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Towards a Prosperous Pakistan:Towards a Prosperous Pakistan:

A Strategy for Rapid Industrial GrowthA Strategy for Rapid Industrial Growth

Pakistan Development ForumPakistan Development Forum

Federal Minister Industries, Production & SpecialFederal Minister Industries, Production & SpecialInitiativesInitiatives

2626thth

April 2005April 2005

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22

Strategy for IndustrializationStrategy for Industrialization

WhereWhere areare wewe today?today? AnAn assessmentassessment ofof ourour IndustrialIndustrial performanceperformance soso

farfar

ShareShare ofof ManufacturingManufacturing inin GDPGDPExportExport performanceperformance

ConsistencyConsistency ofof GrowthGrowth

PrivatePrivate InvestmentInvestment performanceperformanceComparisonComparison ofof JobJob CreationCreation

ManufacturingManufacturing TechnologyTechnology levellevel

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33

Share of Manufacturing in GDPShare of Manufacturing in GDP(%)(%)

Source: World Bank - World Development Reports

1960 1965 1970 1977 1980 1985 1990 2000 2002

Pakistan 12 14 16 16 16 18 17.6 16.7 18

Indonesia 8 8 10 9 13 24 21 26 25.1

Malaysia 9 9 12 18 21 29 24 28 30

Korea 12 18 21 25 28 30 29 33 41

Sweden 27 28 - 24 - - - 26 28.2

Germany 40 - 38 38 - 26 28 29.6

UK 32 30 33 25 - - 25 26.4

Japan33 32 36 33 29 - 28 24 32.3

Selected Asian Countries

Developed Countries

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44

Share of Manufacturing in GDP (%age)

0

5

10

15

20

25

0

5

40

45

1960 1965 1970 1977 1980 1985 1990 2000 2002

PercentageS

hare

Pakistan Indonesia Malaysia Korea

Source: World Bank - World Development Reports

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55

199% %

1.85 . 1

1. .88. 1.57

. 1 1.1

.5 .7

.18 .18

: O ( 4)

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66TRADE BREAKUP World Vs PakistanTRADE BREAKUP World Vs Pakistan--20032003

World Trade Break

Man f &

Eng Goods,

69.50%

Misc, 3%

Textile &

clothing,

5.60%

Mining &

F el,

10.80%

Non-

Ferro sMetals,

1.80%

Agri

Prod cts,

9.30%

Pakistan Trade Break

Textiles,

66.1%

Chemical,1.7%Car ets, 2.4%

Others 5.6%

Marble

Granite , 0.4%

Engineering

goods, 3.9%

Petrole m,

2.2%

S orts

Goods, 2.7%

Leather, 6.3%

Agri

Prod cts,

8.8%

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77Industrial Performance of Pakistan : Growth Rate of

Manufacturing

0

2

4

6

8

10

12

1950s 1960s 1970s 1980s 1990s 2000-01 2001-02 2002-03

%age

Total

Source: 50 Years of Pakistan Volume I Summary, Statistical Supplement of Economic Survey, 2002-03 and

Economic Survey 2003-04.

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88

Source: World Development Indicators 2004, Pakistan Economic Surveys 1987-88,1992-93, 2003-04

Figure 2.2: Trends in Private Investment (% of GDP)

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

18.00

20.00

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

PakistanBangladesh

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99Employment in industry (% of total employment)

20.3

13.

24.4

12.9

17.118.4

31.7

13.6

0

5

10

15

20

25

30

35

Pakistan Thailand Malaysia India

1982 1999

Source World Development Indicators, Various years

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1010

Source: 50 Years of Pakistan Volume I Summary, Statistical Supplement of Economic Survey, 2002-03 and Economic Survey 2003-04.

Industrial Performance of Pakistan: Manufacturing Share of Pakistan in GDP

8.78

2.4

3.99

6.65

7.68

7.66

7.94

8.39

4.38

8.85

0.42

2.26

2.32

2.48

2.66

3.09

4.4

3.56 3.57

4.38

5.36

5.

85.28 5.3

0

2

4

6

8

0

2

4

6

8

20

950s

960s

970s

980s

990s 2000-0

200

-02 2002-03

%agesha

Total Large Scale Small Scale

Source: 50 Years of Pakistan Volume I Summary, Statistical Supplement of Economic Survey, 2002-03 and Economic Survey 2003-04.

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1111

0%10%20%30%40%50%60%70%80%90%

1981 2000 1981 2000 1981 2000 1981 2000Resource

Low Technology Medium Technology High Technology

Pakistan India China Malaysia ThailandTechnology Intensity in nufctured orts ( )

0%10%20%

30%40%50

60%70%80%90%

1981 2000 1981 2000 1981 2000 1981 2000ResourceBased Low Technology Medium Technology High Technology

akistan India China Malaysia ThailandTechnology Intensity in Manufactured Exports (%)

Fig 1. 5 Technology Intensity in Manufactured Exports

Source: Lall, 2003

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1212

ur Visionur Vision

ReRe--positionposition thethe MinistryMinistry ofof Industries,Industries,

ProductionProduction && SpecialSpecial InitiativesInitiatives toto playplay aa

leadershipleadership rolerole inin formulatingformulating andandimplementingimplementing aa comprehensivecomprehensive strategystrategy

forfor rapidrapid industrializationindustrialization ofof PakistanPakistan

whichwhich aimsaims atat maximizingmaximizing jobjob creationcreation andandenhancingenhancing Pakistan sPakistan s internationalinternational

competitivenesscompetitiveness

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1313

Our MissionOur Mission

ToTo increaseincrease thethe shareshare ofof ManufacturingManufacturing ininGDPGDP fromfrom 1818%% todaytoday toto 2525%% inin 20102010 andand

3030%% inin 20152015

ToTo achieveachieve thisthis throughthrough

valuevalue additionaddition inin TextileTextile sectorsector

focusfocus onon thethe engineeringengineering sectorsectormakingmaking holisticholistic interventionsinterventions acrossacross thethe

entireentire valuevalue chainchain inin keykey SMESME clustersclusters

directlydirectly improvingimproving livingliving conditionsconditions forfor LabourLabour

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1414

Our MissionOur Mission

reducingreducing thethe costcost ofof doingdoing businessbusiness

creatingcreating aa strategicstrategic partnershippartnership betweenbetween

thethe PublicPublic andand PrivatePrivate sectorssectorsfosteringfostering ownershipownership ofof IndustrialisationIndustrialisation

policypolicy byby thethe publicpublic atat largelarge

creatingcreating anan institutionalinstitutional frameworkframework forfor

interinter--ministerialministerial coordinationcoordination forfor

industrializationindustrialization

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1515

Value addition in Textile sectorValue addition in Textile sector

UpgradingUpgrading ginningginning sectorsector

ContaminationContamination freefree cottoncotton UpgradingUpgrading productivityproductivity ofof garmentgarment

sectorsector

InvestingInvesting heavilyheavily inin FashionFashion designdesign

CreatingCreating InternationalInternational brandbrand namesnames

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1616

Focus on Engineering SectorFocus on Engineering Sector

EngineeringEngineering DevelopmentDevelopment BoardBoard EDBEDB asas focalfocalinstitutioninstitution

ChairmanChairman && CEOCEO bothboth fromfrom privateprivate sectorsector

EDBEDB RoleRole enhancedenhanced toto createcreate

LinkLink withwith InternationalInternational valuevalue chainchain

LinkLink withwith EngineeringEngineering academicsacademics

BridgeBridge betweenbetween DefenceDefence HiHi--TechTech sectorsector andand PrivatePrivate sectorsector

BringingBringing anan InternationalInternational VisionVision toto existingexisting industryindustry sectorssectors

ComponentComponent manufacturingmanufacturing SectorSector

GinningGinning

MetalMetal ReRe--rollingrolling

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Focus on Engineering & SME SectorsFocus on Engineering & SME Sectors

CreationCreation ofof TechnologyTechnology UpUp--gradationgradation && SkillSkillDevelopmentDevelopment CompanyCompany TUSDECTUSDECPublicPublic--PrivatePrivate PartnershipPartnership

CEOCEO fromfrom privateprivate sectorsector

PITACPITAC toto functionfunction underunder TUSDECTUSDECRoleRole ofof TUSDECTUSDEC

InterveneIntervene toto UpgradeUpgrade TechnologyTechnology andand skillsskills inin keykey SMESMEIndustrialIndustrial clustersclusters

CommonCommon facilityfacility centrescentres // SkillSkill developmentdevelopment centrescentres //technicaltechnical upgradationupgradation centrescentres

DemandDemand drivendriven

AllAll toto bebe managedmanaged byby thethe privateprivate stakeholdersstakeholders ofof eacheachparticularparticular clustercluster

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1818

Focus on SME SectorFocus on SME Sector

FormationFormation ofof StrategyStrategy WorkingWorking GroupsGroupsSWOGsSWOGs

SWOGSSWOGS bringbring togethertogether thethe IndustrialIndustrial ClusterCluster

onon aa commoncommon platformplatform andand allall relevantrelevant

MinistriesMinistries andand ProvincialProvincial GovernmentsGovernments whichwhich

impactimpact onon thatthat sectorsector

ForeignForeign expertsexperts broughtbrought inin withwith helphelp ofof USUS AA II DD

PilotPilot newnew projectsprojects withwith HolisticHolistic approachapproach

IslandIsland ofof ExcellenceExcellence strategystrategy

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Focus on SME SectorFocus on SME Sector

PriorityPriority SectorsSectorsPhasePhase II

ActionAction PlanPlan readyready

byby 1515thth MayMay 0505

Gem &Gem & JewelleryJewellery

Marble and GraniteMarble and Granite

DairyDairy

PhasePhase IIII

ActionAction planplan byby 1515thth

AugustAugust 0505

FansFans

SportsSports GoodsGoods

SurgicalSurgical

InstrumentsInstruments

FisheriesFisheries

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2020Focus on Knowledge Based SMEFocus on Knowledge Based SME

EntrepreneurshipEntrepreneurship

EnterpriseEnterprise CompetitivenessCompetitiveness SupportSupport FundFundObjectiveObjective

ToTo upgradeupgrade thethe competitivenesscompetitiveness ofof PakistaniPakistaniIndustryIndustry toto respondrespond toto thethe newnew challengeschallenges andandopportunitiesopportunities inin thethe knowledgeknowledge basedbased andand highhightechtech economyeconomy

ActivitiesActivities proposedproposed

VentureVenture CapitalCapitalBusinessBusiness IncubatorsIncubators inin collaborationcollaboration withwith

UniversitiesUniversities

EnterpriseEnterprise developmentdevelopment fundfund

MatchMatch--makingmaking grantsgrants CreditCredit guaranteeguarantee EquityEquity financingfinancing

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2121

Reducing Cost of Doing BusinessReducing Cost of Doing Business

CreationCreation ofof NationalNational IndustrialIndustrial ParksParksDevelopmentDevelopment && ManagementManagement CompanyCompany

NIPNIP asas PublicPublic PrivatePrivate partnershippartnership

ToTo developdevelop statestate ofof thethe artart IndustrialIndustrial ParksParks allalloverover thethe countrycountry

11,,500500 acresacres PakPak SteelSteel DownstreamDownstream IndustrialIndustrial

areaarea PeshawarPeshawar andand QuettaQuetta

SheikhupuraSheikhupura forfor engineeringengineering clustercluster

RuralRural PakistanPakistan

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2222

Reducing Cost of Doing BusinessReducing Cost of Doing Business

TheThe UnemploymentUnemployment challengechallengeLopsidedLopsided jobjob creationcreation

Lahore,Lahore, Karachi,Karachi, FaisalabadFaisalabad andand thethe CentralCentral PunjabPunjab

EngineeringEngineering triangletriangle

EntireEntire ruralrural hinterlandhinterland ofof SindhSindh andand PunjabPunjab missingmissing

outout

BalochistanBalochistan ProvinceProvince andand largelarge partsparts ofof NWFPNWFP alsoalso

missingmissing outout

MustMust evolveevolve strategystrategy ofof successfulsuccessful IndustrialIndustrial

ParksParks inin ruralrural areasareas

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ChallengesChallenges

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The Main ChallengeThe Main Challenge

IfIf wewe areare toto followfollow thethe pathpath ofof rapidrapidindustrializationindustrialization andand taketake ManufacturingManufacturing

shareshare ofof GDPGDP fromfrom 1818%% toto 3030%% thenthen

EveryEvery MinistryMinistry involvedinvolved andand ProvincialProvincial

governmentsgovernments havehave toto workwork withwith aa singlesingle--

minded,minded, focussedfocussed visionvision

AA newnew InstitutionalInstitutional frameworkframework hashas toto bebe

developeddeveloped whichwhich dovetailsdovetails withwith thethe worldworld asas itit

isis todaytoday

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2525

Ministries that Impact IndustrializationMinistries that Impact Industrialization

MOIP&SIMOIP&SI PetroleumPetroleum // WaterWater andand PowerPower

ScienceScience andand TechTech // HigherHigher EducationEducation

LabourLabour

EducationEducation FederalFederal andand ProvincialProvincial

CommerceCommerce

CommunicationCommunication // PortsPorts andand ShippingShipping // RailwaysRailways

FinanceFinance // StateState BankBank ofof PakistanPakistan

ProvincesProvinces

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Future ChallengesFuture Challenges

EnergyEnergy MostMost criticalcritical forfor IndustrialisationIndustrialisation

PlentifulPlentiful energyenergy requiredrequired atat mostmost efficientefficient possiblepossible

pricepriceLabourLabour

SimplifyingSimplifying thethe complexcomplex webweb ofof regulationregulation

EnhancingEnhancing LabourLabour SkillsSkills LabourLabour WelfareWelfare

EducationEducation

RaisingRaising basicbasic educationeducation levelslevels

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2727

Future ChallengesFuture Challenges

TransportTransport SectorSector AnAn efficient,efficient, securesecure andand costcost--effectiveeffective logisticslogistics

chain,chain, NorthNorth--SouthSouth throughthrough PakistanPakistan isisessentialessentialTargetTarget 4848 hrshrs fromfrom PeshawarPeshawar toto KarachiKarachi

IncreaseIncrease RailwayRailway forfor FreightFreight

PortPort PerformancePerformance

ReduceReduce ContainerContainer dwelldwell timetime fromfrom 1212 toto 44 daysdaysScienceScience andand TechnologyTechnology

InstitutionsInstitutions whichwhich setset StandardsStandards forfor IndustryIndustrymustmust havehave IndustryIndustry focusfocus

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2828

Future ChallengesFuture Challenges

ProvincialProvincial GovernanceGovernance

LabourLabour regulationregulation

InspectionInspection regimesregimes SkillSkill trainingtraining

LivabilityLivability ofof CitiesCities LawLaw andand OrderOrder

LandLand RecordRecord problemsproblems

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Thank YouThank You

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3030Industrial Performance of Pakistan: Manufacturing Share of Pakistan in GDP

8.78

2.4

3 .99

6.65

7.68 7.66

7.94

8.39

4.38

8.85

0 .42

2.26 2.32 2.48

2.66

3 .09

4.4

3 .56 3 .57

4.38

5.365. 8 5.28 5.3

0

2

4

6

8

0

2

4

6

8

20

950s

960s

970s

980s

990s 200 0-0

200

-02 200 2-0 3

%agesha

Total Large Scale Small Scale

Source: 50 Years of Pakistan Volume I Summary, Statistical Supplement of Economic Survey, 200 2-0 3 and Economic Survey 2003-04.