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WEEKLY NEWSLETTER
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Pakistan
Index
The pace of industrialization since independence has
been
rapid, although it has fluctuated in response to changes
in
government policy and to world economic conditions. During
the
1950s, manufacturing expanded at about 16 percent
annually;
during the first half of the 1960s, it expanded at around
11
percent a year. The pace slowed to under 7 percent a year
in the
second half of the 1960s. Between FY 1970 and FY 1977, the
index
of manufacturing output increased an average of only 2.3
percent
a year. Between FY 1977 and FY 1982, the index rose an
average of
9.9 percent a year. Growth averaged 7.7 percent during the
Sixth
Five-Year Plan (1983-88) and 5.4 percent from FY 1989
through FY
1992. In FY 1993, manufacturing accounted for 17.3 percent
of GDP
at current factor cost, of which large-scale manufacturing
accounted for 61 percent and small-scale manufacturing for
39
percent. Manufactured goods accounted for 64 percent of
all
exports by value in FY 1993, but the bulk of these exports
came
in the relatively low-technology areas of cotton textiles
and
garments.
Total fixed capital formation in manufacturing was
estimated
at Rs57 billion in FY 1993. During the 1980s, private
investment
became much more important than public investment. In FY
1982,
private investment was 53.9 percent of the total, but in
FY 1993
the proportion was 96.1 percent. Total investment in
manufacturing was 5.1 percent of GNP in FY 1993.
In the early 1990s, the manufacturing sector was
dominated by
food processing and textiles (see
table 12, Appendix).
Provisional figures for FY 1992 indicated that sugar
production
was 2.1 million tons, vegetable ghee 819,000 tons, cotton
yarn
862,000 tons, and cotton cloth 234 million square meters.
Other
industrial products included motor tires (647,000 units),
cycle
tires (2.2 million units), cement (6.1 million tons), urea
(1.4
million tons), soda ash (147,000 tons), bicycles (364,000
units),
and paperboard (13,000 tons).
Pakistan has one steel mill, located near Karachi, with
a
production capacity of 1.1 million tons per year. A major
undertaking, the mill required the bulk of public
industrial
investment in the late 1970s and early 1980s, although the
plant
was designed and partly financed by the Soviet Union. It
produced
at 81 percent of capacity in FY 1993, and it was dependent
on
imports of iron ore and coking coal. As of early 1994, the
mill
had not achieved sustained profitability, but there were
plans to
expand it.
Public-sector firms produced about 40 percent of the
total
manufacturing value added in FY 1991, and they absorbed
about 48
percent of gross fixed investment. The total value of
publicsector industrial output in FY 1991 was Rs36 billion (in
constant
FY 1988 prices), but pretax profits were only Rs1.3
billion,
reflecting the inefficiencies and overstaffing prevalent
in these
enterprises.
To improve the efficiency and competitiveness of
publicsector firms and end federal subsidies of their losses,
the
government launched a privatization program in FY 1991.
Majority
control in nearly all public-sector enterprises will be
auctioned
off to private investors, and foreign investors are
eligible
buyers. In March 1992, twenty units had been privatized,
but by
1993 only about 30 percent of the government's target
number of
firms had been sold because some of the enterprises were
unattractive for private investors. In 1994 the government
led by
Benazir Bhutto was committed to continuing the policy of
privatization.
Data as of April 1994
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