Towards a Prosperous Pakistan:

A Strategy for Rapid Industrial Growth

Pakistan Development Forum

Federal Minister Industries, Production & Special

Initiatives

26th April 2005

 2

Strategy for Industrialization

Where are we today?
An assessment of our Industrial performance
so far
Share of Manufacturing in GDP
Export performance
Consistency of Growth
Private Investment performance
Comparison of Job Creation
Manufacturing Technology level
 3

Share of Manufacturing in GDP (%)

1960 1965 1970 1977 1980 1985 1990 2000 2002

Selected Asian Countries

Pakistan 12 14 16 16 16 18 17.6 16.7 18

Indonesia 8 8 10 9 13 24 21 26 25.1

Malaysia 9 9 12 18 21 29 24 28 30

Korea 12 18 21 25 28 30 29 33 41

Developed Countries
Sweden 27 28 - 24 - - - 26 28.2

Germany 40 - 38 38 - 26 28 29.6

UK 32 30 33 25 - - 25 26.4

Japan 33 32 36 33 29 - 28 24 32.3
Source: World Bank - World Development Reports
 Share of Manufacturing in GDP (%age) 4

45
Pakistan Indonesia Malaysia Korea
40

35

30
Percentage Share

25

20

15

10

0
1960 1965 1970 1977 1980 1985 1990 2000 2002
Source: World Bank - World Development Reports
 5

Pakistan’s Share of World Exports

Export of manufactures 1990 2002
World % %
China 1.85 6.21
Mexico 1.06 2.88
Malaysia 0.66 1.57
Thailand 0.61 1.1
India 0.52 0.70
Pakistan 0.18 0.18
Source: WTO, Sherani (2004)
 TRADE BREAKUP World Vs Pakistan-2003 6

World Trade Breakup

Non-
Ferrous Manuf &
Metals, Eng Goods,
1.80% 69.50%

Pakistan Trade Breakup

Mining & Textile &
Agri clothing, Textiles,
Fuel, 66.1%
Products, Misc, 3% 5.60%
10.80%
9.30%

Others 5.6%

Marble
Granite , 0.4%

Agri
Engineering Products,
goods, 3.9% 8.8%

Petroleum, Sports Leather, 6.3%

Chemical,
2.2% Goods, 2.7%
1.7% Carpets, 2.4%
 Industrial Performance of Pakistan : Growth Rate of 7

Manufacturing

12
Total
10

8
% age

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.
 8
20.00
Figure 2.2: Trends in Private Investment (% of GDP)
18.00 India
16.00
Pakistan
Bangladesh
14.00

12.00

10.00

8.00

6.00

4.00

2.00

0.00
1990-91
1980-81
1981-82
1982-83
1983-84
1984-85
1985-86
1986-87
1987-88
1988-89
1989-90

1991-92
1992-93
1993-94
1994-95
1995-96
1996-97
1997-98
1998-99
1999-00
2000-01
2001-02
2002-03
Source: World Development Indicators 2004, Pakistan Economic Surveys 1987-88,
1992-93, 2003-04
 Employment in industry (% of total employment) 9

35
1982 1999 31.7

30

24.4
25

20.3
20 18.4
17.1

15 13.8 13.6
12.9

10

0
Pakistan Thailand Malaysia India
Source: World Development Indicators, Various years
 Industrial Performance of Pakistan: Manufacturing Share of Pakistan in GDP
Total Large Scale Small Scale 10
20

18.39
17.94
18 17.68 17.66

16.65

16

13.99
14
13.09
12.66
12.41 12.48
12.26 12.32
12
% a g e s h a re

10.42

10

8.78 8.85

6
5.36 5.28 5.3
5.18

4.384.41 4.38

4 3.56 3.57

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.
Source: 50 Years of Pakistan Volume I Summary, Statistical Supplement of Economic Survey, 2002-03 and Economic Survey 2003-04.
 11
Technology Intensity in Manufactured Exports (%)
Fig 1. 5 Technology Intensity in Manufactured Exports
90% Pakistan India China Malaysia Thailand
Technology Intensity in Manufactured Exports (%)
80%
90% Pakistan India China Malaysia Thailand
70%
80%

70%
60%

60%
50%
50
40%
%
40%
30%
30%
20%
20%
10%
10%
0%
0%
1981
1981 2000
2000 1981
1981 2000
2000 1981
1981 2000
2000 1981
1981 2000
2000

Resource
Resource Based Low Technology
Low Technology Medium Technology
Medium Technology High Technology
High Technology
Based
Source: Lall, 2003
 12

Our Vision

Re-position the Ministry of Industries,

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.
 13

Our Mission
To increase the share of Manufacturing in
GDP from 18% today to 25% in 2010 and
30% in 2015
To achieve this through
value addition in Textile sector
focus on the engineering sector
making holistic interventions across the
entire value chain in key SME clusters
directly improving living conditions for Labour
 14

Our Mission
reducing the cost of doing business
creating a strategic partnership between
the Public and Private sectors
fostering ownership of Industrialisation
policy by the public at large
creating an institutional framework for
inter-ministerial coordination for
industrialization
 15

Value addition in Textile sector

Upgrading ginning sector

Contamination free cotton
Upgrading productivity of garment
sector
Investing heavily in Fashion design
Creating International brand names
 16

Focus on Engineering Sector

 Engineering Development Board (EDB) as focal
institution
 Chairman & CEO both from private sector
 EDB Role enhanced to create
 Link with International value chain
 Link with Engineering academics
 Bridge between Defence Hi-Tech sector and Private sector
 Bringing an International Vision to existing industry sectors
• Component manufacturing Sector
• Ginning
• Metal Re-rolling
 17

Focus on Engineering & SME Sectors

Creationof Technology Up-gradation & Skill
Development Company (TUSDEC)
Public-Private Partnership
• CEO from private sector
PITAC to function under TUSDEC
Role 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
 18

Focus on SME Sector

Formation of Strategy Working Groups
(SWOGs)
SWOGS 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.D
• Pilot new projects with Holistic approach
 “Island of Excellence” strategy
 19

Focus on SME Sector

Priority Sectors
Phase – I Phase – II
Action Plan ready Action plan by 15th
by 15th May ‘05 August ‘05
Gem & Jewellery Fans
Marble and Granite Sports Goods
Dairy Surgical
Instruments
Fisheries
 Focus on Knowledge Based SME 20

Entrepreneurship
Enterprise Competitiveness Support Fund
Objective:
To upgrade the competitiveness of Pakistani
Industry to respond to the new challenges and
opportunities in the knowledge based and high
tech economy
Activities proposed
Venture Capital
Business Incubators in collaboration with
Universities
Enterprise development fund
• Match-making grants  Credit guarantee  Equity financing
 21

Reducing Cost of Doing Business

Creation of National Industrial Parks
Development & Management Company
(NIP) as Public Private partnership
To develop state of the art Industrial Parks all
over the country
• 1,500 acres Pak Steel Downstream Industrial
area
• Peshawar and Quetta
• Sheikhupura for engineering cluster
• Rural Pakistan
 22

Reducing Cost of Doing Business

The Unemployment challenge
Lopsided job creation
Lahore, Karachi, Faisalabad and the Central Punjab
Engineering triangle
Entire rural hinterland of Sindh and Punjab missing
out
Balochistan Province and large parts of NWFP also
missing out
Must evolve strategy of successful Industrial
Parks in rural areas
Challenges
 24

The Main Challenge

If we are to follow the path of rapid
industrialization and take Manufacturing
share of GDP from 18% to 30% then
Every Ministry involved and Provincial
governments have to work with a single-
minded, focussed vision
A new Institutional framework has to be
developed which dovetails with the world as it
is today
 25

Ministries that Impact Industrialization

MOIP&SI
Petroleum / Water and Power
Science and Tech / Higher Education
Labour
Education – Federal and Provincial
Commerce
Communication / Ports and Shipping / Railways
Finance / State Bank of Pakistan
Provinces
 26

Future Challenges
Energy
Most critical for Industrialisation
Plentiful energy required at most efficient possible
price.
Labour
Simplifying the complex web of regulation.
Enhancing Labour Skills
Labour Welfare
Education
Raising basic education levels
 27

Future Challenges
Transport Sector
An efficient, secure and cost-effective logistics
chain, North-South through Pakistan is
essential
Target 48 hrs from Peshawar to Karachi
Increase Railway for Freight
Port Performance
Reduce Container dwell time from 12 to 4 days
Science and Technology
Institutions which set Standards for Industry
must have Industry focus
 28

Future Challenges
Provincial Governance
Labour regulation
Inspection regimes
Skill training
Livability of Cities
Law and Order
Land Record problems
Thank You
 Industrial Performance of Pakistan: Manufacturing Share of Pakistan in GDP
Total Large Scale Small Scale 30
20

18.39
17.94
18 17.68 17.66

16.65

16

13.99
14
13.09
12.66
12.41 12.48
12.26 12.32
12
% a g e s h a re

10.42

10

8.78 8.85

6
5.36 5.28 5.3
5.18

4.384.41 4.38

4 3.56 3.57

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.