April 05, 2007	Thursday	Rabi-ul-Awwal 16, 1428

ISLAMABAD, April 4: The official planners have advised the government to improve Intellectual Property Rights (IPR) and dispute settlement mechanisms without which it would be difficult to attract sizable Foreign Direct Investment (FDI) in the country.

Official sources told Dawn on Wednesday that the government was asked to follow the example of China who invited FDI manifold by improving IPR practices and by establishing commercial courts for timely dispute resolution.

Sources said one of the main impediments blocking the signing of much-delayed Bilateral Investment Treaty (BIT) with the United States was the failure in improving intellectual property rights.

The government has already announced lucrative incentives for foreign investors. But the response of foreign investors remains lukewarm because of the concerns about business climate and security.

It is, therefore, essential to create a business friendly environment that is conducive for both domestic and foreign investment, particularly in the electronics sector, the planners further recommended.

The government was urged to help develop the electronics industry by attracting foreign investment in the field like many other South East Asian countries.

Electronics is a highly innovative field where new developments are taking place at a very fast pace. In today's globally competitive business environment, electronics firms are under relentless pressure to provide innovative products in shorter time cycles at reduced costs, and with improved quality.

The electronics industry is driven by demands for products that are smaller, lighter, cheaper, and better than the ones they replace. In this scenario, countries like Pakistan that have yet to make their mark in the field of electronics have to go a long way before an electronics industry that is capable of attaining international competitiveness can be developed.

With this background, the objectives of a development strategy for the electronics sector are to: i) build on the existing capabilities in electronics; ii) attract FDI in electronics sector to facilitate the transfer of technology; iii) strengthen the capability in assembly and testing of electronic components; iv) develop and enhance value-addition in the industry by moving into activities, such as research and design; v) support the development of indigenous supply chain; vi) raise the share of electronics in the output of the manufacturing sector from under three per cent at present to 10 per cent in 2010 and to 20 per cent in 2020.

It was also said that in order to achieve the broader objective of developing and sustaining an electronics sector that has the potential to emerge as one of the key drivers of economic growth, a coherent action plan is needed that assigns a leading role to the private sector while emphasising the role of the public sector as a facilitator.

The first step is to foster the existing firms in the electronics sector through supportive public policies. The private sector often complains about the inconsistency of government policies regarding the electronics industry.

While the government has taken steps to ensure policy consistency, the private sector remains skeptical. There is, therefore, a need to restore the confidence of the public sector in the continuity of public policies, the planners proposed.

The electronics activities in the country are mostly assembly and repair-oriented. A few manufacturers are making a narrow range of electronics gadgetry, such as security systems, payphones, electronic sign-hoards, stabilisers, uninterruptible power supplies, inverters, radio and cassette-players, and dish receivers etc.

The government, the official planners believed, can encourage these businesses by removing the customs duty on import of electronics components. There is no dual use of these components and their cheap import will enable the industry to increase its scale of operations.

Large-scale smuggling of electronics products has hindered the growth of domestic electronics industry. Urgent steps were proposed to curb this practice to provide a level playing field to domestic producers.

The global electronics production is controlled by multinationals that possess the necessary product and process technologies. Their innovative capabilities allow them to develop new electronics products at a very fast pace, so that older product lines are becoming obsolete faster than ever before.

Southeast Asian economies developed their electronics industries first by attracting foreign direct investment in low-cost assembly operations and then by developing their design and manufacturing capabilities through transfer of technology. If Pakistan is to develop its electronics industry, it must attract foreign direct investment in the electronics sector.

Electronics is a knowledge intensive industry. The Southeast Asian economies supported their electronics industries through massive investment in human resource development.

In Pakistan, there is an acute shortage of electronics graduate engineers and technicians, especially in emerging technologies. There are only a small number of qualified professionals in tile emerging areas of digital signal processing (DSP), optics digital communications (DC), microelectronics, and microwave. Also, the quality of the available manpower leaves much to be desired. To make the situation worse the production of graduate engineers and technicians is not demand driven, with the result that most employers find that fresh recruits require a long time before they become productive. To address these problems, the following actions were recommended by the official planners:

i) Electronics education should be started at the secondary level. Electronics and computers should be introduced as an integral subject, together with appropriate teaching kits for lab work;

ii) Facilitate and enhance interaction between educational institutions and industry. The report by the committee on electronics highlights various modes of collaboration between industry and academia.

These include: unrestricted research grants: student support through independent contracts, consulting tasks, co-operative projects with public funding; industry sponsored graduate fellowships: part-time degree programmes, student internships, and short-courses and workshops.

iii) Encourage educational institutions to place stronger emphasis on entrepreneurship, commercialisation, and marketing studies in disciplines that lead to electronic related careers.

iv) Grant autonomy to engineering universities and colleges to upgrade their syllabi in line with industry dynamics. Special focus should he placed on upgrading the course content in communications, computers and networking, industrial controls, semiconductor technology, circuit design and simulation.

v) Rather than having separate engineering universities and colleges, universities should be encouraged to set up these departments on their campuses. This will promote interaction of engineering students with basic sciences, including mathematics and physics etc.

vi) Support the educational institutions through special grants to initiate and/or strengthen their programmes in the advanced areas of electronics, such as microelectronics, optics, digital signal processing, and digital communications.