LSM downturn

LSM downturn

Pakistan Bureau of Statistics Report depicts a continuous trend of decline in the production of large scale manufacturing over the past nine months. The productivity is falling in almost all major industries including textiles, leather goods, pharmaceuticals, fertilizers, chemicals, iron and steel. In the month of July alone production shrank by 3.28 percent. The government expects increase in production of small and medium scale enterprises but the targets set for these industries may be difficult to achieve in view of the prevailing unfavourable economic environment.

The Prime Minister and his team of economic managers have repeatedly assured to improve the ease of doing business index. But high interest rate, technological stagnation, rising import cost of raw material and intermediate goods due massive currency depreciation and abnormally high tariffs of energy inputs are taking hevy tolls on the manufacturing sector.

The drop in production of textiles and leather goods will impact both volume and value of exports. The private sector industries can flourish only when the government provides monetary and fiscal incentives in the form of easy credit and tax holiday, if Malaysian and South Korean models of economic growth are any guide. Likewise the industrial policy, if at all it is formulated, should encompass induction of latest technologies and their indegenisation and skill development. It is high time for actions and not hollow promises.

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