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New industrial vision seeks to enhance institutional capacity of SBP and SECP

The 'Industrial Vision' approved by the federal cabinet yesterday also called for further enhancing the institutional capacity of the State Bank of Pakistan and the Securities and Exchange Commission of Pakistan (SECP) to make them "effective regulators and supervisors of the financial system".

It further asked the government to automate the existing manual systems (banking operations) and developing local and wide area networks, connecting various departments and offices across the country.

"Pakistan must continue the reform process with particular emphasis on ensuring autonomy and competence of the 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 would be in the private hands.

A well-functioning financial system that efficiently channels funds and that can be invested for 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.

"While these measures have led to an improvement in the financial system, much more needs to be done to transform the financial sector into an efficient and market-driven financial system".

Boosting agriculture

The government was also urged to achieve a sustained growth rate of 5-6 per cent in agriculture which is imperative to ensure a rapid growth in national income, macroeconomic stability, improvement in distributive justice and 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.

Energy sector

It also believed that the goals of the industrial vision cannot be realised without an effective energy sector. The supply-demand analysis shows that 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.

Transport system

For safe and efficient transportation network a number of measures were also are 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 the revival of Karachi circular railway and introduction of light rail transit system in Lahore as part of measures to improve urban transportation.

An efficient and good quality transport system contributes to economic growth by lowering domestic production cost through timely delivery of raw materials, facilitating market integration, and helping to strengthen competition. 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 o roads, airlines, ports and shipping, and inland navigation can help in improvement of the efficiency of the sector.

The vision also carried out an in-depth study of the major sub-sectors of all the three productive sectors of the economy — agriculture, industry, and services — and within each sub-sector identified key issues and challenges, sets outs strategic objectives and targets, and spelld out a detailed plan to realise the vision.