KARACHI, Feb 13: Mounting demands for food items, construction material and a host of other goods from Afghanistan is expected to improve the performance of large scale manufacturing in the second half of this fiscal year.

In the first half of fiscal 2001-02 many sub-sectors of large scale manufacturing had shown dismal performance.

Cooking oil and ghee makers say supply of these items to Kabul has been in full swing after the fall of Taliban in October. They hope that the supply would rise further once the government puts in place the procedure for offering a fixed rebate on exports to Afghanistan. The government had announced to offer this rebate on January 17.

“We have exported thousands of tons of food items including cooking oil and ghee to Afghanistan since October,” says Amjad Rashid—a leading cooking oil and ghee maker and international supplier of food items. “We hope that exports of food items would rise further in the coming months particularly if the procedure for getting duty rebate is announced immediately.”

Figures for food items export to Kabul in the first half of this fiscal year are not available but the fact that cooking oil industry has performed well during this period can be attributed to increased export of food items to Afghanistan.

According to Federal Bureau of Statistics, Pakistan produced more than 63,000 tons of cooking oil in July-December 2001 keeping its growth rate intact at 17 per cent.

Though production of vegetable ghee recorded a fall of 7.7 per cent at 385,000 tons in six months to December 2001 the country was still able to export thousands of tons of ghee to Afghanistan.

In the past, these and other food items used to be smuggled into land-locked country but since the induction of an interim government there smuggling has come to a halt. That is why an increase in exports to Afghanistan has not lowered local market supplies in cases where actual production of food items has fallen.

Businessmen say a complete network of Afghan-dominated trade centres in business cities of Pakistan including Karachi is making two-way trade easier. Such centres have established closer links between the traders of the two countries.

Pakistan has also started export of cement to Afghanistan and a good quantity had already been transported. This would surely boost cement production in Pakistan in the second half of the fiscal year and add a few basis points to overall growth of large scale manufacturing. In six months to December 2001 production of cement recorded a negative growth of 2.3 per cent at 4.7 million tons.

Since export of glass sheets to Afghanistan has also started last month this industry may also perform better in the second half of this fiscal year: In the first half of the fiscal year the growth of glass plate and glass sheet production was minus 15.2 per cent at 2.4 million square meters.

Metal industries come next on the list of the sub-sectors of large scale manufacturing that should improve their performance in the second half of the fiscal year as the possibility of export of metal manufactures to Kabul has brightened. In six months to December 2001 metal industries had recorded a negative growth of 4.2 per cent but the situation is going to improve with the USAID programme poised to start construction work in Kabul.

Pakistan Steel officials are also pinning their hopes on this.

The start of sugar exports to Afghanistan has also brightened chances for growth of this industry. In six months to December 2001 sugar industry posted zero per cent growth with production rising past 620,000 tons. But as sugarcane crushing has started in November the production is bound to rise.

Analysts say pharmaceuticals is yet another sub-sector of large scale manufacturing that is well-positioned to get maximum benefit from the ongoing world food and medicine supply programme in Afghanistan. Businessmen link a modest growth of one per cent in pharmaceutical production between July-December 2001 to higher supplies made to Afghanistan. In the comparable period of year 2000 this sub-sector of large scale manufacturing had recorded a negative growth of 1.4 per cent. Pharmaceuticals include tablets; syrup; injections; capsules and other items.

OTHER SECTORS: Apart from the industries that are positioned ideally to reap benefits from Afghanistan reconstruction and rehabilitation there are some other sectors too that can boost large scale manufacturing. Textiles is one of them. The textile sector was able to keep its growth rate at 3.2 per cent in July- December 2001 chasing closely the 3.3 per cent growth recorded in a year-ago period. The electronics sub-sector also recorded an impressive 3.9 per cent growth in July-December 2001 against a negative growth of 1.31 per cent a year ago.