WIDESPREAD unemployment and rampant poverty have remained the two major worries of successive governments of the Punjab since early 1990s. Every government has attempted to tackle these two problems in its own way, and failed.

   As small and medium enterprises (SMEs) represent the principal source of job creation and poverty reduction in any economy, this sector has always remained the focus of each government’s efforts to attack these two issues. The same is the case with the present government, which has made every effort to woo private investment in the SME sector for the last couple of years or more.    In what official quarters describe as an attempt to facilitate investment in the industry in general and in the small and medium sector in particular, the government announced a major initiative in the Punjab Industrial Policy in 2003.    Labour inspections of industrial units were suspended under an executive order and social security collection system revamped in order to ‘minimize intervention by the government departments and agencies in the industrial activity’ in the province.

   Although the new policy measures took care of main concerns of the businessmen who had long been complaining against inspections by government agencies for obvious reasons, they miserably failed to produce the desired results and encourage industrialization as was envisaged by the authorities.

   It was at that point that the government realized that absence of adequate industrial infrastructure in the province was a major roadblock in the way of attracting private investments in the SME sector. Despite the fact that Punjab boasts of about 24 ‘planned’ small industrial estates or areas spread all across the province, it doesn’t have the kind of facilities to offer to industrialists that would make them invest their money in the industry.

   Apart from a few existing estates, most of them have failed to lure businessmen, and remain unoccupied since their establishment due to a variety of factors. Lack of modern infrastructure, which determines volume and pace of business and is a key to attracting investment, in these estates is said to be the main reason.

   Almost all of the estates are in a shambles; whatever has been provided by the official agencies responsible for their upkeep in the name of infrastructure is in extremely bad shape.

   All the businessmen and industrialists consulted by the Punjab government on the issue of lack of private investment in industry unanimously called for the provision of modern infrastructure for attracting investment.

“Without proper (physical) infrastructure, it is simply impossible to enhance competitiveness of the SMEs or any other industry; and if the industry isn’t competitive enough, it’s bound to get sick. How can you expect anyone to invest money in such conditions?,” a businessman wonders.

   However, the development of industrial estates and improvement of infrastructure in the existing ones requires huge funding. The successive governments, despite their good intentions, have found shortage of funds the major obstacle in the way of developing and   building industrial infrastructure in the province.

   In order to overcome shortage of funds, the present government came up with a new idea of fostering ‘public-private partnership’ for the development of industrial infrastructure in the province. It resulted in the setting up of a company, the Punjab Industrial Estates Development and Management Company (PIEDMC), as a ‘policy level intervention’ to facilitate and provide facilities that the businessmen require to set up new units.

   PIEDMC was assigned the task to build new industrial areas and estates specifically for the SME sector, and rehabilitate the old ones. The idea behind the establishment of the new company was to involve the private businessmen in the development as well as the management of the new and old industrial estates.

   Though the company is owned by the company, it is chaired by a businessman, Mohsin M Syed. Besides, some 19 members of its board have been taken from different sectors of the industry while five represent the provincial government.    Similarly, the new estates to be built by the company or to be rehabilitated by it would have Boards of Management (BoMs) manned by representatives of the businessmen having their units in those estates.

   At present, PIEDMC is assigned to build two new estates — one each in Lahore and Rahim Yar Khan, and the Phase-II of the estate in Multan besides rehabilitating the Kotlakhpat estates in Lahore and Phase-I of the Multan industrial estate.

   So far PIEDMC is described to be a ‘success’ story both by the officials and businessmen. The new industrial estate, being built on Raiwind Road near Lahore, is expected to be a model industrial estate having modern infrastructure facilities, including testing labs and water and effluent treatment plant to meet exporters’ quality and compliance needs as well as its power generation unit to provide uninterrupted power supply to the industries to be set up there.

   The estate has elicited a warm response from private investors who bought plots like hot cakes. The estate is being developed at a cost of Rs3.5 billion, with Rs1 billion given by the government as a loan to be returned in five years and Rs2.50 raised from the sale of the plots to industrialists.

   The estate, being developed on the pattern of similar areas in countries like Malaysia, Korea, etc, is expected to have over 600 units, attracting an investment of Rs30-60 billion and generating 60,000 direct jobs.

   In the same way, the proposed estate in Rahim Yar Khan will be having 50-75 units of agro-based industries. The funds for it are to be raised by the company from commercial banks at market rate.

   The success of PIEDMC has encouraged to set up another similar company on the same pattern — the Faisalabad Industrial Estates Development and Management Company — to build two new estates in Faisalabad.

   The ultimate objective behind the idea of the establishment of PIEDMC is to encourage t! he private sector to take up ‘development of industrial infrastructure in Punjab as commercial projects’.

   ‘ We want to bring home to the businessmen that the development of the infrastructure projects like the ones undertaken by PIEDMC also offer a good, profitable business proposition,’ officials of PIEDMC say.

   But they forget one crucial point while making this assertion: Though PIEDMC board has an overwhelming majority members from the private sector, it’s still a government owned entity. In addition to this fact, the kind of political backing and support it enjoys was never available even to other government agencies supposed be responsible for developing and maintaining the old estates in the province. ‘Would this kind of political backing also be available to the private sector, starting from acquisition of land for such projects to arrangement of utilities from Wapda, Wasa, and SNGPL, etc?,’ wonders a businessman who is also on the board of PIEDMC.