-scale in
particular and small scale in general.