The development of engineering industry worldwide is characterised with an all out government support



Sep 02 - 08, 2002

The government has approved a 10-year "Engineering Vision" plan, envisaging $10 to 12 billion investment to increase the share of industrial and manufactured engineering goods by 25 and 30 per cent, respectively in GDP during this period.

This was approved on Wednesday, at a high-level meeting, with President Gen. Pervez Musharraf in the Chair. Minister for Industries, Production and Commerce Abdul Razzak Dawood, senior officials of Engineering Development Board (EDB) and SMEDA and private sector entrepreneurs attended the meeting. The vision envisages an increase in our exports earnings starting with $ 2 billion a year to 5/6 billion by 2010 from about 270 million dollars at present against the world market of about $ 6 trillion.

The development of engineering industry worldwide is characterised with an all out government support. In Pakistan this support has not so far been so visible if not absent. As a consequence our engineering industry remains far from achieving its true potential in the face of tersing imports of capital goods. Due to vested interest the country continues to have basically cotton based economy, which offers limited opportunities for future expansion and growth. For achieving major economic strides, it is now essential that our reliance is shifted to other high value added areas like engineering goods industry otherwise we would be left far behind in the 21st century world of science and technology.

Deficit financing, adverse balance of payment situation and inflation are the key factors at the macro level that are responsible for the economic disaster in Pakistan. At the micro level it is our attaching low priority to the development of the engineering industry and the adoption of negative attitude towards a Research and Development (R&D) based policy promote the transfer of technology and development of an indigenous industrial base that have not provided any chance to self-reliance. The net result has been the primary manufactures, low value addition and low level of technology.

With the advent of WTO the economies are getting integrated and only the most competitive and innovative shall survive. Keeping in view the above fact there is a dire need of the long run objective for competitive industry, which may require simultaneous implementation of the following three areas:

a) Leveraging Existing Industrial Strengths.
b) Creating a strong Intermediate Sector and Domestic Linkages.
c) Creating External Linkages through FDI.

Realizing the importance of long term planning the present government decided in the year 2000 to formulate a ten year "Engineering Vision 2010" to achieve desired economic growth and become "Asian Tiger" in the foreseeable future. This long term vision is based on export-led industrial strategy (to increase 5 to 6 billion dollars exports of Engineering Goods annually) through diversification and deepening of the resource-based and non-resource based industries. The emphasis will be on full integration of manufacturing operations through value chain to enhance industrial linkages and to increase productivity and competitiveness by 1) Global Orientation 2) Public/Private Sector Industry 3) Productivity Enhancement and Quality/ Standard 4) Industrial Database 5) Balanced Regional Industrialization.

During the last two years, however, very little has been achieved in terms of the objective of the vision except the preparation of the plan and its approval by the cabinet. Though the president has approved the engineering plan presented by the Ministry for Industries, the implementation procedure for this plan is yet to be finalised.

The "Engineering Vision" strategy, formulated under the auspices of the Ministry of Commerce and Industry by the Engineering Development Board, with the help of the Small and Medium Enterprises Development Authority (SMEDA) and the private engineering sector, is aimed at creating two million new jobs and increasing exports of engineering goods to $ 2 billion a year.

Speaking to industrialists from the engineering sector at a meeting in Islamabad after the meeting on Thursday, Commerce and Industries Minister Razzak Dawood said, "Building an economically strong Pakistan through an invigorated and integrated engineering industry is an essential requirement in today's world".

Dawood, who headed one of Pakistan's leading engineering companies before becoming a minister in the Musharraf government in 1999 said that successive governments had ignored the engineering industry for more than forty years, and that growth in this sector was consequently very low compared to that of other Asian countries.

He said the government has devised a strategy to build on the country's existing industrial base and progressively increase the industrial sector's share to 25 per cent of GDP and the share of engineering goods to 30 per cent of manufacturing over the next ten years.

He said this could only be done through a growth-led strategy of value-added quality production that was not restricted to the import substitution model or the export oriented limited development model. He hoped that the new strategy would help to boost engineering goods exports by $ 2 billion to $ 5 billion a year.

Dawood said, "We have been working for the last two years on a short-term export strategy, focusing on textiles, rice and leather exports. The Engineering Vision is part of our long-term strategy".