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Industrial problems/challengesand solutions for PakistanIntroduction Pakistan positioned as number 43-44 among the nations of the world in ostensible GDP, 26th in GDP with buying power equality and number 55 on the planet in industrial facility output. Pakistan's mechanical segment represents about ...

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Industrial problems/challenges and solutions for Pakistan Introduction Pakistan positioned as number 43-44 among the nations of the world in ostensible GDP, 26th in GDP with buying power equality and number 55 on the planet in industrial facility output. Pakistan's mechanical segment represents about 24% of GDP. Cotton material creation and clothing producing are Pakistan's biggest enterprises, representing about 66% of the stock fares and relatively 40% of the utilized work constrain. Cotton and cotton-based items represent 61% of fare profit of Pakistan. The utilization of cotton expanded by 5.7% during recent years while the monetary development rate was 7%. By 2010 the turning limit expanded to 15 million shafts and material fares hit $15.5 billion. Other real ventures incorporate concrete, manure, palatable oil, sugar, steel, tobacco, synthetic concoctions, hardware and sustenance preparing . In the previous over three periods. The key hindrances which have decelerated and retarded industrial development in Pakistan are as follows 1950s: The era of rapid industrial growth This was the era of rapid and sustain development growth in Pakistan ‘s industrial sector, there were many new industries installed and were very successful in that time. Private industries were at bloom, while Government also introduced many industries. 1960s: The ere of stabilization In the first decade after the independence, there were seen stability in Pakistan industries, Pakistan export started to bloom, and industry sector was at full shines, there weren’t any major problem, except 1965 war and some other political issues. 1970s: Nationalization and its impacts The Nationalization procedure in Pakistan (or truly just viewed as the "Nationalization in Pakistan") was an approach measure program in the monetary history of Pakistan, first presented, proclaimed and executed by individuals chosen Prime Minister Zulfikar Ali Bhutto and the Pakistan People’s Party to establish the framework of communist financial aspects changes to enhance the development of national economy of Pakistan Since the 1950s, the nation had experienced an expedient industrialization and turned into a mechanical heaven in Asia. But, as time advanced, the work exchange associations and work common laborers had progressively

stressed relations with the modern business oligarch class, having fail to enhance working conditions and neglecting to give a solid and safe condition for the specialists in these mechanical industries (2) 1980s: Russia-Afghan war and pro-industry policies of Zia When all is said in done General Zia era gave monetary improvement and strategy a genuinely low need (beside Islamization) and designating its administration to technocrats, for example, Ghulam Ishaq Khan, Aftab Qazi and Waseem Jaffrey. However, somewhere in the range of 1977 and 1986, the nation encountered a normal yearly development in the GNP of 6.8%—the most elevated on the planet around then—thanks in vast part to settlements from the abroad specialists, as opposed to government policy. The main year of Zia's administration matched with a sensational ascent in settlements, which totaled $3.2 billion/year for a large portion of the 1980s, represented 10 percent of Pakistan’s' GDP; 45 percent of its current record receipts, and 40 percent of aggregate outside trade profit 1990s: The decade of privatization The Privatization procedure in Pakistan (here and there alluded to as Denationalization Programme or essentially the Privatization in Pakistan) was a strategy measure program in the financial time of Pakistan. It was first imagined and actualized by the then-individuals chosen Prime Minister Nawaz Sharif and the Pakistan Muslim League, trying to empower the nationalized ventures towards market economy, quickly after the monetary fall of the Soviet Union in 1989– 90. The program was conceived and visioned to enhance the GDP development of the national economy of Pakistan, and inversion of the nationalization program in 1970s . Post 9/11: Commercialization under Musharraf Major Industrial estates were being developed under Musharraf’s industrial vision: M3 industrial, Sundar industrial estate, Chakri industrial, Gwadar sea port development was initiated. This was industrial bloom where Pakistan industries seen clear growth. There was 26% growth in industrial sector. Exports in 2007 were 18.5 Billion $. Present Situation of Pakistan’s Industrial Sector Currently there is no substantial growth in the industrial sector due to many challenges our industries are facing. Major electricity problems. Industrial Production in Pakistan decreased 3.21 percent in August of 2018 over the same month in the previous year. Industrial Production

in Pakistan averaged 5.26 percent from 1990 until 2018, reaching an all-time high of 35.15 percent in April of 1991 and a record low of -21.82 percent in April of 2000.

Issues Confronting the Industrial Sector of Pakistan a.Economic Issues There are many concerns of Pakistan’s industrial zone, but major problem is Energy crisis there has been major shortfall in toward industrial zone in energy supply. Many small levels are affected more and many more has been closed due to these problems. Another problem is in the banking sector which is affecting the industries as Huge bank spread which affect directly and indirectly. Devaluation of currency is another major concern which is affecting our exports and imports. Pakistani currency is under sustain downfall from last decade and it has disrupted our exports majorly. There is major loss to industry sector due to rupee devaluation, product is kept in low prices to match other international product which is a direct loss to Pakistani industries. b.Social Issues women play a major role in the development of a nation. Here in Pakistan it is opposite they are underrated to do something. Role of women Marginalized in industrial sector or in other word not giving them what they deserve. Role of women in Pakistani industrial sector is as labor while they are not given the major role to avoid the dominance. Overpopulation is another major of Pakistan, population is increasing at alarming rate compare to our country economic growth which is on the opposite side. Dense population, increase jobs demand, increase traffic jams, and many problems associated with increased population affect industrial growth in large. c. Political Issues Terrorism is still our problems which has faded away international and national investment. The security concern affects the local and international investment. Many international investment plans and investor avoid investing in Pakistan due to terrorism in the country. Investor need stability and terrorism is major hinder to get that stability. Flawed policies, international isolation and political instability are major blows to industrial downfall. Corruption is major here due to which foreign investor don’t believe in the system and avoid investment in Pakistan. There is also international isolation due to terrorism and international policies from different countries to prove Pakistan as terrorist country. Unhealthy

policies for taxation on industries, no facilitation of export increase, slow process of government halt the industrial growth. a. 1. 2. 3. 4. 5.

Administrative Issues Poor performance of state-owned enterprises (SOEs) Labyrinthine procedures and processes in government offices Poor law and order situation Weak criminal justice system Lack of focus on research and development

Some Workable Solutions to the Industrial Sector Issues a. Provision of cheap and uninterrupted supply of energy to the industrial sector on preferential basis b. Provision of cheap and easy credit facility c. Maximum extraction and utilization of indigenous mineral resources d. Effective and beneficial use of women workforce e. Provision of necessary healthcare facilities for the labour f. Eradication of the scourge of terrorism g. Research-based and workable industrial policies. h. Sustenance of democracy and political stability.

Issues/ Problems Industrialization

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With a population of 180 million, a geo-strategic location, the required human resources and natural endowments, Pakistan has all the potential to grow as a developed industrial national. Unfortunately, it is still a developing nation even after lapse of more than six decades since it appeared on the world map as a sovereign and independent nation. Having rich in natural resources, the country has been going through major challenges and issues hitting the industrialization include growing power crisis, chronic energy shortage, high interest rate, administrative bottlenecks, bad governance, lack of institutional framework, political wrangling and worsening law and order situation.

 Energy crisis Industry has virtually held hostage by the energy crisis. The country faces an energy emergency. Gas load shedding has become a routine in major industrial cities of the country. The officials have projected a gas shortfall of 10.34 billion cubic feet per day by financial year 2015. The country’s demand for energy, according to one estimate, is expected to rise at the rate of 10-12 percent annually in the foreseeable future, which means that if this rate of increase continues, demand for energy may well double before 2015. The acute energy crisis has virtually suffocated the industry, causing widespread discontentment in the business circles. This could result in closure of more industrial units and increase in the unemployment rate in the war-torn country. The country is losing at least 2 percent of the GDP growth annually due to the power shortages.  Interest rate Under IMF pressure, the government maintained one of the world’s highest benchmark interest rates, in an economy hurt by terrorism and falling foreign investment. The high interest rate has been one of the major reasons behind the fall in the country’s industrial output. During the five-year tenure of the former government of Pakistan People’s Party (PPP), the real gross domestic product (GDP) growth averaged at 3 percent against the required rate of 7 percent, according to the Economic Survey of Pakistan for the fiscal year 2013-14  Poor governance The quality of governance is essential for the development of human resources for industrial growth. The good governance ensures the transparency, efficiency and rationality in the utilization of public funds and national resources, encourages growth of the private sector, promotes effective delivery of public services and helps establish the rule of law. There is a

strong correlation between per capita income and indicators of human development such as adult literacy, life expectancy, infant mortality, political and civil rights  Disputable industrial strategy It is a huge barrier in the way of industrial advancement. In the history of Pakistan, there was a policy of import substitution, in the early 1950s. There was a trend of industrialization in the 1960s. The policy of Nationalization was adopted in Z. A. Bhutto’s period and Zia-ulHaq adopted the policy of Privatization. The investors are always hesitant to make investment in such situations.  Lack of mineral resources There is acute shortage of mineral resources like oil and coal etc. These resources are necessary for industrial development. Due to lack of mineral resources, rate of industrial development in Pakistan is very low. Contribution of natural resources to GDP is 0.8 % in Pakistan.  Low investment and low savings Deficiency of capital is one more major problem in the way of industrial development. Pakistan is fundamentally, underdeveloped and there is shortage of capital in the country. Industrial development is impossible without capital. Sufficient capital is a major condition for industrial development. Total investment and domestic saving are 13.4% and 9.5% of GDP respectively.  Inadequate industrial credit There is shortage of active financial institutions in Pakistan, which may provide credit services to industrialists according to their needs. Terms and conditions for the provision of credit are so tight.

 Unfavorable industrial structure There are inequalities in industrial growth in Pakistan. Manufacturing of consumer goods is preferred over capital goods. No doubt, return on consumer goods is more but capital goods are necessary for economic development.  Limited market for capital goods The narrowness of domestic and foreign markets for the industrial goods is also a major hurdle in the way of industrial development. Small size of market is due to low purchasing power, low standard of goods and high cost of production etc.  Lack of industrial consultancy firms The investment in modern industries is not only costly but also risky. The capitalists are regularly withdrawn and hesitant in investing their capital in new industrial ventures. No doubt, deficiency of capital is a problem in Pakistan but the major problem is that existing capital is not properly utilizing due to lack of consultancy firms.  Lack of industrial research Research work for industrial sector is not satisfactory due to lack of technical education and shortage of technological universities in the country. Improvement in production and reduction in cost of production is impossible due to lack of research. Number of technical and vocational institutions in Pakistan is more than 1522 out of which 1140 are in public sector. These are providing training to 3,00,000 persons.  Frequent breakdown of electricity Like other power resources, electricity is also insufficient in Pakistan to meet the domestic needs. There is irregular supply and frequent breakdown of electricity in Pakistan. It is affecting the industrial production in the country. Growth rate of electricity and gas sector, in Pakistan is -21.1%.

 Economic sanctions Advanced countries are not willing in the improvement of backward countries. They have created various trade zones among themselves. As a result, they import and export among themselves. So, export volume of developing countries remains very low. On the other hand, developed nations have imposed various sanctions on import and export with poor nations.  Adverse balance of payment Adverse balance of payment is a new cause of industrial backwardness. To make industrial development, we have to import modern machinery and advanced technology from other countries. But due to shortage of foreign exchange, we cannot import such items to make rapid economic development. Pakistan is facing the deficit of $ 8.3 billion in its balance of payment during 2010-11.  Corruption Corruption is a great evil, which is still increasing at very high rate in Pakistan. It is found in government as well as private sector also. Due to corruption, illiterate and dishonest workers come forward and cause industrial backwardness. Pakistan is at number 34th at the table of the most corrupt nations and at number 1st in South Asia.  Industrial share Before partition, there were 921 total industrial units in sub-continent. But out of 921 industrial units, Pakistan got only 34 industrial units that are just 3.69 % of total industrial share. Accordingly, we started our economy without industrial sector.  Security concerns Today, security is no.1 issue and the primary reason raising concern among the foreign firms that have already invested in the country. The country direly needs overseas investment to bolster industrialization process. The rising violence would not only hamper the Islamabad’s

efforts to attract foreign investment but also hit industrialization in the country. It will also force the foreign firms to quit their operations in the country.

Solutions or suggestions to improve industrial sector  The government’s industrial policy must focus on improving industrial competitiveness, especially with regard to industrial enterprises including small, medium or large.  The industrial policy should be directed towards increasing the share of the manufacturing sector in the total economy. An effective Industrialization Policy should be formulated giving a vision for the industrial economy for both the short-medium and medium-long term.  More allocation of funds for industrial research is required, which is necessary, for the industrial development.  Industrial sector can be promoted by increasing capital. Saving and investment should be increased to develop industrial sector.  To promote industrial sector, there should be technical know-how.  Tax concession is also needed to increase the investment in new industries. 

In time supply of raw material is necessary for the improvement of industrial sector. Advanced infrastructure is necessary for industrial development of Pakistan.

 Financial institutions should provide credit facilities to industrial sector at flexible terms and conditions.  There should be expansion of markets, at domestic and foreign level, of industrial goods. Foreign investment should be encouraged; more incentives should be given to investors. Political stability is compulsory for the development of industrial sector.

 High degree of technical education is required to produce skilled, technical and efficient work force. Problem of load-shedding and irregular supply of electricity should be removed. 

Commercial policy and self-reliance policy should be adopted to remove industrial backwardness. Foreign exchange reserves and the balance of payment position should be favorable to develop industrial sector .

 The government must ensure that the basic physical infrastructure, capital resources, human resources and knowledge resources are adequately developed with special focus on the country’s industrial growth and competitiveness. 

The government should formulate policies to promote the diversification of industrial production. It must remove all the impediments to industrial development, which include such government services, red tape, tax administration, commercial laws, labor issues.

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It must ensure optimum utilization of existing industrial capacities and bring about revival of sick and closed industrial units in the country. The country’s industrial policy should be based on the principal aim of self-reliance. The government should encourage close collaboration between public and private sectors in setting up some of the large industrial ventures in the country .

References:

1. https://en.wikipedia.org/wiki/Industry_of_Pakistan 2. Raza, Syed Rasul; Sani Panwar (2008). "5: Nationalization". Zulfikar Ali Bhutto: The architect of Pakistan (webbook). Los Angelos, Karachi (Pakistan): Syed Rasul Raza. pp. 29–32 3. Press Release. "Nawaz Sharif's privatization". Nawaz Sharif's privatization. And Report. 4. http://hamariweb.com/articles/21991 5. http://jworldtimes.com/jwt2015/magazine-archives/jwt2016/october2016/industrial-sector-ofpakistan-situation-issues-and-solutions/

6. jworldtimes.com/jwt2015/.../industrial-sector-of-pakistan-situation-issues-and-solutions/ 7. blog.pakistaneconomist.com/2018/02/.../industrial-development-pakistan-issues-challeng......