December 02, 2006	Saturday	Ziqa'ad 10, 1427

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LAHORE, Dec 1: Japan International Cooperation Agency (JICA) experts have proposed promotion of highly-valued manufacturing and integral manufacturing and avoiding competition with Chinese products for achieving objectives of Vision 2030 endorsed by the National Economic Council in May, 2005.

The JICA gave their proposals during presentations at a seminar on `Towards a vision 2030: directions of industrial development in Pakistan’ held here on Friday with Beaconhouse University vice-chancellor Sartaj Aziz in the chair.

JICA consultant Hisaaki Mitsui said in his study report on direction of industrial development in Pakistan that the performance of the manufacturing sector had remained modest in comparison with neighbouring countries during rapid and continuous economic growth in 2000s because it had been concentrating on relatively low tech and low value-added products.

He said the JICA had conducted a survey of over 500 industrial establishments in six sectors, including textile clothing, food processing, automobile and parts, electronics, chemicals, housing and information technology from July to September this year.

CEOs, he said, were interviewed with reference to the linking of their industries with foreign markets and technology, learning through research and development and linkage with the local economy.

He said the textile industry had maximum linkage with foreign markets, and automobile and electronics industries were using licensed foreign technology. The chemical industry had imported maximum foreign equipment during the past two years. And electronics and chemical industries were learning through research and development, but the average number of staff employed for the purpose was negligible. Only electronics industry had benefited from public R&D institutions.

Mr Mitsui said the study had revealed that the textile and clothing industry was highly linked with foreign markets and had a large backward linkage with the agriculture sector, but made a little R&D effort.

Food processing industry was weakly linked with foreign markets and technology, while automobile and parts industry had very little export, but it was closely linked with foreign technology. Electronics sector was closely linked with foreign technology but was too small to be considered a leading industry.

Housing and chemical sectors had limited linkage with foreign markets and technology, and the IT sector was mostly service-oriented and too small in size to be examined.

He said that Pakistani manufacturers should concentrate on development of their own designs and band names and strengthening of distribution and marketing channels. Textile and automobile sectors could play leading roles in achieving targets of Vision 2030. Industry specific incentives were not recommended as these could be discriminative towards other industries.

In his research paper, Japan Institute of Development Economics assistant director Prof Hisaya Oda said the growth rate of the manufacturing sector had increased from 6.32 percent during 1971-2000 to 9.25 percent during 2000-2006. Its share in the GDP was 17.9 percent in 2005 and was proposed to be increased to 30 percent by 2030.

He said if agriculture and services sectors grew by 3.89 percent and 5.82 percent, respectively, the industrial sector needed to grow by an average 9.83 percent.

Pakistan’s export items were faced with tough competition. He said seven out of top 10 world export items were high or medium tech and comprised 50 percent of world export market. The research had revealed that foreign direct investment inflows were increasing in Pakistan but were mainly due to privatisation with limited investment in manufacturing sector.

He said China, India and Singapore were frontrunners in FDI performance but Pakistan was among the under-performance countries and ranked 128 in FDI potential ranking of 141 countries.

Pakistan Institute of Development Economics senior fellow Dr Akmal Hussain said the need for shift to hi-tech value-added industry and attracting direct foreign investment was being stressed for the past three decades but the objective was yet to be achieved. High GDP growth rate had hit the balance of payments because only imports had increased.

He said the country had a saving rate of 17 to 18 percent against 28 to 30 percent required for meeting seven percent annual GDP growth rate targeted in the National Economic Council plan.

The country, he said required to increase foreign direct investment to seven billion dollars annually by 2030 but had attracted only 450 million dollars last year. Malaysia had attracted 10 times FDI and India four times as compared to Pakistan.