LAHORE: Share of manufacturing is shrinking in Pakistan, forcing consumers to depend upon imported products and is moving fast towards becoming a trading economy that will not be able to create three million jobs needed every year.
The planners must decide whether they want Pakistan to be a trading, manufacturing, or an agricultural nation. They should keep in mind that all countries with populations of over 200 million have progressed on the strength of industry. China, India and Indonesia are some of the examples in this regard. These countries first established a strong manufacturing base and the trade automatically increased. Trade does not create huge job opportunities like manufacturing. The most developed economies thrive on the strength of technology, innovation, and skills that continue to create jobs needed on a yearly basis.
There are various examples of countries performing miracles in economic growth on the strength of trading. One thing common among them is that their population is small. Trading nations like Singapore, Hong Kong or Dubai allow imports at a fixed low duty and allow the export of all imported items to any destination in the world. With a small population these countries are able to ensure full employment to their population through services.
Pakistan cannot afford this because it needs to create 3 million jobs a year just to absorb the young workforce that joins the job market every year. As a service oriented economy we cannot create so many jobs. Singapore, Hong Kong and Dubai have populations less than that of Lahore and Karachi. These trading economies after a while also established smart manufacturing facilities and have to import workers to run them.
Pakistanis are pinning hope on China Pakistan Economic Corridor (CPEC) for accelerated economic growth. This corridor when fully functional would provide us the opportunity to act as a trading hub as well as a manufacturing center depending on the policies adopted by our government. The trading part is simple. The movement of import and export consignments from this route from China and Central Asian States would boost transport, hoteling, and restauranting activities along the corridor route and low-paid loading and unloading jobs. All the government would have to do is manage law and order on the CPEC route and maintain the infrastructure.
The option of supporting the manufacturing sector required all to gather different approaches. For this the government would have to improve transparency, governance and infrastructure to facilitate manufacturers. At the same time the high cost of doing business would have to be tackled by maintaining the markup in line with its competitors and ensuring that inflation remains low. The industrial policy should not be restricted to one sector.
The facilitations should be available to all manufacturing sectors. We should avail the opportunity available in relocation of textiles from China in Special Economic Zones on the CPEC route but at the same time we should encourage the engineering sector. The country has enough talent in light engineering and it should be exploited. We should move from assembling economy to manufacturing economy in automobiles, home appliances and industrial machines. The CPEC route could attract foreign investment in numerous sectors for establishing manufacturing facilities in SEZs (Special Economic Zones). The Chinese could manufacture some inputs in Pakistan and re-export them to China and other countries.
The developed economies could establish their plants in Pakistan to export their products to China, Middle East and Russia as it would save them huge transportation costs.
Agriculture is a low-hanging fruit that simply needs serious attention from the economic planners. We see that some farmers reap harvests compared with the best in the world and the majority of them in the adjoining farm get half the yield. The fault is rarely in the soil but in the farming practices. Agriculture cannot be promoted in the country if the government continues to encourage import of agricultural commodities as it discourages farmers to increase productivity. The farmers would increase productivity if they are assured their efforts would not be compromised by importing agricultural produce.
The main hurdles are the provincial agriculture extension departments. The farmers, world over, need active assistance of agriculture extension departments to cope with uncertainties of weather, for provision of certified seeds and for judicial use of pesticides and fertilisers. In poor economies like ours the farmers need proactive extension staff to guide them on good practices and use of chemicals during cultivation. They lose a fortune when they are tricked into using a wrong pesticide on crops. They see their labour going in vain when they are supplied substandard seeds or when the fertiliser they use is adulterated. It is the duty of the agriculture extension department to protect the farmers from these malpractices.
Pakistan is a poor country. We can eradicate poverty by availing all the opportunities that industry, trading, and agriculture offers. The jobs thus created would bring prosperity among the poor.
Industry and agriculture have been left alone to struggle for survival and even the infrastructure has been allowed to deteriorate because of lack of funds.