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LSM sector growth at 10-year low

By Muhammad Yasir

KARACHI: Pakistan's manufacturing sector recorded the weakest growth in a decade during the outgoing fiscal year 2007-08. The Large Scale Manufacturing sector (LSM), accounting for 69.5 percent of overall manufacturing registered a growth of 4.8 percent in the current fiscal year 2007-08 against the target of 12.5 percent and last year's achievement of 8.6 percent, Economic Survey of Pakistan 2007-08 commented Tuesday. The survey said the heightening political tension, deteriorating law and order situation, growing power shortages, cumulative impact of monetary tightening and rising cost of doing business are responsible for poor showing of manufacturing in 2007-08. Major constraints in achieving and sustaining the goal of rapid industrialization, are low productivity level without the development of a widely embedded skills base, competence and productivity, global trading challenges cannot be achieved as well as skills shortage, and skills gap in key modern technologies which reduces optimum operation of both plant and machinery, it said. The main contributors to this growth of 4.8 percent in July-March 2007-08 over last year are pharmaceuticals (30.7 percent), wood products (21.9 percent), engineering products (19.5 percent), food and beverages (11.1 percent), petroleum products (6.03 percent) and chemicals (3.1 percent). Individual items displaying positive growth are, cotton cloth (4.8 percent) and cotton yarn (3.3 percent) in the textile group. Cooking oil (1.1 percent), sugar (33.9 percent) and cigarettes (5.1 percent) in the food, beverages and tobacco group. Cement (17.9 percent) in the non-metallic mineral products group and buses (32.0 percent), LCV's (16.4 percent) and motorcycles (28.06 percent) in the automobile group. A few groups showing decline in production are, fertilizers (16.89 percent), electronics (4.6 percent), paper and paperboard (5.5 percent) and iron and steel products (7.6 percent). The individual items exhibiting negative growth include cars and jeeps (3.9 percent), phosphatic fertilizer (24.0 percent) and billets (20.6 percent). During the year 2006-07 the textile industry made an investment of approx. $6.4 billion during the period 1999-2007. The major investment has been made in spinning, weaving, textile processing and making up sectors. Approximately 454,000 new direct jobs have been created and industry has been able to make incremental production and exports. Import of textile machinery, which is the single largest item in the machinery group, picked up to $928.6 millions in 2004-05, $771.5 million in 2005-06, $503 million in 2006-07 and $281.7 million up to July-Feb 2007-08. This shows that investment for modernization of textile industry, which started four years ago, still continues. The industry, however, needs to be facilitated to exploit its full potentials. Textile Skill Development Board: As announced in the Trade Policy for the Year 2005-06, government established this board to provide support to the textile garments sector, and initiated skill development and training of stitching workers. About 3,800 trainees have been trained of which 2,700 are females and 1,100 males in different cities of the country where the courses were launched. Pakistan's automobile sector has been showing an upward trend over the past few years, except 2006-07, and, presently, it is contributing 3.6 billion dollars annually in GDP besides providing direct employment opportunities to about 192,000 people.

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