2. GROUP NAME
IDEAS
: MEMBERS:
MOHAMMAD NOMAN FAISAL IBRAHIM
JUNAID ZEB MOHSIN ABIDI
SHAKIR MAHMOOD
COURSE INCHARGE:
M.A. RAB
3. Introduction:
Since ''Industrial Revolution' industrialization is
regarded essential for rapid development of the country.
The countries that solely relied on agriculture have
remained poor and underdeveloped, whereas the
nations which gave weight to rapid development to
industry achieved high rates of development. The
advanced countries of the world, America, Germany,
Great Britain, Japan, Russia, encouraged
industrialization on large scale. The advantages of
technological change were channeled into agriculture.
Pakistan at the time of partition in 1947, had negligible
industrial base. Since the division of the Subcontinent,
the Government of Pakistan has been utilizing all
available resources domestic as well as external for
rapid development of the manufacturing sector.
4. PAST CONDITION:
1. Pakistan is at a critical juncture in its stage of
economic development. Growth has been
extremely volatile and dependent on external
inflows such as concessional assistance, foreign
direct investment and remittances.
2. As the economic crisis dissipates and is replaced by
another one caused by the floods of 2010, the
critical issues which need to be addressed in order
to position the economy along a path of sustainable
and equitable growth take center stage.
5. CURRENT VIEWS:
Mr. Yaseen Anwer ,Governor, State Bank of
Pakistan has highlighted the role of private
sector in the development of infrastructure in the
country as public sector alone cannot fulfill the
responsibility of removing infrastructure
deficiency.
Mr. Yaseen Anwer said that the importance of
private sector is extremely critical for success of
any policy initiative in the way of infrastructure
development. He said that currently the role of
private sector is limited to the projects in energy
sector in the form of Independent Power
Producers (IPPs) and the success of energy sector
in attracting private capital was due to a policy
of the federal government which provided
sovereign guarantees that led to opening up of
avenues for the private sector.
6. He pointed out that the country’s banking sector,
together with DFIs, has an outstanding portfolio of
Rs 284 billion in overall infrastructure sector, of
which a staggering 68% is in power sector alone.
Other key areas like Oil & Gas exploration,
Petroleum and Roads etc. are not getting much
financing and the performance of DFIs is very
disappointing, with only 2% share in overall
portfolio. A study mentions that if a country wants
to attain a 7% GDP growth, then it has to invest 7%
of its GDP in infrastructure development, he said
and added that this scenario called for some
concrete steps towards infrastructure development.
7. Key Private Sector
Development Issues:
a. Macroeconomic stability achieved in recent years has
been critical in restoring private sector confidence and
catalyzing greater foreign and domestic private investment.
The result has been burgeoning trade, current account, and
fiscal deficits, a high rate of inflation, massive devaluation
of rupee, major drawdown of foreign reserves to finance the
deficits in an environment of weak capital inflows, and a
rising level of domestic and foreign debt.
8. b. Private sector investment and growth in recent years has
been mainly based in the services sector especially
telecommunications and financial sectors. Pakistan’s
manufacturing base over the years has remained narrow with
a concentration of investment in capacity enhancements and
up gradation of facilities largely only in the traditional textile
sector. This sector accounts for 46% of total industrial output
and contributes 60% to Pakistan’s total exports.
c. The enabling environment for private sector development
needs to be further strengthened within an improved policy
and regulatory framework that consists of a defined
industrial policy, competitive policy, an investment policy,
and stronger and capacitated regulatory institutions in key
sectors of the economy.
9. d. A key constraint to private sector growth is the critical
infrastructure deficit, particularly in the power sector. The
demand-supply gap for power has increased substantially over
the years without a corresponding increase in public and private
investment in power generation and strengthening of
transmission and distribution systems.
e. Pakistan provides good protection to investors but lacks
efficient contract enforcement structures which complicate and
increase the cost of doing business. In addition, inefficiencies
and rigidities in the land and labor markets remain major
constraints for greater growth and dynamism of the private
sector.
f. Lack of human resource development and availability of
educated, healthy and skilled labor are big issues in the
competitiveness and growth of Pakistan’s private sector. This
results in distortions in terms of factor utilization by sectors,
contributes to unemployment and lowers factor productivity.
10. g. Despite some financial deepening, Pakistan’s capital markets
still lack financial instruments and institutions specializing in
long term debt, project, and infrastructure finance. This
constraint has far reaching impacts for private sector
participation in infrastructure development and is one of the key
reasons for slow industrial growth and a narrow industrial base.
11. PRIVATIZATION
INTRODUCTION:
Before eighties, the strategy of privatization was given no importance
but today in all developing country, for achieving self sufficiency and
dependance, privatization policy is considered as key to success.
For appreciating the relationship between privatization and success or
development, South Korea, Taiwan and Singapore are the glaring
examples to acquire a lesson.
DEFINITION:
Privatization is the process through which the organizations,
companies, production unit, factories and plants which has been in the
ownership of the governement either by nationalization or the
government investment are tranferred to private sector through sale.
12. OBJECTIVES:
• Technical know how and the modern and sophisticated technology is
of paramount importance for the industrial development. The foreign
investors could be attracted by through privatization process to invest
in the local economy.
• The budget deficit of the government could be bridged through
enhancing the income trough taxes.
• The balance of payment position of Pakistan is persistently adverse.
Although there are many reasons behind but the main cause is export
of raw material or semi-finished goods which earns less foreign
exchange in contrary of export of high valued finished goods like oil,
spare parts, machinery. Privatization can enhance the interest thus
increase the production which could results in high value of foreign
exchange earnings and settle the BOP.
• Privatization can change the basic structure of economy like
development of transport and communication sector.
13. • For acheiving self dependence and rapid pace of economic
development, it is necessary to use our natural resources
maximum possible which include coal, gas, iron, and various
mineral resources. Through promoting the policy of privatization,
natural resources might be used fully.
• Foreign debt burden of Pakistan is nearly 37% which is
unbearable. This burden is due to industrial unit running in the
government sector because of their performance and efficiency is
hope less. Through privatization process, these units are sold to
the private sector, their efficiency and so the production surplus
could be increased which reduce the debt burden.
• Privatization policy through enhance exports may make the
economy of Pakistan stable and strong. As consequence of
privatization economy would develop and boost the exports.
14. ADVANTAGES:
1. Curtail in Political Pressure:
So long the financial and production units are under the
control of government, the public servants are pressurized by the
politicians to design such policy which may injurious for the country.
Through Privatization, these problems can be catered.
2. Discourages Smuggling:
Smuggling and black marketing activity have increased so
enormously that they are started to run as parallel government. As
consequence of privatization, through increasing competition, this
tendency may be curbed.
1. End of Public Sector Evils:
Benefitting relations, indiscriminate waste of resources,
neglect to maintenance of machines, over staffing, fairlessness of the
governement officers from accountability, theft of public property etc.
are the evils which become the rule of the day in government sector.
Process of privatization can free the country from all these evils.
15. 1. Increase In Efficiency:
As the result of privatization, vested interest will increase.
Severe competition will compel the producer to produce best quality
within the minimum cost of production.
1. Expansion in Stock Market:
As a result of promotion to privatization, motivation will
increase amongst the investor on international forum to invest in stock
market and the limited stock market of Pakistan will certainly be
expanded which will promote capital in Pakistan.
1. Boost to Export:
We have been stressing upon the production of import
substitute write from the beginning and neglected the idea of boosting
the exportable due to which our exports could not be increased. As a
result of privatization, the investors would try their utmost to acquire
more foreign exchange through maximum exports.
