INDUSTRIAL SECTOR OF PAKISTAN

1. DEFINITION OF INDUSTRY
Industry is used as short hand term to describe the making and selling of goods as well as
services.
1.1.MANUFACTURING INDUSTRY
Manufacturing industry includes production of goods and Materials, e.g. the making or
production of things in factories.

1.2.SERVICES INDUSTRY
Service industry includes services and assistance in daily life goods and products, e.g. a
commercial activity that provides services by advertising/ hotel/ tourist/ entertainment.

2. MAJOR INDUSTRIAL SECTORS OF PAKISTAN

Textile industry, Sugar industry, Cement, Leather industry, Chemical industry, Fertilizers,
Engineering industry, Telecommunication and Transport.

3. CHARACTERISTICS AND TRENDS OF PAKISTAN’S INDUSTRIAL SECTOR

3.1. SERVICE INDUSTRY
Services sector consists of four major sectors in Pakistan that is; distributive, producer, personal
and social services. These sectors are further distributed in different subsectors. It comprises
various service industries including warehousing and transportation services; information
services; securities and other investment services; professional services; waste
management; health care and social assistance; and arts, entertainment, and recreation. Services
sector contributing 61.21% in GDP of Pakistan. Service sector posted a growth of 4.71 percent in
fiscal year 2018-2019.
3.2.MANUFACTURING INDUSTRY
Manufacturing sector plays pivotal role in the growth of overall economy. It is 2nd largest sector
after Services sector, with contribution of 13.56 percent to GDP of Pakistan during the Fiscal
Year 2017-18. Manufacturing sector serves as backbone of the economy and mainly consists of
Large Scale Manufacturing (LSM), Small & Medium Scale Manufacturing and Slaughtering.
According to National Accounts Committee (NAC), during fiscal year 2018-19, overall
industrial sector grew by 1.4 percent against targeted rate of 7.6 percent, however, manufacturing
sector shrunk by -0.3 percent against targeted rate of 7.8 percent, Large Scale Manufacturing
(LSM) by -2.1 percent against targeted rate of 8.1 percent while SME sector grew at the rate of
8.2 percent. Industrial sector contributes to 20.27% in the GDP of Pakistan in fiscal year 2018-
2019.
Pakistan's Industrial production fell 8.0 % Year on Year in October 2019, following a
drop of 5.7 % Year on Year in the previous month. Pakistan's Industrial production
index growth rate Year on Year data is updated monthly, available from Apr 2008 to Oct
2019, with an average rate of 2.4 %. The data reached an all -time high of 14.2 % in Jul
2017 and a record low of -15.1 % in Mar 2009.
3.3.CHARACTERISTICS AND TRENDS IN PAKISTAN’S IT INDUSTRY
The world is moving fast towards 5G, Industrial Internet of Things (IIoT), and Artificial
Intelligence (AI), the key technologies for Fourth Industrial Revolution (4IR). With the advent of
4IR, new opportunities of prosperity are being created. The new wealth creation paradigm is
based on data-intensive decision systems.
In the information technology sector, National Incubation Centers (NICs) have been established
at Islamabad, Karachi, Lahore, Peshawar and Quetta. Currently, about 200 start-ups are housed
in these facilities. Furthermore, many of these start-ups have the potential to create marketable
products and services have been approved for funding.
In telecommunication sector, as per February 2019, cellular tele-density increased from 72
percent to 75 percent. The 3G/4G broadband services further increased subscribers from 49
million to 65 million.

4. PROBLEMS OF INDUSTRIAL SECTOR OF PAKISTAN

4.1. WEAK INFRASTRUCTURE
The provision of adequate infrastructural facilities including power supply, telecommunication,
and transportation network is a prerequisite for industrial development. The availability of
quality infrastructure lowers the transaction cause of firms and hence directly affects their ability
to compete in the global market.
4.2.BAD GOVERNANCE
The quality of governance is essential for the development of human resources for industrial
growth. The good governance ensures the transparency, efficiency and rationality in the
utilization of public funds and national resources, encourages growth of the private sector,
promotes effective delivery of public services and helps establish the rule of law. There is a
strong correlation between per capita income and indicators of human development such as adult
literacy, life expectancy, infant mortality, political and civil rights.
4.3.UNINTERRUPTED AND AFFORDABLE POWER SUPPLY
Problem of power supply is a major obstacle to business expansion. Consumption of fuel and
electricity has been increasing day by day, but unfortunately, Supply of power is decreasing
rather than increasing. Due to power supply failure industrial sector is facing decline. Increase in
prices and shortage of supply has increased the cost of production of finished goods in industry.
The main cause for the low growth in recent year is due to shortage of power supply. The
Government needs special attention to overcome the shortage of power supply.

4.4.DISCONTINUITY OF INDUSTRIAL POLICIES

The present industrial strategy is the amalgam of various policy measures taken at different
points of time and therefore it is essential to trace out the policies pursued and the measure taken
at various point in time.
All the measures adopted in the 1950’s to protect the industries continued in 1960’s as well. A
key development of 1970’s has been the emergence of a strong small scale industrial sector
comprising mainly the textile, leather, sports goods and surgical instruments created employment
opportunities for the countries growing Labour force.
The industrial policy during 1980's accorded high priority to the restoration of business
confidence, which was eroded by the nationalizing policies of the 1970's.
4.5.LACK OF DIVERSIFICATION
A broad based industrial sector is essential for exploiting the opportunities offered by
globalization. The economic growth can be achieved through the development of a well-
diversified and export driven industries.
In the dynamic areas of electronics, machinery, and metal products, Pakistan has made hardly
any progress, while the engineering sector is dominated by either assembly operations based on
imported parts, or the production of basic and simple components.
4.6.PUBLIC SECTOR ENTERPRISES
The nationalization drive accompanied by the increasing dominance of the public sector during
the seventies severely dented business confidence which led to a sharp reduction in private
investment.
Though the role of public sector has been drastically curtailed as a result of deregulation and
privatization policies initiated in the 1980s, some industries continue to be dominated by the
state owned enterprises. Some of these enterprises produce primary raw materials and
intermediate inputs and resultantly the inefficiencies of the public sector have an adverse impact
on the downstream industries.
State owned enterprises (SOE) have become white elephants for Pakistani economy because
these enterprises need drastic structural, technological and management level transformational
changes.
4.7.SECURITY CONCERNS OF STATE
Today, security is No.1 issue and the primary reason raising concern among the foreign firms
that have already invested in the country. The country direly needs overseas investment to
bolster industrialization process. The rising violence would not only hamper the Islamabad’s
efforts to attract foreign investment but also hit industrialization in the country. It will also force
the foreign firms to quit their operations in the country.
State needs to ensure fool proof security for business installations and business persons so that
industry could prosper in secure and healthy environment.

5. WAYS TO BOOST INDUSTRIAL SECTOR OF PAKISTAN

5.1.PROMOTING PUBLIC PRIVATE PARTNERSHIP
Strategy to boost industry with such partnership has proven effective and beneficial for industrial
sector. Pakistan having state owned enterprises is going for this strategy to boost productivity
and efficiency of state enterprises. Through such partnerships exchange of technology, skills and
strategies happens which is beneficial for industrial growth of Pakistan.
 5.2.ADVANCED TECHNOLOGY EQUIPMENT AND SKILLED MANPOWER
Main industry of Pakistan namely textile and sugar industry have outdated equipment for
production which makes the finished product less competitive to foreign goods. Industries have
to take subsidies to become market competitive which is detrimental for economy of Pakistan.
To boost industry the updated and advanced equipment should be installed and manpower should
be properly trained according to international procedures and practices. For this government can
help via subsidizing the equipment and making courses for staff free of cost or subsidized.

5.3. IMPROVED INDUSTRIAL GOVERNANCE

State can boost industrial growth by equipping policy makers with advanced and ongoing
international governance trends. It will boost capacity utilization of state officials and they will
be able to make sound policies for industrial growth. These policies will be stable and continuing
without any impact of changing political scenarios in state.
5.4. DEVELOPMENT OF NEW IDUSTRIAL ZONES AND SPECIAL ECONOMIC
ZONES UNDER CPEC
For industrial boost timely development of special economic zones is necessary. These zones
will create new opportunities in almost all sectors of industry and employment opportunities will
be created along these zones.
Adding that regional wise development of economic zones is also need of the hour to avoid
centralization in urban cities and to create decentralized industrial ecosystem in the country.
5.5.BOOST SME SECTOR
SME sector is backbone of every economy; this sector can be boosted by giving easy credit
facilities, subsidies in operation & maintenance and subsidized marketing facilities in home and
abroad. Interest rate if lowered then SME can be boosted at significant levels.

5.6. DIVERSIFIED INDUSTRIES

World is going for industry diversification and broadened industrial base. Pakistan cannot rely on
a small number of industrial enterprises with domination of textile and sugar industries. To
become competitive in international arena Pakistan needs to get equipped with latest
technologies and almost widened industrial base.
For this research and development is needed in soft and technical skills at all levels of staff.
Updated Information technology, advanced telecommunication, industrial automation, internet of
things and artificial intelligence are also required to diversify industrial sector of Pakistan.
5.7. HUMAN RESOURCE DEVELOPMENT AND EASE OF DOING BUSINESS
Human resource development is necessary to make industrial sector more competitive in world.
Right person for the right job with required skills is need of the hour of industrial sector.
State is striving to facilitate entrepreneurs and foreign investor by giving incubations and
facilities to establish business and with the time these efforts by government are improving.
 6. FACILITATION BY THE GOVERNMENT
The government has established several institutions to help the private enterprises in a number of
areas including advisory services, marketing support, and export promotion.
6.1. SMALL AND MEDIUM ENTERPRISES DEVELOPMENT AUTHORITY
(SMEDA)
Small and Medium Enterprises Development Authority (SMEDA) provide business development
services to the SMEs through its help desks that have been set up in four regional offices. These
help desks project briefs, pre-feasibility studies and information on regulatory procedures, along
with advice on specific problems. It carries out extensive training need analysis of different SME
zones and conduct training courses and workshops focusing on developing skills that are in
demand.
6.2. ENGINEERING DEVELOPMENT BOARD (EDB)
`
The Engineering Development Board (EDB) has been established by the government for the
promotion of engineering industry in Pakistan. The main objectives of EDB are to formulate and
coordinate government policies relating to the engineering sector and to develop an overall
strategic engineering plan.
The EDB has initiated several programs to help the engineering industries. The Technology
Development program is designed to upgrade technological capacity and capability of the
engineering industry through technology advisory services as well as Research and
Development. The Skills Up-gradation program has been developed to provide technical skills
training to raise efficiency and productivity of the work force.
6.3. NATIONAL PRODUCTIVITY ORGANIZATION (NPO)
The national Productivity organization (NPO) is the nodal agency for the implementation of
Asian Productivity Organization (APO) program in Pakistan. It also serves as a mediator,
advisor, institution builder, and clearing house for productivity information to local institutions.
Moreover, the function of NPO is to offer assistance through human resource development,
technical expert assistance, and dissemination of knowledge and know-how on productivity.
6.4. EXPERTS ADVISORY CELL (EAC)
The Experts Advisory Cell assists the Ministry of industries and production in policy formulation
and in the evaluation of public sector manufacturing units under the control of the Ministry. The
cell has developed a comprehensive data base of public and private sector industries, and
maintains regular contacts with various industry associations.