Towards a Prosperous Pakistan

:
A Strategy for Rapid Industrial Growth
Pakistan Development Forum Federal Minister Industries, Production & Special Initiatives 26th April 2005

Strategy for Industrialization
Where are we today?
ÎAn

2

assessment of our Industrial performance so far
9Share of Manufacturing in GDP 9Export performance 9Consistency of Growth 9Private Investment performance 9Comparison of Job Creation 9Manufacturing Technology level

World Development Reports .Share of Manufacturing in GDP (%age) 45 3 Pakistan 40 35 30 Percentage Share Indonesia Malaysia Korea 25 20 15 10 5 0 1960 1965 1970 1977 1980 1985 2000 2001 Source: World Bank .

4 Pakistan’s Share of World Exports Export of manufactures 1990 2002 World % % China 1.18 0.1 India 0.57 Thailand 0.18 Source: WTO.70 Pakistan 0.66 1.21 Mexico 1.06 2.52 0.61 1.88 Malaysia 0.85 6. Sherani (2004) .

7% Carpets. 2.9% Chemical.60% Textiles. 2. 3% Textile & clothing.TRADE BREAKUP World Vs Pakistan-2003 World Trade Breakup Non-Ferrous Metals.8% Leather.80% Manuf & Eng Goods.4% Engineering goods.80% Agri Products. 5. 3. 10.6% Marble Granite . 9. 6.1% Others 5. Sports 2.4% . 69.7% Agri Products. 66.30% Misc. 1. 8.2% Goods. 1. 0.3% Petroleum.50% 5 Pakistan Trade Breakup Mining & Fuel.

.Industrial Performance of Pakistan : Growth Rate of Manufacturing 12 Total 6 10 8 % age 6 4 2 0 1950s 1960s 1970s 1980s 1990s 2000-01 2001-02 2002-03 Source: 50 Years of Pakistan Volume I Summary. Statistical Supplement of Economic Survey. 2002-03 and Economic Survey 2003-04.

2: Trends in Private Investment (% of GDP) India Pakistan Bangladesh 7 1982-83 1983-84 1984-85 1985-86 1986-87 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 Source: World Development Indicators 2004.00 10.00 0. Pakistan Economic Surveys 1987-88.00 16.00 14.00 6.00 4. 2003-04 2002-03 .00 2.00 12.00 1980-81 1981-82 Figure 2.20.00 8. 1992-93.00 18.

Various years .9 13.7 25 20.Employment in industry (% of total employment) 35 8 1982 30 1999 31.8 18.4 24.1 15 13.4 12.6 10 5 0 Pakistan Thailand Malaysia India Source: World Development Indicators.3 20 17.

Statistical Supplement of Economic Survey.Industrial Performance of Pakistan: Manufacturing Share of Pakistan in GDP Total 20 Large Scale Small Scale 9 18 16 14 12 % age share 10 8 6 4 2 0 1950s 1960s 1970s 1980s 2000-01 2001-02 2002-03 2003-04 Source: 50 Years of Pakistan Volume I Summary. 2002-03 and Economic Survey 2003-04. Source: 50 Years of Pakistan Volume I Summary. . Statistical Supplement of Economic Survey. 2002-03 and Economic Survey 2003-04.

10 Technology Intensity in Manufactured Exports (%) 90% 80% 90% 70% 80% 70% 60% 60% 50% Fig 1. 2003 2000 2000 1981 1981 2000 2000 1981 1981 2000 2000 1981 1981 2000 2000 ResourceBased Resource Low Technology Technology Low Medium Technology Medium Technology High Technology Technology High . 5 Technology Intensity in Manufactured Exports Pakistan India China Malaysia Malaysia Thailand Thailand Technology Intensity in Manufactured Exports (%) Pakistan India China 50 40% % 40% 30% 20% 30% 20% 10% 10% 0% 0% 1981 1981 Based Source: Lall.

Production & Special Initiatives to play a leadership role in formulating and implementing a comprehensive strategy for rapid industrialization of Pakistan which aims at maximizing job creation and enhancing Pakistan’s international competitiveness.Our Vision 11 Re-position the Ministry of Industries. .

9value addition in Textile sector 9focus on the engineering sector 9making holistic interventions across the entire value chain in key SME clusters 9directly improving living conditions for Labour ÎTo achieve this through .Our Mission ÎTo 12 increase the share of Manufacturing in GDP to 25% in 2010 and 30% in 2015.

Our Mission 9reducing the cost of doing business 13 9creating a strategic partnership between the Public and Private sectors 9fostering ownership of Industrialisation policy by the public at large 9creating an institutional framework inter-ministerial coordination industrialization for for .

Value addition in Textile sector ÎUpgrading ginning sector ÎContamination free cotton ÎUpgrading 14 productivity of garment sector ÎInvesting heavily in Fashion design ÎCreating International brand names .

Focus on Engineering Sector institution 9Chairman & CEO both from private sector ÎEDB Role enhanced to create 15 ÎEngineering Development Board (EDB) as focal 9Link with International value chain 9Link with Engineering academics 9Bridge between Defence Hi-Tech sector and Private sector 9Bringing an International Vision to existing industry sectors • • • Component manufacturing Sector Ginning Metal Re-rolling .

Focus on Engineering & SME Sectors ÎCreation 16 of Technology Up-gradation & Skill Development Company (TUSDEC) 9Public-Private Partnership • CEO from private sector 9PITAC to function under TUSDEC 9Role of TUSDEC • Intervene to Upgrade Technology and skills in key SME Industrial clusters • Common facility centres / Skill development centres / technical upgradation centres • Demand driven • All to be managed by the private stakeholders of each particular cluster .

D • Pilot new projects with Holistic approach z “Island of Excellence” strategy .Focus on SME Sector ÎFormation 17 of Strategy Working Groups (SWOGs) 9SWOGS bring together the Industrial Cluster on a common platform and all relevant Ministries and Provincial Governments which impact on that sector • Foreign experts brought in with help of US A.I.

Focus on SME Sector Priority Sectors Phase – I ÎAction Plan ready by 15th May ‘05 9Gem & Jewellery 9Marble and Granite 9Dairy 18 Phase – II ÎAction plan by 15th August ‘05 9Fans 9Sports Goods 9Surgical 9Fisheries 9Furniture .

Focus on Knowledge Based SME Entrepreneurship Enterprise Competitiveness Support Fund Objective: 19 To upgrade the competitiveness of Pakistani Industry to respond to the new challenges and opportunities in the knowledge based and high tech economy ÎActivities proposed 9Venture Capital 9Business Incubators in Universities 9Enterprise development fund collaboration with • Match-making grants y Credit guarantee y Equity financing .

500 acres Pak Steel Downstream Industrial area • Peshawar and Quetta • Sheikhupura for engineering cluster • Rural Pakistan .Reducing Cost of Doing Business ÎCreation 20 of National Industrial Parks Development & Management Company (NIP) as Public Private partnership 9To develop state of the art Industrial Parks all over the country • 1.

Faisalabad and the Central Punjab Engineering triangle 9Entire rural hinterland of Sindh and Punjab missing out 9Balochistan Province and large parts of NWFP also missing out ÎMust evolve strategy of successful Industrial Parks in rural areas .Reducing Cost of Doing Business ÎThe Unemployment challenge 21 9Lopsided job creation 9Lahore. Karachi.

Challenges .

The Main Challenge ÎIf 23 we are to follow the path of rapid industrialization and take Manufacturing share of GDP from 18% to 30% then 9Every Ministry involved and Provincial governments have to work with a singleminded. focussed vision 9A new Institutional framework has to be developed which dovetails with the world as it is today .

Ministries that Impact Industrialization ÎMOIP&SI ÎPetroleum / Water and Power ÎScience and Tech / Higher Education ÎLabour ÎEducation – Federal and Provincial ÎCommerce 24 ÎCommunication / Ports and Shipping / Railways ÎFinance / State Bank of Pakistan ÎProvinces .

ÎEnhancing Labour Skills ÎLabour Welfare Education ÎRaising basic education levels . Labour ÎSimplifying the complex web of regulation.Future Challenges Energy ÎMost critical for Industrialisation 25 9Plentiful energy required at most efficient possible price.

secure and cost-effective logistics chain.Future Challenges 26 Transport Sector ÎAn efficient. North-South through Pakistan is essential 9Target 48 hrs from Peshawar to Karachi 9Increase Railway for Freight ÎPort Performance 9Reduce Container dwell time from 12 to 4 days Science and Technology ÎInstitutions which set Standards for Industry must have Industry focus .

Future Challenges Provincial Governance ÎLabour regulation ÎInspection regimes ÎSkill training ÎLivability of Cities ÎLaw and Order ÎLand Record problems 27 .

Thank You .