KARACHI, Nov 28: Industries and Production Minister Jehangir Tareen is convening a meeting of leaders of various sectors of the industry, officials and independent experts to find out the causes of slump in the growth of industrial production. The industrial production growth rate came down to 10.2 per cent in 2004-05 from 12 per cent in 2003-04 and showed a declining trend during the first two months of the current fiscal year.

The minister attributes a phenomenal expansion in the industrial production base as one of the key factors to the slow growth rate and adds that there are other factors which need to be probed, identified, quantified and then addressed.

The two-day first Pakistan industry conference scheduled for Friday and Saturday (Dec 2-3) in Karachi will also serve an occasion for stocktaking as the theme of the conference is how to sustain the industrial growth momentum.

A number of federal ministers, top bureaucrats, leading corporate leaders and captains of the industry are participating in working sessions of the conference to identify causes and work out a short- to long-term strategy for sustaining the growth rate.

Leaders of the industry speak of the problems in their operations arising from rising interest rates and inflation. “It is raising our production cost and adding to our inventory because of a reduction in market demand,” leader of an industrial association explained and added that the industry had now come under the impact of a double-edged sword.

Interest rates were more than double in the last six month which has severely strained the industry. The industry is already groaning under the impact of rising fuel and transportation cost.

Banks are also being blamed for focussing their attention again on the speculative trading in stock markets where the index has already crossed 9,000 points and may touch 10,000 points as was the case in March this year.

The Oct 8 earthquake has hit hard the construction industry which showed an impressive growth in the 2004-05. The exodus of labour force from Karachi to their homes in Kashmir and Mansehra and Balakot has brought a virtual lull in construction activities.

Constructors and developers fear a delay in return of workers. “They will now be engaged in the construction of their devastated houses and rehabilitation of family members who escaped the wrath of earthquake,” a leading developer said.

More than five million people are said to have been affected by the earthquake and an annual loss of Rs60 billion on incomes of labour in Mansehra and Kashmir areas is estimated. This has obviously brought a slump in the demand for industrial products, leading to piling up of inventory.

A detailed study and deep analysis of the slow growth in industrial production has become all the more necessary after having seen an investment of more than $10 billion in machines and tools imported in the last three years. Textile machinery and equipment worth over $2 billion was imported in the last three years. More than $750 million worth of electric generators, $600 million worth of office machines and equipment, $400 million construction and mining equipment and about $110 million worth of agriculture machinery and equipment were imported.

All this money -— about Rs600 billion in Pakistani currency -— went into creating new capacities and improving production techniques and is expected to generate jobs, show growth in production and bring more money from the market rather than getting up piled in the factory inventory and contribute to the overall development.

Media reported a sharp fall in the growth rate of production virtually across the board in the last two months — July and August. Affected by this slowdown are textiles, food and beverages, automobile, metal industries, fertilizer and others.