Need for a long-term industrial strategy
In spite of the eight five-year plans and two major perspective plans, the government has been pursuing a sectoral approach to industrial development instead of a robust composite one.
The outcome is obvious. The contentious textile policy is failing and the sugar policy suffers from its frequent setbacks. However, the cement manufacturing policy is currently a success.
A long-term industrial policy is needed for three major reasons: to provide employment, to increase the exports and to accelerate its economic growth.
While a large number of workers are employed in industries, their wages are low, but from an investor’s point of view the productivity of labour is also low because of lack of education and inadequate technical training.
The industrial policy has to be on a long-term basis as investment is usually made with borrowed capital from banks. And if the industries do not work properly, the lending banks will suffer. Unless the industries are managed well and the loans are serviced diligently the banks would not be ready to lend for industrial investment.
Local businessmen were quick to fill the vacuum in the textile and sugar sectors as the raw materials were readily available in the shape of cotton and sugarcane. The cement industry was also developed in a big way. India now wants three million tons of cement from Pakistan.
While the textile industry developed, no effort was made to manufacture textile machinery which is imported at a heavy cost year after year. The machinery parts are also imported. The textile industry prefers to buy from foreign suppliers because of the large kickback it gets on the imported textile machinery. So, attempts made to manufacture the textile machinery locally have not been a success. India is not only manufacturing the textile machinery but is also willing to offer it to Pakistan at attractive prices, but the import of Indian machinery in a big way is being discouraged for political reasons.
Investment did not go into the coal mining industry although plenty of coal was available. Even now, we are depending on foreign investors to develop the Thar coal fields. Our industrialists want easy profits made from quick business and not to labour too hard.
A major shipbuilding venture Karachi Ship and Engineering Works was set up. But apart from some boats made for China, the shipyard did not make much headway. We ended up in ship breaking industry and in 1980s and 1990s became the biggest ship breaking country in the world.
We wanted to embark on shipbuilding without the basic raw material – steel – Pakistan Steel Mills was producing one fourth of the steel we needed. When it was established, the capacity of the steel mill was to go from one million tons to three million tons. So, any attempt to build ships without the basic steel had to fail.
And now, Pakistan Steel is to be privatised and two ship building yards are proposed to be set up to promote the shipbuilding industry. How much of a success we can achieve without the basic raw material – steel - when prices of the metal are rising all round, remains to be seen.
India could make headway in the steel sector as its steel manufacturing industry is even older than its independence.
There is Japan for example that is a unique country without raw materials that has become an industrial power, its workers are educated, technically trained and disciplined. So Japan has made tremendous progress in the technological sector. But Pakistan cannot make use of its own research. The research work done in the Pakistan Council of Industrial and Scientific Research and the National University of Science and Technology are not utilised by the industrialists.
If we do not make use of our own research and instead cry for the research work done abroad, what kind of industrial progress can we make? The linkage between the research institutes and the industries needs to be strengthened.
The Engineering Development Board (EDB) was very active at the time Mr Razzak Dawood was its chairman. It had taken various measures to promote the industry and recently it had a meeting in Karachi to develop the chemical sector. It is also giving attention to eliminating the freight problems as the transportation system is inefficient.
However, no headway has been made in the engineering sector in spite of the Heavy Mechanical Complex, the Machine Tool Factory, the Heavy Electrical Complex and other such institutions. These units were scheduled to be privatised but the effort has been suspended pending further study of the issue.
We are trying to export of our engineering products at a time when we are buying more and more of Chinese engineering goods. Our water equipment for domestic use is as good as the Chinese one, but there is a preference for the Chinese products as they are cheap.
We should take pride in our products and patronise them instead of preferring foreign products in the belief that anything foreign is better. But efforts should also be made to improve the quality and prices of local products.