THE government of North West Frontier Province is conducting a survey of actual number of sick industrial units in the province with a view to taking measures for their early revival.

The NWFP Industries Department has formed two different committees with representation from the Small and Medium Enterprises Development Authority (SMEDA) and Industrial Association Peshawar (IAP), for undertaking the survey.

According to Ziaur Rehman, Secretary Industries, NWFP, the committees will ascertain the real causes of closure of industrial units and suggest remedies to make them functional. He says: “Industrial estates of the province have hundreds of non-functional units. Some are permanently closed, while some are those which can be revived through government facilitation.”

The committees will suggest steps for making these temporarily closed units operational. As a first step, the owners of these units would be encouraged and facilitated to make their units operational. Otherwise, their allotment would be canceled and plots re-allotted to genuine manufacturers/investors.

Industrial development and revival of sick units remained on top of the agenda of former MMA-led provincial government. Under the industrial policy 2005, all industries located in industrial estates have been exempted from property tax for five years. The incentives included a rebate of 25 per cent in electricity bills for a period of three years for units producing non-traditional items.

But despite these incentives, the industrial estates in NWFP are considered as a “graveyard” of industries, where almost 70 per cent of the industrial infrastructure is without any utility.

The federal and provincial governments, in the past, had surveyed these industrial estates and a number of committees and bodies were constituted for their revival, but by and large, they remained ineffective in achieving the desired goals.

The Frontier province has six main industrial areas - Hayatabad Industrial Estate, Gadoon Industrial Estate, Hattar Industrial Estate, Nowshera Industrial Estate, Export Processing Zone Risalpur and Kohat Industrial Estate - which should have been the driving engine of province’s industrial economy.

In 2006, the Sarhad Chamber of Commerce and Industry (SCCI) conducted a survey of the existing industrial estates which revealed that only 68 industrial units were operational while 537 projects were abandoned in the three main industrial areas of the NWFP—the Export Processing Zone (EPZ) Risalpur, Gadoon Amazai and Kohat Industrial Estates.

Established in 1999, EPZ Risalpur is spread over 92 acres, out of which 67.72 acres have been allotted for industrial plots. The zone has a total of 137 plots, out of which 50 are industrial, 87 for trading and ware housing. Of the 50 industrial plots, only 10 were allotted and the remaining 55.80 acres are lying unutilised.

At the moment, only three units are operational, while eight have been closed down owing to ban on export from the EPZ Risalpur via land route.

The SCCI’s findings about the Gadoon Amazai Industrial Estate are also not encouraging. The area is spread over 1116 acres, out of which 124 acres were allotted for infrastructure-related development projects. A total of 323 industrial plots were allotted for various industries, out of which at present only 62 units are operational, 149 closed and 29 have completely been shut down.

Similarly, the Kohat Industrial Estate is spread over 38.65 acres with a total of 148 industrial plots, out of which 145 have been allotted and three are vacant. Ironically, only three units are operational, six are sick units, while four are under construction. Official statistics show a dismal picture even at the main four industrial estates of NWFP -- Industrial Estate Hayatabad (Peshawar), Hattar, Gadoon and Nowshera.

In these industrial estates, out of 1,138 industrial units, only 439 are operational, 356 are closed, 238 are under construction and 105 are those for which plots had been allotted but construction is yet to be started. Industrialists attribute the dismal state of the industrial sector to irrational and inconsistent policies of the governments, which they believe had made billions worth investment dead.

Mr Nauman Wazir, President Industrialists Association, Peshawar, argues that the federal government policies towards NWFP remain discriminatory.

He believes that the investors intending to set up a factory in NWFP should have been given incentives for certain disadvantages in location which the government has ignored.

Citing the example of the Gadoon Industrial Estate, Mr Wazir says the government gave incentives to the investors for moving their business to this estate mainly to discourage poppy cultivation.

Some prominent industrial groups invested their money in this area, but all of a sudden the government withdrew all incentives and left it abandoned.

He believes that revival of such a big industrial estate needs drastic changes in industrial policy of the federal government, which at present seems reluctant in extending any incentives to the investors.

The Frontier province, he says, has the potential of producing cheap hydro-power that should be enough for the revival of existing sick units and attracting more investment to the industrial sector.

“The industrialists will need no additional incentives, if they are provided electricity at cheaper rate that can be generated through small hydro-power stations,” Mr Wazir maintains.

Apart from lack of incentives, in his views, poor industrial infrastructure, absence of skilled labour and above all the worsening law and order situation are the major impediments in the revival of sick units. Interestingly, the provincial government intend to set up two new estates, one at Bannu and the other at Jalozai (Nowshera).

Officials at the SDA say the authorities are receiving applications for allotment of plots in these industrial estates, but they are unable to entertain them because of paucity of plots, so the government has to go for new industrial estates.

However, critics say that most of the industrial estates have become an ideal market for real estate business, as people invest to get lucrative return without setting up a factory. The active involvement of the local land mafia in industrial estates is causing paucity of plots for the genuine industrialists, while jacking up the prices of land and increasing cost of doing business.

For example, official price of per acre plot at the Hayatabad Industrial Estate is Rs0.4 million, but the market rate ranges between Rs5 to Rs7 million. The government can cancel allotments of industrial plots, when the investors are not interested in setting up manufacturing units. But the authorities concerned are unable to do so because of political pressures and corruption.

Bank executives attribute flawed business plans of the investors for failure to run industries. In most cases, the owners’ secured banks loans more than their actual needs, which raised the financial burden and finally led to bankruptcy and closure of their factories.