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Process and Growth of Industrializaton in Pakistan

Process and Growth of Industrializaton in Pakistan

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11/21/2012

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PROCESS AND GROWTH OF INDUSTRIALIZATION IN PAKISTAN

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Mr. Ammad Ahmad Miss Iram Aslam Mr. Tahir Hassan Miss Naila Ramzan Mr. Abdul Sattar Mr. Salman Akram

MBE-09-35 MBE-09-11 MBE-09-42 MBE-09-61 MBE-09-68 MBE-09-76

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It is step by step procedure to accomplish targets. Pakistan in early years realized that industrial growth is back bone for strong economy. To accomplish this Pakistan adopted following process:
Development of infrastructure Pakistan Council of Scientific and Industrial Research (PCSIR) Pakistan Industrial Development Corporation (PIDC) Establishment of Sindh Industrial Trading Estate (SITE) Eradication of problems in establishment of industrial estate

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Providing facilities Availability of raw material and resources Adoption of technology Make policies to secure investment and investors

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The Pakistan Council of Scientific and Industrial Research, PCSIR was created in 1953 to develop technologies for utilization of indigenous resources, dissemination of results of research and solving problems in processes and operations besides those encountered by newly established industries.

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The Pakistan Industrial Development Corporation, PIDC was created almost simultaneously to serve as the recipient of technologies in heavy industries such as cement and in those for which private investment may feel shy. PIDC were charged with the responsibility of development of high level manpower which could strengthen its technology base and assist in the process of technology transfer.

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Sindh Industrial Trading Estate, SITE was also established. The Landhi township and Landhi Industrial Area were developed almost simultaneously. Korangi township developed in 1961-69 therefore considered the establishment of industrial estates as an integral part of their planning and as the first and necessary step to ensure employment within the new settle-ment for those being shifted.

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Resettlement of refugees Collection of resources Efficient use of available resources Improvements in communication Taking foreign assistance for planning

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Permanent settlement Decent salaries Utilize workplace in better way

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Poor Infrastructure. Lack of suitable resources. Lack of suitable strategy for maintenance.

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Efficient use of available resources required skilled labour which helps to Increase economic growth. Increase in production. Increase capital formation.

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Back bone of u Industry. Slow communication. Costly Railway communication. Road network communication.

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Development of Technology Opted assistance from USA Indian and Korean development technology

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Since process was established Pakistan focused on implementation of policies for growth of industries. Pakistan focused on some points like, Capturing sustainable industrial development Invitation of investment Small and Medium Enterprises (SME) Small and Medium Enterprises Development Authority (SMEDA) Growth of un organized sector Growth of organized industry

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Availability of market raw material and recourses. Integrated units. Skilled labour. Infrastructure facilities.

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Incentives(taxes) Institutional support Raw matrial availability Man power availability

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Maximum tax generator Large employment generation in S&M sectors More contribution in GDP of the country Government should promote facility to SMEs

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Now a special organization has established to focus on small and medium enterprises as it has major contribution in Pakistan¶s GDP. This looks after the development of infrastructure, input and assistance in the fields of management, finance, technical assistance, training and marketing. The absentee landowners and traders were encouraged to mobilize their savings for small industries pro-jects. The objective was to provide plots and infrastructure facilities so that the rural and urban entrepreneurs could establish their business, based on technology acquired from local or foreign sources. The feudal landlords thus entered into the industrialization programs of the country.

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The manufacturing sector that contributes to the industrialization programs of the country is the production system in small industries in the unorganized sector. This sector has flourished despite the several constraints of availability of industrial infrastructure. It has the technology grounded by local manpower to the extent that fabrication and installation of plant and machin-ery can be handled locally. This holds true of units like the auto repair shops, brick kilns, carpet weaving, dairy products, engineering workshops, fabrication/substitution of small parts, flour mills, food products, foot wear, foundries, garments, ice factories, oil expellers, printing presses, rice mills, soap factories, and tobacco crushing, all over the Country. The unorganized sector has flourished mainly because it is selfreliant.

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Quite in contrast, availability of technology, plant, machinery and manpower is a constraint for medium and large scale industries, for which the required the raw materials also have to be imported. In fact the performance of this sector depends on imported machinery, raw material and technologies. This necessitates the balancing modernizing and replacement of parts and machinery to keep updated in the manufacturing process. The products will otherwise be outdated and may not remain competitive. The plants supplied are on turnkey basis and carry the technologies embodied in them, since the industrialized countries sell complete units and are reluctant to trade mechanical equipments. Production technology was being transferred in Pakistan to a limited extent, through terms of trade which carry a deletion programs as part of the deal, but that is not being strictly observed.Sectors

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Pakistan's two leading companies, as per Forbes Global 2000 ranking for 2005. Global ranking 1,284 1,316 Forbes Global 2000 Company Name Oil & Gas Development PTCL

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Pakistan ranks forty-first in the world and fifty-fifth worldwide in factory output. Pakistan's industrial sector accounts for about 24% of GDP. Cotton textile production and apparel manufacturing are Pakistan's largest industries, accounting for about 66% of the merchandise exports and almost 40% of the employed labour force. Other major industries include cement, fertilizer, edible oil, sugar, steel, tobacco, chemicals, machinery, and food processing.

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Pakistan's industrial sector accounts for about 24% of GDP. Cotton textile production and apparel manufacturing are Pakistan's largest industries, accounting for about 66% of the merchandise exports and almost 40% of the employed labour force. Other major industries include cement, fertilizer, edible oil, sugar, steel, tobacco, chemicals, machinery, and food processing. The government is privatizing large-scale parastatal units, and the public sector accounts for a shrinking proportion of industrial output, while growth in overall industrial output (including the private sector) has accelerated. Government policies aim to diversify the country's industrial base and bolster export industries. Industries: textiles (8.5% of the GDP), fertilizer, cement, oil refineries, dairy products, food processing, beverages, construction materials, clothing, paper products, shrimp Industrial production growth rate: 6% (2005) Large-scale manufacturing growth rate: 19.9% (2005)

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Pakistan is an emerging market for automobiles and automotive parts offers immense business and investment opportunities. The total contribution of Auto industry to GDP in 2007 is 2.8% which is likely to increase up to 5.6% in the next 5 years. Auto sector presently, contributes 16% to the manufacturing sector which also is expected to increase 25% in the next 7 years.

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As of 2009, Pakistan is one of the largest users of CNG (compressed natural gas) in the world. Presently, more than 2,900 CNG stations are operating in the country in 85 cities and towns, and 1000 more would be set up in the next three years. It has provided employment to over 50,000 people in Pakistan

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In 1947, Pakistan had inherited four cement plants with a total capacity of 0.5 million tons. Some expansion took place in 1956±66 but could not keep pace with the economic development and the country had to resort to imports of cement in 1976-77 and continued to do so till 1994-95. The cement sector comprising of 27 plants is contributing above Rs 30 billion to the national exchequer in the form of taxes.

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The export performance of the leather industry has been dismal because its leather products, despite being of superior quality are unable to compete with the competitors viz. India, China and Bangladesh. Since the cutting edge is the price which is higher, the advantages of better quality products are being lost.

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Pakistan¶s IT industry has been rising steadily since the last three years. A marked increase in software export figures are an indication of this booming industry¶s potential. The total number of IT companies increased to 1306 and the total estimated size of IT industry is $2.8 billion. In 2007, Pakistan was for the first time featured in the Global Services Location Index by A.T. Kearney and was rated as the 30th best location for off shoring by 2009, Pakistan had improved its rank by ten places to reach 20th

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The Textile Industry is dominated by Punjab. For example, only 1.5 million people from NWFP are employed in the Industry. 3% of United States imports regarding clothing and other form of textiles is covered by Pakistan. Textile exports in 1999 were $5.2 billion and rose to become $10.5 billion by 2007. Textile exports managed to increase at a very decent growth of 16% in 2006. In the period July 2007 ± June 2008, textile exports were US$10.62 billion. Textile exports share in total export of Pakistan has declined from 67% in 1997 to 55% in 2008, as exports of other nontextile sectors grew.

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That paints a gloomy picture whereby the process of Deindustrialization has been heralded. This process has either given rise to a decrease in the contribution of textile manufactures, or has, as per statistics compiled by Federal Bureau of Statistics, kept it stagnant at about 62.94 per cent of total exports. This is why the emphasis is on primary commodities whose share in exports has increased to 12% and above. The contribution of textile manufactures to the manufactured exports also dropped from 75% to less than 70%. Thanks to devaluation of the rupee, there has been a continuous drop in unit prices of textile manufactures and hence the export earning has seen only a dismal increase. For instance the quantity of cotton yarn exported may be 500,000 tons a year but the foreign exchange earned is up by only 1 to 2%. The increase in export of cotton fabrics may be up by 10%, but the foreign exchange earnings are invariably down by 3 to 7%.

Bases on available information, the country's more than 6,00,000 km² of outcrops area demonstrates varied geological potential for metallic and non-metallic mineral deposits. Except oil, gas and nuclear minerals regulated at federal level, Minerals are a provincial subject, under the constitution of Islamic Republic of Pakistan. Provincial governments are responsible for development and exploitation of minerals, besides, enforcing regulatory regime. In line with the constitutional framework the federal and provincial governments have jointly set out Pakistan first National Mineral Policy in 1995, duly implemented by the provinces, providing appropriate institutional and regulatory framework and equitable and internationally competitive fiscal regime. ` In the recent past, exploration by government agencies as well as by multinational mining companies presents ample evidence of the occurrences of sizeable minerals deposits. Recent discoveries of a thick oxidized zone underlain by sulphide zones in the shield area of the Punjab province, covered by thick alluvial cover have opened new vistas for metallic minerals exploration. Pakistan has large base for industrial minerals. The discovery of coal deposits having over 175 billion tones of reserves at Thar in the Sindh province has given an impetus to develop it as an alternate source of energy. There is vast potential for precious and dimension stones. ` The enforcement of Mineral Policy (1995) has paved way to expand mining sector activities and attract international investment in this sector. International mining companies have responded favorably to the NMP and presently at least four are engaged in mineral projects development.

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