ANALYSIS OF PAKISTANI

INDUSTRIES
SUBMITTED TO MIS QURATULAIN
DATE:- 10-2-2015
GROUP MEMBERS:- QAIM
ALI(57512)
HAMMAD MIRZA(58186)
MUSTAQEEM KHAN(58144)
ADIL SAJJAD
TOPIC:-ECONOMICAL
BACKGROUND OF PAKISTAN

OVERVIEW
Let me give you summary in simple terms as to what the structure of this economy is In 1947
Pakistan had 30 million persons with per capita revenue of Agriculture accounted for almost of
economic production with barely any manufacturing as all industries were located in India.
Hence it was incompetent to feed 30million people and was relaying on getting from the USA.
From there on Pakistan has come a long way. Today with 195 million public per capita income in
2009 was 1000% which was ten times more. Pakistan ranks among the 3rd biggest exporter of
rice in the world and generating sufficient food grains to feed its people. 5 million tons of rice is
merchandised every year by Pakistan which is additional to our requirements. Pakistan is also
one of the five main textile manufacturing countries in the world.so if we measure in relative to
where we were, massive structure of economy agriculture has come down from 60 to 20%.
Therefore out of total domestic income agriculture contribution is only 30% but instead of being
deficient in food manufacture we are actually surplus and that is what effectiveness means i.e. by
consuming the same land you produce more from the same inputs that is how economic
development takes place. Agriculture is not only crops within agriculture there has been an
important change. Livestock dairy mutton beef poultry and comparable other products is 50% of
agriculture output in Pakistan. Pakistan also produces third biggest quantity of milk in the world.
So within agriculture area there is a change i.e. major crops are only 38% of agriculture value
added and 19% are minor crops fisheries plantations fruits and vegetables. Thus we are moving
in a manner where the same land and same resources are being used more efficiently in order to
produce more. As a contrast agriculture is only 25% in the US having a population of 300 million
out of which they not only nourish the entire population but also export to the rest of the world.
Therefore it is vital to realize that when it is said that agriculture is contributing more it is the
productivity of agriculture rather than the part of agriculture in GDP. Manufacturing industry
now account for 25% of the revenue when we recall there was not even a single , Industry value
its name at the time of partition. So if we look back where we were and where we are I think the
justification for Pakistan in terms of progress of economic situation of Muslims in this part is
very strong. But where we are unsuccessful is that we have not existed up to our possible. In
1969 Pakistan exports of industrial goods were higher than the combined exports of Indonesia
Malaysia Philippines and Thailand. In 1960 Korea rivaled Pakistan in its five years planning
process. The misfortune is that even a country such as Vietnam which was completely
confounded by the war has now overtaken Pakistan. About 13 years ago Bangladesh which was
much behind Pakistan till 1990 is now way ahead. Being a student economics and student of
globalization the biggest mission is how can we establish ourselves to reach that place where at
least we can be running not at the nine second a mile but at least ten second a mile 3 race which
is going on in the international economy. Ten more important tasks facing Pakistan economy are
reflected in the following paragraphs.

CHALLENGES FACING BY PAKISTAN ECONOMY

We consume more and save less.
Out of every hundred rupees of our national income, we consume eighty five rupees and save
only fifteen Rs, which means that the quantity of money which is available to spend for
economic growth and Advancement is too slight. Because to increase by 8%, you need at least
24-25% investment rate and if you want to depend on domestic savings, your saving rate should
be 25%. Indias saving rate was about the similar, but last year they
recorded thirty four percent saving rates. Chinas saving rate is 50%, so this is the contrast as to
why we are in severe difficulty because as a nation-state this is a problem which we have to
identify. We have to at least duple on savings rate otherwise we will remain dependent on
external sources.
OUR IMPORTS ARE MORE AND EXPORTS ARE LESS
From 2007-2009, eighty percent of our imports were financed by our export incomes. This
fraction has come down to only fifty percent, it may go up to seventy percent but a gap of 40%
of financing requirements in order to keep with the import level still exists. As a nation we
choose to use even the basic supplies of overseas countries rather than locally manufactured
goods. Un till and unless we do not change this attitude of choosing the imported goods we have
to keep dependency on outsiders to fill in this gap b/w our imports and exports. Dependency on
outsiders means that there are cycles, ups and downs when things are good and one gets financed
moreover when things are bad one starves for financing. No nation which strives to reserve its
honor must go through this particular route. Moreover lower is the gap between our export
earnings and expenditure on imports and that can be attained only by expanding our exports our
dependence on external sources would be reduced.

Energy & Water Shortages Issues:

The most common challenge we face today is energy and water shortages and that is not because
we are not generating enough electricity or we are not having enough water. The main reason for
the losses of KESC from the point is it has generated to the point they realize the billing is 45%25% so therefore 55%-25% people are paying for those who are stealing the electricity. Pakistani
government is out of its own limited resources is paying 200 billion rupees every year as
subsidies for electricity. Our industrys disadvantage is that they get the orders from foreign
countries but they cannot execute the orders because there are electricity outages crisis. In
addition to economic losses it also creates inconvenience for the pursuance of normal life. Our
dams have been silted but no additional dams have been built since Tarbela in 1974. We are
having water course losses of about 20%-25%. Though we are in a state of losses the water is not
equally distributed. The dominant land lords are able to approach greater share of water from the
canals as compared to poor and needy farmers. Therefore the productivity level of poor farmer is
not more than 1 ton per acre as compared to 3 tons by big holders. If we provide the water
equivalently to the small farmer he would also be able to increase the productivity from one to at

least two tons resulting into additional income increase in exports of food grains cotton and fruits
and vegetables which will add to export earnings of Pakistan. With the climate change taking
place with all the 8 glaciers in Himalayas which are going to melt we are going to have
difficulties in future due to global warming.

High Cost Of Establishing A Business:

Pakistan ranks among the bottom half of the rankings as compared to the other countries where
investment for running a business is very high. The particular reason for this height is our
bureaucracy totally sitting on their seats without taking actions or decisions in time. Unless or
until they are pressurized or incentives are given to them. The businesses like particularly the
small and medium businesses have serious issues regarding to the hands of bureaucracy. Even if
we grab some of the investors who are invited by the federal government when they come down
to provincial and local governments they are given a run up to 80%-93% the main issues are the
land is not available, the water is not available the gas is not available, electricity is not available
and roads are not properly constructed. Various government agencies lack in coordination with
each other a number of laws and regulations that are almost obsolete and outdated have proved
to be critically impediments. Inspections of labor laws by multiple agencies the improper,
unsystematic and delays in the court system infringement of intellectual property rights and
evasion of tax payments by competing firms in the informal sector have rendered some of the
well established companies without profit or the feasibility or opportunity of starting near
ventures are questionable.

Crisis/Weaknesses Of Governance & Implementation:.

.If we go through to the policy documents of various governments related to education,
agriculture, health, trade & policy etc, and if we look at the same policy forty years back and as
well as the problems, there is almost rarely any significant record of implementing on those
policies or plans over in this current era. The creation of five years plans and all types of medium
term frameworks, but due to the poor governance and implementation that are the kinds of
hurdles in achieving the goals and objectives. But if we strengthen civil services and promotes
the merit based system regarding to recruitment, performance, promotion, evaluation,
compensation plans, and disciplinary action, etc, we are not capable to make any difference in
the quality of perspectives of governance. Orders are passed by the higher positioned
government workers but they are not followed on; approval of summaries remain buried in the
files record and thats why; whether it is education, water supply, health, law or revenue and
order, you can pin down the problem to the governance issues. Unless the governance
issues are fixed, the economy is not going to shoot or rise at the speed which is required.

Lack Of Continuity Due To Uncertainty:

Any government whether it is military or civilian begins with a clean slate in an organized
manner, forgets the past regrets and try their best that nothing wrong will would happen in the
future. But this is not the way the reality as five fingers are not equal. As the projects and
programs which were initiated by the previous governments have to be considered, the
evaluation should be done as to what the strengths and Weaknesses were, eliminate those
weaknesses and continue them forward. It would take only some years to bring these inherited or
incomplete projects to be completed and the state starts utilizing benefits from new air ports,
motor ways, highways, health and educational institutions etc. But pointing out finger or blaming
of successive governments leads to failure and termination of all those projects and plans. When
they are continued the cost of production accelerates 3 times and it takes more years than it was
estimated to complete them. On the other hand the Pakistani nation has to suffer because of this
lack of continuity when they face such critical issues, the investors are always worrying whether
they should invest in this country as there is no surety or guarantee whether the new government
when comes in action would stop or alter the activities that the previous government was doing,
or adhere to the commitments made to them. If we take the example of H.E.C which was sending
1700 students for PhDs abroad but when the new government was formed it suspended the
funding of those programs so how a nation could become prosper in this kind of situation.

Political And Law & Order Stability/Security:

The overall reflecting or arching theme is that for a richest economy we should maintain the
political stability, law and order situation and security perspectives. The Pakistani Armed Forces
really deserve gratitude for what they progressively have done in Malakand Division to build-up
stability and prosperity as far as the law and order situation is concerned. If the country gets rid
of this scenario of political instability, poor law and order situation and insecurity as soon as
possible. Moreover investors from all around the world are afraid of visiting Pakistan and invest
here, which is a source of economy downfall in this country. In the year 2007 Pakistan also
ranks among one of the most opportunity providing countries according to the international
investor community. A 30 year paper which was a bond to be paid in 2037 for Pakistan and four
times Pakistan has gone through over subscription at a normal price that was only 300 basis
points more than the US fundings. There is a very little ratio of countries that can claim to have
such credibility with international fund managers. So on and so far, in the time period of 2 years
we have missed that boat. Therefore, it is not a good symbol that we continue the journey which
has been intervened by establishing stability, security and peaceful political atmosphere.

Remedies or Solutions For Improvement of Economy:

How can these challenges and problems be overcome in order to improve our the economy of
this state? There are lots of suggestions about it but my focus is only on few points.

Diversion In National Psyche:

As a Pakistani nation we are very much pessimistic and too much intolerant where we see
everything weird in this state. Unless and until we develop such a mentality and everyone should
know his/her part of work and perform it with sincerely and honestly. Instead of sitting and
waiting for someone like any leader or scholar to come and fix the current situation of the state
we should do our duty with courage and faith. Everything requires hard work and struggle to let
the goals and objectives be achieved. Media is always creating hype and spreading rumors by
their ugly acts and creating stories by giving invitations to so called political leaders who just
contribute in predicting negative thinking and exploiting the psyche of public. If we dont have a
positive mindset of can do, it would get difficult to be progressive. Rather than blaming the
government and the system we should change ourselves first, we are not going to
go anywhere in this race for global economic survival.

Importance of Human Capital:

There is no other option in generating revenue, building-up Private sector, public sector, NGOs,
local communities, philanthropists etc, all here to put their hands on deck and confirming that the
system going well and participate in making sure that we have a literate and well educated
society. Every graduate of high school or college has got some technical and vocational skills.
Till the time we build up our human capital, we have to be quick in advance in order to compete
the worlds economy which would be a literate and fully trained economy. It is not just a game of
memorizing material exempt it once and forget about it. In order to apply to problem solving one
has to acquire the knowledge and utilize it. This is a new and modern era where human capital is
as much worthy and important as a machinery and equipment. Pakistan is lacking behind other
countries in the institutions, infrastructure and incentives for human capital formation.

Technological Advancement:
The technology is actually spreading like a fire in the forest. We wouldnt have even imagined
that in 5 years ago in the urban and rural areas of Pakistan, one would be able to access to mobile
phones. 95 million people of Pakistan will be having mobile phones. You can use this technology
in order to provide them banking services, information on climate/weather, agriculture extension,
health, education and other various facilities. It is a powerful technological instrument that
makes the most of the work easier. Technology imparts the information/communication for the
betterment of social and economic problems of Pakistan

The Youth:

Pakistan comes among those countries which has a high ratio of young
labor force which can be harvested for its own and global economy. The countries Japan, Europe,
USA and after 2050 China are consisting to have aging population where the ratio of old to
young people is going to increase. But India and Pakistan are the lucky countries where the ratio
of youth is increasing than the old and aged people. If we train the younger generation properly,
we can also increase the female labor force participation, providing them knowledge and skills,
they can be beneficiary for the countrys economy by working as the labor force for the
upcoming years and in the future. Pakistans economy can rise up ultimately. In 2001, labor
remittances were less than a billion dollars; but if we compare it from today we acquire about 7-8
billion dollars. Which can be increased by 3 or 4 times if we have well trained labor force.i.e
labor force having expertise in their work going for overseas employment. This is also a source
of creating the employment opportunities because if you have large number of younger people
coming to labor force and you dont have job opportunities for them which is a misfit and which
leads your country towards social upheaval.

Devolution And Decentralization Of Government:

As the population is increasing rapidly, it is not easy to govern Pakistan only through sitting in
Islamabad, Karachi, Lahore, Peshawar or Quetta without any practical implementation. The
powers have to be devolve, decentralize and delegate authority and the local or district
governments should be facilitate by the provision of resources so that they have the authority to
take decisions. So that the communities could fulfill the requirements and necessities in
accordance of those decisions. By sitting in Islamabad one cannot visualize what is needed in
Chaghi or Loralai and many other areas of the country. Let us associate the powers to the people
at the ground level and there would be much better allocation and utilization of resources. There
must be a system of accountability of the local governments by the provincial governments and
of provincial governments by the federal government but not interference or usurpation of
powers. If we do that, then a lot more can happen with same amount of resources which are
being wasted today, and the economic growth rate can be raised from 6-7 percent average to 8-9
percent annually.