ISLAMABAD, Aug 12: The government has directed the economic ministries to formulate viable recommendations to revive private sector investment by further liberalising the ongoing policies.

Informed sources told Dawn on Saturday that President Gen Pervez Musharraf and Prime Minister Shaukat Aziz had directed the officials of the ministries of finance, commerce and the Central Board of Revenue (CBR) to get the higher prices of utilities reduced especially that of power and gas with a view to encourage sizable private investment in the country.

Both the leaders had also called for removing "a plethora of administrative barriers to investment such as corruption, red tape and higher cost of inputs".

The Planning Commission in one of its presentations given to the president and the prime minister recently had regretted that despite extending host of tax concessions and incentives offered during the last six years, the private sector remained shy and failed to make considerable investment.

The commission believed that a well-defined and coherent policy package was required for the strengthening of competitive edge of the private sector, which had to play its role as an engine of growth.

Also, the government needed to overcome its financial and technological constraints to achieve its long-term economic objectives, the commission said, stressing that the current low tax-to-GDP ratio should be improved substantially to overcome the scientific, technical and human resources constraints to raise the present per capita income of $780 to $3,000 in next 25 years.

Sources said that the officials of the Planning Commission wanted to have consistent inputs from all stakeholders to promote private sector investment.

Pakistan has to make important strategic choices to ensure sustainable growth in the manufacturing sector in a rapidly changing, and international competitive environment that requires massive structural changes rather than a marginal change, a shift in the production paradigm to technology and knowledge based industrialisation, with a focus on a quantitative and qualitative growth of an integrated and competitive industry in the private sector.

The commission also informed both the president and the prime minister that increasing the productivity was essential not only for economic growth but even to remain competitive in the world economy, and that exclusive reliance on factor accumulation would no longer suffice.

The manufacturing and industrial sector was suffering from various structural problems resulting in slow growth rate of output and exports, low level of investment, high concentration of the manufacturing industries, allocative technical inefficiencies, poor quality of products, low level of research and development activities, resulting into slow growth of productivity making the Pakistani products uncompetitive in the world market.

The traditional industries such as foods and textiles still account for an overwhelming share of the manufacturing output.

The commission also believed that there was a need to examine the incentives and policies needed for pioneering industries, whether that were new products, processes or technologies, so that the range of activities could be expanded. This should be clearly distinguished from incentives for Small and Medium Enterprises (SMEs) which relate to size rather than growth of specialisation.