ISLAMABAD, March 9: The Pakistan Ordnance Factories (POF) plans to manufacture items of commercial use to diversify its activities to achieve capacity utilization to offset budgetary constraints for defence requirement.

POF Chairman Maj-Gen Mohammad Javed told a news briefing here on Tuesday that the objective of the decision was to earn more to contribute positively to the defence budget to offset budgetary constraints.

POF's exports at about $40 million were highest about three years back mainly because of supplies to Sri Lanka but had come down to "very low and not worth mentioning" since then, he said.

Since defence budgets were going to be frozen or reduced in the future, he said, POF would be paying for itself and might even contribute to other defence needs through this move.

The POF chief, who joined the country's premier defence production organization recently, said the POF had a lot of spare terminal capacity which could be used for producing commercial items.

For example, he said, the POF could use its capacity for oxygen and gas cylinders' production which had a commercial use in the market. Defence production capacity, he further said, was developed for difficult times but this capacity had to be retained through commercial use so as to face any emergency situation in future.

The POF was fully geared to supply arms and ammunitions to the armed forces for all times to come according to their requirements, he said, but progress would also be made towards more and more value addition, through reverse engineering.

Asked whether there was any specific decision or government directive to freeze or reduce the defence budget, he replied in the negative, but said it was the general view that defence budget should not go beyond a certain limit "and it is a dividend of peace".

The POF chief said another view was that the development budget should get a share higher than the defence. When told that budget utilization even during the first six months of the current fiscal year was about 55 per cent against 35 per cent utilization of the development budget, he said the reason was that a major chunk of the defence budget was consumed by pays and allowances.

This, he added, could not be termed as an imbalance because the nation had to maintain a defensive parity and on the other hand improve the system of spending.

Responding to a question about defence collaboration with the Nato countries, Maj-Gen Javed said there was not much progress on that front because Nato was not forthcoming although there might be some contacts by individual countries.

Answering another question about collaboration with Turkey, he said that too did not go beyond discussions because both were producing similar products.

Pakistan's focus, he went on to say, would continue to be Gulf countries for defence exports and strengthen their existing facilities that could not be measured in terms of export quantity or earnings because it was a great diplomatic windfall.

"The United Arab Emirates, Saudi Arabia and Bahrain are few examples in this regard." POF's major exports, he said, related to arms and ammunitions, including tanks and artillery.

The POF chief was of the view that sale of arms and ammunitions was very difficult in the current situation because the world market was "depressed, mono polized and captured".