Pakistan's manufacturing sector needs massive structural changes

ISLAMABAD — Pakistan has to make important strategic choices to ensure sustainable growth in the manufacturing sector in a rapidly changing, and international competitive environment, says an official study.

By A Correspondent

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Published: Sun 8 Jul 2007, 8:50 AM

Last updated: Sat 4 Apr 2015, 10:16 PM

The study made available to this correspondent called for moving out of the low skills equilibrium which traps both individuals and employers in a low expectations and low productivity environment. A focused policy thrust, supported by adequate resource is required for raising the threshold levels of the technology and skills base which will result in better productivity and quality. This required massive structural changes rather than marginal change, a shift in a the production paradigm to technology and knowledge based industrialisation, with a focus on the quantitative and qualitative growth of an integrated and competitive industry in the private sector. The inefficiencies of import substitution must give way to an export led strategy, and to diversification away from traditional industries and services.

Generally, it is admitted in the official quarters that Pakistan's manufacturing and industrial sector is suffering from various structural problems that is causing slow growth of output and exports, low level of investment and high concentration of manufacturing industries.

And like previous practices, this time too the government is examining a number of proposals to provide certain relief to the industry. The Central Board of Revenue (CBR) is reported to have agreed to offer certain concessions to make the Pakistani industry competitive in the international world. Many of the concessions have already been given in the new budget announced on June 9, 2007.

Some of the problems being faced by the Pakistani industry have been identified to help improve the sector. In this regard it is said that technical inefficiencies and poor quality of products needed to be improved. The government wanted the industry to grow at a faster rate so that it could become competitive. For growth in exports various recommendations were also formulated which were being considered by the government. One of the factors that reportedly contributed in the low growth of exports was the competition being given by the Chinese and Indian products. "The government can offer fresh concessions and other possible fiscal and non fiscal incentives to help increase our exports. But the exporters will have to strive hard to remove their inefficiencies and improve their products to compete in the international market". an official said.

He said poor quality of products and the absence of proper research and development activities were resulting in slow growth rate of productivity, making the country's products uncompetitive in the international market. Diversification of products, he said, is another important issue which needs to be taken into account by the businessmen and the entrepreneurs.

A senior official of the Planning Commission said that issues concerning the weak performance of industry and low level of exports have been discussed during the last few important meetings.

He referred to Vision 2030 which according to him provide solutions to adequately help the industry. He said "The Case for industry" is chapter in the Vision that says that in a world of aggressive competition it is not enough to keep generating growth exclusively from factors accumulation. Empirically, between 20-25 per cent of growth has emanated from productivity gains in various countries.

The entire process for increasing productivity needs to be based upon the realisation that most people who actually do work are hardly educated and lack training. The objective is to promote higher value manufacturing while maintaining traditional edge in low technology and resource based industries. "For this to happen, we must not only make policies, but effectively implement them also. The wide range of activities and skills vailable, even when they are limited or circumscribed or scattered, lead us to believe that it is possible to achieve these objectives", he added.

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