ISLAMABAD, Oct 30: The Asian Development Bank (ADB) has urged the government to develop a 'national strategic vision', reflecting the interests of all stakeholders including the private sector, government institutions
, employees' organizations and trade unions with a view to promote industrial competitiveness.
"The government needs to define short and long-term industrial goals and to start planning how to strengthen or create capabilities to achieve these goals. The vision should inform priorities for public expenditure," the bank further stated.
In its latest report 'Industrial Competitiveness, the Challenge for Pakistan', the ADB said the government should monitor the progress of national strategic vision by implementing its policies and programmes.
The government was also advised to set up an 'industrial competitive agency' to be headed by someone at a very senior political level to mount a strategy to cut across competing interests and coordinate the ministries concerned. "In the Pakistani context this might involve combining the work of the Export Promotion Bureau (EPB) and the Board of Investment (BoI)."
About allocating resources at various levels, the report said it has to be decided at the highest level that which generic areas - education, infrastructure, finance, science and technology - had to be addressed. "This needs a strategic vision of what the main engines of industrial competitiveness are going to be. At the sectoral and sub-sectoral levels, the government has to decide which activities should be supported for achieving long-term economic and technological growth."
The report said that in the light of international benchmarks, adequate government support is required to have a competitive strategy as part of the significant commitment in terms of public investment in relevant technical and general education, as well as strengthening of public research and development activities. "Some of these problems will require long-run, not short-run solutions," it added.
The report counted a number of weaknesses in the area of physical infrastructure, such as power. Any further measures to improve the investment climate whether reducing bureaucratic restrictions or ensuring continued macro stability, would also help in competitiveness terms.
"It is widely acknowledged that slow growth in private investment, particularly in large-scale manufacturing has been one of the key constraints on Pakistan's economic growth. Part of the explanation in the uncertain political scene, but more narrowly economic and institutional aspects of the general investment climate have also had a negative impact on investment decisions," the report asserted.
High cost and poorly functioning infrastructure, the report continued, could clearly impede the operation of enterprises which may be efficient in terms of mastery of their own production processes.
"There is an evidence that infrastructure, in particularly in the power sector, has been a key bottleneck. Problems with lack of reliable power supply are indicated by the relatively high proportion of power that firms in Pakistan estimate is a loss on average due to power outages. In addition, there can be lengthy waiting time for connecting the grid."
