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Pakistan’s Industry

  • Syed Fazl-e-Haider
  • Apr, 2019
  • 644
  • Country diary


Karachi: now is the time to develop an industrial policy, provide a clear-cut framework for long-term development, increase investment, broaden the base and create jobs

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 industrialisation include the 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.

Pakistan’s industrial sector accounts for about 24 percent of the gross domestic product. Cotton textile production and apparel manufacturing are Pakistan’s largest industries, accounting for about 66 percent of the merchandise exports and almost 40 percent of the employed labour force. Cotton and cotton-based products account for 61 percent of export earnings. The consumption of cotton has increased by 5.7 percent over the past five years while the economic growth rate was 7 percent. By 2010 the spinning capacity increased to 15 million spindles and textile exports hit $15.5 billion. Other major industries include cement, fertiliser, edible oil, sugar, steel, tobacco, chemicals, machinery and food processing.

It is beyond irresponsible, perhaps even stupid, not to have an industrial policy in a country like Pakistan, abundant in its resource base but reeling under the pressure of veiled vested interests. While capital is diverted to short-term high-return options, millions are forced to live in subhuman conditions without stable jobs.

Now is the time to develop an industrial policy, provide a clear, sustainable framework for long-term development, promote investment, broaden the industrial base and create substantial jobs.


Industry has virtually held hostage by the energy crisis. The country faces an energy emergency. Gas cuts have 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 gross domestic product growth annually because of the power shortages.

The liabilities to the entire energy chain or circular debt continued to increase in the absence of any plan for power sector reforms. The circular debt has now reached Rs. 400 billion mark. The circular debt problem emerged due to difference between production cost of electricity and the tariff charged from consumers, which forced the government to provide subsidy. The government failed to bridge the gap in power production costs and the money paid by utility consumers. Higher cost of furnace oil forced the government to raise power tariff, but the consumer tariff is still believed to be less than the cost of power. The expensive power particularly for commercial and industrial sectors will further fuel the inflation pushing more people into extreme poverty in the country.


Under the International Monetary Fund 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 four-year term of the former government, the real gross domestic product growth averaged at a little above 3 percent against the required rate of 7 percent, says the Economic Survey of Pakistan for the fiscal year 2013-17.

The reduction in discount rate to single digit could provide some relief to the ailing industry.

The private sector can play a supreme role in industrialising the country. The execution of any industrial programme depends on investment of foreign capital, coupled with technical skill. The central bank’s tight monetary policy has not allowed the private sector to play its key part as engine of growth. T...

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