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March 5, 2021

‘Most of 83 industrial zones in Pakistan remain under-utilised’

Business

March 5, 2021

ISLAMABAD: Most of 83 established industrial zones in Pakistan remain under-utilised, a think-tank said on Thursday, as the government planned new special economic zones.

The Economic Advisory Group called for the industrial development breaking away from the old industrial policy set in 1960s. The group is an independent group of economists, policy analysts, financial experts and academics to deliberate on Pakistan’s economic policies.

The group’s members said setting up of new special economic zones, including technology zones is a good sign. Preferred strategy should be a general improvement in the policy, such as accession to the information technology agreement, alignment of border mechanisms, and harmonisation of taxes.

Most of 83 industrial zones in Pakistan remain under-utilised and are ghost towns, the meeting was told.

The members of the group said the old industrial policy was defined on the basis of selection of winners and losers by the government which led to industrial protection, continuation of infant industry, and misallocation of credit.

Despite various instruments of support, including subsidies and financing facilities, Pakistan could not move up the ladder of value addition in the manufacturing,” they said. Industrialisation further suffers from anomalies in tax and tariff policies which have led to an anti-industry and anti-export bias.

The economic advisory group the new auto policy helped in increasing consumer choice and competition within the auto sector of the country by attracting new investment. It further stressed the need of integrating public safety in the vehicles being assembled in the country.

The group advised the government not to consider mobile phones and IT services as consumer goods and services. This re-classification can provide cheaper access of latest technology for citizens, entrepreneurs and IT talent workforce by lowering down of tariffs on information technology products.

The group said the priorities should be heavy investment in skills development, trade facilitation, consumer welfare, regional integration, and capacity building of corporate sector to absorb and utilise information. By investing in these areas, the government can extend its support to all players without discriminating one sector over others. The government cannot have an industrial policy in isolation without integrating it with tax and tariff policy.

The group’s members said the industrial protection enjoys the support of special lobbies in Pakistan and hoped that a constituency for consumer choice can be soon evolved.

The Economic Advisory Group urged the ministry of industries to initiate work on a new industrial development strategy for the country and align its efforts with the provincial ministries to prepare a cohesive national framework.