ISLAMABAD, Aug 23: President Pervez Musharraf has approved the establishment of Exim Bank of Pakistan to offer state credit for exports of capital goods and made it mandatory to use at least 30 per cent indigenous plant and machinery in all energy sector projects.
Briefing newsmen about the 10-year Engineering Vision, Commerce Minister Abdul Razak Dawood said here on Friday that the extent of provision of funds for the Exim Bank and other related modalities would be finalized in consultation with the State Bank in the next few weeks.
A three-member ministerial committee comprising ministers of commerce, science and technology and petroleum is being constituted to provide recommendations for the specific steps required to be taken by the government to ensure the implementation of the Engineering Vision and growth strategy approved by the President.
Main thrust of the plan, he said, was to change the mindset of the whole government machinery to support procurement of engineering products and award of contracts to local companies.
The President, he said, had directed to complete details of the Exim bank and present before the federal cabinet for formal approval not later than March next year. Till such time, the central bank would provide sufficient credit for exports like Exim banks of any other country.
The minister said that the President would issue separate directives to ensure that all tenders would require local component of plant machinery and equipment to be at least 30 per cent specially for energy sector projects, including power, oil and gas.
The President also directed to earmark 2000 mw of power generation with progressive indigenization for local engineering industry. Trigger points to implement the decision for uniform capacity and technology based power plants would be finalized in consultation with Wapda and implemented through a presidential directive, he said.
As a matter of government policy, the President has directed all the stakeholders, including the relevant government ministries and departments and private sector industrialists, to renegotiate existing agreements with foreign partners to permit exports particularly those of tractors and cars from Pakistan.
The existing agreements do not allow export of Pakistani engineering goods being produced by local factories of foreign companies despite sufficient technology transfer and under capacity utilization.
The plan approved by the President, he said, envisaged building on the existing engineering base and progressively increase the share of industrial sector to 25 per cent and share of engineering goods to 30 per cent of manufacturing in 10 years.
The minister said that rationalization of tax and tariff regimes would be continued for another two years, although most
of the duties for import of finished and raw products had almost been equalized to provide level playing field to all stakeholders.
He said that an amount of Rs2.5 billion had been approved to set up 25 centres of common facility and support centres, each costing Rs100 million.
Under the Engineering Vision the government would also start schemes for employers both in the public and private sector through secured guarantees against gratuity and provident fund to the suppliers for leasing transport and domestic appliances to their employees.
He said that another Rs2 billion ($35 million) would also provided by the government out of the technology development fund of the Ministry of Science and Technology for allocation to the engineering sector on matching grant basis.
Besides that, the government would also make the SRO827 fully effective by ensuring that both the public and private sector procurement is done from the local engineering industry and strengthen Pakistan Standards Quality Control Authority (PSQCA) and Engineering Development Board (EDB).
He said that total investment required for the engineering sector over 10 years had been estimated to be around 10-12 billion dollars that would generate around 2 million employment and increase engineering exports to 10-12 per cent from existing 3 per cent. Under a low road scenario exports of engineering sector would cross $2 billion to $5 billion under a high road scenario.
It was petty, he said, that Pakistan banked only on agro- based exports that amounted to $6 billion out of $300 billion world textile exports while its engineering exports amounted to only $271 million out of a total $6 trillion world exports.
The minister said that the engineering vision was prepared on the basis of comprehensive studies on surgical goods, fans, autoparts, heaving engineering, ceramics, molds and dyes, steel, electrical capital goods, etc.