Retrograding Industrial Sectors in Pakistan: Causes and Remedies.

Byline: MUHAMMAD ABEER FAROOQ-AMIR

China-Pakistan industrial cooperation intended to develop Pakistan as a major manufacturing hub in the region, and establishment of Special Economic Zones (SEZ) would generate tremendous investment opportunities for local manufacturers and attract huge manpower. The shifting of industries from China to Pakistan would lead to export advancement, technologies transfers, import substitution, employment generation, and all these are the prime targets of the government.

Both the countries have concentrated to build nine prioritized zones in all provinces and federal areas of Pakistan. Work on SEZ's namely Allama Iqbal Industrial Zone, Rashakai Zone, Faislabad, and Bostan Baluchistan was under process; where large number of foreign investors has shown greater interest for investment in these SEZs. The current phase of the China-Pakistan Economic Corridor (CPEC) is concerned with industrialization, agricultural cooperation, promotion, and development of the private sector. Both countries are working on the 10th joint action committee meeting of CPEC and the next phase would primarily focus on measures for the development of Industrial Parks, Gwadar Port, and technology.

Industrial backwardness is the most important factor in the performance of the industrial sector of Pakistan. The rate of growth in the Industrial sector averaged 5.01 percent from 1990 until 2021, reaching an all-time high of 67.60 percent in April of 2021 and a record low of -39.80 percent in April of 2020. In 2020, the agriculture sector contributed around 22.69 percent to the GDP of Pakistan, 17.69 percent came from the industry, and over half of the economy's contribution to GDP came from the services sector. The advanced countries of the world including the USA, China, Germany, the UK, and Canada encouraged industrialization on a large scale. The industrial sector of Pakistan has expanded much as compared to the partition time.

There are several causes of the industrial slowdown in Pakistan: lack of technical know-how, the prevalence of high inflationary pressures, the policies of nationalization and denationalization of industries, the narrowness of the market, higher cost of production in the industrial sector combined with poor quality of labour, lack of infrastructure facilities, higher oil prices, lack of industrial consultancy firms, and declining investor confidence due to various economic factors. To improve the industrial sector of...