ISLAMABAD, 27 September 2004 — Pakistan is launching a new high-incentive, multi-pronged industrial policy in order to expand manufacturing, spur business and face the WTO challenges. The new, long term National Industrial policy (NIP) spans 2005 to 2015.
It focuses on both the foreign and domestic investment and covers the entire gamut of industrialization, fiscal incentives, taxation policy, FDI inflows, repatriation of investment, dividends, fees and remuneration, utilities, infrastructure, cost of doing business, and development and provision of skilled manpower.
Jehangir Khan Tareen, minister for production and special initiatives, says “the comprehensive National Industrial Policy will be finalized by January next.” “It will provide incentives to large, medium and micro industries.”
Several government ministries, institutions and stakeholders have worked on National Industrial Policy (NIP), including, Small & Medium Enterprises Development Authority (SMEDA). SMEDA, within its own sphere, has identified engineering, gems and jewelry, marble and granite, furniture, fisheries, sports goods and dairy, as lucrative projects.
Tareen said, “we will work on the public-private partnership model to encourage growth in these sectors by providing facilities like Common Facility Centers, and Technical Training Centers at industrial clusters.”
A public-private company can be formed for promotion of engineering in the industrial triangle comprising cities of Wazirabad, Gujranwala, Sialkot, and Gujrat which are already the hub of manufacturing a vast number of products ranging from electronics, to heavy electricals, fans, cables, sports gear, crockery, cutlery, auto parts, high class furniture, and ceramics.
But, some private industrialists say NIP is welcome, but, already, there is no restriction on any foreign or domestic investor, for setting up any industry and bank credits are liberally available. But, the government should help in issues like rising cost of doing business, tax adjustments and refunds, and high utility prices, now when the quota-free environment is about to get started in full.
Public-private partnerships can be profitable in sectors like electricity generation, natural gas, toll roads, irrigation, water sewerage systems, provincial highways and several other areas, Dr. Abdul Hafeez Sheikh, minister for investment and privatization says. Manila-based Asian Development Bank (ADB) has offered $500 million financing and risk-guarantees for such partnerships.
Prime Minister Shuakat Aziz is personally leading the team that is giving final touches to new economic plans and the NIP, before its launch. He is mobilizing the domestic and foreign investors, businessmen, bankers, corporates and companies dealing with manufacturing and foreign trade, and all stakeholders belonging to the private and public sectors.
“The government has designed and chalked out a fiscal policy to provide the investors with all the facilities they require. Investors should establish industries, keeping the export target, and the growing domestic consumption pattern, in view. The government will provide all assistance, besides marketing access for their products abroad. Pakistani exports crossed $12.5 billion in fiscal 2004, but still we have to go far ahead,” he says. The export target for the current fiscal 2005 is $13.7 billion. Imports are projected at $16.7 billion.
But, with economy picking up, all indications are that these will go much higher, which is good news for Pakistan’s business partners. Imports were $15.48 billion in 2004.
The Ministry of Commerce (MoC) will appoint a trade negotiator to ensure larger market excess for Pakistani exports. Taxes will be further reduced in order to “speed up industrialization” Aziz told a delegation of Federation of Pakistan Chambers of Commerce & Industry (FPCC&I) - the country’s top business organization. Its President, Riaz Ahmed Tata, led the talks with Aziz. The prime minister told FPCC&I, “we need industrialization to create more jobs, to increase incomes and strengthen the economy. Your role is important. You should invest in sectors which have an export potential.”
He also told the FPCC&I team “we want to facilitate the industry to help increase industrial production and productivity, ensure economic progress, a rapid creation of more jobs, and shoot for higher growth. The government has also increased its development spending on infrastructure to facilitate private business operations.
Tata assured Aziz that all business and industry leaders will “positively respond to the prime minister’s call.” He said, “we have been given an opportunity to serve the country.” He said, the industrial sector’s share in the economy is 26 percent, but it already pays 60 percent taxes. We have problems in investment.
Domestic investment attracts foreign investment. There is law and order problem in Karachi. More facilities should be provided to industries and there is a need to improve the port and shipping.
The government attaches a high priority to housing and construction, in the country, particularly in the business hub of Karachi where Aziz will like to see many more shopping centers and hotels. He said “the government wishes to transform Karachi into a vibrant modern city. Besides larger development spending there, it will further improve law and order.”
A new industrial estate will be established where all infrastructure facilities will be provided. It can be established on public-private sector partnerships. The new policy attaches a high priority to small and medium enterprises (SMEs) — a sector that is growing fast. The government will now set up specific estates for development of SMEs to expand industrial output and provide more jobs.
Textile industry products that contribute nearly 67 percent to all exports, will receive the government’s special attention. It is considering establishing a new Ministry of Textiles (MoT) as there is “ a vast scope of development of the textile sector” Aziz says. Pakistan hopes, it will be one of the three major global players in textiles - besides China and India - under the WTO regime and its quota-free world.
Pakistan is likely to face energy shortage. To overcome it, the government is expanding its electricity generation. It plans to import electricity from Tajikistan at competitive tariff, and natural gas from Iran, Qatar or Central Asia. Three separate plans for laying one or more pipeline are being finalized. This gas can also be supplied to India and countries beyond. Private industry can also establish its own electricity generation plants.
The new prime minister, this week, asked bankers “to gear up their efforts to attract and assist investors to speed up industrialization that will create more jobs and expand exports.”
The fast growing banking sector has also “beefed up the economy to grow faster.” He said, now better loan facilities are available for industry, business, housing and real estate, and farming.
Aziz has asked banks to “extend credit facilities liberally to farming, SMEs and industries to help them grow fast. Consumer financing, has not only helped the common man, but has spurred demand and industrial growth. Larger credit for autos, motorcycles, and consumer durables, has strengthened the economy.
While boosting big business is up front in the government plans, it did not forget steps to attract small and medium investors and expatriate working in the Gulf, Saudi Arabia, and North America.
It has launched what it calls “ a low-cost industrial scheme,” at Karachi, for the overseas Pakistanis. Called “Al-Watan Industrial Zone” the project will be completed by Port Qasim Authority (PQA), in 12 to 18 months, Babar Khan Ghauri, minister for communications, said while laying its foundation. The project is spread over 300 acres.