ARTICLE: Prime Minister Imran Khan this week pledged to promote the local industry and pursue the policy of "Make in Pakistan" so that people rely on local products that will help curtail the country's import bill. "Our government is vigorously pursuing 'Make in Pakistan' policy to promote export-led industrialisation in the country and our efforts in the last two years have been to further this objective through various interventions, particularly in ease-of-doing-business," the prime minister said during a meeting with a delegation of leading exporters from various sectors, including poultry, rice, fruits, information technology, pharmaceuticals and textile.
Pakistan Tehreek-e-Insaf government, in the first two years of its tenure, did take some steps towards 'Ease of Doing Business', but towards the 'Cost of Doing Business' nothing significant has been achieved except that the import tariffs on some of the raw materials consumed in local produce have been curtailed. To comprehend what really went wrong with 'Make in Pakistan' in the short history of Pakistan, one has to go back a bit in its history and turn of events.
Pakistan, in early 1950s, embarked on an ambitious plan to go for 'Make in Pakistan'. Pakistan Industrial Development Corporation (PIDC) was established to motivate and support the private sector's induction into industry. WAPDA was established for electrification of the country in general and industry in particular. Pakistan Council of Scientific and Industrial Research (PCSIR) was set up to conduct research and development to facilitate local production and entrepreneurs.
Consequently, the 1960s was a decade of remarkable industrial growth, when apart from local entrepreneurs multinational corporations also stepped in. The 1970s was an era when all good done by the local private sector was nationalised and replaced by State-Owned Enterprises (SOEs). The 1980s was an era where nepotism, corruption and inefficiencies in the system started to creep in. The 1990s and thereafter was an era when vested interests, avarice and utter disdain for the rule of law replaced nationalism and all what was in the interest of the state leadership and their elite cronies was considered good for the country.
A liberal import policy regime coupled with a skewed fiscal policy crippled the local industry as did the random induction of IPPs while sidelining other viable options like hydropower, nuclear, etc. As matters stand today, our local industry is all but crippled, SOE losses bleed the exchequer, cost of electric power and fuel is unaffordable for the industry or trade and incompetence combined with corruption in state machinery creates obstacles at every step.
A combination of all above resulted in shying away of investment by local and foreign investors alike. There was a time when multinationals considered Pakistan an ideal market to be in. Phillips had one of its largest manufacturing facilities in the region in Pakistan, producing electronic items, white goods, bulbs, etc. Siemens, too, had a strong industrial base in Pakistan producing high-tech power transformers. So was the case with Areva of France and many others. Not being provided a level playing field they all packed up and left Pakistan. With them also went away the transfer of technology and high end training of local engineers and professionals in marketing and management. For the same reason our once flourishing ceramics and tile manufacturing industry collapsed. And many more met the same fate.
The strategy of the incumbent government to go for 'Make in Pakistan' is the right strategy to generate the much-needed employment, limit imports and enhance exports. To achieve it, the government has to do far more than a few steps taken towards Ease of Doing Business. Equally, if not more, important is the need to devise ways to reduce the cost of doing business. Presently, our products are neither competitive against imported goods nor in the international markets.
(The writer is former President, Overseas Investors Chambers of Commerce and Industry)
Copyright Business Recorder, 2020