KARACHI - The decline in industrial sector growth rate has been the major cause of decline in overall GDP growth rate during the last three years. Therefore, there is an urgent need to prioritize industrial revival and develop macro and micro strategies for achieving sustainable high industrial sector growth in Pakistan, stated FPCCI in its research study on Review of Pakistans Largest Scale Manufacturing Sector- Diagnosis and the Way Forward, which was released on Thursday. The study was jointly conducted by the Federation of Pakistan Chamber of Commerce & Industrys Research Department and Business Support Centre of Institute of Business Management (IBM). Addressing a news conference to launch the study at FPCCI building, Sultan Ahmed Chawla, President FPCCI, said recent growth in the economy has been dominated by an increased momentum in services, particularly in telecommunications and finance, while manufacturing has remained concentrated in textiles and other sectors somewhat appeared neglected. He said that the report reviewed overall LSM performance and focuses on six industries, namely: pharmaceuticals, automobiles, engineering, fertilizer, textiles & apparel, and water and energy. To reinvigorate investment in industry, there is a need to formulate a comprehensive industrial policy that promotes investment in public infrastructure, stimulating entrepreneurship, improving business climate and through reducing the cost of doing business, he said. On the occasion, Dr Javed Akbar Ansari, Dean CBM, said Pakistan is de-industrializing since 1988. The LSM share of GDP has remained stagnant at about 12 per cent during 2004-05 to 2009-10 and there is no consistent increasing trend, indeed the LSMs GDP share has fallen from 12.9 per cent in 2004-05 to 12.2pc in 2009-10. He said in 2009-10 the LSM sector accounted for just 8.9 percent of gross fixed capital formation and measured at constant 1999-2000 prices gross fixed capital formation in the large scale manufacturing sector declined by 24.5 per cent in 2008-09 and by 15.4 percent in 2009-10. He further said that the share of the LSM sector in the national labour force was probably less than ten percent and this share has also remained stagnant over the previous decade. The share of the LSM sector in total exports is high but the export to total sales ratio remains low in most branches, the major exception being the textile sector. According to report, growth of agricultural value added is highly significantly correlated with the industrial value added growth rate. A one per cent growth in industrial value added leads to 0.59 per cent growth in agricultural value added. On the other hand, the growth of the service sector has little or no impact on agricultural value added growth according to our estimations. Similarly, growth in trade transportation and communications is strongly and significantly positively associated with industrial value added growth. A one per cent growth in industrial value added growth leads to a 0.81 per cent growth in trade and communication service value added. There is no significant association between trade and transportation, services growth and growth of agricultural value added, it stated. Neither agriculture nor the service sector can take up the slack caused by decline in the industrial sector growth rate. Quite the contrary, service sector growth and agriculture sector growth will themselves decline in sympathy with fall in industrial growth, it mentioned. The report stated that the imposition of RGST is likely to exacerbate tax administration costs of the corporate sector and could have a strong negative impact on the growth of sales revenue. As per the recommendations of the report, industrialists themselves must take the primary responsibility for reversing de-industrialization. The industrialist community in Pakistan has to develop a consciousness of the need to play such a role. For well over two decades they have shied away from playing such a leading role for the reindustrialization of Pakistan. The report has recommended to the government to appoint FPCCI nominee to the State Banks Board of Directors, promoting universal banking annual industrial investment targets for all banks and NBFCs. It also suggested evaluating advances performance of all banks in terms of desired credit flows to industry. Also, increase public manufacturing investment especially in the capital goods sector. It advised the government to relaunch PIDC. It advised FPCCI to set up a comprehensive quantitative and qualitative data base and to formulate a medium term national industrial development plan.