LAHORE, Oct 22: The Punjab Industries Department which once used to play a key role in the establishment of industry in various parts of the province has become almost redundant, thanks to the vested interest and policies of those at the helm of affairs during the past two decades.

As things stand, the department is still there but devoid of any significant role. It has lost the role of regulator of investment that led to over-investment in certain sectors and under-investment in others. For example, 320 flour mills in the province are running at 50 per cent of their capacity and 39 sugar mills at 30 per cent.

It is not only the investment problem that led to crisis but induction of more agencies into the field, with same or over-lapping mandate, has created investment havoc. The industries department, the Small Business Corporation, the Small Industries, Punjab, and the SMEDA have almost identical functions creating confusion among investors.

For how long the government is prepared to let this confusion prevail and industry suffer is anybody’s guess. The only certainty in this otherwise uncertain situation is decline in role and respect of the industries department that used to all-pervasive harbinger of industrial development.

During the pre-deregulation period of 1985, the department used to regulate industry and industrialist at almost step of their business concerns — from pre-investment studies to credit lines to investment protection. But its fortunes took a nosedive with the advent of industrialist politicians on national horizon in the early eighties.

“The new brand of politicians hated any sort of system and it was even true for industrial regulations that were totally inflexible at that time. This made the department their natural target,” says an official of the department.

But Nawaz Sharif, the then provincial finance minister, had a personal stake in seeing the department disintegrate, he said. The department also had wing for the central purchase for all provincial departments — from CT scan mechanises to stationary. The Ittefaq House used to bid for the sale of road rollers. Since Ittefaq’s product was inferior to that of its competitor, the Heavy Mechanical Complex, Taxila, it lost successive bids. What drove the final proverbial nail in the coffin of the department was the bid that the Ittefaq House lost when Nawaz Sharif had taken oath of provincial minister. It proved too much for him, he said and added that within a week, secretary Mugeesuddin was made OSD and the purchasing authority was devolved to respective departments. From that day onwards, the department has seen its powers being increasingly chipped away and now it is completely stripped of any power and function that can contribute to industrial growth of the province, he said.

During the pre-1985 period, no industry could have been set up without a No-Objection Certificate (NOC) from the department. This was in addition to assessing import liabilities, fixing the credit line, raw material assessment and machinery balancing, modernization and replacement. This dominant role had its negative and positive effects on the industry. But, instead of refining the process, the government chose to dump the whole system, says an industrialist. There were complaints against the employees of highhandedness, red tapism and hampering growth of the industry. These grievances had a measure of justification but it kept the industrial growth directed and regulated, he said.

With these restriction gone, industry grew at a phenomenal pace but became directionless and every thing went hey wire. No one knew how much investment was needed and where, he said. This resulted in an investment confusion and at present the Punjab has more than 300 flour mills, 39 sugar mills and 90 ghee mills of whom 59 were working at 50 per cent of their capacity, he said. Industrial units were going sick with equally phenomenal pace now with which the investment was made. It put the national economy up side down and has hurt the banking sector like anything, he said.

Now the department’s role is limited to data collection, pre-investment studies and census of industries. All of them non-regulatory and devoid of any legal power. “The department sends around 5,000 data collection forms but receives back only 50 per cent of them,” says an employee of the data collection wing.

Industrialists tend to ignore this effort for two reasons; there is no legal protection for it, and different agencies — the Social Security Department, the Employees Oldage Benefit, the Labour Department, the Environment Protection Agency — collecting the same data for different purposes. Of course, the industrialist could not hire a man for filling these forms, he said.

As far as census of the industry is concerned, the last one did was in the mid-nineties. It is largely because of lack of manpower, says an official of the administrative wing of the department. No recruitment has been made for the last seven years but people did keep retiring and the department shrank to skeleton of what it used to be — out of sanctioned strength of 398 at the headquarters, only 200 are left. “One can hardly expect miracle in such an uncertain atmosphere,” he said.

The devolution plan has dealt another blow to the already dilapidated industries department. All its divisional headquarters have been converted into district headquarters and the budget directly sent to the district governments. Unfortunately, there are many districts where no industrial district officer (IDO) was required but the department had to open office for the sake of provincial presence. It opened around 16 new offices even in districts like Mianwali, Leiah, Lodhran, Rajanpur, Khanewal, Jhang, Pakpattan, Vehari, Bahawalnagar and Muzaffargarh where industry is almost negligible. One wonders about the logic of carrying out this exercise when the parent department has no role to play. But it reduced the strength of headquarters and hampered the whatever little work was being done there.

It is not only weakening legal powers that led to decline of the departmental role but an increasing invasion from other departments in its area of work has also hurt it. Now, the Punjab Small Industries is doing the same job with additional attraction of a credit line for small industries. Small Business Corporation is another example and the SMEDA still another. These agencies are involved in the same job with no one knowing where the fine line of their jurisdiction falls. The Water and Power Development Authority (WAPDA) gives industrial connections without checking with department and so does the Sui Northern Gas. No one really knows who is supposed to give the location clearance for the new industry — a big factor in directing the investment. Municipal committees and other agencies sometimes give clearance even for prohibited areas and once the unit is installed, it is regulated on the plea that investment is already made. All this left the industries department look like what it should not be in any country striving for industrial growth.

About the ways of reviving the fortunes of the department, the officials think that the government would soon realize the importance of the department in directing and safeguarding the national investment. More sick units and drying investment will convince it about the utility of the department. The government should either wind up the department or make full and proper use of it.

One way of doing the same is to end overlapping in different departments and let the parent department, industries in this case, handle all matters related to industrial growth. The government should continuously monitor the activities and keep refining them instead of throwing the baby out with tub water, says an employee of the department.

“All facilities to the industrialists can be provided at one place in the department and promote investment friendly atmosphere,” he said.