PESHAWAR: With little industrial and agricultural base, the North-West Frontier Province has not much at stake in post-2005 era, although the province may not go unaffected by the challenges the new WTO regime would pose.
Information gathered from official and business circles revealed that the provincial government was least prepared to meet the challenges that would be confronted by the provincial economy after January 1, 2005.
Except for a small 'WTO unit' set up in the agriculture department that too, is in its nascent stage there is no other significant initiative on the part of the provincial government.
The province, according to official documents, has around 1700 medium-size and small industrial units, and more than half of them are closed for quite some time because of unfavourable business climate.
"Successive governments failed to revive the industrial units that were declared sick long ago, hence, with so many non-functional units the WTO does not seem to cause dent to the industrial base of the province except for a couple of sub-sectors that are picking up," said an official of the industries department.
The WTO could pose major threat to pharmaceutical manufacturing sector that had attracted substantial amount of investment during the last few years because of some incentives offered by the Federal Government.
"Once low priced Indian medicines start finding their way in Pakistani market through legal channels under the free trade regime of WTO it would become difficult for the local products to bravely face the challenge," said a Peshawar-based representative of a federal public sector entity responsible for capacity building of the private sector.
However, owners of pharmaceutical units, when contacted, dispelled the impression saying that their products were much better in quality than the Indian and Iranian products which were still finding their way in Pakistani markets illegally. Mohammed Zulfiqar, coordinator, WTO unit, agriculture department, NWFP, said that the big task before the local manufacturers would be to maintain international quality standards failing with, he said, they would stand no chance even in their own local markets because of high quality foreign goods.
"Cost and quality would be of foremost importance once the WTO regime's next level gets effective," said Mr Zulfiqar.
Mohammed Tariq, head of the NWFP chapter of Small and Medium Enterprises Development Authority (Smeda), also expressed identical views saying that manufacturing units, failing to keep their costs at a reasonable level and maintain high standards, would be out of competition for ever.
Both of them said that apart from the threats emanating from the WTO regime, there were good things also, which could benefit the developing countries.
"Pakistan in general and the NWFP in particular can benefit from the industrial sector's those fields, which are based on natural resources like furniture, minerals and hydro power," said Mr Tariq.
"Basically, WTO is going to impact medium and large sized industrial units whereas in the case of NWFP majority of the manufacturing units consists of small concerns," said Mr Tariq, adding: " business activities at the side lines of the WTO agreement would go as usual."
Mr Zulfiqar said that the WTO agreement entailed regulatory protection for the member countries and it was only up to each of them to make best use of the rules.
"Free trade does not mean that states would become redundant and they would not be able to protect their manufacturing sector, there is plausible room to take care of one's economic interest by keeping within the WTO's framework," said Mr Zulfiqar.
WTO experts representing private sector organizations, however, doubted the federal as well as the provincial government's capability to make use of the regulatory cover enshrined under the WTO agreement.
"The public sector does not have the experts to utilize the WTO's rules to their advantage," said an official source. "It (WTO) is a tool, you want to take benefit of it or become a victim," said Mr Zulfiqar.
He appeared optimistic about the provincial agriculture sector's chances to get benefit of the situation. "We have already brought down the level of subsidies to our farming sector and now the developed countries like Germany would have to follow the suit, which would ultimately create opportunities for farmers belonging to developing countries," said Mr Zulfiqar.
Nonetheless, said certain other officials, the free trade agreement could cause irreparable loss to the agriculture and industrial sectors.
Giving example in support of their contention, one of the officials said that if the federal government did not provide protection to the sugar industry and allowed import of sugar in fulfilment of the free trade agreement then the manufacturers would certainly be at the receiving end.
"Now the choice would have to be made by the government either to protect the sugar industry and sugarcane growers or let the sugar be imported without much restrictions, which would benefit the end users as its price would eventually experience major slide," said the official.
Similar views were expressed by a senior official of the food department, NWFP, who, on the understanding of anonymity, said that farmers would stop cultivating wheat if they were not provided sufficient protection against the free import of atta under the World Trade Organization agreement.
"Under the WTO regime the owners of flour mills would have to take care of their interest on their own as the federal and provincial authorities would be left with little role, hence, there appears to be a big question mark to the effect that whether our millers are capable enough to cater for their businesses effectively," said the official, who himself is a farmer.
Official circles said that while the farmers and industrialists appeared to be with bleak future under the WTO regime because of poor preparedness on the part of the federal and provincial governments, the consumers were likely to be beneficiary of the growing competition.
"What else end users would like to have when sugar's price would come down from Rs 22 per kg to Rs13 to 15 per kg or atta's price come down from Rs15 per kg to any thing near to Rs10 per kg," said a senior official, adding that " that can happen if the federal government does not provide protection to the two manufacturing sectors."
