Karachi is the ideal place for setting up of production facilities as its a port city, has a big pool of educated and skilled people, but its marred by poor law and order and extortion. Punjab does not have law and order issue but its facing problems due to energy crisis and to some extent trained man power. KP and Balochistan are scarred by a civil war kind of situation. The dilemma is that till three years back, most of the industries were moving from Karachi towards Punjab. But now due to the energy crisis they are moving out of the country.
What and how can the government salvage the industrial base of the country?
**LAHORE: “I would move my production facility to Karachi provided the law and order is at Lahore’s level,” said a Punjab-based entrepreneur. A Karachi businessman said “Lahore is my preferred investment destination if energy and power issues are addressed.”
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These views are not limited to a few entrepreneurs but almost everyone who is managing industries in Pakistan faces region-specific drawbacks, said President Lahore Chambers of Commerce and Industry, Farooq Iftikhar. He said every creditable global report on the cost of doing business in Pakistan points towards constantly increasing vulnerability of investment in this country.
“What we lack is a viable investment climate at one place,” he said. He added that opportunities available in one region of the country are nullified by substantial drawbacks affecting only that part of the country.
Engineering entrepreneur, Almas Hyder, said Karachi being a seaport is best suited for establishing industries, particularly exporting concerns. It has ample land, electricity and gas.
Moreover, the city has the highest literacy rate in the country, which has enriched its human resource, he said.
“However, what it lacks is the security to the investment,” said Hyder. “Besides paying legitimate government taxes, businessmen are subjected to extortion by three different politically strong groups,” he said.
“While the government waives all taxes on exports, the thugs grant no such exemption even to the exporters,” he added.
This affects the competitiveness of their products as the extortion cost is almost as high as government taxes. Hyder said those Pakistani businessmen who did not want to leave the country were shifting their production facilities to Punjab until the province ran out of power and energy supplies three years back. “Now most of the Karachi-based businessmen are shifting their capital outside the country,” he added.
“Punjab is facing a different dilemma,” said Economic Forum of Punjab Chairman Nabeel Hashimi.
The law and order situation in Punjab is satisfactory, there are no extortionists in the province and industrial estates are much better maintained than in any other part of the country. However, power and energy shortages have nullified all these advantages, he said.
Khyber Pakhtunkhwa is plagued by terrorists while Balochistan is engaged in a kind of civil war.
That leaves the big cities of Sindh and Punjab to play their part in accelerating growth, he said.
Industries in Punjab operate at 66 percent of their installed capacity because of gas suspension and electricity outages, he said.
Industries in Karachi and Hyderabad face no such problem but they also operate below capacity due to frequent strikes or regular disturbance of peace in the city, said Hashimi.
Moreover, high-priced alternate power arrangements increase the production cost of Punjab-based industries while high extortion cost enhances the cost of industries in Karachi.
Chairman Pakistan Hosiery Manufacturers Association, Adil Butt, said the industries in Pakistan have long been braving the high cost of corruption, and in recent years, high inflation and bank mark up. However, they cannot cope with extortion or energy shortages. Both issues are serious and should be tackled on a priority basis.
“At a time when the global economy growth is low, the local industries need all possible facilitation to lower their costs,” said Butt.
“Any increase in production cost due to bad governance would pass on our markets to our competitors,” he added.
