THE Chairman, Board of Investment (BOI), at a meeting with members of the Karachi Chamber of Commerce and Industry (KCCI) on 28th February, stated that the President General Pervez Musharraf has directed the provincial governments to set up at least two model industrial estates in each province by ensuring all infrastructure facilities to attract local and foreign investment.

The chairman, BOI, also said the provincial committees have been assigned the task to examine industry-related issues and devise market plans to gain some competitive edge in the world market. The above initiative is part of the efforts of the federal and the provincial governments for accelerating industrial activity in the country.

Parameters: Properly located and organized industrial estates are vital for the economic development of any region. Such estates add value by providing efficient services so essential for producing goods and services at a competitive cost. Factors of production are assembled therein for producing capital, and intermediate and consumer goods for markets, both local and abroad. The target of setting up of at least two industrial estates in each province is no small or an easy task. Each industrial estate is unique in the sense that it reflects the special characteristics of the surrounding areas. Therefore, it is expected that the model industrial estate in each province shall have a number of distinctive features.

However, for making industrial estate as a model there are certain common parameters that need to be fully provided by each province. In order to facilitate the provincial governments to undertake this challenging assignment, the main parameters of a model industrial estate are discussed below:

1: Organization for the ownership and operation of the industrial estate must be properly structured. It might be better if an independent board is formed for the purpose. The board to have financial independence must be authorized for development of all physical infrastructure in the area. In Pakistan generally, the government manages the industrial estates. In view of the overall privatization scenario it will be a better idea the administration of such industrial estates is handed over to independent boards with substantial stake of the private sector. This may, with concurrent allocation of reasonable financial resources, help improve the poor conditions prevailing in some of the existing industrial estates.

2: Location is a very important consideration for the citing of any industrial estate. Suitable location will help attract a number of important industries that can make its operation a success. Connectivity to main cities, markets and raw material sources; reliable infrastructure availability, safety from floods, etc. are factors that figure on the top for citing any industrial estate.

3: Industrial estate may spread over a fairly large area. Industries also need more area for any expansion in future. Therefore, most of industries would like to have bigger size plots than their present requirements. The needs of providers of various essential services should be taken care of. Also, there should be open spaces, such as playgrounds and parks.

4. The planning of an industrial estate is a crucial affair. This planning is like planning of a new city but more complex in certain respects. Depending upon the natural slope of the land area, different methods can be used to installing different industries. It may be better if large, medium and small industries are located in different sectors. In fact it will largely be the medium and small industries as a number of large industrial sectors have been declared inefficient by the international financial institutions. Each sector needs to be further divided on the basis of nature of the industry and the type of effluents generated.

Women are increasingly being employed as workers in a number of industries. It will be better if the related industrial units are located in the same clusters. Provision may be kept for community buildings in each sector. Many process industries build accommodation for the essential staff in mill’s compound. This practice may continue. Alternately, each industry may build housing units in separate enclosure meant for residential purposes. This approach might be preferred from the education point of view of the children. Collectively financed schools and health units can be easily developed for the purpose.

5. It may be advisable if the land area is acquired in one-go but then the development activities are undertaken in phases, as various needs begin emerging. This might be a better approach in situations where clientele is uncertain and financial resources limited.

6. Internal roads and sewerage system is among the most critical elements that distinguish any industrial estate from the rest. Wider roads facilitate movements of goods and services. As heavier truck will ply on these roads, sometimes carrying machinery and other times transporting raw materials or finished products, it is essential that roads are built strong for heavier loads. Better sewerage help keep clean the environment. If there is possibility of natural flow, it must be capitalized. The government must not compromise on the quality of these two essential elements. Both these facilities may be planned for meeting requirements of the next 25-50 years.

7. Environment/pollution control and effluent treatment plants are the critical elements for future trade and export. In case, industries are found violating prescribed norms, there is no question of securing any export orders. In the past, such violations were ignored but not in the time that is coming with the globalization. Industries located in a estate may be required to comply with the requirements otherwise punitive actions should follow including imposition of heavy fines and cancellation of license.

8. An estate should be connected with important cities, towns and the rural areas with roads links and railways, wherever feasible. Transportation options should be available for carrying of raw materials as well as the finished goods at competitive rates. There may be repair garages and parking lots for buses, trucks and trailers. Proper restaurants may be provided at appropriate places for catering meals and drinks at reasonable rates.

9. Availability of water, gas, electric power and telephones is essential for efficient working of any unit or office. Abundant quantity of potable water, regular 365-day availability gas, reliable power and good telephone links are taken for granted for any estate worth the name. In case, any of these essential services lapse even for day it will damage the reputation of the concerned estate. The cost of these facilities has to be reasonable otherwise local industry will not be able to compete fairly. Fall-back position for each utility service may be provided to cover emergencies. The provincial authorities should see to it that duty-draw back facilities are provided timely and on a fair basis.

10. Law and order is the element without which one cannot attract any investment, be it local or foreign. Safety of the property of the industrial units, the work-force and other functionaries in a estate must be jealously ensured and the exploitation of workers and extortions must be ruthlessly checked.

11. Residential colony with full amenities will have an added attraction for any industrial estate. Workers and officers may be provided accommodation in colonies developed jointly by industrial units and the estate. Facilities such markets, mosques, clinics, schools, recreation centres, etc. may be developed. Street lighting in newly-built colonies as well as industrial areas is a pre-requisite.

12. Attracting prospective industries for location in any estate is essential otherwise there will be no justification for the estate itself. The board shall have to decide on the type of industries suitable for location in a specified estate. Some industries have competitive advantage of location in certain areas. For example, fruit-processing and mineral-based industries will have better advantages in Balochistan. Competitive advantage of location and other criteria may be employed in deciding the industries that have the greater potential of success if located in the estate. In case the provincial and the federal government offer certain incentives for the area, it will give a boost to the estate. However, these incentives may last for the time announced originally, and not revoked after a year or so after the industrial units were cited here due to the incentives. The government has to establish and maintain its credibility.

13. One-window approach is called for granting approvals and the resolution of any problems. Time is money. An industrialist does not like loss of even a day in bureaucratic procedures. Procedure for allotment of land, receipt of payments, approval of building plans, connections for all utilities and services, etc. need to be streamlined in a way that an investor should be able to forecast as to when he is going to start his factory. Transparency, fairness and efficiency in the estate will work wonders for attracting local and foreign investors.

14. Government and utility offices and banks are the places to facilitate smooth operation of industrial units and marketing of the finished products. Other offices such as those of electric inspector, labour court, etc. should be right inside the estate. An estate may lease out these facilities to the concerned departments or to the concerned association of trade and industry.

Improvement: Each province has a number of small or large industrial estates and industrial areas . However conditions in these estates are not up to the mark, main reasons for which are lack of financial resources, mismanagement, lack of co-ordination, neglect, defective planning, easy and careless attitude, etc. As a result, industries and workers both suffer. The cost of production goes up and productivity goes down which also leaves a very poor impression of the estate with foreign buyers. Such an impression also discourages foreign investors as well as Pakistani expatriates who have their own plans for establishing industry. However the following measure, if taken, may help improve the situation:

1. Proper survey of the conditions in estates in each province, preferably through experienced consultants. The parameters listed in the earlier part of this paper can be used and supplemented by other relevant issues. Extensive interviews with the industry, management of each estate, bankers, government officers/engineers/technicians as well as workers can provide useful information for improving the existing conditions.

2. The development of model estates will take sometime. The country simply cannot wait that long for the promotion of trade and the attracting of foreign and Pakistani expatriates to relocate their industries in Pakistan. The existing estates can be improved rather quickly by allocating sufficient financial and human resources. The provincial and the federal government have to join hands in this important task. The federal government might also arrange loans and grants for the purpose.

CONCLUSION: The government should realize the importance of the proper industrial estates for the accelerated economic development of the country. Half-hearted measures have not helped in the past and are not going to take us out of the present stagnation. Estates have to be up-graded and fast. This will not be possible without substantial financial outlays coupled with policy decisions to set up properly constituted independent board to administer the affairs of all these industrial estates. All of us should take note that the setting up the industrial estates require huge financial resources coupled with modern planning, efficient administration and dedicated implementation capabilities. These resources must be gathered and invested in these projects. Also, industrial estates might be organised in such a way that once operational, these are financially self-sustaining for the times to come.