A rapid industrial expansion
By Sultan Ahmed
PRIME MINISTER Shaukat Aziz has defined job creation and income generation as major objectives of his government. They are indeed imperative and urgent in a country with extensive unemployment where more than a fourth of the people live in absolute poverty.
He wants to achieve that through a rapid industrial expansion that is all-embracing and ranges from granite industries to silver jewellry making with textiles as the centrepiece. It is to cover large scale industry as well as large and medium enterprises in their full range.
A strategy is being drawn up for that purpose and it should be ready by October. It has taken a long time to formulate the strategy and let us hope the outcome will be worth the long wait. The strategy will promote the concept of “one village-one industry” which has been borrowed from Thailand where it has been a major success. The range of such industries is being expanded so that the talents and skills of each village can be promoted and full advantage taken of them.
The prime minister wants the ministry of industries and production to focus on the development of the small and medium enterprises, the engineering sector and on setting up of export processing zones. Port Qasim area is to have a textile city and an industrial park. He also wants the ministry to focus on horticulture, home appliances, sports goods and surgical goods and furniture-making. The export target for furniture last year was $22 million, but the performance fell short of the target by three million dollars.
The fact is that in the early years Pakistan was famous for its sports goods, surgical instruments and cutlery, but later there was more stress on the large-scale industry and these industries were neglected and suffered for want of adequate patronage, sufficient investment and modernisation. Now even Pakistanis prefer these items produced abroad and pay higher prices for them. So, the competitors of Pakistan in these areas improved their products and took over the markets.
The prime minister wants “one village-one industry” to specialise on a variety of items ranging from special textile, silver jewellry, ceramics and blue pottery depending on the talent available in each village and its tradition.
These industries can improve the non-farm income in the rural areas. But mere reliance on old talents and skills is not enough. There is need for greater research to develop new products; the workers in the rural areas are to be given training to acquire new skills and refine their talent. Having developed skills, the trained workers can become self-employed producers.
Meanwhile, the ministry of industries has come up with programmes to develop marble and granite industries, gems and jewellry making as well as to promote the diary industry. These industries can make a major contribution to the economy. The major focus should be on value addition. At a time when the exports are excessively dependent on imported inputs beginning with machinery, raw materials, energy and packaging materials, we have to make better and higher priced items even for domestic consumption.
Although domestic consumers prefer cheaper items, the fact remains that even such items are made by using imported raw materials. If such products have a brief life they will be discarded and we will have to import more and more raw materials to manufacture their substitutes. The best example is the water equipment made in Pakistan.
The ambitious plans for industrial expansion cannot be put into effect if adequate electric power is not available to run the industries, both small and large. Industrial production in Karachi has been disrupted in recent months by the failure of the KESC to ensure steady supply. The exports have suffered due to these setbacks. The government is now making extra efforts to increase the output of power, including production of more nuclear power as part of its Energy Security Plan 2005-2030.
It is also to have a few thermal units hired from the General Electric of the US and offer higher tax and other incentives to those who agree to produce nuclear power here under the supervision of the International Atomic Energy Commission, like the nuclear power plants at Chashma. The Chinese companies are interested in setting up such plants.
More and more funds are also being pledged by donors for the $6 billion national trade corridor which will take six years to complete. After the World Bank has committed $1.8 billion, the Asian development Bank has pledged dollar one billion. The NTC will provide transit facilities for trade with Central Asia, western China, Afghanistan and Iran. Initially it will connect Karachi-Gwadar and Kunjarab section which is estimated to cost $2.8 billion. It will develop the ports, rail and road systems and shipping facilities as well as the aviation system. Such infrastructural development is regarded essential to ensure a steady economic growth of 7-8 per cent.
Meanwhile, with Ramazan coming in a few weeks the usual apprehension that prices of essential goods particularly of those used more commonly in this month will rise. The government is arranging for easy availability through import of those items which are in short supply. The federal government has asked the provincial and local government to be very vigilant. Market committees are to be set up everywhere and price magistrates to be appointed with full powers.
The government is to ensure that the markets have enough supplies of items beginning with Atta. The Sindh government is releasing as much supplies of wheat as the flour mills need at Rs430 for 40 kilograms. Similarly adequate supply of sugar is to be ensured from the official stocks so that its price is brought down in Ramazan to around Rs30 from around Rs 40 at present.
The fact is that the shopkeepers procure enough stock well before the Ramazan begins and begin pushing up prices which reach their peak before eid. Thereafter, they do not really bring down prices to the pre-Ramazan level. The consumption of foodstuffs goes up in Ramazan by about 50 per cent.
Every year we are told that the government will not permit profiteering and exploitation of the faithful who fast. Initially there is some price check and a few arrests, and then they are let off after minor fines. Prices then go up and up as official intervention is seen ineffective. Even when there is no shortage and the supplies are adequate, the profiteers create a shortage through hoarding and manipulation.
Will it be any different this Ramazan? The prime minister wants to make a difference and so he is in touch with the businessmen to have the desired results. He is not relying on the sugar mill owners, also sitting in his cabinet, to bring down prices; instead he will import more and release the government stocks. He wants to succeed in this case as the general elections are due next year.
Meanwhile, the Utility stores are reported to be selling substandard Banaspati Ghee and oil repacked by it. The utility stores should not ruin their reputation. There were also reports that the Zakat fund continues to be misused. The auditor-general of Pakistan has reported irregularities to the extent of Rs165 million in the Zakat fund in his report to the National Assembly for 2004-05 . While more funds are being committed for poverty alleviation the funds collected from people in the name of Zakat should not be misused or wasted.

