Shifting of Capital & Industries from Pakistan : A Critical Analysis

3.5       The Government should resolve the issue of circular debt and instead of relying on oil and gas the government should pay attention to use hydel and coal for electricity generation. There is also need to minimize the line losses, control the electricity theft and better load management to ensure the maximum supply to the industry. The schedule of load shedding should be rationalized according to the needs of industrial sector. The sectors which are more dependent on electricity and bear huge losses due to non availability of power supply should be given priority. Such sectors should be allowed continuous supply of electricity for the longer period.

3.6       During the period of power shortfalls the load management may be made carefully. Those areas which are hub of industry should be given the status of industrial corridors which may be connected with separate feeders. In such area load- shedding would only occur in case of emergency. Load shedding schedules for such industrial areas should be announced in advance for the information of the public.

3.7       Subsidies on electricity for household consumer also affect the cost of energy for industry which results short supply for the industry because of more consumption by the household sector. Therefore electricity pricing should be rationalized according to usage. Before making any change in the pricing the industrial sector should be taken on board and informed in advance about such changes as these factors contribute towards the cost of production.

3.8      There is need to chalk out a broad based economic policy at government level to safeguard the industrial sectors. The main focus should be given not only to big industries but also pay attention to medium and small enterprises and cottage industries which could provide more employment opportunities if given due priority and attention. The government would have to look into the challenges faced by the industrial sector and solve the issues like electricity and gas load shedding, reduction in the power tariff and creation of a tax free zone in all major cities of Pakistan.

3.9       In fact at Government level a holistic approach is needed to solve Pakistani trade and industry which requires strong political will, statesmanship and patriotism. The government should come up with independent policies keeping in mind its own best national interest. To restore the confidence of the investors and to ensure full capacity production there is a need for cost effective and reliable energy supply for industry at all cost without which it would not be possible to take out the country from this crisis.

3.10     The government has to reduce the budget deficit and increase its revenue through broadening of tax base, applying strict monitoring and enforcement mechanism for collection of taxes and to bring Agriculture sector in the tax net as currently manufacturing sector is bearing most of the tax burden. This will also help to increase Tax-GDP ratio which is very low as compared to other regional neighbors.

This will reduce fiscal deficit and debt burden and create greater fiscal space in the future for utilizing of government funds for the Public Sector Development Programme (PSDP) especially for the uplift of industrial sector.

3.11     On the expenditure side, there is a need to control current expenditure and defense spending.  More sources should be reallocated towards development expenditure particularly in health, education, energy and physical infrastructure. This will help to attract more investment in the country as well as generate further employment opportunities. This will also increase the productivity of the manufacturing sector.


From the discussion in previous sections it is quite clear that due to lack of economic reforms in the country, energy crisis, law and order situation businessmen have lost their faith on the government policies.  Most of the industries have either been closed or shifted outside Pakistan causing multiple problems like low economic growth and unemployment. A board based approach at government level would be needed to chalk out a long term strategy to overcome this issue.

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