THE expected tour of Prime Minister Shaukat Aziz to China during last week of September, followed by the visit of President Hu Jintao to Pakistan in November this year, will pave the way for opening new avenues of bilateral co-operation on wide-ranging issues.

China has extended financial, technical and industrial assistance for various sectors of economy. It helped to establish a sound capital goods industry, which is equipped with versatile production facilities and design and engineering capabilities.

A few of these monumental projects are Heavy Mechanical Complex, Heavy Foundry and Forge, Heavy Electrical Complex, Heavy Industries Taxila, Pak Aeronautical Complex and a number of thermal and nuclear power plants.

Of late, there has been increasingly Chinese investment in private sector too, particularly in auto industry.

A unique feature of the Chinese co-operation has been the transfer of technology and willingness to upgrade production machinery to suit local market conditions. As part of technology transfer programme, a large number of Pakistani engineers and technicians have been trained by the Chinese experts, in China as well as in Pakistan. The whole-hearted technology transfer, in contrast with the reservations of the western sources, has immensely helped Pakistan in achieving self-reliance in some sectors.

Pakistan can learn from China’s rich experience in further promoting its economic and industrial development. This is also considered desirable in the present situation when Pakistan’s trade deficit is worsening persistently.

Besides oil, major portion of foreign exchange is spent on the import of capital machinery, vehicles and other equipment, which has a share of almost 30 per cent in total import bill. The machinery group, second largest component of the import bill, consumed $5.918 billion in 2004-05 and $7.949 billion in 2005-06, the highest ever in a year.

Understandably, there is an urgent need for adopting measures for import substitution. The authorities can facilitate and encourage indigenous manufacturing of selected items of machinery in collaboration with the Chinese. There may be a number of areas for product diversification that can be jointly identified for the proposed cooperation, taking into consideration the classification of import of machinery and equipment by Pakistan during last few years and the competitive edge of the Chinese products.

According to the available statistics, Pakistan has been importing textile machinery, power generating machinery, electrical machinery, construction and mining machinery, agricultural machinery and other equipment, accessories and semi-finished goods.

Though textile industry maintains its ranking of the single largest manufacturing sector, unfortunately indigenous manufacturing of its machinery could not develop along with the growth of textile industry.

Resultantly, demand for textile machinery still is almost entirely met through global imports. The dedicated machinery installed at the Spinning Machinery Company at Lahore and Textile Machinery Company at Karachi are at present lying idle as the two industrial units stand privatised, which can be put to operation again, in private sector. Even, otherwise, local engineering industry has the requisite capacity and capability to produce various items of textile machinery, if foreign technology partners extend support in terms of design, engineering and quality assurance.

The products may include ring spinning frames, for which Chinese machines are already popular in the local market, and other equipment like shuttle-less looms, blow room equipment, draw frames, carding machines, dyeing and finishing machines etc for which the Chinese have acquired latest technology from the western sources.

In the first phase, CKD kits/components for these items may be imported and assembly can be done locally. Sometime back the Chinese were also interested to produce and market silk printing machinery in Pakistan. Indigenous manufacturing of textile machinery items could, preferably, be undertaken on a joint venture basis, which, besides other advantages, would allow continuous technological up-gradation in the area, so essentially needed by us.

Major funds have recently been allocated for the improvement of communications and other infrastructure, whereas various projects of highways, canals, dams and water reservoirs are planned. These activities require a wide range of earthmoving and construction machinery such as bulldozer, scraper, excavator, motor grader, mechanical shovel, mobile crane, dump truck and alike that are being imported at present.

Farm mechanisation can get boost if modern agricultural machinery, including farming vehicles and small tractors, is produced and made available locally. Development of mining, quarrying and material handling equipment is another feasible proposition as prospects for mechanised mining for upcoming projects are very promising, which would replace present deployment of manual labour allowed to work under poor working and living conditions.

Currently, the government’s major thrust is on developing energy sector for which a number of incentives have been extended lately. A variety of equipment for thermal and hydro power stations can be produced to meet the growing demand. Refurbishing and manufacturing of the large turbines and generators for power generation can be undertaken under a phased programme. Likewise, a broad range of equipment for grid stations needs to be produced domestically.

Pumps and compressors required for the energy sector can be manufactured in Pakistan. Oil drilling rig is in high demand for oil and gas exploration activities, which at present is being availed by domestic as well as international oil exploration companies operating in Pakistan primarily on rental basis.

Drilling rig, on-shore or offshore type, which normally is required to operate up to a depth of 10,000—12,000 meters, is very costly world over and, consequently, its rental charges are as exorbitant as $18,000 per day. Rigs for soil investigations and water well drilling are also needed. Production of oil drilling equipment however will require balancing/up-gradation of existing machinery and other facilities.

The proposed arrangement, if implemented in real earnest, will result in improving the growth of engineering goods that remains practically stagnant.