New industrial policy aims to sustain growth rate of 8% pa

[Lahore_Real_Estate]

* Government yet to approve Industrial Policy 2011

By Ijaz Kakakhel

ISLAMABAD: The Industrial Policy 2011—awaiting approval from government—is aimed at sustaining growth rate of 8 percent in manufacturing sector per annum—which will help double the manufacturing output in the next ten years.

Other goals of the policy is the expansion of the currently stagnant industrial employment from the current 13 percent of labour force to at least 20%. Accounting for employment elasticity means an addition of 4 million workers to the industrial workforce, who will need to possess different and higher skills to succeed in the global competitive environment.

After proper consultation with stakeholders, the Ministry of Industry and Production has forwarded the Industrial Policy 2011 to the government for approval, sources told Daily Times Monday. The new policy will help in diversification from traditional resource based/low technology enterprise to medium and high technology enterprise.

Under the new policy, a group of primary industries will be supported in order to improve access and provide lower cost of inputs for value addition. These include steel and chemicals. Pakistan’s domestic production of steel and its intermediate products is barely 18% of current demand (7 million tonnes used annually, which is expected to increase sharply as the economy picks up). Moreover, special steels are nearly all imported whether for construction, tools dies and fixtures, machinery or electrical machines.

Steel use in Pakistan has seen average growth rates of 6 to 7 percent in recent years, which is in line with global trends, showing growth of around 6 percent. It is forecast that world’s steel demand in 2012 will grow further by 6.0% to reach a new record of 1,441 mmt.

According to the new industrial policy, Pakistan possesses large deposits of iron ore, but like the rest of the mining sector, this potential is not exploited because large scale mechanised mining has yet to come to the country. This in turn adversely affects the competitiveness of downstream manufacturing which is heavily reliant on steel.

Similarly, the major porphyry deposits of copper and gold, which straddle the Pakistan-Afghan border regions, need to be exploited quickly. It is emphasised that the need of the hour is to attract major investment in the mining sector through transparent and professional agreements, which give comfort to foreign investment with its expertise of large scale mining (missing in Pakistan) and the economic rights of the provinces and federation.

In this regard, the industrial policy states that over the next five years, the government will reform the steel sector and extend full support to develop indigenous metallurgical capabilities. While the capacity of Pakistan Steel Mills will be increased substantially in the next ten years and more metallurgy institutes will be set up in national universities, foreign investment in the sector will be encouraged based initially upon imported iron ore, with a transition towards exploitation of the large deposits of iron ore in the country.

The policy further revealed that the proposed Industrial Development Board will launch a comprehensive programme focusing the reform of the steel sector within six months. The copper and gold deposits at Reqo Deq area will be rapidly brought into production with gradual progressive move towards refining these metals. Like steel, nationalistic slogans need not come in the way of good business models.

The 2011 Industrial Policy further revealed that the chemical sector is the biggest component in world trade, with values nearly the same as that of machinery and equipment. Pakistan currently imports the bulk of its basic and secondary chemicals (imports total nearly $4 billion per annum), which reduces competitiveness in the global market. In this regard: The government will facilitate the establishment of a petrochemical complex near a major port, or refinery as a public-private partnership.

The policy also stresses establishment of Industrial Clusters and Science Park.

Pakistan boasts several industry hot spots (locations where substantial industry and commerce exists around a particular range of products ranging from agribusiness to engineering). There is a need to strengthen these clusters through provision of basic services, infrastructure and linkages. In addition, there is a need to build stronger linkages between industry, academia and government.

In this regard, the Industrial Development Board will develop a list of selected hotspots around the country. These will be accorded the status of industrial clusters and guaranteed access to electricity and gas. These hotspots will also be linked with universities and research stations, and provided with soft and hard infrastructure. These will also be given priority in PSDP for increased allocation of recourses for the provision of health and education.

Finally, the government will establish a series of 1000 acre “Science Park” in the country to host technology-intensive enterprises, with the first one being set next to Islamabad to host technology-intensive enterprises. These Parks will be provided uninterrupted power supply, telecom hubs, security, management infrastructure, restaurants, accommodation, convention centers, entertainment, sports facilities etc. The government will absorb initial start-up cost for the science park.

The sources claimed that the New Industrial Policy 2011 would help the country in achieving maximum industrial goods indigenously with creation of jobs opportunities and many more.