Challenges facing economic recovery
Having provided liberal fiscal and monetary stimulus, policymakers are looking forward to an economic recovery driven mainly by the manufacturing sector and the construction industry. However, stimulus alone will not be enough. In the case of manufacturing, the growth has to be synchronised with an increase in agricultural output and the establishment of China Pakistan Economic Corridor (CPEC) related Special Economic Zones (SEZs) equipped with all infrastructure facilities.
Sustained growth in the construction industry is primarily linked to the speed with which a vast network of small dams is built across the country. Not sufficiently diversified and with sluggish exports, the manufacturing sector depends heavily on the rural market for the sale of industrial goods as well as overall domestic demand. Agriculture provides raw materials and primary commodities for processing/ manufacturing which contribute the bulk of the export earnings.
That the large-scale manufacturing sector recorded five per cent growth in July was a positive development. The growth was however concentrated in a few industries like cigarette, wheat and grain milling, cement and medicines. The remaining sector, estimated at 90pc by an independent economist, had shown zero growth. Lately, car sales have picked up and even fetch a premium price in the market.
The issues facing the various under-performing manufacturing sectors and the official measures taken for their recovery so far were reviewed at a meeting chaired by Prime Minister Imran Khan on October 1. Manufacturers from various sectors, including pharmaceutical, cement, textile, chemicals, house appliances etc presented their points of view. The prime minister was assisted by the country's top economic managers comprising minister for industries, advisor commerce, advisor finance, state bank governor and senior officials.
Take the issue of CPECrelated industrialisation. The CPEC Authority Ordinance of October 2019 has lapsed and its chairman has lost his authority and legal status. The ordinance, originally valid for 120 days, was extended for another 120 days by a resolution of the parliament. The federal minister for information says a bill would now be moved in the parliament and hoped the opposition would support it.
A Special Parliamentary Committee meeting on
October 2 noted that no progress has been made in CPEC projects in Balochistan since 2017. In response to the briefing given by officials of provincial ministries and allied departments, the Committee Convener PPP Senator Sherry Rehman said they were shifting responsibility on one another and there seems to be no institutional collaboration. Senator Usman Khan Kakar regretted that 132kV grid station in Bostan, a site for SEZ, could not be started due to the nonavailability of funds.
In a related development, the CPEC Parliamentary Committee unanimously agreed that the National Transmission & Despatch Company would execute the 220kV grid station project of Dhabeji Special Economic Zone for which the Sindh government will provide the land, the right of way and other ancillary facilities. The secretary power assured that PC-1 of the project would be revised and submitted to the planning commission at fast track.
The committee also directed The National Electric Power Regulatory Authority to look into three prioritised Special Economic Zones with regards to the supply of electricity and suggest resolution of the problem.