Pakistan's manufacturing sector reels from a multitude of external and self-inflicted setbacks. Cotton, textiles, ghee, automobiles, sugar, cement, fertiliser…
The performance of Pakistan's corporate manufacturing sector was far from impressive in fiscal year 2001-02, recording modest growth of just 4 percent against the 8.6 percent achieved the year before. The situation is not expected to improve in the near future. The forecast for the next fiscal year is that the current declining trend or a flat rate of growth will continue. Despite visible signs of recovery in the world economy, the adverse impact of post-9/1 1 events on Pakistan's industrial sector has not yet been overcome prompting fears that the country could be experiencing de-industrialisation. While new petroleum refining, fertiliser and automobile units were being established till just few years back, some of these, like the Fauji Jordan Fertiliser Company, have ceased operation this year. As a financial executive put it, "we do not hear of any new industrial projects coming up except those few with start ups in the late 1990s that are now coming into production". He adds, "There is not much demand from corporates for capital expenditure funding and commercial banks are diverting their liquidity towards consumer banking, particularly car lease financing, which, from a larger perspective, is nonproductive compared to export-oriented manufactures".
In the 2001-02 budget, growth in the large-scale manufacturing sector was targeted at 6.5 percent. As a result of developments after 11 September, the target was drastically scaled down to 3.2 percent. The fiscal year had begun on a positive note with growth in the sector exhibiting a rising trend until September 2001. The strong external impact on the economy is evident from the fact that the sector grew by 5.3 percent in the first quarter (July-September) of the outgoing fiscal year, but dropped to 0.6 percent in October and then registered a negative rate of 5.7 percent in November 2001, at the peak of Afghan war. The end of the war saw the sector rally, growing by 6.8 percent in December and 16.3 percent in January, and this is what helped the cumulative growth of corporate manufactures reach 4 percent last year. The main contributors to this modest growth were petroleum at 18.7 percent, food and beverages at 6.1 percent, textile and garments at 4.4 percent and tyres and tubes at 5.9 percent. Among the industries which registered negative growth were air-conditioners by 76.9 percent, bicycles by 7.6 percent, tractors by 9.6 percent, phosphatics fertiliser by 49.5 percent and cosmetics by 32.9 percent.
Profile and performance