November 21, 2006	Tuesday	Shawwal 28, 1427

KARACHI, Nov 20: Pakistan has been warned not to rely solely on the principle of free market economy for the promotion of industry, which may retard its growth in the age of global competition.

On the contrary it needs active role of the government in promoting specific groups of the industry by introducing policy measures. These observations have been made by Japan International Cooperation Agency (JICA) in their final report on direction of industrial development in Pakistan based on Vision-2030. It is surely an appropriate and valid approach to rely on the function of market economy to allocate economic resources, particularly after having bad experience from nationalisation of private establishments wherein government was deeply involved in the management of industrial sector.

However, JICA points out that this experience does not conclude that the government has no role in promoting specific groups of the industry by introducing policy measures.

In all of the East Asian countries, including Japan, which achieved rapid industrial development, the government has played an active role in promoting specific groups of industry with a market-friendly approach, JICA study maintained.

With globalisation the manufacturing industry in the world is going to be reorganised. If Pakistan takes the easy way to rely on the principle of the free trade and does nothing to promote the local industry, the JICA study apprehends that Pakistan might miss the bus and become an “orphan” in the middle of the global competition.

Instead, JICA suggested that Pakistan should adopt two strategies in order to enhance industrial development of the country, firstly promoting high value manufacturing and secondly ensuring effective implementation of industrial policy.These strategies have been based on the Japanese experiences in the post-war period as well as the experience of rapid industrialisation in Thailand and Malaysia after the mid 1980s.

In the international trend of globalisation, JICA believes Pakistan should take these two strategies to achieve the target of rapid economic growth anticipated in the Vision 2030, prepared by the Planning Commission of Pakistan.

JICA believes that Pakistan is somehow suitable to adopt these strategies from its comprehensive survey of local manufacturing industries.

Considering the intense competition with the Chinese products in the domestic market, and the experience of rapid industrialisation in the East Asian countries, JICA suggests that the integral type manufacturing should be an appropriate choice for Pakistan so that it could promote high-value manufacturing.

It further stated that Japan had an advantage in integral manufacturing, so their automobiles and motorbikes were much competitive internationally, while the US has an advantage in module manufacturing, so their personal computers have sweeping competitiveness in the world market.

In Pakistan, Japanese’s automobile firms have assembled cars and motorbikes for over 25 years. These assemblers have made significant efforts to develop human resources suitable for integral manufacturing. In one of the Japanese assemblers, for example, around 400 senior technical workers out of 2,000 had the opportunity of training at one of the Suzuki’s assembling plants in Japan to learn the root of integral manufacturing.

The JICA believes that the automobile industry can be a model case for the country to learn about the integral role manufacturing can play. The other sectors should possibly learn the fundamental nature of this integral manufacturing by examining the experience of the automobile industry.

One of such examples cited by JICA is about textile industry. The integral type manufacturing should considerably improve the international competitiveness of the Pakistani textile industry, by developing so-called ‘new synthetic fiber.’ The fiber is produced by adjusting the designing of yarn with the function of the fabrics.

The basic principle of the current industrial policy in Pakistan is being a “facilitator”, which might means that the government formulates the framework of incentives for all groups of industry so that each of them can equally benefit from the government policy, the report added.