PAKISTAN is striving for an industrial revolution of a gigantic nature. In the last ten years, industrialization has jumped in leaps and bounds all over the country. The cluster of industries is more in the Provinces of Punjab, NWFP, and Balochistan. An upsurge of more than ten times has been witnessed in these three provinces. Industry has grown multi-fold on the Lahore-Multan Road, in Chunian, Raiwind, Muzzafargarh, Dera Ghazi Khan, Gadoon, and Winder to name a few areas.
Sindh which was the main region of industrialization has not seen such a manifold increase in industrial activities and it seems that it has been relegated to the sidelines by the policy-makers with regard to any further proliferation of the industrial base. The provinces has missed the boat for there is not much new industrial activity to boast of. Furthermore, Karachi, the city under siege, was once the fortress of industrial activity and it could be rightly said that Karachi was the prima donna on the stage of industrialization.
Karachi, being the largest city, with a readily available pool of skilled and semi-skilled workforce, with an educated citizenry, and with advantages of two multi-functional seaports and a strategically located airport, ahs always been the ideal site for setting up of industries. However, successive governments have ensured that this city was kept from further strengthening its industrial base. Consequently, there has been less industrial activity these past few years. Hence it has ensued into a dwindling interest in setting up of industries even in other parts of the province of Sindh.
At the same time, the prevailing law and order scenario and the inflationary trends have also precluded any and all notions of sprucing up the investment process in industries. Moreover, the "hidden costs of operation" are higher in the province of Sindh too. The industrial situation in Sindh can be compared to the industrial scene in NWFP and Balochistan a decade ago.
There is then this imperative need to initiate and implement policies that will induce and attract industrial investment in this province. The beginning can be made by introducing the incentive of Octroi, Export tax, Zila Tax exemption on plant and machinery, raw materials, auxiliary materials, packaging materials, and finished goods of any new industry above the cost of Rs. 50 million, upto a period of five years after start of production.
This facility is already begin provided by the governments of NWFP and Balochistan while this facility is also available in certain areas of Punjab. Sindh is the only province left out. It is to the advantage of this province if this disincentive is removed as soon as possible so that the process of attracting investment in Sindh gets an additional boost. The provincial government can take the decision on its own and this will be a complement to any further incentives that the Sindh government can manage to convince the Federal government for.
This facility would not in any manner whatsoever decrease or affect adversely the current Octroi or District Council revenue because this facility is for attracting new industries which do not form any part of the present revenue projections from Octroi, etc. On the contrary, if the figures of NWFP are scanned, it will prove that Octroi revenue will increase as large industries will be set up in Sindh which at present the entrepreneurs may be contemplating in other provinces.
A further point of consideration is that as of June 1995, the Customs Duty and Income Tax exemptions for the whole of Balochistan and NWFP, as well as the rural areas of Sindh and Punjab, which were available for the last 5 to 8 years have lapsed. By the end of June 1995, the exemptions provided to Gadoon will also lapse. Therefore, except for the SIZ marked areas, all other industrial areas in all provinces will not have any special or extraordinary incentives from Islamabad. It is then upto the four provinces to devise their own incentives to attract industrial investment. The more liberal and progressive the incentives, the more will be the inflow of industrial investment.
It is, sincerely, proposed that the Sindh government should act immediately and take positive measures to exempt the imposition of Octroi as is done by the other provinces. Once industrial investment is captivated in the industrial sectors of the province, it will be a boon for the coffers of Sindh among other points. Since this exemption will be for a period of only five years, the government will continue to receive additional revenue after the expiry of the exemption period. In the meantime, an operative industry will start paying other revenues to the provincial exchequer. From social security and other labor levies to excise. From a share of the Sales Tax pool to the miscellaneous duties, rates, and taxes.
More importantly, the inflow of industrial investment will generate substantial direct and indirect employment for the denizens of this province. The Prime Minister has herself pointed out that her Secretariat has received more than four hundred thousand applications for employment. A case in example is the proliferation of employment opportunities in Hub. Nearly 20,000 persons are directly earning their income from the industrial units in Hub. Moreover some 40,000 persons are indirectly benefiting from the industrial activity going on in this industrial area. Today, Hub Chowki ahas become a big township compared to just 15 years ago when it was a simple outpost. This is a classic example of incentives being proved beneficial to the community and also to the country. Even the local residents have been able to enjoy from the honeypot in more ways then one. The employment opportunities close to home is a major factor. Furthermore, the value of their land has increased manifold, resulting in additional bounties for the community.
The following three measures are presented for the consideration of the Sindh government. It is hoped that implementing these three measures will provide the required impetus in attaining the objectives of accelerated industrial investment in Sindh: