It is a fact little known to the masses that when Pakistan got independence in August 1947, we inherited a marginal 4 percent of the industries from the Subcontinent, and over time and with great fortitude by our ancestors, in 1952, Pakistan Industrial Development Corporation (PIDC) was established that powered private sector to take its first flight.
The era of industrial growth progressed steadily through the Golden Era of the 1960s, only to come to an abrupt and undesired halt in the eighties period from where on we drifted toward becoming a mere trading nation instead of a knowledge-driven economy, widely known for its products around the globe. Today we are struggling to survive through the short-sighted policies that only focus on the top five sectors of export industry of Pakistan that consists of textile, carpets, sports-goods, surgical and leather industry. Pakistani industrialists now, have become a victim of this debacle and lunacy – the unwise strategies creating a divide among different industrial sectors through unfair incentives.
The five sectors were initially brought up for the purpose of sales tax to declare these sectors zero rated but with time these sectors became the main focus when devising economic policies. These particular sectors enjoy discounted electricity and gas rates with additional reduced duties and taxes while the rest of the manufacturing divisions are given no subsidies to boost their competitiveness in the international market, though they are performing better compared to the selected ones.
When I take a glimpse of the annual export reports. It is very surprising to find that many exporting industries from the prioritized five sectors fail to be a part of top exporters, but they are still enjoying all of their incentives. Whereas the other top exporters are left devoid of these benefits. This unfair policy is demotivating our manufacturers where they find themselves struggling more to stay competent in the international market to contribute their share to the national exchequer.
It is important to note that Pakistan’s industrial foundations are laid by SME’s and today these industries are taking a serious hit because of these ill-advised policies that support only a handful setups only. Their impractical plans have damaged the roots of small to medium industrial arrangements of the country.
The unjust bias towards the five sectors has led us to this situation of economic crunch. Every country needs diversity in its export products to meet the ever changing and fast-growing market. But concentrating and over-relying on a few sectors has led us to this drastic yet long forecasted economic destruction that our policy makers failed to see. The country becomes vulnerable to external shocks and global market fluctuations if it depends on the export earnings of limited sectors only; these events lead to trade deficits and affect overall balance of payments.
Pakistan is a country with great regional diversity. Each province has its own set of skills and comparative advantages of different industries, for example, Punjab is known for its rich soil and textile hub.
Balochistan for its rugged terrain full of mineral resources, Sindh for its coastal line fit for catering fisheries industry and Northern Pakistan for its tourism and winter nuts. Today only Punjab is considered as the epitome of industries in Pakistan while the rest of the regions are neglected which means that the country has missed many growth opportunities in the areas where it could have easily evolved using regional strength and resources.
Diversification not only enables a country to tap into multiple markets and industries, fostering overall economic growth and development but also has the capacity to enhance a country's resilience to economic shocks. If one sector faces difficulties, other sectors can compensate and mitigate the impact on the overall economy but unfortunately at present Pakistan has no backup sector ready for the international market to take the front lead if textile takes a hit.
It is high time for the Government of Pakistan to realise the potential of every export-oriented industry and place them on an equal level to enjoy the economic boom. It is without a doubt that many industries suppressed under the top five can single handedly magnify the existing export revenue by four times if given a level playing field. Hence all of these sectors should be given an equal chance to enjoy the incentives in order to allow them to thrive and reflect their prosperity in the economy.
Ismail Suttar
CEO HubSalt
Copyright Business Recorder, 2024