July 31, 2006	Monday	Rajab 4, 1427

SOME of the critical bottlenecks which usually slow down economic growth or make it uneven, have now been identified by the top rulers and need to be eliminated.

The policy makers now realise that production surplus is not large enough to boost exports at the needed pace. So, the target for export has been set at $18.6 billion for current fiscal year.

The production has to increase all round, including in agriculture and industry and the IT sector too, to create a large trade surplus after meeting the average consumption of the 160 million people.

The production has to be of value-added products and not the usual low-priced goods manufactured by a developing economy. And it is not by any means easy to sustain and cover almost all the export items.

If the preference is not for exporting the value-added, we will be exporting our products at throw away prices, as we had done in the past and do partly now. Look at the price at which we sell our garments compared to the countries which have developed popular brands abroad. Even many of the garments from Bangladesh sell at a higher price than those from Pakistan.

In addition to the high quality of the goods, their marketing has to be done far better than what is being done now.

Industrial parks are being set up in Lahore, Karachi and Faisalabad and new trading estates with modern production units with a great deal of promise. Let us hope they rise up to the expectations and improve the quality of the exports and the export transactions.

It all begins with making the revamped and refurnished the Planning Commission (PC)- a think tank that will come up with development plans for the short term, medium-term and long-term periods ranging from five to 25 years as mentioned by Prime Minister Shaukat Aziz. The Commission’s ideas and plans will cover all the sectors of the economy, beginning with the value added in agriculture including cattle farming.

It is unfortunate that the Commission does not have any member from Sindh and the Frontier province. Let us hope this vacuum will be filled soon and the Commission made a more representative body.

If the PC‘s plans are taken seriously by the president, the prime minister and the cabinet, the ministries and divisions would take its advice seriously and try to act on it. What matters is the weight which the PC comes to have with the top rulers instead of the manner in which its plans were dealt with in the past.

The Commission’s first five year plan was not accepted by the top bureaucrats even as an official paper despite its positive merits. The officials did not want an external body of experts to tell them what to do in their field.

The second five year plan was a stunning success as President Ayub Khan backed it in full. The third plan fell a victim to the war in East Pakistan and its eventual independence.

What matters is not only the plans, but also their funding and completion in time. The World Bank and the Asian Development Bank have found that Pakistan’s capacity to execute large projects in time is limited. There are too many roadblocks hindering their progress, including political uncertainties.

So the World Bank has tried to increase the capacity building of the government. And that has been a slow process. That has instead to be speeded up and the builders stay faithful to the targeted completion dates.

Now President Musharraf wants development work in Sindh to be speeded up. He says the pace of development in the Punjab is fast. The same should happen in Sindh now; Sindh has too many political schisms that hinders speedy development. The Sindh assembly is an ineffective instrument to monitor the progress of development plans.

Two factors have stood in the way of adequate and fast development in Sindh. Inadequate power supply and frequent interruptions in power supply are a major deterrent. But now the KESC has promised an end to load shedding. We have to see how real that commitment is and how long that policy holds.

The other deterrent to rapid development of the country including Sindh is low real investment. The investment rate has been a poor 16 to 17 per cent of the GDP instead of the 20 per cent needed now and 25 per cent needed later. The 20 per cent investment was achieved for the first time last year and let us hope that will be sustained and increased over the years.

The real investment is usually not as large as on paper, so the input: output ratio has been distorted and the production levels are far below the optimum.

What matters urgently is not only increasing the over all production, but also the productivity all round. The productivity of every rupee invested, every worker employed and machinery used should increase to their maximum capacity and that will reduce the unit cost of production and export prices as well, as China has achieved spectacularly.

The minister for Industries and Production Jahangir Khan Tareen says that comprehensive efforts are being made to increase the exportable industrial production. He says the industrial parks and estates are being set up countrywide including FATA which will be equipped with the necessary facilities.

After the Lahore industrial park which is to be completed in two months comes into production, we may have an idea of how good such parks can be. An industrial estate for installation of small and modern industrial units is being set up in Korangi without a deadline for it to come into operation. It should be given a target date for completion and commencing production.

The marble industry which now exports $20 million worth of goods is to be expanded to raise its foreign exchange earnings to $500 million. But five years is a long period to achieve that. It should be done much quicker.

Mr Tareen says that marble industries are being set up in FATA and Balochistan. Modern mining machinery is to be introduced for that purpose. The Port Qasim area too is to have its own industrial park and other export facilities.

What matters is not only announcing such schemes but following that up until their completion and helping them out during the period of the teething troubles and then develop them further.

We have to be more innovative. Industries need educated, skilled and trained workers to produce optimum results. We have to train them to compete in the international market.