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Technological gap

The Prime Minister Shahid Khaqan Abbasi has advised the entrepreneurs of industrial sector to upgrade its technological base to enhance global competitiveness. He admitted that conditions of manufacturing sector are not ideal, but assured that the government is making efforts to facilitate the manufacturing enterprises. The same advice has already been given to the business community by the Chairman State Engineering Corporation (SEC) in his visit to Islamabad Chamber of Commerce and Industry.

Most of the South Asian countries are using 5th generation technology and Pakistan’s industrial sector is stuck in the 2nd generation technology whereas a number of units in the sugar and cement industry are using 1st generation technology. Who is responsible for this big and almost un-bridgeable technological gap? The answer is successive governments from 1972 and onwards. The decade of 1960 was an era of agriculture and industrial development.  The government was facilitating the private sector for the import and indigenization of emerging technologies. Landis Machine Tool Company was assisted in a big way to upgrade its technology. Taxila Heavy Mechanical Complex was established to start the production of heavy machinery and capital goods to accelerate the pace of indigenization of imported technologies. The economy reached to the high pedestal of take-off stage. The manufacturing sector was growing at 8 percent.

After assuming power, Z.A Bhutto reversed the pace of industrialization and latest technologies’ indigenization with his devastating policy of nationalization private industries and banks. Even the rice mills were taken over by the government. It killed the private sector initiatives to establish new industries with the state-of-the art technologies. The economic growth rate dropped to 2.2 percent. The industries under the state control were made inefficient by imposing slack managements and encouraging strikes by the labor unions.

In the decade of 1980s a policy of privatization was half heartedly started but the economic environment did not improve because of electric power crisis. The military government of that time made efforts to launch the construction of Kalbageh dam to overcome the power crisis but could not succeed. The elected governments made the tax structure highly regressive. They did not workout a viable energy policy and the recipe of IPPs further vitiated the economic environment. Incentives and financial assistance was not granted to the private sector to import and indigenize the latest technologies. The sky-high tariffs of energy inputs and a barrage of direct and indirect taxes pushed the country to 147th position on the World Bank’s cost of doing business. Hence Pakistan I exports lost their comparative advantage in the world market. Because of step fall in exports and enormous rise in imports worsened. The cobweb agreements of the PPP government with IPPs and the present government deals with Chinese Companies have created the quagmire of circular debt, the non payment of which results in electricity generation shortfall. In such a grim scenario, how can private sector venture to take a quantum leap and bridge the current technological gap of three generations?

The Planning Minster Ahsan Iqbal has painted a rosy picture about the relocation of Chinese Industries to the Special Economic Zones SEZs under the framework of CEPEC in terms of joint ventures and employment opportunities for the Pakistani workforce. It will not be possible for Pakistani entrepreneurs who are using 2nd generation technology to enter into joint ventures of high-tech industries. Same is the case with our engineers, technicians and so called skilled workers because they do not have the training and expertise to operate high-tech instruments and machinery. Is it possible for the government and private sector to send thousands of engineer, technicians and labors to get training for handling the technology used in the industries to be relocated in SEZs? It is for the government to find a way out in consultation with and cooperation of the government. The war goods industry in the country is a glaring precedent of indigenization of latest technology.

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