THE total foreign direct investment during 2006--07 was estimated at aro-und $8.4 billion. Of this total, Sindh got something like $2.32 billion or 27 per cent, the Sindh Industries Minister, Mr Rauf Siddi-qui estimated recently.

Compare these figures with industrial investment in 2002-03, when Sindh's share was 57 per cent of Rs536 billion as Mr Tariq Ikram, former Chairman of Export Promotion Bureau, had informed members of the SITE Association of Industry.

Has Sindh lost appetite for the industrial investment over time? “Yes,” say many industrialists while attributing this trend to a host of factors. ``We are located in close proximity of two ports,'' Nisar Sheikhani, Chairman of SITE Association of Trade and Industry said and added “but we are being denied the location advantages”.

“We should get imported items of strategic interests like oil and petroleum products at landed cost,'' he observed and wondered as to how the government would justify taxing Karachi business by keeping a uniform price on oil while it discriminates when it comes to sharing the benefit of hydroelectric power. “Did not we pay from our taxes the costs of Tarbela, Mangla and Warsak dams and are we not contributing in many new water projects?'' he argued.

Sheikh Fazal Jalil, the Chairman of Korangi Association of Trade and Industry has one industrial unit in Lahore and one in Karachi. “I pay electric bill in Lahore at Rs5.33 a unit and in Karachi I pay Rs9.10- Rs9.60 for a unit'' he informed.

Industry in Karachi grew at a fast pace in early days because of its close proximity to ports. It suffered a setback in the decade of eighties because of shifting of government's focus to the north. Some improvement in terms of utilisation of idle capacities and some investment was seen when interest rate came down in the year 2000, lasting hardly for a few years.

Business complains of growing lawlessness in Karachi and for that matter in the whole of province, rising utility costs and perpetual shortages of water, electricity and gas, crumbling infrastructure and the expensive bank loans. It seems that all these factors are slowing down pace of industrial investment in Karachi and other parts of Sindh.

More than 10,000 big and small industrial units in and around Karachi are hard pressed because of such problems. The Sindh government is yet to make a comprehensive survey of industries in the province to find out how many of these are working at optimum or partial capacities and about the demand for water, gas, electricity and other infrastructure facilities that can be taken up at the provincial and federal levels.

During these conversations and meetings with the industrialists and the Sindh’s industries minister, two factors emerged conspicuously that have hampered the industrial growth in Karachi and other parts of the province.

Industrial land in Karachi and adjoining areas is hard to get and if it is available, it's price is prohibitively high. What is astonishing is the fact that the available land in second and third phases of SITE, North Karachi, Nooriabad is booked but most of it lies vacant for want of investment. The second factor is more than 100 per cent high cost of electricity is given by the KESC for industry in Karachi as compared to Wapda-fed areas.

“The government knows that industrial estates have become hub of real estate activities,'' Mr Rauf Siddiqui, responded to the observations made by many industrialists during their meetings with him. ``Speculative booking of industrial plots and a shamefully low non-utilisation fee on such booked plots encourage speculators to hold on the property for unlimited period,'' the minister remarked. He did indicate that, ``something might be done'' but did not elaborate as to what could be done to tackle the problem.

Business people say that an acre of industrial plot in Korangi is now priced at Rs100 million, in SITE Manghopir Rs60 million and anywhere from Rs30-50 million in other industrial zones in and around Karachi.

“A 500 square yards plot in Korangi is now worth Rs10 million'' Sheikh Fazal-e-Jalil, the Chairman of Korangi Association of Trade and Industry (KITE) informed.

“Availability of industrial land at affordable price is the most important and deciding factor in investment'', Mr Siraj Kassim Teli, a former president of the Chamber of commerce and Industry said while recalling his suggestion he made at a businessmen convention organised by Mr Rauf Siddiqui in May in Karachi.

The previous government in Sindh enforced a law according to which the industrial land was to be given to prospective investors at 25 per cent of the market price with a condition that the project would be taken up and completed within a stipulated time frame. Those who failed to comply with timeframe would lose their plots and their money will not be refunded.

Siraj was one of the two private sector members taken in Scrutiny Committee of Land Utilisation. In the light of his two years experience in that committee, he observes that “the need of the hour is to have a policy which does not have discretionary powers with any committee or government department'. Land allotment given by the Chief Minister's Investment Cell by the last government was scandalous. One of the beneficiaries who acquired a big piece of land to set up a `gold city' was arrested and now is in hiding.

Zubair Motiwala a former President of Karachi Chamber of Commerce and Industry and ex-Chairman of SITE Association of Trade and Industry too complains of the disparity in quality and cost of land available in Karachi as against that in Lahore and Multan.

The infrastructure facilities available to investors at Kot Lakhpat in Lahore, Multan, Sunder and Faisalabad are much better than in many places in Karachi and other places in the province.

With a virtual non-existent infrastructure, the cost of industrial land in Karachi is much higher. Even in the schemes that are to be launched, the price of land is higher and Zubair made a comparison of land cost at Rs25 million an acre in upcoming Textile City and only Rs4 million Sunder in Lahore.

In Karachi, the investors suffer high capital cost of project mainly because of prohibitively high land cost and the production cost mainly because of more than 100 per cent difference in electricity tariff of KESC and WAPDA.

The KESC was seeking a five year power purchase agreement with National Transmission and Distribution Company (NTDC) for a dedicated supply of 750 megawatt but apparently failed to get a positive response. Instead, the KESC is being given electric supply at marginal cost i.e Wapda gives KESC electric power from its most uneconomical plant and hence the difference in cost.

With reports that electric tariff is being revised in the coming days, the industrialists fear it may prove to be a proverbial last straw on the camel's back.