Pakistan’s industrial policy has been mostly in disarray over the last seven decades. The initial industrial policy in the 1960s and 70s focused on large scale manufacturing (LSM), and resultantly government-sponsored investment facilitated, among others, the establishment of heavy steel mills in Karachi, Heavy mechanical complex (HMC), Heavy Electric Complex (HEC) and Heavy Industries (HIT) at Taxila. Following the government’s cue, large industries were set up by the private sector in and around Karachi and Lahore. These large industries attracted vendor industries in their vicinity, leading to heavy urbanisation and industrialisation of these cities which resulted in, among others, local environmental degradation and human health-related problems. Towards the end of the twentieth century, the importance of small and medium enterprises (SMEs) was finally realised, and the first SME policy was announced in 2007.

The industrial policy of Pakistan has been dictated by the vagaries of international economic scenarios, the whims of international donors, and the vested interests of local industrial conglomerates and cartels which have come into existence over time. Accordingly, the industrial policy has over time favoured giving tax exemptions to specific industrial sectors at the cost of other industrial manufacturing sectors. Consequently, our economy relied on a small industrial base such as textiles for earning foreign exchange and generating local employment. Resultantly, industrial growth became regressive over time as existing industrial sectors became inefficient and un-competitive due to reliance on tax rebates and on special trading status to export markets. Further, a few new industries which were set up over the 1980s and 1990s decades, such as auto and telecommunications, are still in the assembling stage with major value-added items being imported from abroad, thus depriving the country of technology, foreign exchange, and local employment.

The present COVID-19 crisis has glaringly exposed the shortcomings which have been incorporated into our industrial development strategy over many decades. When the COVID-19 crisis started, it came to the fore that, despite having raw materials, Pakistan was not manufacturing hand sanitisers and personal protection equipment (PPE), but was exporting relevant raw materials to be value-added abroad and then imported back at higher prices. Similarly, it came to the fore that we have only a few hundred ventilators in a country with a population of over two hundred million; and there is a lengthy process of importing these costly ventilators. However, given the government interest, there are now chances that ventilators could be manufactured in the country, thus saving precious lives and foreign exchange, and developing a new local industry.

Similarly, since lockdown has been announced due to the COVID crisis, there is a crisis in the pharma industry. It has been revealed that major raw materials for medicines manufacture are being imported-mainly from India, but which could be produced in the country. Further, the COVID crisis has also highlighted the lengthy process of drug approval and manufacturing in the country. For instance, Remdesivir is considered an effective medicine in the COVID treatment, and Pakistan, despite having the capability, is importing it from Bangladesh due to lengthy local drug approval and manufacturing policy.

Also, to kick start the economy after lockdown a special package has been given to the construction industry with the argument that it will generate employment for the working class and the supporting industries. However, again, the ‘special package’ for the local industry needs to stipulate that local goods, such as tiles and sanitary equipment, use should be facilitated by the construction industry to generate local employment and promote the indigenous industry.

Thus, the industrialisation process, which was initially started during the 1960s has slowly been replaced with trade and foreign goods flooding the local market, resulting in de-industrialisation and unemployment in the country. However, it is said that every crisis represents an opportunity, and the COVID-19 crisis has offered a chance to again realign our present skewed industrial policy towards indigenisation. The industrial policy should focus on diversification of our manufacturing portfolio, and should rely on local resources and manpower for better value-added products, both for home and foreign markets.

Ahsan Munir

The writer is a freelance columnist.