Pakistan industry thrives on pro-business policies

dubai - Sector is expected to grow at 7.7% during the ongoing fiscal year

Business in Pakistan is looking up as industries are driving economic growth.

The industrial sector of the country is expected to grow at 7.7 per cent during the ongoing fiscal year as compared to the growth of over 6.4 per cent during the fiscal year 2015-16. This projection is based on surveys and statistics collected by the ministries of finance and industries and the Planning Commission of Pakistan.

Fiscal year 2016-17 and fy-18 are the two years that will make or break pro-business Prime Minister Nawaz Sharif who will face national parliamentary elections in May 2018. He and his cabinet are doing their best to stay in power for a third five-year term beyond May 2018.

Some of the pro-business steps the government has taken over the last three years of its rule include the supply of cheaper bank credit and raising forex reserves to ensure lager imports of capital goods, machinery and key raw materials.

Sharif has also granted several tax incentives to domestic and foreign investors. These incentives were offered to sectors ranging from auto to telecom and IT. It led to the auto sector becoming the No 1 industry. There is also renewed investor interest and fresh FDI inflow into IT and telecom.

Energy supply
The government believes the industrial sector will grow on the back of better energy supply. New foreign- and domestic-financed energy projects coming on stream as well as new investment related to the $46 billion China Pakistan Economic Corridor will help drive industrial growth.

Sharif's efforts are aimed at improving the energy sector. "This is our government's No 1 priority," said Khawaja Mohammad Asif, Minister for Water and Power.

"We are doing our utmost to push the availability of energy, oil, natural gas and imported liquefied natural gas, including imports from Qatar, to the maximum. Our target is that no demand from industry, business and households should remain unfulfilled," said Shahid Khaqan Abbasi, Minister of Petroleum.

The government, aided by the private sector, plans to ensure growth of 12.5 per cent in the field of electricity generation, gas production and distribution.

Manufacturing, the soul of the industrial sector, is likely to record a 6.1 per cent growth. Large scale manufacturing is projected to grow 5.9 per cent. Additional efforts are being made to enlarge the spread, variety and to further improve the quality of products. In fact, businessmen and exporters already cite several examples of this being successfully undertaken.

The prime example is the fast-growing fashion industry and ready-to-wear dresses and apparel sector. Celebrity Pakistani fashion designers now enjoy good profits and are earning applause at fashion shows held in Dubai, other GCC countries, London and Paris.

Small manufacturing
Yet another fast-growing industry is small and household manufacturing that caters to a population enjoying rising personal incomes. It is expected to grow at an 8.2 per cent rate.

The mining and quarrying sector is projected to grow by 7.4 per cent. The construction and real estate sector is set to grow by 13.2 per cent.
Islamabad expects aggregate demand to stay stable, plus the normal growth on the basis of an increase in population and enhanced personal and family incomes. The aggregate demand will be maintained, provided remittances sent by overseas Pakistanis continue.

The overall documented Pakistani economy/GDP is worth $280 billion, but when the undocumented part is included, it amounts to more than $1 trillion, according to one source.

The State Bank of Pakistan, in its latest report on the state of the economy, said: "Acceleration in industrial growth from 4.8 per cent in fy-15 to 6.8 per cent in fy-16 is a positive sign. The growth was achieved despite sluggish global demand. But it will perform better in fy-17."

The writer is based in Islamabad. Views expressed by the author are his own and do not reflect the newspaper's policy.

• Pakistan