ISLAMABAD, June 13: The government has predicted multiple challenges in achieving the 2007-08 growth target of 10.9 per cent in manufacturing sector including the sector’s complete dependency on traditional low value added industries whose share in the world trade is continuously declining and the ever-increasing cost of doing business.
The government has already missed the 13pc growth target in the industrial sector in the outgoing fiscal year by achieving just 8.4pc.
The industrial growth has been one of the weakest sides of Pakistani economy as investment in upgrading technology is low and diversifying into emerging markets, products and processes, are either slow or nearly constant.
The government’s Annual Plan 2007-08 has identified a number of constraints and challenges which are likely to prove as the biggest hurdle in the way of achieving the industrial growth target set for next fiscal.
"An efficient, international quality supply chain, which is so essential for local industry to flourish, is missing partly due to insufficient scale of economies, and partly due to bundling of raw material, parts and modules by the multinationals in their assembly-oriented companies, which discourage a local vendor industry to flourish," states the Annual Plan.
It has identified major constraints in achieving the goal of rapid industrialisation. A serious constraint has been the low productivity level. Without the development of a widely-embedded skills base, competence and productivity, global trading challenges cannot be achieved.
Pakistan is faced with both skills shortage and skills gap in key modern technologies. This reduces optimum operation of plant and machinery. Inadequate and unreliable power supply, a major constraint, is getting worse and the main cause of poor competitive rating to the country’s industry. The country’s power deficit has already touched the 3,000-MW.
There is also saturation of capacity. Many key sub-sectors such as steel, automobiles, fertilisers, paper and paper board, chemicals etc., are facing saturation of capacity.
The issue of transport and communication infrastructure has been hovering for decades. The current road and rail network, according to the Annual Plan, is inadequate even for the immediate demands of the manufacturing sector.
Even the available infrastructure is very poorly maintained. Port congestion and port charges are high, adding the cost of doing business and lowering competitiveness.
The annual plan has also highlighted the certification and standards issue. While some progress has been made, many products manufactured in Pakistan still lack proper certification for quality and safety, which hinders the wider acceptance of such products both locally and globally.
The plan has pointed out that the challenge lying ahead of Pakistan is not to rediscover industrial policy, but to re-deploy it. The policy framework should be based upon advanced industrial economies, where focus is on the entire value chain.
The plan has admitted that the present urban industrial centres cannot accommodate the expected increase in industrial and manufacturing activities. Industrial corridors, estates and industrial parks are to be set up by provincial governments along with motorways, expressways and railways with full support of the federal government.
The Annual Plan has proposed acquisition of technology, promotion of technology-based small firms, reducing the cost of commercialisation of locally generated technology, reducing the cost of introducing new products and promotion of venture capital as key strategies to meet the objective rapid industrialisation.