Six-point agenda to promote industrial investment

A NEW three-year industrial vision with a six-point agenda has been developed to attract fresh investment in the sagging manufacturing sector of Khyber Pakhtunkhwa for addressing some of the core issues hindering its growth. The objective is to make the province an attractive destination for investment by year 2015. The document 'The Vision 2015: Growth For Industries and Manufacturing Sector in Khyber Pakhtunkhwa' has been prepared with support of the USAID on the request of Sarhad Chamber of Commerce and Industry (SCCI). These priorities include round-the-clock gas supply, slashing tariff rates and uninterrupted supply of electricity, countering misuse of Afghan Transit Trade, workforce development, transformation of business environment and at least Rs89 billion per year investment in infrastructure. Being a producer of natural gas, it has been argued that the province should enjoy preferred supply of gas. The present output of natural gas from well-heads is 340 million cubic feet per day (MMCFD), whereas the consumption in the province is 227 MMCFD. Likewise the strategy advocates investment of government profits from net hydro generation in building of new projects for bridging the gap in demand and supply. Electricity generated from the new projects be given to the industries at cheap rates, using wheeling charges, it says. Furthermore, priority be given to protecting industries from loadshedding schedules because frequent loadshedding to manage the demand supply gap is undertaken arbitrarily, without any clear policy. It also suggests contractual arrangements and bulk buying for the industrial consumers to facilitate the industrial units to self-regulate their use. For developing industrial infrastructure, the "Vision'' advocates merger of Sarhad Development Authority (SDA) and Small Industrial Development Board (SIDB) and putting it under private sector for managing functions of the industrial estates On the basis of international benchmarks, it estimates that the province needs to invest 6.3 per cent of its resources on infrastructure. This will come to Rs89 billion, which can be managed by creating a fiscal space in public sector as well as by going into public-private ventures. The "Vision" also envisages undertaking a comprehensive labour market assessment, strengthening technical and vocational trainings, developing skill standards, entrepreneurship and setting up of employment exchanges for youth. It recommends providing a shared platform for expensive technology through industry-specific common facility and training centres (CFTCs), which can play a critical role in supporting various manufacturing sub-sectors. A number of organisations, such as TUSDEC and respective sector management companies are working to develop CFTCs. There is a need to support this effort and undertake it more coherently. . There is also a dire need to facilitate the local industries in developing an access to the national and international markets. The legal and regulatory regimes are mostly outdated and are not considered investment-friendly. Citing a recent study conducted by the World Bank, the 'Vision' says, Peshawar was ranked 8th, amongst 13 cities of Pakistan on ease of doing business. "There is a need to improve cost of doing business in Khyber Pakhtunkhwa and as an indicator Peshawar's rank will be improved from 8th to 3rd in Doing Business survey in the next five years." Access to finances by ensuring liquidity for the local industrialists, limiting interest rates and introducing sector-specific financial products can also help manufacturing sector to achieve the intended growth, it says. The 'Vision' also has targeted double digit growth in the manufacturing and industrial sector. Business people privy to development of this 'Vision', told Dawn that this exercise is mainly a private sector-led initiative. However, different stakeholders in the public sector have also been taken on board because its implementation will rely on the government. The document which has not been made public so far, will be forwarded to the chief secretary Khyber Pakhtunkhwa to have ownership of the government, they say. Officials at the Industries Department, however, say implementation of this programme is likely to be marred by issue of ownership, as currently the provincial government is too preparing an industrial policy, to succeed the one introduced in 2005 by the MMA government. "What are the government priorities and to what level it can pump in money for the industrial development are the questions which can be answered once the proposed policy is formulated," a senior official tells Dawn. The plan also advocates putting public sector entities such as SDA and SIDB under private sector for the purpose of governing the industrial estates. This issue has been cropping up every now and then and it has always been opposed by the bureaucracy, says this official adding, "getting this Vision implemented in toto will be an uphill task." Khyber Pakhtunkhwa posses mineral resources in abundance that can provide a sound base for manufacturing which is still lagging behind other provinces, as currently it has only 2100 industrial units in 17 different estates. Of these total units, according to this new study, 616 are closed because of various reasons. The 'Vision' acknowledges the fact that industrial sector of the province has an immense growth potential which remains untapped because of absence of an enabling business environment, unskilled labour force, geographical disadvantage because of distance from the Karachi port, poor quality perception as compared to Punjab and Karachi's industries, poor material testing facilities and weak business development services sector.