WHAT most people know about Gujranwala is but only a small part of a bigger story. There is much more to the city, located on G.T. Road, than its ‘signature’ food and wrestlers.
It is a major manufacturing hub with more than half a million workers and produces a wide range of consumer durables as well as capital and intermediary goods for various large-scale industries and the power sector. These people work either from their homes and shops, or in small- to medium-sized factories.
Once focused mainly on the domestic market, the entrepreneurs from Punjab’s third largest industrial centre are now trying to expand their overseas presence into markets in Europe, Africa and the Middle East.
The city, according to Khawaja Khalid Hassan, president of the Gujranwala Chamber of Commerce and Industry (GCCI), contributes almost 9pc to the national (industrial and agricultural) output, and fetches export revenue of $450-550m a year.
‘The government listens only to large industrialists. It does not realise that our labour-intensive industries are being dragged down by its neglect of the SME sector’
According to a GCCI estimate, 5,000 small and medium enterprises and 16,000 cottage units, along with a few large factories, are located in the city
“The exports from this city are rapidly increasing. We send consumer goods like washing machines, fans, gas appliances, plastic furniture etc, as well as cookware, sanitary-ware, fittings and several other products to more than 24 European, African and Arab countries,” he says.
“Ours is a vibrant industrial economy; you name a product and I’ll take you where it is being manufactured, fabricated or assembled. Some products like viscose yarn are made only here in Gujranwala. And we are the leading manufacturers of products like washing machines,” says Khalid.
According to a GCCI estimate, 5,000 small and medium enterprises and 16,000 cottage units, along with a few large factories, are located in the city.
“A majority of our entrepreneurs are self-made and lack the required marketing skills,” says Amer Hassan.
“If supported by the government, they have the potential and access to skilled labour and raw materials to be able to expand rapidly to overseas markets,” he concludes.
Several manufacturers interviewed by Dawn complained that their competitiveness is constrained by bureaucratic red tape, corruption, inadequate industrial infrastructure, policy instability, access to financing and severe energy shortages. These also happen to be the main factors that make the country a less attractive destination for investment.
“These factors have adversely affected growth of industry in Gujranwala and increased our cost of doing business,” says Imtiaz Hussain, a manufacturer and exporter of sanitary-ware.
“The government listens only to large industrialists. It does not realise that our labour-intensive industries are being dragged down by its neglect of the SME sector.”
He points out that his production sanitary-ware units has dropped by almost 66pc and exports shrunk to just 10pc because of the gas shortage. “Since we are small in size and do not enjoy the political clout of the textile industry, we are totally ignored by the government and its agencies.”
Many also claim that the industries dependent on continuous gas supply are shifting to Khyber Pakhtunkhwa.
“You either have to invest heavily in expensive alternatives to electricity and gas and bear additional production costs, or relocate the units elsewhere,” points out a former GCCI official.
Khawaja Zarrar Kaleem, a former GCCI president, says the energy shortage and high electricity prices are keeping manufacturers in the city from expanding their production capacities.
“It is time the government realised the significance of the SME sector and started involving it in the policymaking process. If we are exporting our products to Europe and other places despite
the competition from China and elsewhere, it means we are meeting international quality standards. A little help from the government can push our exports,” he says.
He complains that the Trade Development Authority Pakistan (TDAP) does virtually nothing to help small- and medium-sized manufacturers find overseas markets for their products.
“It is more focussed on the same old export items like textiles and helps only existing exporters. If a manufacturer wants to export his product(s), he will get no help from TDAP. Likewise, the Small and Medium Enterprise Development Authority (Smeda) has not done anything to facilitate any industry.”
When the last elections took place and the pro-business Nawaz Sharif was elected prime minister, business confidence in Gujranwala also soared like the rest of the country.
But one and a half years after the inauguration of the government, many feel disappointed with its ‘poor economic performance’.
“The business confidence is dipping again. When this government took over, we thought it had a plan to fix the economy and solve our energy and other problems. Instead, our difficulties have increased and the cost of production has gone up 15-20pc in one year because of the decline in productivity due to the energy crunch,” admits Imtiaz, the sanitary-ware manufacturer.
“The more disturbing thing is the widening gap between the government and the SME sector, which has totally excluded small entrepreneurs from the policymaking process. Many problems can be addressed if the government somehow bridges this gap,” notes Zarrar, the former GCCI president.
Published in Dawn, Economic & Business, November 10th, 2014