LAHORE: In the absence of any viable industrial policy, the industrial production remained hostage to the federal budget for the last three decades, impeding long-term investment, said industrialists.
Industrialists from various sectors of the economy regret that Pakistan now lags behind all regional countries in industrial growth due to inconsistent government policies. Unfortunately, there is no long-term growth plan given by any government since 1980, they said.
“In 1962, Pakistan’s exports were higher than Malaysia and equal to that of China, while today we are hovering around $24-25 billion, while Malaysian exports have crossed $150 billion and China $1.9 trillion,” said Almas Hyder, engineering entrepreneur.
Immediately after independence in 1947, the founding fathers gave an industrial vision for the country, he said, adding that they established creditable institutions such as Pakistan Industrial Development Corporation (PIDC), PCSIR and established SITE industrial estate in Karachi.
They encouraged establishment of industries that reduced the country’s dependence on imports, he added.
Hyder said that Ayub Khan in his tenure laid emphasis on technical education, green revolution, industrialisation and export incentives. During Khan’s era technical education budget was 13.4 percent of the total education budget. “Today, it has been reduced to only three percent with the result that we are facing acute skill shortages in our human resource.”
Farooq Iftikhar, president of the Lahore Chamber of Commerce and Industry (LCCI), said that in 60’s the manufacturing sector grew at an average of 9.9 percent due to stable industrialisation policy introduced by the martial law regime. The growth averaged 5.5 percent in 70s after massive nationalisation by the then PPP government, he said, adding that the growth rebounded to an average of 8.2 percent in 1980s after initiation of the privatisation process.
He said because of uncertainty created by frequent changes in government, each of which reject the policies of its predecessors, the growth again plummeted to an average of 4.8 percent.
Iftikhar said even during the much-trumpeted Musharraf era, the manufacturing growth remained erratic, depending each year on the incentives provided in the budget. The manufacturing growth was 9.3 percent in 2000-01, 4.5 percent in 2001-02, 6.9 percent in 2002-03, 14 percent in 2003-04, 15.5 percent in 2004-05, 8.7 percent in 2005-06, 8.2 percent in 2006-07 and 5.4 percent in 2007-08.
During the last five years, the growth of manufacturing sector has remained in the negative or dismal growth of two-three percent, he added.
Mian Anjum Nisar, former president of the LCCI, said that the present regime has changed its policies on industries frequently creating uncertainty among entrepreneurs. It even deviated from the long-term plan on auto industry development by allowing import of used cars, levying 16 percent sales tax on tractors and even tried to bring in a failed auto manufacturer as new entrant on huge incentives, he said.
Nisar said that the government has nullified its long established policy of free market economy in textiles by imposing quota of yarn import and withdrew only after much harm was done. The industry could import polyester fibre after paying six percent duty, while imported yarn made from the same polyester fibre is allowed at zero duty, he said, adding that under-invoicing favours imports and harms the local industry.
M I Khurram, leading textile entrepreneur said that unfortunately Z A Bhutto’s tenure rewards were delinked with the efforts. This practice, he regretted, still continues.
In all the progressing economies the rewards are linked with productivity. The incentive to earn more motivates workers to enhance their skills and efficiencies, he said, adding that this has kept the manufacturing sector of the country at a disadvantage with its competitors.
Even the government regularly increases the salaries of its employees by hefty margins without ensuring improvement in the delivery of services to people and the state.
He said the result is that the institutions continue to deteriorate, while their budget regularly increases.
“In Singapore the increase in salaries of the state employees is linked to annual growth in GDP,” he said, adding that the salary of public servants increase is limited to 70 percent of the growth in GDP.
Bureaucracy strives hard for better economic growth to ensure handsome increase in their salaries, he added.