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Pakistan
Manufacturing
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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