Industry of Pakistan

Industry of Pakistan
Introduction

The industry of Pakistan is a vital sector of the country’s economy that

contributes to its growth and development. According to the World Bank, the
industrial sector accounted for 28.11% of the gross domestic product (GDP) in
20211. The industry of Pakistan is composed of various sub-sectors, such as
manufacturing, mining, construction, electricity and gas, and others. The
manufacturing sector is the largest and most diversified, with textiles being
the dominant industry. Other important industries include cement, sugar,
fertilizer, chemicals, pharmaceuticals, machinery, and food processing. The
industry of Pakistan faces many challenges and opportunities in the 21st
century, such as globalization, technological innovation, environmental
sustainability, and competitiveness.
Characteristics of the Industry of Pakistan

The industry of Pakistan has some distinctive characteristics that shape its
performance and potential. Some of these characteristics are:
• The industry of Pakistan is largely based on private enterprise, but some
sectors have been nationalized or partially privatized by the government
over the years. For example, the financial services, transportation, and
telecommunications sectors were nationalized in the 1970s, but have
been gradually liberalized and deregulated since the 1990s 2. The
government also owns and operates some strategic industries, such as oil
and gas, defense, and nuclear energy3.
• The industry of Pakistan is heavily dependent on the availability and
quality of natural resources, especially cotton, oil and gas, coal, and
minerals. Cotton is the main raw material for the textile industry, which
is the largest export earner and employer in the country 1. Oil and gas
are the main sources of energy for the industrial sector, as well as for
the transport and domestic sectors4. Coal and minerals are used for
power generation, cement production, and metal extraction.
• The industry of Pakistan is concentrated in a few urban centers, mainly
Karachi, Lahore, Faisalabad, and Sialkot. These cities have the
advantage of access to ports, airports, railways, roads, and markets, as
 well as skilled labor and infrastructure. However, this also creates
problems of congestion, pollution, and inequality, as well as vulnerability
to natural disasters and political instability.
• The industry of Pakistan is characterized by a dual structure, with a
large gap between the formal and informal sectors. The formal sector
consists of registered and regulated enterprises that operate on a large
scale and use modern technology and management. The informal sector
consists of unregistered and unregulated enterprises that operate on a
small scale and use traditional technology and skills. The informal sector
is estimated to account for about 30% of the GDP and 70% of the
employment in the country.
Trends in the Industry of Pakistan

The industry of Pakistan has undergone significant changes and developments in

the past decades, reflecting the economic and social transformations in the
country and the world. Some of the major trends are:
• The industry of Pakistan has diversified and expanded its product range
and export markets, especially in the manufacturing sector. The textile
industry, which used to produce mainly cotton yarn and cloth, has now
diversified into value-added products, such as garments, knitwear,
towels, bed sheets, and carpets. The textile industry has also increased
its exports to non-traditional markets, such as China, the European
Union, and the United States. Other industries, such as
pharmaceuticals, chemicals, engineering, and electronics, have also
developed and enhanced their export potential.
• The industry of Pakistan has improved its productivity and quality
standards, especially in the manufacturing sector. The adoption of new
technology, innovation, and quality management has enabled the industry
to increase its efficiency and competitiveness in the global market. The
industry has also benefited from the availability of skilled and educated
labor, as well as from the support of various institutions, such as the
Pakistan Standards and Quality Control Authority, the Engineering
Development Board, and the Export Promotion Bureau.
• The industry of Pakistan has faced increasing competition and
challenges, especially in the manufacturing sector. The liberalization of
trade and investment policies, the emergence of new competitors, such
 as China, India, and Bangladesh, and the changing consumer preferences
and environmental regulations have posed threats and opportunities for
the industry. The industry has also suffered from various internal and
external shocks, such as energy crises, security issues, political
instability, and natural disasters.
Problems of the Industry of Pakistan

The industry of Pakistan, despite its achievements and potential, faces many
problems and constraints that hinder its growth and development. Some of the
major problems are:
• The industry of Pakistan suffers from a lack of adequate and reliable
infrastructure, especially in the areas of energy, transport, and
communication. The chronic shortage of electricity and gas, the poor
condition of roads and railways, and the inefficient and costly port and
airport facilities have increased the cost of production and reduced the
competitiveness of the industry. The industry also faces difficulties in
accessing and maintaining modern technology and equipment, due to the
high cost of imports, the low level of research and development, and the
weak intellectual property rights protection.
• The industry of Pakistan faces a high and complex tax burden, especially
in the formal sector. The multiplicity of taxes, the frequent changes in
tax policies, the lack of transparency and accountability in tax
administration, and the widespread tax evasion and avoidance have
created uncertainty and distortion in the industrial sector. Industry also
faces problems of access to finance, especially for small and medium
enterprises, due to the high interest rates, the collateral requirements,
the cumbersome procedures, and the limited availability of credit.
• The industry of Pakistan faces a lack of effective and consistent
government policies and regulations, especially in the strategic and
sensitive sectors. The frequent changes in government policies, the lack
of coordination and consultation among different ministries and agencies,
the influence of vested interests and pressure groups, and the
corruption and inefficiency in public institutions have created uncertainty
and inconsistency in the industrial sector. The industry also faces
problems of compliance with international standards and agreements,
especially in the areas of labor, environment, and trade.
Conclusion

The industry of Pakistan is an important and dynamic sector of the country’s

economy that has contributed to its growth and development. The industry of
Pakistan has some distinctive characteristics, such as its private-public mix,
its resource dependence, its urban concentration, and its dual structure. The
industry of Pakistan has also undergone significant changes and developments,
such as its diversification and expansion, its productivity and quality
improvement, and its competition and challenge. However, the industry of
Pakistan also faces many problems and constraints, such as its infrastructure
deficiency, its tax burden, its policy and regulatory uncertainty, and its
compliance difficulty. The industry of Pakistan needs to overcome these
problems and capitalize on its potential, to achieve its vision of becoming a
competitive and sustainable industrial sector in the 21st century.