Large Scale Manufacturing (LSM) is dominating the manufacturing sector of Khyber Pakhtunkhwa by contributing 7 percent to Gross Domestic Product (GDP) during 2016-17, said the latest KP Economic Review released recently. Manufacturing is considered as backbone of economy of a region, which provides employment opportunities to a bulk of population. It is second largest sector of the economy with a share of 10 percent to GDP. The sector is mainly divided into three sub-sectors namely Large-Scale Manufacturing (LSM) Small Scale Manufacturing (SSM) and Slaughtering. According to Labor Force Survey of Pakistan 2014-15, the employment share of manufacturing in Khyber Pakhtunkhwa's total labour force is 10.18 percent.
During the fiscal year 2016-17, the LSM dominated the whole sector by contributing 7 percent to GDP and 73 percent to manufacturing sector followed by SSM, which accounts for 2 percent of total GDP and 19 percent to manufacturing sector. The third component of this sector is slaughtering, which accounts for 0.8 percent of overall GDP and 8 percent to manufacturing sector.
The growth of manufacturing sector is depending on better availability of utility services, enabling environment, credit to private sector and capital market gains etc. The growth of this sector suffered in past due to non-availability of the desired inputs and poor law and order situation. The major hurdle in the growth of the manufacturing sector was power shortage, which is managed by the government for industrial purpose through providing separate electricity transmission lines that give uninterruptible electricity to industrial estates in Khyber Pakhtunkhwa.
In Khyber Pakhtunkhwa, the manufacturing sub-sector recorded a growth of 10.4 percent in the fiscal year 2015-16 against 0.42 percent in 2014-15, but overall industries sector witnessed a growth of 4.5 percent in FY 2015-16 as compared to 5.4 percent in 2014-15 due to the negative trend in Electricity Generation & Distribution, sub-sector of industries sector, which decreased by 53 percent.
LSM showed a growth of 11.7 percent during fiscal year 2015-16 as compared to -1.63 percent in 2014-15. The historical timeline data shows that LSM grew by 12 percent in 2015-16 as compared to 2012-13, where the growth rate of LSM was -6.5 percent, while small scale manufacturing and slaughtering industries maintained their growth for the same period by 8 and 4 percent respectively.
The industry specific data shows that the sugar industry in Khyber Pakhtunkhwa has recorded a highest growth rate of 135 percent, electric bulbs showed 73 percent, cigarettes showed 15 percent, cement and ceramics shows 10 percent and woolen products recorded a growth of 8 percent, which match industry, edible oil and ghee, fertilizer industry, paper & paper board industry, beverages and textile industries showed a decrease of 24 percent, 15 percent, 10 percent, 8percent, 3.8 percent and 1 percent, respectively in production.
Textile spinning units and integrated plans with weaving and upward integration is another virgin sector after tourism in Khyber Pakhtunkhwa, offering a great investment. Special allocation of gas connection for captive and industrial use is being solicited by the provincial government from the federal government.
In Khyber Pakhtunkhwa, raw material for cement production is abundantly available such as gypsum and limestone, which is not only benefiting current producers, but also attracting new investors to the market. Several cement industries are operating in the province including Lucky Cement, Bestway Cement, Cherat Cement and Kohat Cement.
The sale of pharmaceutical industry had doubled both in domestic as well as in international market making it a lucrative sector for investment. The success of pharmaceutical industry located in Peshawar, Nowshera and Hattar areas is a role model and further supports the development of new units and expansion of existing ones in the province.
The national furniture industry is exporting annually around Rs 1200 million. There are a total of 71 furniture factories in Khyber Pakhtunkhwa and most of them export furniture to international markets.
Different types of wood is easily available in the province including Rose Wood to cater for raw material for various industries, including match manufacturing, particle board and furniture industry, which are benefiting in terms of both cost and quality, with high export potential.
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