Towards a Prosperous Pakistan: A Strategy for Rapid Industrial Growth Pakistan Development Forum Federal Minister Industries, Production & Special Initiatives 26 th April 2005
Strategy for Industrialization 2 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
45 40 Share of Manufacturing in GDP (%age) Pakistan Indonesia Malaysia Korea 3 35 30 Percentage Share 25 20 15 10 5 0 1960 1965 1970 1977 1980 1985 2000 2001 Source: World Bank - World Development Reports
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) 4
TRADE BREAKUP World Vs Pakistan-2003 5 World Trade Breakup Non-Ferrous Metals, 1.80% Manuf & Eng Goods, 69.50% Pakistan Trade Breakup Mining & Fuel, 10.80% Agri Products, 9.30% Misc, 3% Textile & clothing, 5.60% Textiles, 66.1% Others 5.6% Marble Granite, 0.4% Engineering goods, 3.9% Agri Products, 8.8% Chemical, 1.7% Petroleum, 2.2% Carpets, 2.4% Sports Goods, 2.7% Leather, 6.3%
Industrial Performance of Pakistan : Growth Rate of Manufacturing 6 12 10 Total 8 % age 6 4 2 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.
20.00 Figure 2.2: Trends in Private Investment (% of GDP) 18.00 16.00 14.00 12.00 10.00 8.00 6.00 4.00 2.00 0.00 Source: World Development Indicators 2004, Pakistan Economic Surveys 1987-88, 1992-93, 2003-04 7 1980-81 1981-82 1982-83 1983-84 1984-85 1985-86 1986-87 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 India Pakistan Bangladesh
Employment in industry (% of total employment) 8 35 30 1982 1999 31.7 25 24.4 20 20.3 17.1 18.4 15 13.8 12.9 13.6 10 5 0 Pakistan Thailand Malaysia India Source: World Development Indicators, Various years
20 Industrial Performance of Pakistan: Manufacturing Share of Pakistan in GDP Total Large Scale Small Scale 9 18 16 14 12 % age share 10 8 6 4 2 0 1950s 1960s 1970s 1980s 2000-01 2001-02 2002-03 2003-04 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.
90% 90% 80% 80% 70% 70% 60% 60% 50% 50 40% % 40% 30% 30% 20% 20% 10% 10% 0% 0% Technology Intensity in Manufactured Exports (%) Fig 1. 5 Technology Intensity in Manufactured Exports Pakistan India China Malaysia Thailand Technology Intensity in Manufactured Exports (%) Pakistan India China Malaysia Thailand 1981 1981 2000 2000 1981 1981 2000 2000 1981 1981 2000 2000 1981 1981 2000 2000 10 Resource Based Low Technology Medium Technology High Technology Based Source: Lall, 2003
Our Vision 11 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.
Our Mission 12 To increase the share of Manufacturing in GDP 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
Our Mission 13 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
Value addition in Textile sector 14 Upgrading ginning sector Contamination free cotton Upgrading productivity of garment sector Investing heavily in Fashion design Creating International brand names
Focus on Engineering Sector 15 Engineering Development Board (EDB) as focal institution Chairman & CEO both from private sector EDB 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
Focus on Engineering & SME Sectors 16 Creation Creation of Technology Up-gradation & Skill Development Company (TUSDEC) Public-Private 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
Focus on SME Sector 17 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
Focus on SME Sector 18 Priority Sectors Phase I Action Action Plan ready by 15 th May 05 Gem & Jewellery Marble and Granite Dairy Phase II Action Action plan by 15 th August 05 Fans Sports Goods Surgical Fisheries Furniture
Focus on Knowledge Based SME 19 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 Activities proposed Venture Capital Business Incubators in collaboration with Universities Enterprise development fund Match-making grants Credit guarantee Equity financing
Reducing Cost of Doing Business 20 Creation 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
Reducing Cost of Doing Business 21 The 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 Must evolve strategy of successful Industrial Parks in rural areas
Challenges
The Main Challenge 23 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 A new Institutional framework has to be developed which dovetails with the world as it is today
Ministries that Impact Industrialization 24 MOIP&SI Petroleum / Water and Power Science Science and Tech / Higher Education LabourLabour Education Federal and Provincial Commerce Communication / Ports and Shipping / Railways Finance Finance / State Bank of Pakistan Provinces
Future Challenges 25 Energy Most Most critical for Industrialisation Plentiful energy required at most efficient possible price. Labour Simplifying the complex web of regulation. Enhancing Labour Skills Labour Labour Welfare Education Raising Raising basic education levels
Future Challenges 26 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 Port Performance Reduce Container dwell time from 12 to 4 days Science and Technology Institutions which set Standards for Industry must have Industry focus
Future Challenges 27 Provincial Governance Labour regulation Inspection regimes Skill training Livability of Cities Law and Order Land Record problems
Thank You