The MMA government of the NWFP come up with the
first-ever industrial policy for the province after a span of over two
years in power. The formulation of policy is more than welcome at a
time when the province has cash-strapped coffers and the poverty level
is in the vicinity of 50 percent.
However, it is mainly the implementation of this
policy and most importantly its role in addressing the economic woes
of the inhabitants of the province that would be of any significance
notwithstanding its formulation.
Under the first-ever industrial policy announced by
Chief Minister, Akram Durrani, industries in the NWFP have been
exempted from property tax for five years. This concession is
applicable to both the existing and new industries. Since heavy
property tax has always been a disincentive for intending industrial
investors, the province of NWFP, a tax holiday might allure a handful
of investors to the industrial sector in the province. Because of the
ever-increasing rates of property in the NWFP, where majority of the
people, with a conservative and conventional mindset, having extra
money usually prefer to invest in real estate for safe investment
studded with lucrative returns.
Two other important features of the industrial
policy, apparently contradictory to the MMA government approach, have
been inducted in a bid to reconcile both the industrial workers and
The policy has exempted industries from labor
inspection for three years on one hand while it facilitates with a
provision for social employees security on the other hand. On the back
of the worst working conditions in NWFP with almost none
implementation of labor laws, the exemption from labor inspections not
only sounds nonsensical but might lead to a massive purge of
However, in the backdrop of World Trade
Organization (WTO) rules with effect from January, 2005, it is
seemingly likely that the major portion of industrial investment would
be from foreigners in future. The government should have made the
provisions regarding industrial workers very stringent in order to
protect their interests. Instead this step is akin to marginalize an
important factor of production in mostly the labor-intensive
industries of NWFP. The aloofness of the MMA government, whose
electorate mainly comprises lower and lower-middle class sections,
towards apathy of industrial laborers is quite evident as there is no
provision in the new policy of the minimum wage level.
Moreover, the so-called "Social Employees
Security" system that is included in the industrial policy is
reflective of the mediocre and 'uneconomic' approach of MMA economic
managers in the provincial set-up.
Under the system it has been made obligatory upon
the industrial owners to contribute 10,000 rupees per annum to workers
social security if it has one to 10 employees. This amount progresses
with same ratio if an industry employs more workers.
Though the NWFP industrial policy has earmarked 10
percent of the 81-megawatt electricity of the Malakand II Hydro Power
project for industrial establishments yet it is the price of the
electricity which really matters.
NWFP, on the back of its hydel resources was
producing the cheapest electricity in the world and have the potential
to attract industrial investment at a much greater level. However,
contrary to the expectations, the new policy does not offer any
rebates in the electricity charges to industrial consumers.
The provision that a special committee would
identify certain industries for rebates of 25 percent in electricity
charges for three years to be financed out of profits of Malakand II
Hydropower project seems insufficient to attract investment.
This might lead to favoritism as every
industrialist would be out there to get electricity rebates.
A sincere desire and revolutionary effort for
developing industries calls for almost 75 percent uniform electricity
rebates to all industry. It seems that the docile NWFP government is
shy from taking a firm stand vis-a-vis federal government by telling
the latter that it intends to provide cheaper electricity to
industrial consumers in the province.
The MMA government and its ministers have every now
and then been vowing that the province holds great potential for
industrial investment. But in the announced industrial policy there
has been no mentioning of the potential sectors for investment. Even
the recently held high-profile conference organized by the NWFP
government and addressed by the Prime Minister Shaukat Aziz and
Federal Minister for Privatization and Investment, Hafeez A. Sheikh,
could not come up with exact recommendations about potential sectors
for industrial investment. Only a handful of sectors like oil and gas
hydropower, mineral and tourism were identified while other sectors in
which the NWFP has already either greatly contributed or has more
industrial employment to the country's economy in particular textile,
tobacco, food and beverages were not mentioned. The MMA government has
not taken even any solid steps regarding the development of the
sectors identified in the conference.
This could be ascertain from the fact that the NWFP
government is not a party to any worthwhile oil and gas exploration
agreement with any foreign company, whereas, it has no capacity to
initiate explorations of its own. In case of hydropower the MMA
government could not get even an iota of the huge sums which the NWFP
has outstanding towards the centre rather it could not get the amount
of eight billion which it always boast of being pledged by the federal
government under its efforts. In fact, Durrani has recently said the
federal government is reneging on its promise. The mineral sector is
always the same. Even the province could not establish a viable gems
cutting and polishing industry despite of its capital, Peshawar, being
a hub of gems trade in the entire Asia. Whereas tourism could not be
promoted in an areas whose government ministers themselves have been
implementing Talibanization and involved in forced segregation of
sexes and vowing to ban 'unIslamic' entertainment.
The industrial policy also includes setting up of
three new industrial estates one each near Charsadda, Kohat and Bannu
which should be admired but it is not the matter of establishing more
industrial estates rather putting into gear the already stalled ones
like the Gadoon Amazai Industrial Estate in which only 76 industrial
units are working while 143 are closed.
Due to failure of successive provincial governments
and indifference of federal government rather its anti-development
policies regarding the NWFP as well as non-developmental approach and
conservative mindset of the people of NWFP industrialization of the
province could not be done. This could be gauged from these facts and
figures. Out of the 1,848 industrial units that were established from
(1947-2001) 738 closed down. Most of these units numbering 351 packed
up during 1995-2000. The industrial policy has no provision for
rehabilitation of such immense industrial capacity.
The industrial policy is also silent about
providing a capital base for industrialization in the province while
no mechanism for raising capital for industrialization like a stock
exchange in Peshawar is made part of the policy. Whereas, the MMA
economic managers by not pointing towards the ways and means of
technology development, a sine-qua-nom, for industrialization has
given a proof of their lack of economic insight.
The policy has also failed in mentioning how to
capitalize upon the stupendous reconstruction process going on in
Afghanistan in which the industries of the NWFP being the closest and
having great comparative advantage and location advantage could play
an instrumental role.
The NWFP along with FATA is considered as hub of
fundamentalists and Islamic radicalism in the West and a lawless
territory both in and outside the country. In the West a few people
could distinguish between the MMA and the Taliban regime. In such a
situation that is going to invest in the Frontier is anybody's guess.
The MMA knows it and perhaps this might have been a psychological
reason for its listlessness in the economic especially industrial
affairs of the province. The so-called first-ever industrial policy by
the MMA that is neither a complete nor an exhaustive document is the
epitome of this lack of interest. But the foreign or Western
governments must keep in mind that industrialization could be a
panacea or a counterforce whatever Talibanization or extremism that is
going on in the NWFP.