Industrialization refers to process of manufacturing consumer goods and capital goods to create social overhead capital in order to provide goods and services to individual and businesses.

Public Sector Orga izati Th s w a p rat g v r m t ficiary is g ral p lic y Orga izati Th

Private Sector s w privat a p rat w rs y

ficiary is c s mi g p lic wh s s g a s rvic s It is pr fit ri t f r pr fit

It is

t pr fit- riv tw y th law

N c mp titi is i v lv rga izati s P licy cisi s ar

C mp titi

is i v lv

It is ma ag r th r l s f shar h l rs Exampl s : R tail st r s, charita l rga izati s, cr it i s

Exampl s : KESC, PIA, Pakista Railways

industries remained neglected by private sector due to: ‡ Lack of expertise ‡ Experience ‡ Capital & Technical know how In such a desperate situation PIDC (Pakistan Industrial Development) made a breakthrough .When Pakistan came into being.

‡ The c r rati starte f cti i fr 1952 Mai fu cti f t e c r rati : stries i  t esta lish refera l those i which ri ate sector i ot show i terest Or  In s ch industries which were of ital i ortance from securit and economic oint of iew .

cement. harmaceutical. a er oard and news rint. sugar. Textile. chemicals. Hea engineering included iron and steel. Fertilizers. hea chemicals. Shi uilding. etro chemicals. The included Jute. and Ex loitation of marine fisheries .‡ Ori inall made res onsi le to romote 15 s ecified industries. natural gas. coal & eat.

all round de elopment in industrial sector emerged ‡ The countr ecame self sufficient in most of the agro ased industries ‡ The period 1960-1970 proved to e the est period of economic histor of the countr regarding industrial investment made private sector .‡ In the de elopment of large and small scale industries is er lauda le ‡ In a short period of one decade1957-1967.

fiscal and trade policies .Such a good performance of the private sector was also the result of appropriate government¶s industrial. commercial.

Main features of government¶s helpful policies are:  Extended li eral tax concessions  rotection to infant industries  Required infrastructure facilities were full provided for the growth and expansion of industries  Introduction of export onus scheme  Export onus vouchers stimulated imports of consumers as well as capital goods Cont«. .

 Import of industrial machiner against li eral issues of licenses helped a lot to the growth of industries  Commercial anks and insurance companies. esta lished in private sector .


‡ I J 1972.Pakista I strial D v l pm C rp rati (PIDC) ha s cc ssf lly sta lish 60 i strial its. t .

‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Fertilizers Ship il i g J te Mills Cement fact ries Chemical plants Heavy Mechanical C mplex Electricity C mplex S gar industries Textiles Paper B ard and Newsprint W len mills Distri uti n f Natural gas etc. .

‡ The nationalized industries were not paid full compensation. ‡ Nationalization distur ed the investment climate in the private sector. ‡ The a sence of consistent policy towards the private sector y the Government. .‡ The nationalization of asic industries discouraged private sector investment. ‡ The industrialists who had already lost assets in the former East akistan were not ready to invest even in small industries.

‡ Flour milling. . ‡ Vegeta le ghee were nationalized in 1973.‡ The G vernment gave repeated assurance in 1972 that no further industry would e nationalized. ‡ Commercial anks and Shipping were nationalized in 1974.Life insurance was nationalized in late 1972. rice husking and cotton ginning were nationalized in 1976.The promise was not kept and to the contrary.

‡ The Government is not satisfied with the profita ility.‡ The increasing demands of la our.operational efficiency and the quality of products of the public industrial unit.resulted in low level of investment. the social and political unrest .It formulated and implemented an industrial policy wherein the private sector was to play the major role. ‡ The Foreign investors were reluctant to invest in Pakistan due to political uncertainty and fear of further nationalization. .


.‡ Privatization is a process by which the Government of a country transfers the state owned enterprises to the private sector.

‡ To reduce the drain of government resources caused y the losses of the state owned enterprises. ‡ To improve productivity. . ‡ To create greater opportunities for the private sector to expand and modernize these enterprises. ‡ To release resources of the government for the development of social and physical infrastructure. ‡ To develop a via le capital market. efficiency and profita ility of these assets.

‡ To produce goods according to the satisfaction of the customers.‡ To facilitate economic activities rather than to complete or interfere unduly with economic activities. . ‡ To relieve public enterprises from repeated political interferences.


‡ Decreasing the number of existing employees or reducing the size of staff employed in an organization and still maintaining and promoting the efficiency of the enterprises. .

‡ ‡ ‡ ‡ ‡ ‡ ‡ Downturn in business Improved technology Merger Transfer of work Reduced funding Overstaff Preparation for privatization .


‡ ‡ ‡ ‡ ‡ ‡ ‡ Public and Private Sector ±An Introduction The Private Sector in Pakistan The Golden years . 1947-1967 The fall of Private Sector The Public Sector in Pakistan The Ascendency of the Public Sector . 1972-1977 Post Ascendency Period .

sugar and textiles. ‡ It set up industries in the field like fertilizer.‡ The private industrial sector in Pakistan was progressed through the efforts of Pakistan Industrial Development Corporation(PIDC). chemicals. cement. .

‡ A number of industries were established in joint venture with Iran. ‡ After laying a firm industrial base. China and Russia. . PIDC makes disinvestment in some of the projects and transferred them to the private sector.

. ‡ The State Provided technical training.‡ The Government set up 10 industrial estates and provided infrastructure facilities . ‡ Protection was given to infant industries like electrical cables .steel rerolling etc. paints .

‡ The commercial banks and insurance companies in the private sector helped in financing industrial development.‡ Export Bonus Scheme in 1959 helped to boost the exports of Pakistan. . ‡ The government gave liberal tax concessions to industrial undertakings.

paper and sugar mills were divested to the private sector.‡ Machinery and spare parts were imported on a large scale which helped in the expansion of industries. ‡ Major industrial units that included jute. . ‡ Heavy Mechanical Complex at Taxila and Machine Tool Factory at Landhi were established in the machinery sector.

‡ The total investment in private sector dropped from Rs.‡ Nationalization of industries in 1972 was the biggest cause of the fall of private industrial sector in Pakistan.650 million during 1976-1977 .1358 million in 1970-1971 to Rs.

locomotive assembly and manufacture and chemicals were transferred to the public sector. electrical equipment. ‡ The nationalized industries were not paid full compensation. . heavy engineering. ‡ The foreign investors were reluctant to invest in Pakistan due to fear of further nationalization.‡ The basic industries including iron and steel. basic metals .

‡ The devaluation of currency to the extent of 131% raised the cost of machinery which resulted in rapid cost inflation. social and political unrest resulted in low level of investment in private sector. ‡ Despite the repeated assurance of the government to stop nationalization in 1972 life insurance. banks and shipping and flour mills were nationalized during 1972-1974. .‡ The ever increasing demands of labor.

increasing employment were the core reasons of nationalization.‡ The public sector of Pakistan has its roots from 1972 when private industrial units were nationalized. ‡ To eliminate the concentration of wealth in few hands. raising the volume of production. .

‡ In 1972. petroleum and shipping companies and private sector banks were nationalized. 32 basic industries and 3 life insurance companies were transferred to public sector. . ‡ During the period of 1973-1974.‡ The share of public industrial sector increased from 7% in 1972 to 71% in 1977.

. ‡ In 1977. the process of nationalization faded as no big industries were brought to public industrial sector of Pakistan except rice husking units.‡ The control of the state extended to SME sector in 1975 & 1976 with flour mills and cotton ginning factories nationalized.

‡ Most of the industrial units were denationalized and brought back to their respective owners.‡ General Zia-ul-Haq came in to power in 1977 and immediately took measures to promote Private Sector in Pakistan. .

. ‡ The sixth Five Year Plan (1983-1988) specifically adopted privatization as a central theme.‡ The private sector was further encouraged by the introduction of fiscal incentives in 19821983 such as tax holidays and rebates in custom duty.

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