presentation industries of pakistan

Industrial Sector of Pakistan. Situation, Issues and Solutions

• Essays, Outlines
• Jun 20, 2023
• Noshin Bashir

Table of Contents

1. Introduction:

The industrial sector plays a crucial role in the economic development of any country, and Pakistan is no exception. This sector encompasses various industries such as manufacturing, construction, mining, and electricity generation. However, the industrial sector in Pakistan faces numerous challenges and issues that hinder its growth and potential. In this article, we will discuss the current situation of the industrial sector in Pakistan, the challenges it faces, and propose some workable solutions to address these issues.

2. Industrial Sector and Its Components:

The industrial sector in Pakistan comprises different components, including manufacturing, construction, mining, and electricity generation and distribution. The manufacturing sector encompasses both large-scale and small-scale industries, which contribute to the production of various goods. The construction sector involves infrastructure development, housing projects, and building construction. The mining sector focuses on the extraction of minerals, while the electricity generation and distribution sector deals with power production and supply.

3. Importance of Industrial Sector for a Country:

The industrial sector plays a vital role in the economic growth and development of a country. It contributes to the Gross Domestic Product (GDP), generates employment opportunities, promotes technological advancement, and enhances exports. Additionally, a strong industrial sector leads to increased investment, improved infrastructure, and enhanced standard of living for the population.

4. Different Phases of Industrial Development in Pakistan:

• 1950s: The Era of Rapid Industrial Growth:

During this period, Pakistan witnessed significant industrial growth, primarily driven by policies that focused on import substitution and protection of domestic industries.

• 1960s: The Era of Industrial Stabilization:

The 1960s saw efforts to stabilize the industrial sector, with the government focusing on the expansion of basic industries and establishing industrial estates.

• 1970s: Nationalization and its Impacts:

The 1970s marked a significant shift as industries were nationalized, leading to a decline in private investment and efficiency. This period witnessed a decline in industrial growth.

• 1980s: Russian-Afghan War and Pro-Industrial Policies of Zia:

The industrial sector faced challenges due to the Soviet-Afghan war, but the pro-industrial policies of President Zia-ul-Haq led to some growth and expansion in specific industries.

• 1990s: The Decade of Privatization:

In the 1990s, the government initiated privatization policies, aiming to improve the efficiency and competitiveness of the industrial sector.

• Post 9/11: Commercialization under Musharaf:

Following the events of 9/11, Pakistan witnessed increased commercialization and foreign investment in sectors such as telecommunications and banking.

5. Present Situation of Industrial Sector of Pakistan:

• Situation of Manufacturing Sector:

– Large Scale Manufacturing Sector: The large-scale manufacturing sector in Pakistan faces various challenges, including energy shortages, high production costs, and inadequate infrastructure. These factors limit its growth and competitiveness in the global market.

– Small Scale Manufacturing Sector: The small-scale manufacturing sector plays a crucial role in employment generation and poverty alleviation. However, it lacks access to credit, modern technology, and skilled labor, limiting its potential.

• Situation of Construction Sector:

The construction sector in Pakistan has witnessed significant growth in recent years, driven by increased infrastructure development and housing projects. However, it faces challenges such as a lack of skilled labor, insufficient financing options, and delays in project completion.

• Situation of Mining Sector:

The mining sector in Pakistan has vast untapped potential, including reserves of minerals such as coal, copper, and gold. However, issues such as inadequate infrastructure, outdated technology, and bureaucratic hurdles hamper its development and exploitation.

• Situation of Electricity Generation and Distribution Sector:

Pakistan faces persistent energy shortages, leading to frequent power outages and hindering industrial growth. Insufficient investment in the power sector, outdated infrastructure, and inefficient distribution systems contribute to the energy crisis.

6. Issues Confronting the Industrial Sector of Pakistan:

The industrial sector in Pakistan faces several issues that hinder its growth and development. These issues can be categorized into economic, social, political, and administrative challenges.

• Economic Issues:

– Energy Crisis: Frequent power outages and inadequate energy supply disrupt industrial operations and increase production costs.

– Huge Bank Spread: High interest rates and a large difference between lending and deposit rates limit access to affordable credit for businesses.

– Devaluation of Currency: Frequent devaluation affects the cost of imported machinery and raw materials, making production expensive.

– Under-utilization of National Resources: Inefficient utilization of natural resources, such as minerals and agriculture, limits the industrial sector’s potential.

– Lack of Infrastructure: Inadequate transportation, communication networks, and basic facilities hinder industrial growth.

• Social Issues:

– Marginalized Role of Women: Limited participation of women in the industrial sector restricts the talent pool and hampers economic growth.

– Overpopulation: Rapid population growth poses challenges in terms of providing employment opportunities, education, healthcare, and social services.

– Malnutrition and Diseases: Poor nutrition and inadequate healthcare facilities affect the workforce’s productivity and overall well-being.

– Corruption: Widespread corruption and bribery undermine the business environment and discourage investment.

– Slackness and Lethargy: Lack of efficiency, productivity, and work ethic hampers industrial growth.

• Political Issues:

– Terrorism: Terrorism and security concerns negatively impact the industrial sector by deterring foreign investment and disrupting business activities.

– Flawed Policies: Inconsistent and unpredictable policies create uncertainty for businesses and deter long-term investment.

– International Isolation: Geopolitical factors and strained international relations limit trade opportunities and foreign investment.

– Political Instability: Frequent changes in governments and political instability create an uncertain business environment.

• Administrative Issues:

– Poor Performance of State-Owned Enterprises: State-owned enterprises suffer from inefficiency, corruption, and mismanagement, impacting the overall industrial sector.

– Labyrinthine Procedures and Processes in Government Offices: Bureaucratic hurdles, red tape, and complex procedures make it difficult for businesses to operate smoothly.

– Poor Law and Order Situation: High crime rates, lack of security, and weak law enforcement create an unfavorable environment for industrial growth.

– Weak Criminal Justice System: Delays in legal proceedings, lack of accountability, and a weak justice system discourage investment and hinder business operations.

– Lack of Focus on R&D: Insufficient investment in research and development limits technological advancement and innovation.

7. Some Workable Solutions to the Industrial Sector Issues:

To address the challenges faced by the industrial sector in Pakistan, several workable solutions can be implemented:

• Provision of Uninterrupted & Cheap Supply of Energy to Industrial Sector:

Investment in power generation capacity, diversification of energy sources, and improvement in transmission and distribution infrastructure can help overcome the energy crisis. Ensuring affordable and uninterrupted power supply to industries will enhance productivity and competitiveness.

• Provision of Cheap and Easy Credit Facility:

Financial institutions should offer affordable credit facilities to industrialists, particularly small and medium-sized enterprises (SMEs), to promote investment, expansion, and modernization. Reduced interest rates, simplified loan procedures, and targeted financing programs can enhance access to credit.

• Maximum Extraction and Utilization of Indigenous Mineral Resources:

Efforts should be made to maximize the extraction and utilization of indigenous mineral resources through modern technology and efficient mining practices. This will reduce reliance on imports, generate employment, and contribute to industrial growth.

• Effective and Beneficial Use of Women in the Workplace:

Promoting gender equality and providing equal opportunities for women in the industrial sector can tap into a significant portion of the talent pool. Encouraging skill development, providing safe working environments, and offering incentives can increase women’s participation and contribute to economic growth.

• Provision of Necessary Healthcare Facilities for the Labor:

Ensuring access to quality healthcare facilities for industrial workers can improve their productivity, reduce absenteeism, and enhance their overall well-being. Investment in healthcare infrastructure, occupational safety measures, and awareness programs is crucial.

• Eradication of the Scourge of Terrorism:

Efforts should be made to improve security measures and eradicate terrorism. This includes strengthening intelligence agencies, enhancing law enforcement capabilities, and promoting social cohesion to create a secure environment for businesses.

• Research-based and Workable Industrial Policies:

Formulating and implementing research-based industrial policies that promote investment, innovation, and technological advancements can provide a favorable business environment. Consistency, transparency, and stakeholder consultations are key factors for effective policy implementation.

• Sustenance of Democracy and Political Stability:

Strengthening democratic institutions, ensuring the rule of law, and maintaining political stability are essential for creating a conducive environment for industrial growth. Political stability attracts investment, fosters confidence, and encourages long-term planning.

• Promotion of Public-Private Partnership:

Encouraging collaboration between the public and private sectors can leverage the strengths of both to address infrastructure development, skills training, and technology transfer. Public-private partnerships can enhance efficiency, innovation, and investment in the industrial sector.

• Improved Law and Order Situation and Protection of Property Rights:

Efforts should be made to improve the law and order situation by strengthening law enforcement agencies, promoting accountability, and ensuring the protection of property rights. Establishing effective dispute resolution mechanisms and providing a secure environment for businesses will encourage investment.

• Reservation of Substantial Budget for Research and Development:

Allocating a significant budget for research and development (R&D) activities will foster innovation, improve productivity, and enhance the competitiveness of the industrial sector. R&D initiatives should focus on technological advancements, skill development, and sustainable practices.

8. Conclusion:

The industrial sector in Pakistan faces various challenges that hinder its growth and potential. Addressing these issues requires a multi-faceted approach, including reforms in energy supply, access to credit, infrastructure development, gender equality, healthcare facilities, security measures, policy formulation, political stability, public-private partnerships, law enforcement, and R&D. By implementing workable solutions, Pakistan can unlock the full potential of its industrial sector, stimulate economic growth, and improve the standard of living for its citizens.

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Industry in Pakistan

Apr 01, 2019

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Industry in Pakistan. Cotton. Cotton seeds. How cotton is made. Cotton yarn. Metals. Pakistan does not have large amounts of metals . Iron is used in making cement. How cement is made. Fertilizers. chemicals.

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New Hope for Pakistan’s Mistreated Workers

Germany’s new supply chain act could help curb some of the world’s worst labor injustices..

• Human Rights

Nasir Mansoor has spent 40 years fighting for Pakistan’s workers. Whether demanding compensation on behalf of the hundreds of people who died in a devastating 2012 factory fire in Karachi or demonstrating against Pakistani suppliers to global fashion brands violating minimum wage rules, he’s battled many of the country’s widespread labor injustices.

Yet so far, little has improved, said Mansoor, who heads Pakistan’s National Trade Union Federation in Karachi. Despite spending most of his time dealing with issues in the country’s garment sector, labor laws are still routinely flouted inside factories. Not even European Union trade schemes such as the Generalized Scheme of Preferences—which benefits developing countries such as Pakistan but requires them to comply with international conventions on labor rights—have helped curb violations in an industry notorious for them. Regulations and trade protocols look good on paper, but they rarely trickle down to the factory level. “Nobody cares,” Mansoor said. “Not the government who makes commitments, not the brands, and not the suppliers. The workers are suffering.”

But change might finally be on the horizon after Germany’s new Supply Chain Act came into force last year. As Europe’s largest economy and importer of clothing, Germany now requires certain companies to put risk-management systems in place to prevent, minimize, and eliminate human rights violations for workers across their entire global value chains. Signed into law by German Chancellor Olaf Scholz in January 2023, the law covers issues such as forced labor, union-busting, and inadequate wages, for the first time giving legal power to protections that were previously based on voluntary commitments. Companies that violate the rules face fines of up to 8 million euros ($8.7 million).

For decades, Western companies based in countries with highly paid workers and strong labor protections have sourced from low-income countries where such laws don’t exist or are weakly enforced. While this business model cuts costs, it’s made it incredibly difficult for workers to seek justice when problems arise. Given the garment sector’s long history of poor labor conditions—whose victims are a predominantly female workforce—rights groups say the industry will feel some of the highest impacts of new due diligence laws such as Germany’s.

Until now, promises made by fashion brands to safeguard workers stitching clothes in factories around the world have been largely voluntary and poorly monitored. If the promises failed or fell short and that information became public, the main fallout was reputational damage. As governments come to realize that a purely voluntary regimen produces limited results, there is now a growing global movement to ensure that companies are legally required to protect the people working at all stages of their supply chains.

The German law is just the latest example of these new due diligence rules—and it’s the one with the highest impact, given the size of the country’s market. A number of other Western countries have also adopted similar legislation in recent years, including France and Norway. A landmark European Union law that would mandate all member states to implement similar regulation is in the final stages of being greenlighted.

Although the United States has legislation to prevent forced labor in its global supply chains, such as the 2021 Uyghur Forced Labor Prevention Act, there are no federal laws that protect workers in other countries from abuses that fall short of forced labor. That said, a proposed New York state bill , the Fashion Act , would legally require most major U.S. and international brands to identify, prevent, and remediate human rights violations in their supply chain if passed, with noncompliance subject to fines. Since major fashion brands could hardly avoid selling their products in New York, the law would effectively put the United States on a similar legal level as Germany and France.

Abuses in textile manufacturing have been well documented. Horror stories about brutal violence or building collapses make the news when there’s a major incident, but every day, members of a predominantly female workforce live on low wages, work long hours, and endure irregular contracts. Trade unions, when they are allowed, are often unable to protect workers. A decade ago, the European Parliament described the conditions of garment workers in Asia as “slave labour.”

As of January, Germany’s new law applies to any company with at least 1,000 employees in the country, which covers many of the world’s best-known fast fashion retailers, such as Zara and Primark. Since last January, German authorities say they have received 71 complaints or notices of violations and conducted 650 of their own assessments, including evaluating companies’ risk management.

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In Pakistan, the very existence of the German law was enough to spark action. Last year, Mansoor and other union representatives reached out to fashion brands that sourced some of their clothing in Pakistan to raise concerns about severe labor violations in garment factories. Just four months later, he and his colleagues found themselves in face-to-face meetings with several of those brands—a first in his 40-year career. “This is a big achievement,” he said. “Otherwise, [the brands] never sit with us. Even when the workers died in the factory fire, the brand never sat with us.”

Nearly 12 years on from the 2012 fire, which killed more than 250 people, violations are still rife for Pakistan’s 4.4 million garment sector workers, who produce for many of the major global brands. Several of these violations were highlighted in research conducted by FEMNET, a German women’s rights nonprofit, and the European Center for Constitutional and Human Rights (ECCHR), a Berlin-based nongovernmental organization, into how companies covered by the Supply Chain Act were implementing their due diligence obligations in Pakistan. With the help of Mansoor and Zehra Khan, the general secretary of the Home-Based Women Workers Federation , interviews with more than 350 garment workers revealed the severity of long-known issues.

Nearly all workers interviewed were paid less than a living wage, which was 67,200 Pakistan rupees (roughly $243) per month in 2022, according to the Asia Floor Wage Alliance. Nearly 30 percent were even paid below the legal minimum wage of 25,000 Pakistani rupees per month (roughly $90) for unskilled workers. Almost 100 percent had not been given a written employment contract, while more than three-quarters were either not registered with the social security system—a legal requirement—or didn’t know if they were.

When Mansoor, Khan, and some of the organizations raised the violations with seven global fashion brands implicated, they were pleasantly surprised. One German retailer reacted swiftly, asking its supplier where the violations had occurred to sign a 14-point memorandum of understanding to address the issues. (We’re unable to name the companies involved because negotiations are ongoing.) The factory complied, agreeing to respect minimum wages and provide contract letters, training on labor laws, and—for the first time—worker bonuses.

In February, the factory registered an additional 400 workers with the social security system (up from roughly 100) and will continue to enroll more, according to Khan. “That is a huge number for us,” she said.

It’s had a knock-on effect, too. Four of the German brand’s other Pakistani suppliers are also willing to sign the memorandum, Khan noted, which could impact another 2,000 workers or so. “The law is opening up space for [the unions] to negotiate, to be heard, and to be taken seriously,” said Miriam Saage-Maass, the legal director at ECCHR.

After decades of issues being swept under the carpet, it’s a positive step, Mansoor said. But he’s cautious. Of the six remaining global fashion brands contacted, three are in discussions with the union, while three didn’t respond. Implementation is key, he said, particularly because there has already been pushback from some Pakistani factory owners.

Last month, EU member states finally approved a due diligence directive after long delays, during which the original draft was watered down. As it moves to the next stage—a vote in the European Parliament—before taking effect, critics argue that the rules are now too diluted and cover too few companies to be truly effective.

Still, the fact that the EU is acting at all has been described as an important moment, and unionists such as Mansoor and Khan wait thousands of miles away with bated breath for the final outcome. Solidarity from Europe is important, Khan said, and could change the lives of Pakistan’s workers. “The eyes and the ears of the people are looking to [the brands],” Mansoor said. “And they are being made accountable for their mistakes.”

Louise Donovan is a Nairobi-based correspondent for the Fuller Project .

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Suspending trade with India has cost Pakistan. Can the new government shift gears?

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• By Hasan Ali Contributor @hali1189

April 1, 2024 | Islamabad

At a recent press conference, Pakistan’s newly appointed Foreign Minister Ishaq Dar promised to “seriously examine” reopening trade with India – an aspiration that, if pursued, would mark a major diplomatic shift.

Islamabad suspended trade in 2019 after Delhi stripped the majority-Muslim state of Jammu and Kashmir of its legislative autonomy. Back then, Pakistan’s annual Indian imports totaled around $2 billion, and its exports to India neared $500 million. Today, all goods must be funneled through a third-country port such as Singapore at added costs to Pakistani businesses and consumers – a significant burden in an already flailing economy. 

Why We Wrote This

Comments from Pakistan’s foreign minister hint at a softening stance on trade with India, putting a spotlight on the countries’ fraught relationship and the consequences of closing the border to commerce.

“You haven’t been able to stop Indian products from entering the market,” says Mubashir Hussain, a spice merchant in Lahore. “All that you’ve done is made them more expensive.”

Experts say the trade ban has also backfired politically. Pakistan has made dialogue with India contingent on Delhi restoring Kashmir’s special status, but the Indian government views the disputed territory as an internal matter – and a largely settled one at that. With Prime Minister Narendra Modi expected to win a third term in India’s upcoming elections, Pakistan’s leadership is firmly on the back foot. 

“Pakistan’s declining economic situation, unstable politics, and precarious security situation make its influence marginal when compared to India,” says Pakistani academic Yaqoob Khan Bangash.

Pakistan’s newly appointed foreign minister has signaled a desire to reopen trade with neighbor and arch-adversary India – an aspiration that, if pursued, would mark a major diplomatic shift.

Islamabad suspended trade in 2019 after relations with Delhi deteriorated, in part because of India’s decision to strip the majority-Muslim state of Jammu and Kashmir of its legislative autonomy, and Pakistanis have been paying the price ever since. 

“I was speaking to an Indian company just yesterday that wants to sell us cumin,” says Mubashir Hussain, who owns a spice and dry fruit import business in Lahore. “I would like to buy the product, but it will first have to go to Dubai and then have its country of origin changed.”

While Pakistani businessmen and consumers are forced to foot the bill for these convoluted import journeys, experts say the trade ban has backfired politically. 

Over the past five years, Pakistan has made dialogue with India contingent on Delhi restoring Kashmir’s special status. But the Indian government refuses to engage with Pakistan on the disputed territory, viewing it as an internal matter – and a largely settled one at that. With border security concerns unresolved and Indian Prime Minister Narendra Modi expected to win a third term in the country’s upcoming elections, Pakistan’s new leadership is firmly on the back foot.

“Pakistan’s declining economic situation, unstable politics, and precarious security situation make its influence marginal when compared to India, and so its 2019 demands have only led India to further solidify its position,” says Pakistani academic Yaqoob Khan Bangash. He points to how India’s Supreme Court sided with the federal government on Kashmir’s status last December. “If Pakistan wants any detente with India it would have to eat a lot of humble pie and make the first few moves.” 

Trade pains

The Sharif family, which controls the ruling Pakistan Muslim League N (PMLN) party, has historically favored closer ties with India, partly because it relies on the electoral support of the Punjabi trading community whose interests are served by the border remaining open for commerce. This stance has frequently raised the ire of the country’s powerful military establishment, and was a contributing factor in the breakdown of civil-military relations during the 2013-2018 government of Muhammad Nawaz Sharif.

Now back in power, the PMLN “has compelling political reasons for pushing for border trade with India,” says Michael Kugelman, who directs the South Asia Institute at the Wilson Center. “Pakistan’s economic crisis offers an additional incentive.”

Pakistan’s economy is suffering from relatively low growth and high levels of inflation and has become dependent on cash injections from the International Monetary Fund. Some believe reopening the door to a massive neighbor market is just the economic jolt Pakistan needs.

In 2018-2019, Pakistan’s annual Indian imports totaled around $2 billion, and its exports neared $500 million. Today, there is no formal trade. All goods must be funneled through a third-country port such as Dubai or Singapore, at added costs. 

“You may have banned trade, but you haven’t been able to stop Indian products from entering the market,” says Mr. Hussain, the spice merchant. “All that you’ve done is made them more expensive.”

Foreign Minister Ishaq Dar acknowledged this reality at a press conference in London in late March, promising to gather stakeholders and “seriously examine” reopening trade with India. “What India did in 2019, the steps they took to amend the constitution and law, that was very painful,” said. “But I think the business community of Pakistan is very keen” to restart direct trade.

Unresolved tensions

While some Indian business communities agree, Indian officials are less keen.

Diplomat Maleeha Lodhi, formerly Pakistan’s Permanent Representative to the United Nations, notes that it was the Modi government that first imposed trade restrictions in 2019.

Months before Kashmir was stripped of its special status, a suicide bombing killed 40 Indian service personnel in the state's Pulwama district. India “slapped a 200% customs duty on Pakistani exports,” says Dr. Lodhi, and withdrew Pakistan's Most Favoured Nation Status – a principle that ensures that countries are not able to discriminate in the terms they offer trading partners. Delhi blamed Pakistan for the attack, which was claimed by the outlawed terrorist group Jaish-e-Mohammed, but Pakistan has consistently denied any involvement. 

The same day as Mr. Dar’s press conference, India’s Minister of External Affairs harkened back to these security woes, accusing Islamabad of being a sponsor of state terrorism. “How do you deal with a neighbor who does not hide the fact that they use terrorism as an instrument of statecraft?” he asked, referring to terror attacks on Indian soil. “It’s not a one-off happening ... but very sustained, almost at an industry level.”

In light of this, analysts in Pakistan have questioned the wisdom of Mr. Dar’s comments on restoring bilateral trade.

“Indian officials have repeatedly established their lack of enthusiasm and often, utter contempt, for the idea of any kind of normalization,” says foreign policy commentator Mosharraf Zaidi who served as an advisor to the Ministry of Foreign Affairs between 2011 and 2013. “For any Pakistani leader to continue to desperately signal his country’s openness to trade relations whilst India sustains a belligerent and bullying approach is inexplicable.”

The criticism appears to be resonating in at least some quarters of Pakistan’s foreign office.

On Thursday, spokesperson Mumtaz Baloch clarified that there had been “no change in Pakistan’s position” on resuming trade with India, an apparent backtrack on the foreign minister’s proposal.

Even if the government manages to placate its critics inside Pakistan, hopes for immediate change are slim. For Dr. Bangash, the academic, appealing to Mr. Modi’s legacy may be Pakistan’s best strategy.

“In his third term, the only thing which might lure Modi to want to talk to Pakistan could be a yearning to be recognized as a world peace maker,” he says.

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