The Engineering Development Board (EDB) is planning to bring the “unrecognised” engineering sector into the fold of recognised one, to help boost its production and exports.

The new plan, a part of the Vision 2020, is being finalised and is likely to be put up before the federal cabinet for approval shortly.

Officials however complain that the government’s decision to strengthen the engineering sector, to boost its exports and ultimately turn it into a driver for economic growth is facing serious difficulties because of inadequate supply of utility services, especially electricity and gas. The EDB officials concede that their efforts to increase export of engineering goods from $93 million to $1 billion by end of June 30, 2007 has not succeeded. They blame the concerned ministries for not taking interest in providing timely utility services to the industry.

“How can you expect the engineering industry to grow when it does not get adequate power supply, gas and other utilities”, asked Mr Imtiaz Rastgar, Vice Chairman of the advisory committee of the ministry of industries, production and special initiatives.

While complaining that Wapda’s tariff is high, he said the people sitting there do not offer any support unless their “interests” are looked after properly. “This is causing huge problems to the investors and the engineering industry,” Mr Rastgar said who earlier served as EDB’s chief executive.

The sales tax refund, he said, is also a major problem. Businessmen often complain that unless they pay “facilitation fee” to CBR officials in the Central Board of Revenues (CBR), they do not get their refunds.

“ Unless these serious impediments are removed, the dream of enhancing the export of engineering goods will remain a dream,”, Rastgar believes.

Asked whether the export of engineering goods has declined or has remained static for the last few years, he said, the situation is not all that bad and that things are moving ahead, though very slowly.

He also criticised the industry for not coming up to the expectations despite having received all possible fiscal and non-fiscal incentives from successive governments, particularly in the last 10 years. “The irony is that they do not go for the value addition and product diversification which is extremely necessary for increasing the exports”, he said.

Citing an example, he said due to global warming, the US and other western countries are desperately looking for importing quality fans which, “we cannot provide despite having such a huge fan industry”. Pakistani fans, he said, do not come up to the international quality standards and hence our other competitors, including China and India, are benefiting from the situation.

Mr Rastgar said textile industry always serves as a primary/training industry in every country to be ultimately useful for other industries like watch-making, toy-making, electronic equipments, tools and dyes. “But our textile industry does not invest in other fields and continues to be supported by the government,” he said.

The cycle industry also is seeking Rs150-200 rebate on every cycle meant to be exported with a view to compete with India and China. But the government cannot offer this rebate and the industry continues to be uncompetitive in the global market. Similarly, home appliances industry and furniture industries are also looking for subsidy, he added.

The government offers maximum protection to the engineering industry by rationalising tariffs and zero rated import of raw materials. It also provides every opportunity to the businessmen to participate in various international fairs and helps them to move towards indigenisation.

The world’s largest economies have flourished after developing engineering industry which provide value-added, high quality products and work with innovative technologies.

Though the EBD has been revamped, it still is unable to extend all possible assistance to the business to get its genuine problems solved by different ministries. “We are failing because we do not get encouraging response from the concerned economic ministries as well as Wapda, two gas utilities and other service providers, an EDB officialcomplained. The businessmen are therefore shy to adequately invest in the engineering industry”, he said.

The EDB does not have any leverage with various concerned ministries. It initiated tariff adjustment exercise for the year 2006-07 through a Committee on Tariff Reconstructing which consists of 18 sub-committees including conveners from the private sector.

A separate committee on simplification on SROs, comprising industrialists, was set up to rationalise tariff vis-a-vis raw materials, intermediary and finished goods. It also proposed reduction in the input cost for the industry by proposing lower tariff on inputs, creating conducive environment for foreign direct investment (FDI) and local investment.

“But I must accept that we have not largely succeeded so far and there is a need for increased inter-action between all the stakeholders”, he said.