INDUSTRIAL POLICY IN PAKISTAN
By Dr. Khawaja Amjad Saeed
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 Pakistan.
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 linkages.
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.