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Business

March 21, 2017

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Rapid industrialisation impossible due to flawed govt policies

Rapid industrialisation impossible due to flawed govt policies

LAHORE: The state alone cannot accelerate industrialisation unless it is prudently guided by industry associations that are the actual stakeholders facing problems in running their manufacturing plants due to flawed government policies.

Though we see several industrial associations in Pakistan in regular contact with the top government functionaries, their problems remain unresolved. Experts wonder whether it is due to the weak presentations by the associations or the government functionaries do not listen.

The government planners assert they announce policy after careful deliberations with all stakeholders, whereas the industry associations often complain they were not taken into confidence when policies relating to their sectors were being formulated.

Most of the industrial associations are operating at a disadvantage, as their head quarters are far away from the policy centres. All Pakistan Textile Mills Association (Aptma) has its head office in Karachi although there are hardly 60 textile mills out of over 425 in the province that are Aptma members.

The policy makers sit in Islamabad. To lobby their case they have to go all the way to Islamabad that is over 1,200 kilometres away.

In the same way, the Pakistan Association of Auto Parts and Accessories Manufacturers (Paapam) has its head office in Lahore, but most of the vendors are operating from Karachi. Again the policy centre is in Islamabad.

These associations do not know about policy changes when they are made as they operate hundreds of miles away from the policy centres. In India, most of the trade associations are head quartered at Delhi where the policies are formulated.

Industry associations’ the world over guide the government in formulation of policies needed by their sector on the strength of extensive research. They provide irrefutable global data from creditable institutions and with references for the bureaucracy to recheck the facts.

In Pakistan, distorted facts are presented to the planners, some of which are proved wrong on recheck by the bureaucracy. This hurts the creditability of the concerned association and results in delayed decisions.

Another problem with our trade and industry associations is that they not only operate as a national body representing the entire sector but also operate on regional basis with national associations operating at provincial level.

In recent times, it has been observed that the priorities of different zonal associations of the same industry have different priorities. The central chairman in such instances would toe the line adopted by the region he/she belongs to.

Take for instance the case of Aptma. Its central chairman belongs to Punjab and pleads for the reduction in power tariff in line with the stance of the Aptma Punjab zone. Their members from other three industries produce power from natural gas which is cheaper.

The industries in Punjab cannot get the natural gas as the right to use gas lies with producer province; so they get imported re-gasified liquid natural gas that is very expensive compared with natural gas.

Aptma Punjab wants the imported gas to be mixed with the natural gas and want a weighted average tariff of the average price of natural gas and RLNG. This suggestion if accepted would increase the gas price for other three provinces and reduce the tariff of RLNG users.

Naturally, the regional associations outside Punjab oppose this move. To develop gas infrastructure, the federal government has levied gas infrastructure surcharge on supplies of gas to industries. Again, this decision too is opposed by the zonal associations outside Punjab.       

 

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