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Reviving Industry & Creating Jobs
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Industry faces uncertain future
Average growth of only 2% in 5 years record low
Government does not honor commitments
Lack of security for business community
Crippling gas & power crisis
Lack of access to finance - crowding out of private sectorPoor trade linkages limited access to big markets
Inadequate, insufficient industrialization centered in too
few locations in countryNeglected, disadvantaged SMEs
Weak Institutions, weak Infrastructure
Skill shortages across all sectors
Under invoicin lar e undocumented econom
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Investment has collapsed
Investment to GDP 12.5% in FY12 record low
Source: Pakistan Economic Survey FY12
0.0
5.0
10.0
15.0
20.0
25.0
FY07 FY08 FY09 FY10 FY11 FY12
Investment declined to 12.5% of GDP,
Lowest level of investment
since 1950.
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Power deficit may rise to over 11,000 MW in 5 years
Source: NTDC National Power System Expansion Plan 2011, NEPRA State of Industry Report 2011, PPIB, WAPDA public documents
12,000
16,000
20,000
24,000
28,000
32,000
2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17
Peak Demand Peak Generation
Projected peak demand
at 6% p.a. growth
About 2,500 MW of ongoing,funded projects should come
online between FY11-15
Few sizable projects due to
circular debt
NeelumJhelum likely to be delayed
further
(11,400 MW)
(8,600 MW)
(6,400 MW)
(5,700 MW)
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The Gas deficit will more than double in 5 years
Source: Petroleum Institute of Pakistan projections updated for actuals
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2
011-12
2
012-13
2
013-14
2
014-15
2
015-16
2
016-17
2
017-18
2
018-19
2
019-20
2
020-21
MMCFD
(3.5 bcfd) (5.2bcfd)
Projected gas supply from
domestic sources
Projected gas demand
(1.6 bcfd)
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Crowding out of private investments
Government
Agriculture
Industry
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 June-12
PKR
trillion
Government has left
no money for industry
or farmers leading to
collapse of economy
Banking sector credit by sectors
Source: State Bank of Pakistan
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Regional Trade is the lowest in the world
Source: World Bank
27%
16%
6%5%
3%
1%
0%
5%
10%
15%
20%
25%
30%
East Asia Europe Latin
America
Sub Saharan
Africa
Middle East South Asia
Intra-regional trade as a % of GDP
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Rapid Industrial growth for job creation
Create 10 million jobs through 9% growth
Restore investor confidence / business friendly
environment
Affordable and reliable energy
Democratization of Capital
Human Resource development
Industrial zone in every district of Pakistan
SME development / sector development companies
Regional trade hub
Institutional strengthening
9%
2%
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Restore investor confidencePolitical solution to end war on terror
Professional police system, independent of political
interference, to improve law & order
Mechanism to address corruption and rent seeking
Address challenges for doing business with respect
to regulation; contract enforcement and property
rights; infrastructure; information symmetry;
development of integrative supply chains.
Delivering on legally binding government contracts
Alternative dispute resolution mechanism to speed
up contract enforcement
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Energy Emergency
Electricity & Gas shortages to be eliminated within
PTIs first term in office
Resolve Circular Debt through moving to lower cost
generation and reduction of line losses
Bring Load shedding to manageable proportions
Fast track gas imports and ensure equitable rationing of
Gas until new gas supply arrives
Provinces to play their role in Energy generation
Make Pakistan an Energy Secure state
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Increase availability of Capital
Create space for Bank lending to industry by reducing fiscal deficit to 4.5%
of GDP within PTI first term in office
Set up specialized financial institutions to raise long term capital for
infrastructure, industry (similar to role of now defunct NDFC, IDFC)
Specialized financial institutions to raise capital for SMEs
Deepen financial markets through vibrant debt and capital markets
Make Pakistan the world leader in Islamic Finance
Raise capital from expatriate Pakistanis through retail bonds, IPOs
Stimulate issuance of Money Market Instruments and Corporate Bonds bystrengthening mandate and funding of Investment Banks, which should be
moved under SBP supervision
The Mutual Fund industry, Provident/Pension Funds and Insurance
companies mobilized to stimulate demand side for corporate debt
Fiscal reforms and debt / capital market development
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Access to finance for SME sector
Simplify financial access for SMEs shifting away from
collateral based lending towards cash flow based lending
Government to provide core investment in new SME Venture
Capital ProgramSECP to create Alternate Investment Market for SME listing
for issues over Rs 25mn
Enhance SME access to bond and capital markets, facilitate/
incentivize specialized private equity companies for SME
Loans to SMEs procuring local machinery be offered and loan
repayment guarantee insurance scheme
Alternate dispute resolution mechanism to find solution to
Democratization of Capital
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Human Resource developmentAlignment of Skills and Education with Industrialization
Train 2 million new workers per annum
Current Workers to be trained and supported for
Upgrading their skills and knowledge
Providing good Health Care for labor force (to protecthealth and reduce losses in workdays)
Promotion of Innovation and Technological Up-
gradationBringing Universities into mainstream of industrial and
economic development(University-Industry Linkages.)
Encouragements be put in place for enterprises which
use Universit s ca abilities demand driven research
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Set up Industrial zones across Pakistan
Infrastructure &Utilities
Special Economic
Zones for SMEs andJawan Marakaz
Labor colony withhousing, schools,
health unit
Specialized Financialinstitutions for access
to Capital
Universities, R&D,
Quality & Standards,
Labs & testing facilityINDUSTRIAL
ESTATE
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Thar coal Industrial Cluster
Power
Generation
Fertilizer
Diesel
PetroChemical
Strategy focused on developing
local resource base for jobs
and wealth creating
activities
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SMEs promotion - focused incentivesSector development companies led by private sector for developing
an integrated development strategySkills, Technology, Marketing
Revamp TDAP with independent board and professional
management for better co-ordination with government ministries,
tax authorities and tariff commission for creating market linkages indomestic and export markets for SMEs. Remove from government
control, no bureaucrats to be appointed.
Revamp SMEDA into an effective private sector led institution with
independent board and professional management. SMEDA tofacilitate export policy, technical skills development and access to
finance for SMEs. Remove from government control, no bureaucrats
Tax procedures simplified to support the SME sector
Support of Management training to be provided, apprenticeship andtechnical & vocational training according to skills development policy
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SMEs developmentOne village One product project to promote traditional
handicrafts, skills and culture (revitalize AHAN program)Jawan Marakaz to facilitate and mentor local entrepreneurs
Land Documentation reforms - Urgent drive for land
documentation, enforcing legal rights of land owners.
Achieving ISO & other international standards for SME through
accredited trained engineers; specialists
Technology Funds to upgrade equipment and training of
workers.Technology up gradation centers for sector development (E.g.
Tools dies, mould centre in Karachi and Gujranwala)
Cluster development initiatives for existing SME clusters
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Regional Trade corridors
Geo-strategic proximity to fastest growing economies in the
world
combined GDP of USD 11 trillion (2012)Only country that shares border with China and India, two of
the fastest growing markets GDP, population, trade
Intra-regional trade only 1% of GDP in South Asia vs. 27% in
East Asia and 16% in Europe huge potential to expand trade
Establish trade corridors between South Asia, Central Asia, ECO
Public Private partnership in transforming trade and transport
logistics chain and services to international standardsRemove infrastructure bottlenecks to intraregional trade
Use SAFTA framework to address non tariff barriers on both
sides
Create environment which fosters cross border investments
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Institutional reforms for growthMake FBR fully Autonomous to insulate from Political Influence
Separate Tax Policy from Tax Administration
Revamp Customs department; deploy technology to check under
invoicing of goods
Strengthen & empower SECP, CCP, OGRA & NEPRA to act against
Cartels, Speculators, and Gas & power thieves
SMEDA / TDAP to be restructured with independent Board with
majority holding by private sector
Strategic investment agency to manage all other SOEs (Steel
Mill/Discos etc) similar to Malaysias Khazanah
Fully Autonomous Board
Mandate to revitalize within two years
CEOs of all SOEs to be appointed by Boards not PM (including
TDAP and SMEDA)
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Infrastructure Public Private initiatives
National Trade Corridor Loss of 4% of GDP (Rs
800bn in FY12) annually due to inadequate andantiquated railways, transport infrastructure. Focus
on cost effective supply chains.
Railways revamp PSE, business plan to focus onraising freight traffic above 6 million tonnes for
return to profitability
Public Private Partnership getting privateinvestment in transport, energy, water supply &
sanitation, low cost housing, education / health
sectors. IPDF Framework exists for private sector to
invest in ublic oods / ro ects
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