‘Higher manufacturing growth must for more jobs’

LAHORE: Experts say countries with higher manufacturing growth compared to GDP growth have created more jobs than countries like Pakistan, where manufacturing growth has been marginally higher or at par with the GDP growth.
They pointed out that the GDP growth of China averaged 9.5 percent in the last decade but its manufacturing growth was 15 percent during the same period. Similarly, they revealed that India’s manufacturing growth in the last ten years was three percent higher than its average GDP growth. In case of Bangladesh, the manufacturing growth remained double than its GDP growth.
“Pakistan unfortunately depicted a lopsided trend in manufacturing growth,” said Almas Hyder, the senior Vice President of Lahore Chamber of Commerce and Industry (LCCI). In the last 20 years, the country’s large scale manufacturing (LSM) posted growth ranging from 15 percent to negative 2 percent. For the past two years, the LSM growth has remained at or below the GDP growth of the country. He said in developing economies with high unemployed youth, jobs are mainly generated by the manufacturing sector.
Hyder blamed both the successive governments and the private sector for this sorry state of affairs. He said if we take the case of energy and power shortages, the state abdicated its responsibility by failing to plan for more affordable power generation before the shortages occurred. At the same time, the inefficiencies in power generation and distribution systems grew. “We lose 20 percent power in the flawed and corrupt distribution system. We fail to collect 12 percent of the billed amount from different consumers that has over time accumulated to over Rs600 billion,” he added.
As far as the private sector is concerned, they are operating their factories without an energy audit. He said 10-15 percent less energy would be consumed if the systems in the factories were improved after proper energy audit at a very nominal cost.
Another 10 percent saving could be made with some investment that is recoverable in six months. He said Rs14 per unit tariff that the industry pays to the power distribution companies could be reduced by 15-25 percent through efficient use of energy.
Engineering entrepreneur Syed Nabeel Hashmi said that private sector usually ignores material flow management that could drastically reduce wastages in the system. Through prudent material management, the inventory could also be substantially reduced and turned cost effective for the manufacturers. He said theft from the system could be remotely controlled through proper use of technology.
Hashmi said sustainability was another issue that our manufacturers continue to ignore. This includes minimum use of energy and water. Recycling of heat; reuse of water after treatment and use of clean technology where possible. He said taking care of health issues of workers, coupled with a sustainable environment friendly process would improve the workers’ productivity and reduce cost.
Financial analyst Amina Usman said that everything boils down to lowering the cost of doing business.
The public and private sectors would have to work in tandem to reduce the cost. She said though corruption was the main element that increases the cost of doing business, if the government took some measures, the costs could be reduced substantially. “For instance by revamping
Railways and ensuring transport of goods through trains, the transportation cost can easily be halved,” she said, adding that one wagon can carry weight equivalent to eight 20-ton trucks.
She said a train in Pakistan on existing tracks could carry 22 wagons, meaning one train carry a load of 176 trucks. She said running eight goods train a day could reduce the load on roads in a big way and reduce the transportation cost too.
Currently, she added businessmen pay more to transport goods from Lahore to Karachi then they pay for the same goods to go to China. There are certain elements that discourage domestic manufacturing. One is under invoicing the other smuggling that nullify the advantage of protective duty every government provides to the domestic industries. She said imported cost of many under invoiced products was cheaper than the domestic products.
These products, she added include artificial leather (70 percent industry closed courtesy under invoicing); tyres and tubes (imported below cost of inputs used in tyres).