Fresh policy push must for underperforming sectors of economy

LAHORE: Pakistan needs a broad based industrial policy that provides equal growth opportunities to all the sectors of economy. A number of other sectors like light engineering, pharmaceuticals, and food processing have a far larger export potential than textiles but they remain on on the bottom of the policy planners' priority list.

In the years right after independence, planners provided incentives to the textile millers by arranging foreign loans for the purchase of machinery. The intent was to convert the cotton, grown in the country, into yarn and earn higher foreign exchange than the country was earning by exporting raw cotton. This opportunity was grabbed by the textile millers and they went on launching one spinning mill after another. They never went for higher value addition.

The value-added exports in textiles were introduced in the late eighties by small entrepreneurs, who brought (apparel design) samples from abroad and started producing garments locally. These entrepreneurs grew by leaps and bounds while adding to the bulk of value-added textile exports of the country. They flourished without any facilitation from the state or financing from the banks. The banks now preferentially finance them because they are better paymasters than basic textiles. They have no loans standing against them. To be honest, the sector in trouble is the basic textiles. Despite being pampered by successive governments for over half a century, Pakistan’s share in textiles is less than 1.6 percent. It has, in fact, declined from 2 percent a decade back to its current level. Non cotton producing countries like Bangladesh and Vietnam command twice as much share in global textile trade.  

It is interesting to note the total share of textile and clothing in global trade is only 6 percent of total world trade. The share of engineering goods in total global trade is over 60 percent. This sector has remained neglected despite the fact the highest value-addition can be obtained from engineering products. Indian pharmaceutical exports exceed total exports from Pakistan. This is in the face of the reality that until the start of the century all the largest pharmaceutical firms had manufacturing facilities in Pakistan. The flawed pharma policy discouraged the international and domestic drugmakers from exporting their products.

Had the same attention -- as given to textiles- been given to engineering and other sectors a share of only one per cent in global engineering trade would have meant exports of over $60 billion. The planners must understand the sectors grow on facilitation and prudent policies of the government. It is highly unfortunate the exports of engineering goods from Pakistan are less than one percent of its total exports.

Pakistan has cities like Gujranwala, Sialkot, Faisalabad, and Multan besides Karachi and Lahore with crude engineering bases, which need harnessing. We have got innovatively skilled artisans, who can develop spare parts of high-tech imported machines with rudimentary tools. Imagine, what wonders they can work with proper equipment and facilities. They may be able to produce top quality industrial machines. Unfortunately, no viable engineering policy has ever been made in the country. A ministry of engineering is more in need than a textile ministry.

The value addition in textiles is limited, compared to the potential of the same in engineering. One kilogramme of steel worth Rs70 could be transformed into a grill that could fetch Rs200 or it could be developed into a high-tech mould worth over Rs20,000. If the national planners pay engineering sector even half the attention given to textiles, Pakistan’s trade deficit will be nowhere to be found in no time.

Engineering Development Board, established two decades back to formulate a comprehensive engineering policy and facilitate the growth of the sector through prudent regulations, has failed to deliver. In fact, EDB has become a parking place for accommodating cronies, retired bureaucrats, or favourites. A document pertaining to grant of full autonomy to the board is rusting in the Prime Minister’s Secretariat.

As for pharmaceutical sector, the drug regulators should facilitate manufacturers by helping them register with the drug authorities of the developed economies. No drug making company in Pakistan is registered with FDA in the United States. Numerous Indian companies and a few Bangladeshi firms are export billions of dollars worth generic drugs to United States by the virtue of registration. The superior quality of Pakistani medicines has been acknowledged by the multinationals operating in the country.