December 05, 2006	Tuesday	Ziqa'ad 13, 1427

ISLAMABAD, Dec 4: Japan International Cooperation Agency (Jica) has advised Pakistan to formulate an industrial development strategy, with a focus on promotion of high-value-added products.

In a comprehensive report on “Direction of industrial developments in Pakistan”, the Jica said there were two options for Pakistan either to put in place a framework of incentives for all groups of industry, and rely on the principle of free market economy, or to prioritise the importance of the industrial sectors to effectively utilise the limited resources of the country.

The report said the decision-makers in public as well as private sector should enter in an intensive discussion on these alternatives and decide which way to take to promote industrial development. “At least, they need to look into the experience of the East Asian countries and examine the reason for their rapid industrialisation,” the report said.

It said overseas Pakistanis sent a lot of foreign remittances to the country through formal banking systems, in the wake of strict check on transactions through illegal channels after the terrorist attacks on US in September 2001. In addition, many of the overseas Pakistanis remitted their money to the country, fearing their assets to be frozen abroad.

The report said these capital inflows unfortunately flown to stock markets and real estates, as there were inadequate investment opportunities existing in the domestic markets.

The Jica said it was possible to invite the capital inflows to industrial sector by offering profitable investment opportunities. “Since the domestic economy is flourishing and foreign direct investment is increasing, it is high time to formulate an industrial development strategy”.

It said the Pakistani manufacturing industry was internationally competitive in low-tech and generally low-value-added products like textile and food. The share of Pakistan in the world export was 0.2 per cent in 2005.

For the last two decades the expansion of Pakistan’s share in the world export remained modest. Low-tech products such as textile consist of 72.7pc, while the share of medium-and-high-tech exports remains only 8.15 per cent. On the other hand, the share of medium-and-high-tech exports is 54.7 per cent of the total in the world.

“If the manufacturing industry should grow by 10 per cent a year, it is imperative to promote more high-tech, high-valued manufacturing, which could expect increasing demand in the world market. One of the examples of such high-tech and high-valued products should be automobile,” the report said. According to the world export data of 2005, automobile has the largest share in the world export, and this share has increased since 1995.

Referring to the deletion programme, withdrawn in July 2006, that forced car assemblers to buy Pakistan made auto parts, the report said it was important to expose the automobile industry to international competition.