THE LOCAL engineering industry is loosing its share in domestic market as the Ministry of Industries and Production and the Engineering Development Board have failed to pursuade the public sector organisations not to import foreign goods and equipment which are locally manufactured at competitve prices and comparable quality.

A number of developing countries including India have adequately protected their local industry even by defying the WTO Rules. However, the situation in Pakistan is worsening for public and private sector organisations based on import substitution. But due the reported bureaucratic connivance, public sector enterprises continue to import those foreign goods and equipment which are manufactured locally at the cost of national exchequer and unneccesary forex spending.

And in this backdrop, President Gen. Pervez Musharraf is said to have taken a very serious view of this practice and directed the authorities of the ministry of industries and Engineering Development Board to immediately intervene and make sure that local industry does not suffer any more.

Interestingly, a number of letters had been written by the Director General of the Engineering Development Board to various state corporations “not” to import those items which are being produced in Pakistan, but with no results.

Secretary Industries Dr. Akram Sheikh also looks helpless. Whenever, any complaint comes from any state enterprise to him, he instantly writes his remarks on the same paper, directing the concerned government agency to buy locally manufactured goods specially from the public sector companies but without achieving any thing.

The ministry of commerce had also been involved in the issue but here too no success has been achieved “Price Preference to be accorded only in cases of procurement by the government but in case of procurement by other public sector agencies, bidders tendering for engineering goods produced in Pakistan shall be accorded a price preference in rupees up to a specific percentage (in proportion to the value addition) of the lowest quoted landed cost of an item of foreign origin with similar specifications as mentioned in the tender”, says Mr. Kishwar Khan, Deputy Chief (WTO) of the ministry of commerce.

In his letter written to all state corporations, he mentions Statutory Notifications (S.R.O.) dated December 2001 which says, “the public sector agencies shall incorporate condition in tender documents for all major industrial and infrastructure that imports of turnkey plants or award of turnkey contracts to foreign manufacturers or contractors for such project shall “not” be allowed, and instead local manufacturers or contractors shall been encouraged to undertake EPC (Engineering, Procurement and Construction) contracts.

However, in cases where local capacity and expertise is not available to this extent, the foreign manufacturers to contractors shall be considered but required to associate fully the recognised local design, engineering and manufacturing organization. The public sector agency shall patronise the public sector manufacturers as consortium partners to foreign companies to ensure that dependence on imported plant and machinery reduced progressively from year to year. The local content in large projects shall be determined, on case to case basis, by the Engineering Development Board(EPB) on th pattern of industry-specific deletion programme”.

What has been the role of the Engineering Development Board is not all that satisfactory as it was not being given any importance by the state enterprises to buy locally manufactured goods in order to have import substitution and thus saving the precious foreign exchange.

The Board has been writing letters to the authorities of the state sector over the issue and one such letter written on July 13, 2002 by its Managing Director Javed Akhtar Paracha to the Chairman National Telecommunication Corporation which says ,”this is to inform you that government has always been encouraging the local industry to prepare for import substitution. In this regard from time to time various Directives, Notifications have been issued by the government to urge the Organisations under administrative control of the government to purchase their requirement through purchasing locally made goods”.

“In case there is only recognised manufacturer in the public sector of the required item or component of engineering goods, it shall be mandatory on the public sector agencies to award contract to the local manufacturers on negotiation basis. In case the terms of contracts are not mutually agreeable between the buyer and the seller, a decision shall be taken by the National Council for the Engineering and Industrial Coordination. M/S LTE Engineering is an established ONLY ONE public sector manufacturer of optical fibre cable who has supplied 3600 Km to PTCL with further order of 1350 Km being under process. You are requested to effect your requirements strictly in accordance with the conditions as spelled in SRO and specified above”, the director general said.

Earlier on May 9, 2002, Mr Piracha wrote a letter to Dr. Shahid K. Hak, Managing Director Pak-Arab Refinery Limited over the issue. “It has been brought to our notice that some of your contractors are considering import of certain items which being produced by recognized local manufacturers. Case in point pertains to Optic Fibre Cables, Steel Pipes and some other items being locally manufactured. This would hurt the local industry.

Copies of relevant government directives issued from time to time in this regard advising the local public/private organisations to encourage local manufacturing industry are enclosed for your kind perusal. Kindly advise your contractors not to resort to imports but instead obtain goods and services from the recognised locally manufactured, consultants and contractors. Needless to say the import of locally manufactured goods would attract statutory rates of duties”, Mr. Piracha said.

Another such letter was written to Chairman PTCL Akhtar Ahmad Bajwa by the director general of the Engineering Development Board on July 16 this year asking him not to import any thing which was being manufactured by the LTE Engineering with international specification and standards. “This is with reference to the tender notice appeared in a newspaper dated 4th and 5th May, 2002 bearing Nos. PUR.5-13/2002/1193, PUR.5-14/2002.1194 and PUR/5-15/2002/1195 for supply, installation, testing and commissioning of Optical Fibre Access Network lines and 2.5/10 GBIT/SEC SDH junction Transport Network in Rig Topology for Metropolitan Areas of Karachi, Lahore and Islamabad/ Rawalpindi on Turnkey basis.

Here again It was pointed out to the PTCL chairman that LTE Engineering is an established ONLY ONE public sector manufacturers of optical fibre to be contacted rather than giving tenders in newspapers to purchase the same products from other foreign companies or their local agents.

LTE Engineering is the only public sector organisation in which no government funding is involved and it is working on commercial lines. Although it is producing Optical Fibre of the international standards, some state sector organisations prefer to import the same allegedly for their own vested interest. Some of the Chinese companies which are in deep cut throat competition with LTE Engineering are often said to be involved in “obliging” state sector companies to get contracts.

Why the state sector of the country has been destroyed, it is not very difficult to understand. What happened to prestigious organisations like Heavy Mechanical Complex (HMC) is before us. HMC had been manufacturing cement and sugar plants for export purposes. However, their plants and other machinery could not get orders in the past because Ittifaq of Nawaz Sharif was to be benefited. There is always a lip service to protect the local industry but practically there is nothing happening even during the present government to promote organisation like LTE engineering and other private sector industries.