ISLAMABAD, Aug 2: The newly-approved “Industrial Vision” urges the government to restructure and strengthen non-banking finance companies to make them an integral part of financial services industries.
The Vision made available to Dawn also calls for further enhancing the institutional capacity of the State Bank of Pakistan and the Securities and Exchange Commission of Pakistan (SECP) in becoming “effective regulators and supervisors of the financial system.”
It further urges the government to automate the existing manual systems (banking operations) and to develop local and wide area networks, connecting various departments and offices across the country.
“Pakistan must continue the reforms process, with particular emphasis on ensuring autonomy and competence of regulators and promoting professional management at all levels of decision-making in the financial institutions.”
It also asked the government to implement the privatisation process efficiently and prudently so that 90 per cent of the banking assets are in the private hands.
A well-functioning financial system that efficiently channels funds, that can be invested to most productive uses, is essential for industrial development and growth.
Recognising the importance of financial reforms in the process of industrial development and economic growth, a series of measures have been adopted in recent years with a view to removing various distortions in the financial system, minimising government's interference in the banking system and strengthening the prudential regulations.
The government was also urged to achieve a sustained growth rate of five to six per cent in agriculture which is imperative to ensure a rapid growth in national income, macroeconomic stability, improvement in distributive justice and a reduction in poverty.
“This can be realised by exploiting the achieved potential of all the sub-sectors of agriculture, diversifying agricultural production towards high value crops, and conserving land and water resources.
A higher level of investment in agricultural research and development (R&D) activities supported by favourable policy instruments, human resource development, and necessary physical and institutional infrastructure could prove a catalyst towards achieving enhanced productivity and the desired growth rate.
It also believed that the goals of the industrial vision cannot be realised without an effective energy sector. The supply-demand analysis shows that even modest economic growth, the current rate of change in supply will result in power shortages in Pakistan, adversely affecting the growth process.
Therefore, Pakistan needs to concentrate not only on the expansion of energy resources but also on improving efficiency of resource use.
For expansion of power supply it is important to increase the supply of power from traditional resources, like hydel, thermal and nuclear and from other sources, like building micro-mini hydel power units.
For safe and efficient transportation network, a number of measures were also proposed which included modernisation of the maintenance system, introduction of user charges, human resource development through training in transport management and maintenance standards and enhanced participation of the private sector in transport projects.
It recommended revival of Karachi circular railway, and introduction of light rail transit system in Lahore as part of measures to improve urban transportation.
Major issues in the transport sector are: inadequate physical capacity; inadequate maintenance system; poorly targeted investment priorities; operational and financial inefficiencies of the public investment; and lack of private sector participation.The rational allocation of inland freight traffic between rail and road network, privatisation of railway's operation in selected sections and inclusion of private sector in development of roads, airlines, ports and shipping, and inland navigation can help improve efficiency of the sector.
The Vision also carries out an in-depth analysis of major sub-sectors of all the three productive sectors of economy: agriculture, industry, and services and within each sub-sector identifies key issues and challenges, sets out strategic objectives and targets, and spells out a detailed plan to realise the vision.
Information technology (IT), it said, has assumed greater importance in the knowledge-based economy. The government has accorded high priority to the IT sector.
The main initiatives include the addition of facilities for computer education and training at affordable rates while ensuring quality of education, enhancement of internet infrastructure and provision of efficient internet services at reasonable rates, establishment of software technology parks and data networks, incentives for software exports and computer hardware manufacturing, enhance arrangements for marketing of software overseas, and the provision of a legal cover to electronic transactions enabling implementation of e-commerce.
The software industry in Pakistan has enormous potential to grow from its current size.
The worldwide IT services market is growing at the rate of eight per cent in real terms and expected to reach about $910 billion by 2010. Of this, about 54 per cent will consist of hardware maintenance, IT management and other services.
Strategies have been proposed under several focused areas, including IT education, e-governance, and targeted IT human resource development.
The Vision also believed that the role of construction and housing sector in economic growth of a country is quite significant.
In Pakistan, there is a huge gap in the supply and demand for housing: currently there is a shortage of 5.5 million units.
The Vision discusses the role of science and technology and research and development in quantitative and qualitative improvements in the construction and housing sector.
The recommendations include acquisition of technology for improving the quality of building material, opening of a department of architecture at the higher level of education, establishment of a centre for standardisation of construction material, research and development on improvement and commercialisation of high quality construction material, and provision of other facilities and infrastructure.
For increased availability of affordable housing for the poor, development of construction material, like ferro-cement for low-cost and mass housing is recommended. This is a low-cost technology, and commercial production of the material can be useful for achieving the objective of housing for all.