CONTRACT PACKAGE 7 (PSO REFORMS) · “Redefining and strengthening the role of Industries,...

CONTRACT PACKAGE 7 (PSO REFORMS)

STUDY NO 7 : REDEFINING AND STRENGTHENING THE ROLE OF INDUSTRIES DEPARTMENT

Final Report (June 2008)

Table of Contents

TUI.UT TUBACKGROUND OF THE STUDYUT .......................................................................... 5

TUII.UT TUSUMMARY OF DETAILED ANALYSIS REPORT UT ......................................... 8

TUIII.UT TUTHE BEST PRACTICES FRAMEWORKUT ....................................................... 12

TUIV.UT TUGAP ANALYSISUT .................................................................................................. 17

TUV.UT TURECOMMENDATIONSUT ..................................................................................... 22

TU1.UT TUSCOPE AND JURISDICTION OF THE DEPARTMENTUT ................................. 24

TU1.1.UT TUPRIORITIZATION AND FOCUS ON CORE ACTIVITIES UT ............................................................. 24 TU1.2.UT TUINCLUSION OF SERVICE SECTOR IN PURVIEW OF INDUSTRIES DEPARTMENT UT .............. 25

TU2.UT TUEFFICIENCY AND EFFECTIVENESS OF THE DEPARTMENTUT.................. 28

TU2.1.UT TUPARTICIPATION IN STRATEGIC PLANNING OF THE PROVINCE UT .......................................... 28 TU2.2.UT TUDEVELOP COMPREHENSIVE INDUSTRIAL POLICY UT................................................................. 29 TU2.3.UT TUDEVELOP INDUSTRIAL MASTER PLANUT...................................................................................... 29 TU2.4.UT TUIMPROVE INTER-DEPARTMENTAL LIAISON AND COORDINATIONUT ................................... 31 TU2.5.UT TUESTABLISH KEY PERFORMANCE INDICATORS FOR PERFORMANCE EVALUATION UT ..... 32 TU2.6.UT TUREVIEW OF THE LEGAL FRAMEWORKUT ...................................................................................... 32 TU2.7.UT TUALIGNMENT OF ORGANIZATIONAL STRUCTURE AND ROLESUT............................................ 33 TU2.8.UT TUTRAINING OF PERSONNEL WITHIN INDUSTRIES DEPARTMENTUT......................................... 36 TU2.9.UT TUESTABLISH RESEARCH AND DEVELOPMENT CELLUT ............................................................... 37 TU2.10.UT TULINKAGES OF EDUCATIONAL AND VOCATIONAL TRAININGUT ............................................. 40

TU3.UT TUFACILITATION OF THE INDUSTRIALISTSUT ................................................... 40

TU3.1.UT TUMARKET DEVELOPMENT AND PROMOTION UT ............................................................................ 40 TU3.2.UT TUESTABLISH INVESTOR PROMOTION AND SUPPORT CENTREUT .............................................. 41 TU3.3.UT TUPROMOTION OF R&D INTENSIVE INDUSTRYUT ........................................................................... 42 TU3.4.UT TUDEVELOP IT INFRASTRUCTURE AND PRESENCE ON WEBUT ................................................... 43 TU3.5.UT TUDIRECTORY OF INDUSTRIES AND SERVICES UT ........................................................................... 45 TU3.6.UT TUIMPROVE SURVEY MECHANISMUT ................................................................................................. 46 TU3.7.UT TUENTREPRENEURSHIP TRAINING AND ADVISORY SERVICES UT............................................... 47 TU3.8.UT TUINFRASTRUCTURE DEVELOPMENTUT............................................................................................ 47

TU4.UT TUINDUSTRIAL REGULATIONSUT ............................................................................ 48

TU4.1.UT TUINDUSTRIAL SAFETY AND INSPECTIONUT.................................................................................... 48

TUVI.UT TUAPPENDICESUT....................................................................................................... 50

TUA.UT TUEXTRACTS OF ECONOMIC SURVEY OF PAKISTAN RELEVANT TO SERVICE SECTORUT ............ 50 TUB. UT TUMARKET DEVELOPMENT SCHEMESUT .................................................................................................... 52 TUC. UT TUHIGHLIGHTS OF GLOBAL INCENTIVES TO PROMOTE R&D DEVELOPMENTUT ............................. 54 TUD.UT TUTHE BEST PRACTICES FOR SURVEY UT .................................................................................................... 56 TUE.UT TUMAPPING OF TERMS OF REFERENCES WITH THE REPORTUT ............................................................ 59 TUF.UT TURESOLUTION MATRIXUT ............................................................................................................................. 66

Study No. 7: Redefining and Strengthening the Role of Industries Department

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A. F. Ferguson & Co.

I. BACKGROUND OF THE STUDY


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I. Background of the study This report is a part of the study of the Punjab Resource Management Program (PRMP) under the Resource Management Component of the Technical Assistance Loan 2031 -Pak Islamic Republic of Pakistan from the Asian Development Bank under PRMP. A. F. Ferguson & Co. has been engaged to carry out studies under “Contract Package 7 PSO Reform (including preparation for Privatization, Liquidation & Corporate Restructuring) of the aforesaid loan. The aforesaid package can be segregated into two broad categories: A. Public Sector Organization (PSO) reform This intends to assess the financial and operational viability of the entities and to recommend strategies for their future direction which may include course of action for privatization, liquidation, corporate restructuring or institutional development. B. Specific studies focused on the following areas i) Improvements in Agricultural marketing ii) Redefining and strengthening the role of Industries, Commerce and Investment

Department iii) Implementation of labour laws iv) Implementation mechanisms of environmental protection regulation. The studies for PSO reform mentioned above are intended to be conducted for PSOs listed below: i) Punjab Seed Corporation (PSC) ii) Punjab Provincial Cooperatives Bank Limited (PPCBL) iii) Punjab Small Industries Corporation (PSIC) iv) Punjab Tourism Development Corporation (PTDC) v) Government Printing Press (GPP) The project was initiated in June 2006. This report covers the specific study related to “Redefining and strengthening the role of Industries, Commerce and Investment Department”. The Industries, Commerce and Investment Department was divided into two departments under notification No.SO.CAB-1/2-53/88. The two new Departments are “Commerce and Investment Department” and “Industries Department”.


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Our approach to the project is structured as follows:

• Stage I : Initiate Project and Formulate Strategy (Inception Report)

• Stage II : Conduct Detail Analysis (Mid Term Report) • Stage III : Develop Recommendations (Draft Final Report) • Stage IV : Final recommendation based on comments on draft

final report (Final Report) A formal deliverable in the form of a written report becomes due at the conclusion of each stage. The Inception Report, delivered at the conclusion of the Inception stage presented our preliminary understanding of the work plan for fulfilling our terms of reference. The objective of the mid-term reporting was to provide a basis for the Government of Punjab and ADB to review problems and issues identified in the course of the project. The existing functioning of the department was studied in detail as part of the detailed analysis report to form a basis for the recommendations presented in the draft final report. The draft final report compared the existing practices of the department to identify gaps therein and proposes recommendations aimed to cover the gaps identified. Feedback received from the Government of Punjab and ADB has been incorporated in the Final Report, where required and resolution of the comments of the various stakeholders have been given in the Appendix F to this report.


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II. SUMMARY OF DETAILED ANALYSIS REPORT


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II. Summary of detailed analysis report A detailed analysis of the current roles and functions of the Industries Department (ID) was presented in the Detailed Analysis Report. A summary of the analysis of the current roles and functions is given in the ensuing paragraphs. The Industries Department is a department of the Provincial Government. It constitutes a Secretariat, attached bodies, autonomous bodies and special institution. The Secretariat core function is liaison with the Provincial Government. Secretariat maintains a close contact with each body and coordinates with them on all issues. The Industries Department constitutes of the following bodies through which it operates in the province. Attached Bodies

a) Directorate of Industries b) Punjab Prices and Supplies Board (PPSB) c) Punjab Consumer Protection Council (PCPC) d) Controller Printing and Stationery

Autonomous Bodies

a) Punjab Small Industries Corporation (PSIC) b) Punjab Industrial Development Board (PIDB) – Defunct c) Punjab Industrial Estate Development & Management Company (PIEDMC) TP

1PT

d) Faisalabad Industrial Estate Development & Management Company (FIEDMC) 1 Special Institution

a) Technical and Vocational Training Authority (TEVTA) All the attached bodies are directly linked to the Industries Department and are reportable to the Secretary Industries on major issues. Secretary Industries is required to approve strategic decisions before implementation. The Secretariat closely monitors the functioning of each body. Autonomous bodies although under the ambit of the Industries Department, are not required to report to the Secretariat under the current regulatory setup. However for administrative matters concerning the Government of Punjab the bodies process their requirement(s) through the Industries Department. Each body is governed by a Board of Directors. The Secretary Industries is the member of the board by virtue of his office and is part of the decision making process. The Industries Department obtains the necessary information/updates as and when required. Special Institution that includes TEVTA has a separate Governing Body. The Secretary Industries is a member of the board. Other than that the institution is not required to interact with the Industries Department on any matter. The Institution although falling under the ambit of the Industries Department has been given autonomy to work freely and interact directly with the TP

1PT As per notification No.SO.CAB-I/2-53/88 dated 5P

thP January, 2007 these companies have now been included in the

Rules of Business as Autonomous Bodies. The following companies were reported as Public Companies in the Inception report


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Government. The budget allocation and the Annual Development Plan (ADP) schemes relating to TEVTA are also kept separate from the Industries

Overview of functions being performed by the Industries Department The main objective of Industries Department is to promote the growth of the industrial sector in Punjab. The functions being performed in this regard by the Industries Department, its attached and autonomous bodies are briefly explained below: Direct Functions

• Planning and development of Industries. • Carrying out of industrial surveys and publishing of following information:

a) Preparation of Industrial Directory on provincial basis. b) Computerization of data pertaining to Industry. c) Preparation of Pre-Investment Studies


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• Annual inspection of Steam Boilers and renewal of Boilers Fitness Certificate under Boilers Act and conducting Boilers Engineer’s Examination.

• Liaison with Chambers of Commerce and Industry. • Facilitation in acquisition of land for Industrialists. • Providing information and guiding investors to establish industries. • Control, monitoring and stabilization of prices of essential commodities. • Protecting the rights and interest of the consumers against the marketing and sale of

goods and services. • Providing printing services to different departments of Punjab. • Service matters except those entrusted to the Services and General Administration

Department (SG & AD). Functions preformed autonomous bodies and special institutions

• Promoting small and cottage industry • Providing infrastructure facilities to entrepreneurs by up-gradation and development of

new industrial estates. • Providing technical, commerce and vocational training courses


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III. THE BEST PRACTICES FRAMEWORK


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III. The Best Practices Framework The Best Practices Approach asserts that there is a technique, method, process, activity, incentive or reward that is more effective at delivering a particular outcome. Best practices approach can also be phrased as the most efficient (least amount of effort) and effective (best results) way of accomplishing a task, based on repeatable procedures that have proven themselves over time for multiple entities. The best practice approach is the process of developing and following a standard and proven way of doing things that government can use for improving the current industrial practices to achieve objectives efficiently and effectively. The best practice framework has been developed by studying and analysing rigorously the practices prevailing in countries across the globe. Key best practices of the industries departments of the following countries have been reviewed:

Developed Countries Emerging Countries Japan India USA - Tamil Nado UK - Gujarat Canada China Australia Malaysia

A variety of policies and objectives was found across the countries studied. These reflected differences in governance, history, politics, economics, and culture and legal traditions. Documenting and presenting these practices is a complicated process and the resulting material may easily confuse the readers. Hence, the key best practices of the respective departments of the countries studied are presented in the following The Best Practices Matrix.

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CountriesBest Practice Tamil

NaduGujarat

1 Focus on facilitation as opposed to regulation2 Inter-departmental liaison3 Strategic planning4 Industrial policy5 Performance evaluation6 Industrial inspections7 Investor promotion and support8 Legal function9 IT infrastructure and website of the Department10 Provision of training and advice for would be investors11 Research and development12 Land acquisition for Industrial investors13 Consumer Protection14 Management of government printing and stationery15 Linkage(s) of educational and vocational training16 SME facilitation17 Working for technology infusion and upgradation18 Inclusion of service industry in the purview of industries department19 Industrial Surveys20 Industrial safety21 Facilitative role of Industrial Department in Business revival22 Directory of industry and services23 Industrial exhibitions and trade shows

Note: The Best Practice Matrix is based on the publicly available information provided by the respective departments.

UK USA Aust-ralia

T h e B e s t P r a c t i c e M a t r i xSr. No.

India Japan Mala-ysia

ChinaCanada


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Based on the above study, the roles and responsibility of the Industries Department in different countries may be broadly categorized into the following three models: Model 1: Interventionist Model This approach primarily focuses on more extensive regulation significant legal and governance related to industrial activity. Such systems rely on bureaucracy with high costs to the government and potentially more barriers to traders and industrialists entering the market. Model 2: Public Private Partnership (PPP) Model Mix of private and public enforcement, in this model the role of regulation and/or facilitation is partially carried out by the Government whereas in other cases the private sector manages itself in a self-regulatory manner. Introduction of joint public private partnerships are also evident in such model, where deficits in government resources are met by the private sector contributing favorably towards acceptability of initiatives related to industrial facilitation. Model 3: Non-interventionist / deregulation Model Dependent primarily on private action, and evidenced by the general lack of legal and regulatory requirements. Investors and industrialists are mostly left to resolve problems themselves. The above models are depicted in the diagram (given overleaf) to enhance the understanding of, and linkage between them. Globally more and more governments are encouraging increased participation from the private sector. There are a number of cross-sectoral issues relating to promoting private sector investment. The fundamental aspects to be followed are:

Government should specialize in planning, structuring, and regulation while the private sector should specialize in management, investment, construction, and financing;

The transfer of responsibility to the private sector should be accomplished through deregulation and open competition or well-established contractual arrangements including management contracts, capital leases, concessions, sale of assets and rights to operate;

Economic regulation should be applied where there is insufficient competition but it should be transparent and predictable while still accommodating the concerns of the affected parties;

Long-term domestic financing sources must be developed; and Commercial risks should be assigned to the private sector but other risks should be

assigned according to which party is able to mitigate the risks.


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- Extensive regulations.- System bases on bureaucracy.- High cost to government.

- Mix of public private enforcement - Deficit in government resources are met with private sector contributions

- Almost no control / regulations- Led by private sector (in true sense self regulatory)

Regulated

De-regulated

Pub

lic s

ecto

r int

erve

ntio

nPri v at e s e ct o r in v ol v em

ent

Model 1: Interventionist

Model

Model 3:Non-

Interventionist Model

Model 2:Public Private

partnership (PPP) Model

The Best Practice Framework


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IV. GAP ANALYSIS


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IV. Gap analysis A detailed analysis of the current roles and functions of the ID was presented in the Detailed Analysis Report (DAR) and is summarized in Chapter II of this report. This chapter compares the current roles and functions of ID with the international best practices. The gaps identified during this study which need be bridged to enable ID to function in its revised role as facilitator to industrial activity in the province are summarized as under:

Sr. No

Ref of

DAR Current Role Gaps in existing

practice

Recommendation

Ref. Recommendation Secretariat

1 8

Monitoring of functioning of attached and autonomous bodies (defined below)

Need for clarity in roles and responsibilities of bodies

2.7 Alignment of Organizational Structure and Roles

Monitoring and performance evaluation criteria are yet to be developed.

2.5 Establish Key Performance Indicators (KPIs) for performance Evaluation

2 8 Promotes Industrial development

Mechanism for effective Investor and Industrial promotion deficient

3.2 Establish Investor Promotion and Support Centre

Need for improvement in inter-departmental liaison and coordination

2.4 Improve inter-departmental liaison and coordination

Industrialist interaction is deficient with no formal forum for lodging complaints


3 8 Provide input in Government policies

The input is provided to Government on a reactive basis and the quality/impact of the feedback needs to be improved.

2.2 Industrial Policy

Role of the department in provincial policy making is not defined.

2.1 Strategic planning

Directorate

4 9 Served as functioning hand of the Industries Department

Has depleted function in the post devolution scenario. Majority of its functions have been transferred to Districts. The Body lacks clearly defined roles.

2.7 Alignment of Organizational Structure and Roles

9 Coordinates with District Governments

Coordination with District Governments needs to be clearly defined.



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Sr. No

Ref of


practice

Recommendation

Ref. Recommendation Planning Cell

5 9.3 Liaison with the Chambers and the Industrialists

The linkages with the chambers and the Industrialist is very weak


The current role of the cell is not in line perceived objective.

Land Acquisition Cell 6 9.4 Facilitates the

Industrialists in acquisition of land

Land Acquisition Cell is in line with the purpose of the department but currently the efforts in this regard do not have synergy in them.


Boiler Inspection Wing 7 9.6 Certification of

Industrial Boilers is no more mandatory. Industrialists have been given an option to get their boiler inspected from insurance agencies.

The functions pertain to regulation of industrial safety and lack alignment with core focus of industrial facilitation

1.1 Prioritization and focus on core activities

Economic Analysis and Statistical Cell 8 9.7 Collection of Industrial

Statistics. Possibilities for improvement in survey mechanism such as private sector involvement and use of IT not considered

3.6 Improve survey mechanism

Industrial Promotion Center 9 9.8 Maintains an

information center for industrial investments

Database for industrial investor facilitation not developed Facilitation Centre not developed


Internal Audit Wing 10 9.9 The audit wing currently

deals with the objection raised against the Industry Department.

Criteria for performance audit need to be defined.

2.5 Establish Key Performance Indicators (KPIs) for performance audits

11 Arranging Industrial Exhibitions

Industrial exhibitions not being carried out.

3.1 Market development and promotion

Punjab Prices and Supplies Board (PPSB) 12 10

Monitoring and regulation of prices of essential commodities at provincial level

The role is closely linked with the functions being performed by the PCPC


Punjab Consumer Protection Council (PCPC) 13 11 The main role of the

department is the protection of consumer

The department role is not in line with the role of the Industries Department and should be separated.



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Sr. No

Ref of


practice

Recommendation

Ref. Recommendation Controller Printing and Stationary (GPP)

14 12 It is mandated to cater to the printing and related demands of all the departments of Government of Punjab.

The private sector is more efficient at doing printing work

Detailed recommendation has been set out in a separate report

Punjab Small Industrial Corporation (PSIC) 15 13 It has been established to

promote small and cottage industries.

The gaps have been covered under a separate Study/Report

Detailed recommendation has been set out in a separate report

Technical and Vocational Training Authority (TEVTA) 16 17 It is a special institution

of Industries Department established for providing technical, commerce and vocational training courses. It is a special institution and working independently.

Linkage between the Industries Department and TEVTA is weak.

2.10 Linkage of educational and vocational training

Punjab Industrial Estate Development & Management Company (PIEDMC) 17 15 Development and

maintenance of Industrial Estates

The industrial planning lacks clarity. The bodies are not working under a long term direction.


Faisalabad Industrial Estate Development & Management Company (FIEDMC) 18 16 Development and

maintenance of Industrial Estates

Need for alignment with strategic planning at provincial level.


Punjab Industrial Development Board (PIDB) 19 14 Defunct Defunct

Other gaps based on prevalent best practices In addition to the gaps identified in the existing functioning of the Industries Department, the following gaps have been identified based on best practices prevalent in the developed and emerging countries studied in the pervious section of the report.

Sr. No.

Gaps in existing practice Recommendation reference

Recommendation

20 Lack of Strategic Planning 2.1 Strategic planning

21 The service sector is not included in the purview of Industries Department

1.2 Service Sector

22 Lack of formal review of Laws, rules and regulations 2.6 Review of the legal framework

23 There is no research function within the department 2.9 Establish Research and Development Cell

The department lacks the capacity to provide guidance on the following issues

3.3 Promotion of R&D intensive industry

WTO Technological advancements


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Sr. No.

Gaps in existing practice Recommendation reference

Recommendation

24 Inadequate qualifications and training 2.8 Training of Personnel within Industries Department

25 Lack of Information Technology (IT) infrastructure 3.4 Develop IT infrastructure and presence on web

26 There is no process to identify bottlenecks in industrial growth

2.9 Establish Research and Development Cell

27 Need for liaison with other departments 3.1 Market development and promotion

28 Need for development of the Industrial Master Plan 2.3 Develop Industrial Master Plan

29 There is need to update the directory of industries to cover all industries including service sector

3.5 Directory of industries and services

30 Lack of business support for new as well as existing businesses

3.7 Entrepreneurship training and advisory services

31 Need to improve infrastructure facilities in the province 3.8 Development of infrastructure

32 The current practices of industrial safety and inspection need re-engineering as per the best practices

4.1 Industrial safety and inspection


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V. RECOMMENDATIONS


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V. Recommendations Modern Industrial Department function has evolved significantly over the past few years from the conventional role as the regulator to the concept of facilitator and promoter of the local industries. The Industries Department is presently not equipped to handle the range of functions as facilitator and promoter of local industry. Over time, roles and functions have not been updated to address the changes required to modernize the department in line with the international best practices. The Industrial Department is required to shift its focus from regulation of industrial development to facilitation of the prospective investors and industrialists. The transition towards such facilitation should be expedited. Industries Department should provide assistance to prospective and existing industrialists in critical areas including:

a. Assistance in business and industrial set-up b. Agency services i.e. the department obtains approvals, licences and registrations for

industrialists c. Provision of industry statistical information d. Marketing and promotion in international market (of local industries) e. Infrastructure Development

The new roles and functions of the department which in line with international best practices are perceived to be along the following core activities as illustrated in the diagram below:


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The Industries Department should be reorganized to address structural issues that are hindering it from achieving its goals. In order to bring the roles and functions of Industries Department of the Punjab Government in line with the roles functions of any modern Industries Department, changes are required in the structure, function and overall outlook of the Industries Department. Previous section of this report presented the gaps identified during the comparison of the current roles and functions of the ID with the international best practices. This section of the report gives the recommendations thereto. The recommendations have been tailored in view of the economic, social and technological environment in the province to improve practicability of such recommendations. These recommendations have been divided into the following four sections: 1. Scope and jurisdiction of the department 2. Efficiency and effectiveness of the department 3. Facilitation of the industrialists 4. Industrial regulations


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1. SCOPE AND JURISDICTION OF THE DEPARTMENT This section lays down our recommendations to enable the Industries Department to focus on the core activities directly related to facilitation in line with the International best practices. The recommendation also proposes to exclude activities which are not in line with core activity and vision of the Department.

1.1. PRIORITIZATION AND FOCUS ON CORE ACTIVITIES

The Industries Department is engaged in a number of fields which are not directly linked to industrial promotion and development. There are examples where such function are performed by the Industries Department however there is a need to ensure that existence of such additional roles do not effect the core objective of the department i.e. industrial promotion, facilitation and development. The list of such non-core functions is given below. Printing and stationery

The Government Printing Press is currently under the umbrella of the Industries Department. In the case of other countries, except for Japan, the function of government printing is generally outside the scope of Industries Department. A separate report is being submitted under Study No. 6 wherein recommendation of the future role of GPP has been discussed in detail. Based on the outcome of such study, if a decision is taken to continue with the Government Printing Press, it is recommended that the function be managed as an independent corporate entity to improve the efficiency & effectiveness of its processes and service delivery to the respective client departments. Certification of boiler engineers

Capability of the Industries Department to deal with such additional roles also needs to be evaluated. The function of boiler inspection certification should be outsourced to the Technical and Vocational Training Institute (TEVTA) which is already engaged in trainings. Boiler Inspectors having experience in conducting such examinations and certifications should also be transferred to TEVTA for smooth transition of the function. Possibility of placing the Board for conducting such examination under TEVTA may also be considered. Land Acquisition Cell

This function is performed by the Board of Revenue (BoR) Department, Government of the Punjab. The role of the Industries Department is merely liaison between the potential industrial investor and the BoR. The Industrial Investment Promotion Centre should assist in coordination of such function and the need of a separate land acquisition cell should be reconsidered.


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1.2. INCLUSION OF SERVICE SECTOR IN PURVIEW OF INDUSTRIES DEPARTMENT

The tertiary sector of industry (also known as the service sector or the service industry) is one of the four main industrial categories of a developed economy, the others being the secondary industry (manufacturing), primary industry (extraction such as mining, agriculture and fishing), and (quaternary) the sharing of information. Typically the output of this sector is content (information), service, attention, advice, experiences, and/or discussion (also known as "intangible goods"). Other examples of service sector employment include: Franchising Restaurants News media Leisure industry/hotels Consulting Healthcare/hospitals Waste disposal Real estate Personal services Business services

Service industry has had a significant share in the provincial economy. The growth in the service sector such as financial services and telecommunication has been phenomenal. The Industries Department currently has no specific role in promotion of the service sector. There is a need to identify the key areas for facilitation of service industry at provincial level in liaison with private sector. It cannot be doubted that the manufacturing sector as a key contributor to GDP and export earnings, has a strong foundation upon which to further develop, expand, and diversify. But in the light of current, future market and industry challenges, there must be rethinking on some of the approaches and strategies. As per theory of progression, economies tend to follow a developmental progression that takes them from a heavy reliance on agriculture and mining, toward the development of industry (e.g. automobiles, textiles, shipbuilding, steel) and finally toward a more service based structure. The services sector has been identified as one of the key drivers of economic growth besides manufacturing and agriculture over the next 10 years. The concerted development of the services sector has to be a part of the national development strategy to venture into new growth areas and broaden the economic base. It will also be promoted as an important source of export earnings particularly with the intention to narrowing the traditional deficit in the services account of the balance of payments. It is also expected to provide the basis for sustained rapid growth of the economy.


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Rapid growth of the economy, particularly the manufacturing sector, has facilitated the growth of related services sector such as the banking and financial sectors, telecommunications, construction and engineering, as well as professional services like accountancy, legal and architectural. The services sector will also gain significantly from the continued advancements in the manufacturing sector towards higher value added and high technology activities. Initiatives to move into value creating activities within the manufacturing value chain will open up new investment opportunities in the services sector. The proposed transformation to a knowledge-based economy will also certainly generate a new wave of Information and Communication Technology (ICT) based service activities. The rapid developments in transport, telecommunications and ICT will have a significant influence on the growth of the services sector. Efficiency in the services sector can reduce the cost of doing business, which can further contribute to the growth of the manufacturing sector and attract more foreign direct investment. The economic survey of Pakistan for the year 2006-2007 shows the fact that the service sector is a major contributory in the economy of Pakistan. More details have been reproduced in Appendix A to the report. Policies and strategies for development of service sector Generally, the development of the services sector is guided by 5 broad strategies, namely:

• Strengthening domestic capacity and capability in services sub-sectors and niche areas where the province has a competitive advantage.

• Venturing into new services activities with growth potential, which will be a spin-off

from initiatives to move into value-added activities along the manufacturing value chain and the development of a knowledge based economy.

• Intensifying efforts to promote the export of services to narrow the services deficit of the

balance of payments.

• Taking full advantage of liberalization of trade in services under the General Agreement on Trade in Services (GATS) where they should continue to selectively open up several sectors as well as participate in market openings in other economies.

• Promoting the private sector to participate and invest more aggressively in services

activities with growth potential while improving productivity and efficiency levels. Foreign investment will continue to be promoted particularly in areas that involve high knowledge and technology intensity. and,

• Focusing on human resource development to meet the requirement of a modern and

competitive services sector. Given these strategic directions, among the services sub-sectors that are being promoted are, manufacturing related service activities, transportation, port services, tourism, education and health.


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The services sector still needs to be assisted to be a strong pillar of the economy, with the relevant sub-sectors providing strategic support to both manufacturing and agriculture, while others evolve to become world-class players, making inroads into, and having strong footholds, in the regional and global markets. The current Punjab Government setup does not cater for the promotion or support of the service sector. It is highly recommended that the service sector should be treated as an industry and the promotion of service sector is built into the roles of the Industries Department. The recommendation is in line with the international best practices. The Industries Department needs to include the service sector in the following functions:

Inclusion of service sector in the master planning and industrial policy. The government should actively promote policies to create a competitive environment by eliminating monopolies and removing entry barriers.

Surveys on service industry and publication of such statistics. Compilation of directory of services. Providing information and guiding on service sector. Promoting innovation in service sector.


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2. EFFICIENCY AND EFFECTIVENESS OF THE DEPARTMENT

This section lists down the recommendations for improvement in processes and functions of the Industries Department. Revision in existing internal processes as well as new procedures are required to bring the functioning of the department in line with best practices so that the department can contribute positively towards economic development of the country. The department has an important role to play in promoting business linkages and networking to promote greater levels of cooperative business activity and knowledge sharing.

2.1. PARTICIPATION IN STRATEGIC PLANNING OF THE PROVINCE

There is a need to develop a strategic planning document at provincial level including a separate section related to investment promotion and industrial development. Cross-departmental involvement should be ensured in strategic planning in the province. Currently, the policy initiatives are generally sporadic and the vision of the provincial government is not effectively translated into executable action plans for the Industries Department. The industrial policy is currently an isolated document not linked to the strategic vision of the government. The objectives of Industries Department need to be aligned with the strategic direction of the government as a whole The benefits of Strategic Planning have been witnessed in the case of Malaysia where Master Plans are developed on a national level providing a uniform direction for future initiatives and growth. Nine such plans have been developed for Malaysia and it is recommended that similar plans should be developed at a provincial level and linked to similar initiatives at Federal Government level. The key areas which may constitute such a strategic planning are illustrated below:

Sector Focus on Relevant to Industries Department Agriculture Value Addition For agro-based industry Manufacturing Technology Transfer Service Sector Facilitation

Core activities of the department

Private Sector Development Infrastructure Development For industrial estates Education Primary and IT literacy Housing Low cost housing Health Emergency services International Environment WTO For Industrial Investment and

trade Human Capital Development For vocational training

The contents of the plan will vary depending upon the governmental preferences and macro economic environmental factors and may have to be revisited on an annual basis.


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The government has developed Vision 2020 as guidance for various policy initiatives in the Province. The Vision document may be used as guidance for development of comprehensive and coherent planning for investment and industrial promotion in Punjab.

2.2. DEVELOP COMPREHENSIVE INDUSTRIAL POLICY

For the purpose of this report, an industrial policy is any government regulation or law that encourages the ongoing operation of, or investment in, a particular industry. It is often related to, or wholly determinant of, investment policy for specific industry.

Government involvement in industrial development is the policy of most if not all countries in the world. The United States, has also implemented strong tax, tariff, and trade laws to protect itself from "dumping", the flooding of a market by a competing nation with goods or services below market prices in order to gain an advantage over domestic firms.

In Japan, the Industries Department has been actively involved in development of major industries, particularly electronics and software. The impact of such intervention is disputed, as Japan is still not a power in software, and has lost much of its advanced electronics industry to Asian Tigers, especially South Korea and Taiwan.

The industrial policy needs to be a comprehensive and coherent document defining the priorities and approach of government towards industrial promotion and development. The policy of the Government clearly identifies the direction of deregulation and facilitation.

The various policy initiatives of the Government need to be evaluated to ensure alignment with the overall policy guidelines laid down in the vision of Industries Department. In line with the international best practices, Industries Department is recommended to play an active role in formulation of Industrial policy. The policy should set a clear goal/line of action for each body. The policy should be detailed enough to cover all areas and should be in line with the investment policy. It is recommended that close liaison with Commerce and Investment Department is maintained for a consistent and coherent policy. It is also recommended that the industrial policy should be made part of the investment policy. The policy should be issued periodically and should consist of both medium term and long term policies. The department’s role with regard to coordination with the government in formulation of central policies needs to be improved and made formalized. The department process of policy formulation would form the basis of improved inputs. The formulation of their own policy will guide them to identify needs of the industrialist and the gaps in the current economic scenario. The policy formulation process will highlight the proposed outlook of the provincial scenario. The recommendations should be in line with the proposed provincial policies.

2.3. DEVELOP INDUSTRIAL MASTER PLAN

An action plan for Industrialization of Punjab covering a period of 15 years should be prepared in close coordination of Commerce and Investment Department. The plan should be in line with the vision of Punjab and linked to long term goals of the Government of Pakistan. The plan should have long term as well as medium term goals along with a timeline for achievements of plans.


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Industrial as well as investment policy should be drafted in line with these action plans. The Master Plan should cater for impacts of the international business environment and the Strategic Planning initiatives at Federal and Provincial Level. The possible sources of information for the Master Plan are depicted in the following figure:

Socio-Econom

ic factors

The industrial master plan should provide the indicative strategies, and critical paths, that each sub-sector need to adopt and follow, while, at the same time, providing the public sector with the


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necessary enabling mechanisms to support and assist the private sector in their efforts. The plan must be realistic, pragmatic, and visionary at the same time. The Plan should identify the initiatives and support required by the government in the form of incentives, investment, infrastructure development and coordination. The master planning process should be led by the Planning and Development Department. In view of the strategic nature of such master planning it is desirable that coordination of relevant departmentsTP

2PT and key stakeholders should be ensured at to facilitate the practicability of the

master plan. The Private Sector Development Committee (PSDC) can be used as a forum to discuss and formulate key aspects of the master plan. It is also desirable that Investment Advisory Committees (IACs) be formed comprising of stakeholders including academia, chamber of commerce and industry and industrialists. The constructive feedback form such IACs should be considered while formulating the Industrial Master Plan. Strategic planning in the form of the master plan should identify potential industries and geographical locations where focused growth should be promoted, industrial segments requiring consolidation and areas where facilitation is required for local as well as foreign investors. The various initiatives related to industrial development in the province are currently not coordinated. Moreover, linkages between investment promotion, research & development, export promotion, vocational training and industrial development at federal, provincial, district and business level is generally deficient. The master plan proposed above should therefore aim to bridge the communication and coordination issues at various levels.

2.4. IMPROVE INTER-DEPARTMENTAL LIAISON AND COORDINATION

The Industries Department needs to improve coordination with other Departments. The need for coordination is emphasized in domains where more than one department is involved in achieving the same objective. Such domains should be identified and concerted efforts need to be closely coordinated with the other departments. One of the examples in this regard is that since the splitting of the Commerce & Investment Department and the Industries Department the direction of both the departments partly overlaps each other. It is therefore highly recommended that both departments should work in close coordination with each other and their projects should be closely coordinated to avoid duplication of efforts. Possibility of merging the two departments for improved linkage between investment promotion and industrial development may also be considered. Another example is that Planning and Development (P&D) Department plays an active role in guiding/facilitating the Industrialist in the current WTO environment. There is a separate cell established within the (P&D) department for this purpose. Establishment of an advisory cell, to deal with WTO issues relating to the industries of Punjab, within the Industries Department

TP

2PT Relevant departments include the Industries Department, Commerce and Investment Department, Labour

Department, Environment Department in addition to Planning & Development Department


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would constitute an overlapping of the role unless it is closely coordinated and respective areas clearly identified.

2.5. ESTABLISH KEY PERFORMANCE INDICATORS FOR PERFORMANCE EVALUATION

The functioning of the attached and autonomous bodies should be closely monitored by the Industries Department. Their performance should be measured against their respective action plans and defined Key Performance Indicators (KPIs). Their compliance and performance reports should be monitored by the Industries Department. The Key Performance Indicators may include hard statistics such as number of industrial units established in the industrial estates or relatively soft indicators such contribution in reduction of cost of doing business and results of customer satisfaction surveys from existing industrialists.

2.6. REVIEW OF THE LEGAL FRAMEWORK

An important aspect of industrial development is the support of the Government in removing administrative obstacles being faced by the Industrialists. The Punjab Government does not have a function to carry out a review of the current legal framework prevailing in the province and to suggest improvements to decrease administrative impediments. Review of the existing legal framework may be carried out either:

a. Within the Industries Department by a specialized legal cell or

b. By the legal department currently functioning within the government of the Punjab

a - Development of Legal Cell The legal cell needs to be established to carry out a review of the current industrial laws and bring them in line with the international best practices that are most suited to our local industrial needs. It should critically analyze old laws and recommend changes to them to bring them up to date with the current industrial practices. It is important that the bottlenecks to industrial growth presented by laws is highlighted and removed. With the government stance to provide facilitation rather then regulation the laws need to be improved to bring out the best of the industrial potential. The legal cell should carry out the following functions

1. Studying problems in Business to Business transactions of services and products by manufacturers

2. Legalisation study with benchmarking of overseas models 3. To identify and lower administrative barriers 4. Bringing the provincial laws in line with the federal laws 5. Drafting of legal documents 6. To devise implementation plan


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The cell should monitors the following legal frameworks relating to industrial development

1. Registration and regulation of business 2. Investment promotion and facilitation 3. Trade licensing 4. Public divesture and privatization 5. Taxation of industry and trade 6. Export Processing Zones 7. Public procurement 8. Regulation and protection of intellectual property 9. Requirement of an environment impact assessment (EIA) 10. Dispute settlement mechanism 11. Regulation of employment 12. Regulation of conditions of employment under the Factories Act 13. Regime of land ownership and transfer 14. Control of restrictive trade practices and monopolies 15. Industrial safety 16. Industrial statistics 17. Regulations of Factories

b - Review of laws by the Legal Department The review of laws and regulations may, alternatively, be carried out by the Legal Department within Government of the Punjab. In this case close coordination will be required among the Industries Department and the legal department. Any changes in the legal framework including laws, rules and regulations as a result of such a rationalization exercise should be discussed among both departments rigorously before enforcement and implementation.

2.7. ALIGNMENT OF ORGANIZATIONAL STRUCTURE AND ROLES The current direction of the policies of the Punjab Government is more inclined towards facilitation than regulation however; the roles of the Industries Department are based on the legacy policy of industrial regulation. The current role of the directorate has been discussed in detail in Section 9 of the Detailed Analysis Report. An analysis of the current functioning of the directorate clearly highlights the fact that the role of the directorate is redundant and does not support the vision of the government. The directorate has always been the functioning arm of the Industries Department. The most critical factor to improve Industries Department is the reorganization of the directorate. The directorate can play a critical role in facilitating industrialist and improving industrial development. Following is a list of recommendations for improvement of role of the Government. It has been felt that since the devolution of the Industries Department the directorate has been forced to support the structure of the local government. The department was never devolved completely. The industrial regulatory role has been shifted to the district offices while utilizing the resources of the Directorate. The Directorate has not shifted its role to facilitation rather it is


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still involved in the functioning of the district offices. Roles of District Government Officials specifically District Offices (E&IP) should be clearly laid down and enforced through appropriate legislations to support the Industries Department in its revised facilitative role. Old mindsets must be replaced by new attitudes and market driven strategies and obsolete practices must give way to production and marketing approaches which can meet the ever changing demands of the new era. It is important to re-define the role of the Industries Department, prioritize and focus on limited but vital roles. Policy formulation should be categorized as a crucial role of the Directorate, whereas roles related to various service provisions should be clearly defined. It is important to consider that certain provision of services can possibly be provided by the private sector. Revision in role is especially necessary for the kind of public services which may be competing with private sector for the provision and where the public sector does not display the competitiveness. Furthermore, in order to materialize the private sector involvement into the service provision, possible mechanisms should be identified. Identifying the bottlenecks of private sector entry into the service provision or supporting mechanism should be sought.

Recommendation Impact on existing organization

Capacity building required

Prioritization on core activities

Government Printing Press (GPP)

Dependent on separate report on GPP

Consumer Protection The role will remain with PCPC (Note 1)

Price controlling of essential commodities

To be consolidated with Consumer Protection (Note 2)

Boiler Inspection Certification To be transferred to TEVTA Service Sector New role

Policy formulation Planning Department/Secretariat (Note 3)

Yes

Publication of statistics of service industry

Economic analysis and statistical wing

Yes

Compilation of directory of services

Economic analysis and statistical wing

Yes

Information, promotion and guidance

Industrial Promotion and Support Centre (IPSC)

Yes

Promoting innovation in service sector

Research and Development (R&D) (new wing)

Yes

Planning Strategic Planning Punjab Government / P&D (Note 3) Industrial Policy Planning Department/Secretariat

(Note 3) Yes

Industrial Master Plan Planning Department/Secretariat (Note 3)

Yes

Investor Promotion and Support Centre IPSC in coordination with Yes


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Recommendation Impact on existing organization

Capacity building required

Investment and Commerce. Department (Note 4)

IT Infrastructure Development IT Wing needs to be developed. Capacity building required

Yes

Performance Audits P&D or Any outside body Review of laws, rules and regulations Legal Cell needs to be developed Yes Training of personnel within the Industries Department

To be outsourced

Research and Development Promotion of R&D intensive

industry R&D (new wing) Yes

Technological developments R&D (new wing) Yes Advice on WTO R&D (new wing) in coordination

with P&D Yes

Removal of bottlenecks in industrial growth

R&D (new wing) Yes

Business revival R&D (new wing) Yes Directory of Services and Industries E&A Wing with support from IT

Wing.

Survey Mechanism E&A Wing with support from IT Wing.

Entrepreneurship training and advisory services

TEVTA

Industrial Safety and Inspection Department

Boiler Inspection. Yes

Boiler Examination TEVTA

1. Consumer protection The primary objective of the ID is to facilitate and support the industrialists. So the function of the Provincial Consumer Protection Council (PCPC) may be at sometimes, in conflict with the primary objective. To avoid the impact of increased litigation under regulatory/interventionist regime, it is recommended that a mix of public and private sector initiatives should be adopted in the case of consumer protection in Punjab. In such a model out of court settlements should be encouraged. Incentive should be provided to Alternate Dispute Resolution Committees for various consumer products outside the Consumer Protection domain of the provincial government. It is recommended that PCPC and Punjab Prices and Supplies Control Board (PPSB) are combined into one entity to reduce the venues of consumer interaction with government

2. Price controlling of essential commodities


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As mentioned above, the function of price control should be made part of the function of consumer protection. All complaints related to price and/or quality of consumer products should be addressed to one body. This would reduce the number of bodies with which the consumer has to interact leading to improved efficiency of the department and improved customer satisfaction.

3. Planning and policy formulation The role is to be performed at a strategic level. It is proposed that the role be performed by the economic advisor. The economic advisor has to be strengthened up by building up capacity in this respect. Direction and guidance in respect of the role has to come from the top management which includes the Secretary, Planning and development Department and the provincial Government

4. Investor Promotion and Support Centre The IPSC should be expanded to district level. Activities should be closely coordinated with the Commerce and Investment Department. The district offices should be a combined office of both the IPSC and the Commerce and Investment Department. This will enable the public to gather all the information from a single window.

2.8. TRAINING OF PERSONNEL WITHIN INDUSTRIES DEPARTMENT

Personnel at Industries Department typically do not have a required set of competencies and skills. Training is not carried out through a systematic documented training program that ensures that all key personnel are trained in the appropriate areas and retained with the organization. It is recommended that training and capacity building needs of ID personnel should be addressed on urgent basis. To this end, the Government should:

a. enhance the role of the National Institute of Public Administration in the design and delivery of training;

b. establish a core and more advanced learning curriculum for public servants from entry level on through successive levels of responsibility;

c. set certification standards for public service managers in areas such as financial management, internal audit, procurement and contracting;

d. develop specialized programs for advanced financial management and other core management functions such as risk management, commitment accounting, debt analysis ; and

e. Introduce modern and timely financial and human resource information systems to track all spending and provide appropriate tools for effective scrutiny and decision-making.

A formal mechanism may involve different techniques and methodologies to implement the elements required to build the capacity and training needs. Below are some of the approaches and methodologies that may be used to make the capacity building program more beneficial for creating a pool of public servants that are all round in terms of knowledge, skills, networks, attitudes and mindsets, as well as values, character, and constant diagnostic analysis and understanding of the environment in which they operate.


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Brainstorming Sessions within the department to discuss the critical issues being faced by the department Experiential learning approaches, including internships, attachments and study tours will target sharing of experiences and building skills. Training the trainers will help to sustain the capacity building program and will enhance its quality High-level participatory strategic planning workshops and seminars will mix work and learning as well as team building Distance learning will take advantage of the modern information and communication technologies such as video conferencing to share knowledge and experiences as well as debate within and across borders Case studies on different areas sharing the practical problems and their solutions Monitoring and evaluation through peer review mechanisms (for example training institutes and Universities) will ensure constant improvement and sustainability Benchmarking with the respective department of some developed country like Japan or some developing countries like Malaysia

2.9. ESTABLISH RESEARCH AND DEVELOPMENT CELL

There is a need to establish a research function in the Industries Department. With the ever changing and the ever evolving international scenario the industrialist of Punjab and especially the small and medium scale industrialist find it hard to compete, on its own, in the international arena as well as in the domestic market The research and the development cell must work on the lines to improving the quality, efficiency of business as well as reducing the cost of doing business. The cell must keep a close eye on the international scenario and should update the industrialist of key compliance and regulatory issues including a special emphasis on WTO. The cell should identify areas where potential growth is available and should carry out feasibility studies of such new opportunities. The cell should also conduct detailed analysis of failed business. Such research and information should be disseminated to the public and industrialist through:

1. Website 2. Periodic publications 3. Investor Promotion and Support Center (IPSC)

Technological developments The pattern of technological development has varied considerably. The impact of such development is generally assessed in terms of increased production. It is equally important, however, that such production is competitive in internal and external markets and in terms of manufactured exports. In most developing countries, technology issues have revolved largely


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around the development of technological infrastructure, the acquisition and use of foreign technology or development of indigenous technological capability. With increasingly open markets, the principal emphasis must now shift to the development of technological innovative capability at plant and cluster levels for the achievement of sustained competitiveness. Research and Development (R&D) is the best way to monitor global technological developments and select those that are relevant to future competitive needs. It should coordinate with IPSC to communicate the knowledge to industrialist. Technological developments should be promoted in industrial exhibitions. The cell should encourage entrepreneurs to develop research function for technological developments. The evidence from industrialized countries has shown that government support policies for technological innovation at the enterprise level is essential. The forms of this support may vary from technical and commercial information services to support for R&D activities to capacity-building for technology management at the enterprise level. In the light of the key role of technology for competitiveness and global trends and developments in this regard, the principal issues and policy options that need to be determined are the following:

• In order to strengthen the technological base in Punjab, increased foreign technology will be necessary, including through increased economic and technological cooperation between developing countries. While initiative in this regard must be taken primarily by Department, policy and institutional measures will be necessary, both to promote technological partnerships and linkages with foreign enterprises and for rapid technological absorption and adaptation. Indigenous technological development must also be promoted through applied research activities in enterprises, universities, R&D institutions and other technology-innovation bodies;

• It is essential that technological innovations and use of new generic technologies are promoted in resource-based industries and the industrial commodities sector, as also in various manufacturing sub-sectors, both through upstream (improvement of raw materials, productivity etc.) or downstream (re-engineering customer services) activities, or through strategic business alliances for technology on R&D;

• R&D cell should develop a strategic framework and monitoring mechanisms for dealing with new generic technologies, including through subcontracting with foreign firms;

• The competitiveness of national enterprises engaged in international services subcontracting through electronic networks should be strengthened through increase of their technological innovation capability;

• The growing relevance of technological innovation in manufactured-related services for sustainable competitiveness needs to be highlighted. It should be considered how related capacity-building processes can be accelerated in developing countries and economies in transition.

• It is necessary to formulate and implement new creative financial and fiscal incentives for promoting innovations.

The following fields of technology management require special emphasis by developing countries and economies in transition during the short-term:

• Diagnostics of the technological competitive position of companies and consequent definition of technological strategies for sustainable competitiveness, highlighting ad hoc blends of R&D and technology transfer activities;


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• Management of R&D for devising new selected applications of existing and emerging technologies - different functions from the ones for which they were originally intended;

• Management of R&D for industry-related services; • Management of technology transfer negotiations and agreements, including technology

absorption and adaptation; • Product innovation • Technology information - particularly on clean technologies – technological forecasting

and monitoring; • Performance benchmarking, total quality management and process re-engineering.

Research on Business Models A key area of research may include research on possible business models available to small, medium and large enterprises. Such research may include:

Business planning and evaluation techniques Business ownership and financing structures including cost of equity and cost of debt Business structures available e.g. sole proprietorship, partnerships, joint ventures, single

member companies, private companies, listed and unlisted public companies. Possibility of introduction of business structures such as Limited Liability Partnership (LLP) may also be explored

Improving facilitative role of Industrial Department in Business revival The research cell should also examine and formulate reform plans and programs for enterprises, gives directions to the reform, reorganization and upgrading and management as well as helps settle major issues in enterprise reform. It should work out policies and measures for the development of large enterprises and enterprise groups and guides the strategic reorganization of the state-owned-enterprises. It should maintain statistics of, monitors and analyses the sector's economic performance. It makes annual forecasts of major development targets and exercises macro control over the electronic and information product market and coordinates the importation of these products. Facilitation in removal of bottlenecks in industrial growth Recent international experience has shown that excessively complex administrative procedures required establishing and operating a business, is the main hindrance in flourishing industry. The costs of administrative barriers are numerous ranging from securing land access to obtaining building license. The level of administrative costs is positively correlated with corruption incidence and exhibits a negative correlation with quality of governance degree of transparency and public wages etc These correlations suggest administrative reforms need to be incorporated into broader agenda for the reforms such as:

• Trade and financial liberations • The fight against corruption and • The public sector administrations


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The role of the industrial department should be redefined as catalyst and supporting private sector involvement and optimization of the work. Work towards monitoring and eventual reduction in the cost of setting up and doing a business.

2.10. LINKAGES OF EDUCATIONAL AND VOCATIONAL TRAINING

The Industries Department should compile information regarding the need for work force related to specific industries. Information gathered through surveys may be used as a source of identifying potential areas for improved educational and vocational training support. Need assessment results for such educational and vocational training should be shared with educational institutions and TEVTA. The Industries Department may also facilitate the emerging industries by linking technical educational institutes to such industries. Such linkage is likely to facilitate the industrialists in the form of fresh talent and providing fresh graduates an opportunity of applying the theoretical skills learnt at college to practical scenarios in the real world. Possibility of compiling a Human Resource Management System (HRMS) in collaboration with the Department of Labour should also be considered. This will assist in developing a database of technically skilled individuals which will eventually facilitate development of human capital at national level.

3. FACILITATION OF THE INDUSTRIALISTS

The recommendations relating to improvement and provision of infrastructure, agency services and value added information to the industrialists are discussed in this section. The section emphasise on increased productive interaction of the department with industrialist and potential industrial investors in the province. TThe Department has to act as an enabler while regulating only key areas. The recommendations in this area are being discussed in turn.

3.1. MARKET DEVELOPMENT AND PROMOTION

For the success of any business entity, marketing assumes a critical business function and therefore, could be rated as a pre-requisite. Today, when the restrictions and trade barriers are being progressively removed across the globe, the importance of effective communication between an array of sellers and a wide galaxy of buyers has reached new heights. Punjab Government should streamline its policy initiatives with global realities. Thus, various schemes for the industries to enable them to enter into a fruitful business relationship with buyer/consumer community both within and outside the country should evolve. Trade Development Authority of Pakistan (TDAP) previously Export Promotion Bureau (EPB), helps exporters to participate in exhibitions abroad and sends delegations to export markets to explore new markets and develop the traditional markets. Product and market reports are developed and shared through the website as well. Export promotional activities are carried out in coordination with trade bodies at home and Pakistan's trade missions abroad.


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Like many countries, Pakistan is facing greater export competition in the region. To retain competitive edge in the traditional markets and to acquire the same in the new markets, TDAP is emphasizing quality, modernization, and innovation in Pakistan's export drive. The Industries Department should liaison with the TDAP for development of the markets and promotion of the local industry. The aim is to secure and to preserve maximum access and fair treatment for exports from the Punjab to international market. It seeks to protect Punjab rights and trade interests by monitoring and responding to trade policies and measures of other trading partners through multi-lateral and bi-lateral negotiations and other channels The Industries Department should formally develop and seriously implement a “Market Development and Promotion Strategy” for the local industries. Such strategy should be based on three pillars namely:

a. Image building b. Brand awareness c. Perception about the quality and national values

Image-Building is the function of creating the perception of a country as an attractive site for international investment. Activities commonly associated with image-building include focused advertising, public relations events, and the generation of favourable news stories by cultivating journalists, and so on. A list of Market development schemes have been attached as Appendix B to the report. This objective can be better achieved by making public private partnerships and improving the interaction of the department with trade and commerce bodies. Support should also be provided to initiatives taken by the industrialists to encourage private sector participation in this area.

3.2. ESTABLISH INVESTOR PROMOTION AND SUPPORT CENTRE

The Industries Department should establish an “Investor Promotion and Support Centre” at district level. The role and function of such centres should be of twofold:

a. Provision of information

b. Provision of agency services

a - Provision of information: one of the purposes of the centres is the timely provision of up-to-date and relevant information to the investors helping in start-up of new businesses, as well as to support the existing businesses. The information may include the following:

1. Cost of doing a particular business 2. Feasibility studies 3. Sector wise studies 4. industrial statistics


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5. Procedural guidance and 6. Updating on laws, rules and regulations etc.

b - Provision of agency services: second and most critical function is provision of agency services including obtaining all the relevant approvals, licensees, and registrations on behalf of the investors. It has become central part of most countries’ industrial policies. The structure proposed for such a promotion and support center is as follows: There should be a central office that should be coordinating the activities at each district office. The district offices should be interacting offices with the public. They should guide the investors and provide them with required information. They should also act as complaint collection center and should create a linkage between the Industrialist and central office. The central office should guide the district office in any issue that may arise. Information should be processed by the central office and guidance in this regard should be provided to the District office. An online link between the central office and district offices is essential in this regard. This online link in form of a portal should be made available to visitors at the district office. Through the portal the visitor should gain access to the library and research material maintained at the central office.

3.3. PROMOTION OF R&D INTENSIVE INDUSTRY

Research and development has to be promoted by the government through prioritizing of facilitation services to industries dealing in new and emerging technologies. The potential areas in which such facilitation will be prioritized should include production of Information and Communication Technology hardware, such as processors, microchips and other high tech machinery with potential for technology transfer. There is evidence to support the link between government intervention and the successful industrial development in the South East Asia region. Benefits from foreign investment such as the transfer of technology, skills and managerial techniques that could help developing industries become internationally competitive were captured using policies such as local content rules, joint-venture regulations and incentives related to investment in technology intensive industries. The benefits of such preferential treatment is dependent on a country's ability to learn directly from foreign direct investment Such policies have traditionally been central to the industrial policies of countries that are attempting to catch up with technologically and economically more advanced states. Fiscal and non-fiscal benefits policies have been devised by countries exhibiting significant IT growth such as India (IT systems development) and Finland (Telecommunication equipment manufacturing). Such facilitation has resulted in measurable benefits in the form of improved exports and contribution to the positive growth of the economies of the respective countries. A table depicting the key fiscal and non-fiscal benefits offered by different countries for promotion of Research and Development are given as Appendix C.


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3.4. DEVELOP IT INFRASTRUCTURE AND PRESENCE ON WEB

IT Infrastructure needs to be developed in the Industries Department. The current era is of technology. The dissemination of information could improve drastically by use of Information Technology. It will provide easier access to investor and Industrialist. For this purpose the following information technology measures should be adopted.

a. Website b. Integrated Information Portal a. WEBSITE

A website should be developed and maintained to interact with investors and to disseminate information. Availability of the following information on the website could prove to be beneficial to the industrialists and other users within and outside the government. 1. Industrial statistics of Punjab The statistics should be made available to general public. Any one interested in investing whether local or foreign should have access to such information. 2. Directory of industries and services in Punjab The directory with respect to industry and services should be made available on the website. A category wise search option should be include in the site. Such a database will be helpful to the industrialist, the service provider and the customer. Manual yellow pages require a large 3. Guidelines on how to invest in Punjab Complete guidance on how to invest in Punjab needs to be publicized on the website. The complete procedures along with relevant forms should be available on the website. The site should guide on how to invest and where to invest. The procedure to establish an industry in an industrial estate should also be laid down. 4. Studies on where to invest Studies and research done by the Industries Department on areas of potential investment should be made available on the website. These studies should include cost of doing business in every district of the province. 5. Latest copy of legislation Complete laws and latest legislation should also be made available on the site.


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6. Links of related websites Links of related websites should be available on the site. Related sites include sites of provincial and federal government and bodies related to industry. The site may include site of SMEDA, TDAP, TEVTA, PIEDMC, PSIC, chambers etc. 7. Complaint portal Complaint collection can be facilitated by the website. It will be easier for industrialist and the consumer to lodge complaint. A quick action can therefore be taken to resolve the issue. 8. Help center The site should be directed towards providing help and support to the industrialist. Apart for providing help online the site should also provide a discussion portal for the industrialist to discuss their problem. Links to international forums should also be provided so that the industrialist can find solution to its problem. 9. Bulletin Board Current and new development along with relevant news should be posted on the bulletin board. The site should also allow its members to use the board to post requests 10. Contact information for key official and functionaries in Industries Department Contact information for key official should be available on the website. This would allow the public to easily interact with the relevant official when needed. b. INTEGRATED INFORMATION PORTAL The internal flow of information needs to improve as well. It will be highly beneficial for the management if the Investment Promotion and Support Center are interlinked. Sharing of information and fast processing of application and complaints will be possible. Information Technology should be improved to an extent that data from different relevant libraries should be available at portals available at district offices of IPSC. The portal should also be linked to database of SMEDA, PSIC, Chambers and other federal level sites. The portal should also provide an online status of agencies services being provided by the IPSC as explained in Section 3.2 of the report. The user will be able to see an updated status of its application and can therefore follow up on any delays. This will help improve investor confidence by brining transparency in the procedure. A process of how the portal will be interlinked is explained in the following diagram.


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Central Database

User User

Portals Available atIPC (district offices)

Portals Available atIPC (district offices)

Industrial LibrariesSMEDA DatabaseOther Databases

Wapda

PTCL

Licences

Data and research material of the Industries Department

3.5. DIRECTORY OF INDUSTRIES AND SERVICES

The directory of industries is currently being compiled by the Industries Department which includes statistics of the manufacturing industries only. As mentioned earlier the service sector has a significant contribution in the economy of the province therefore not including the information related to service sector in the directory of industries significantly curtails the benefits of such a directory. An important initiative in this regard should be development of a directory of services in Punjab in line with the concept of “Yellow Pages Directories” used in the UK. This would assist the service providers related to construction services, logistics, transport, automotive repair etc. The project for development of the directory can be carried out as a public private partnership using the Chambers of Commerce and media to attract service providers to register initially for free or at a nominal charge. The government may initially fund the cost development and printing of such directory. As the benefits of being registered on the directory become more evident to the service providers and the public a registration charge may be introduced to make the project a continuing self-sustaining exercise. The directory of services should be available on the website of Industries Department and hard copies should be provided for free or at a subsidized cost. The directory of services may be compiled as a separate publication or as part of the directory of industries.


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3.6. IMPROVE SURVEY MECHANISM

The survey conducted by the current economic analysis cell in the Industries Department is not in line with best practices. The main areas which need to be improved include:

• Efficiency in conducting surveys and compiling results should be improved through simplification of the survey mechanism

• The response rate of survey respondents needs to be improved • Confidence building measures need to be taken to encourage industrialists to provide

accurate information by linking the benefits of such information to the survey respondents • Dissemination of results of the survey should be improved as the compiled information is

irrelevant if it is not available for analysis. • The survey results need to be available to public. The results of such surveys should be

made available on the web. It is recommended that the following essential requirements should be incorporated in the current survey mechanism so as to improve the effectiveness of such survey

1. Specific goals for the survey need to be established before planning work for carrying out a survey begins. The objectives need to be specific, clear-cut and unambiguous.

2. Proper planning should be carried out before a survey is launched. Roles of the

Directorate and the district government should be clearly defined.

3. The sample selection for carrying out a survey should be improved. An appropriate sample will help improving efficiency of the survey as well as improving the integrity and relevance of data to provide an excellent analysis to support the objective of the survey. A low cooperation or response rate does more damage in rendering a survey's results questionable than a small sample, because there may be no valid way scientifically of inferring the characteristics of the population represented by the non respondents

4. Training of interviewers should be carried out to improve the collection of data. This will

result in timely collection of quality data. Interviewers and other research staff must also be carefully trained and indoctrinated to uphold and maintain the confidentiality of respondents.

5. Specific procedures should be designed to stimulate survey cooperation or participation.

These procedures include, (where possible) sending advance letters to industrialists to inform them of the pending survey, offering monetary (i.e., cash) or non-monetary (some other valued reward) incentives to encourage participation, and sending reminders or making follow-up calls to those who do not respond initially. Where possible, specific efforts to directly observe or measure the characteristics of non respondents should also included in the overall survey design.

6. The data collected from survey should be critically examined in a search for meaning

processed, refined, and thoroughly analyzed.


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7. Establish clear intentions and meticulous procedures to assure the privacy of respondents and the confidentiality of the information they provide. Interviewers and other research staff must be carefully trained and indoctrinated to uphold and maintain the confidentiality of respondents.

8. The results of data must be made publicly available. A website should be developed and

results of the surveys should be uploaded on the website.

9. These recommendations are in line with the best practices as provided in Appendix D to the report.

Apart from recommendations stated above we are of the opinion that conducting surveys is not in line with the core activities of the Industries Department. The possibility of transferring the role to the Provincial Bureau of Statistics should be considered. The Industries Department should be involved in analysis and dissemination of data compiled by the Provincial Bureau of Statistics. Private sector involvement in conducting surveys and publication of directories could be another option. It is believed that Public-Private partnership in carrying out such exercises could result if increased efficiency and effectiveness.

3.7. ENTREPRENEURSHIP TRAINING AND ADVISORY SERVICES

Greater emphasis should be given to the provision of training and advice for would-be entrepreneurs. Although the failure rate remains high even in those countries where such support is available, an improvement in the quality of management is likely to lead to at lease modest reduction in the rate of failure. Training courses on development of entrepreneurship skills may be conducted by TEVTA. It is however recommended that such courses are focused on specific types of industry as generic courses generally result in transfer of academic knowledge having relatively less relevance to practical issues.

3.8. INFRASTRUCTURE DEVELOPMENT Infrastructure related to industries includes infrastructure related to province as a whole which includes roads, logistics (i.e. railways, trucking), telecommunication and IT infrastructure. The role of the government in this area is being managed in the form of public private partnerships and initiatives by the private sector which have exceeded the contributions covered by the government e.g. telecommunications. The infrastructure directly linked to an industry includes factory premises, storage space, drainage and utilities facilities related to the industrial unit. The industrial estates developed by the Punjab Government are currently working as corporate entities actively providing such facilities to industrialists. There is need to link such infrastructure initiatives with the strategic vision at a provincial level. In a deregulated environment the function of infrastructure development is primarily carried out by the private sector. In such a scenario it is recommended that the Industries Department provide assistance on a need basis and such facilitation should be available as an option to the


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industrial investor where he believes that the department can assist in meeting his infrastructure requirements.

4. INDUSTRIAL REGULATIONS

This section is related to the regulatory role of the Industries Department. The focus on facilitation does not eradicate the need for suitable regulation and the key regulatory roles that the department must perform in order to monitor the growth of the Industries are detailed in this section.

4.1. INDUSTRIAL SAFETY AND INSPECTION

In the matter of industrial safety, regulation is required from the Government. The Industries Department in this regard has to coordinate with the Environment Department to define the role to be played by it. Environment Department is a key player in regulating the industrial safety. But its prospective might not cover all the issues relating to industrial safety especially those issues that do not have an impact on the environment. The Industrial need to figure out its role and define the safety regulations that are to be monitored by it. Once clarity has been achieved in the role, the Department needs to establish how it intends to regulate the industrial safety. The options available to the Department are Model 1 and Model 2 as set out in Chapter III of the report. Boiler Inspection In case of Boiler Inspection the Industry Department needs to ensure that such inspections are carried out. The current scenario in which such inspections are not mandatory has to be thought over. As per current laws the insurance agencies can also carry out such inspection but a drab response from them have left a hole in this necessary monitoring. It is recommended that Industries Department should play a passive role in such inspection. The Industries Department should leave the role to private inspection agencies. The role of the department should be to issue certificates of practice to such agencies and to monitor their performance.


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VI. APPENDICES


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VI. Appendices A. EXTRACTS OF ECONOMIC SURVEY OF PAKISTAN RELEVANT TO

SERVICE SECTOR The economic survey of Pakistan for the year 2006-2007 has revealed that the commodity-producing sectors (agriculture and industry) contributed 2/5th and services sectors contributed remaining 3/5th to the real GDP growth of 7.0 percent in 2006-07. Within the commodity-producing sectors, the contribution of agriculture alone has been 15 percent (or 1.1 percentage point) while 25 percent (or 1.8 percentage point) contribution to this year’s growth came from industry. Services sectors as a whole contributed almost 60 percent (or 4.2 percentage points) to this year’s strong economic growth. Contribution of services to gross domestic product for Pakistan at 53.3% in 2006-2007 is a good indicator of the potential for growth in this area. Growth Performance of Components of Gross National Product (% Growth at Constant Factor Cost)

1980’s 1990’s 2002-03 2003-04 2004-05 2005-06 2006-07

Commodity Producing Sector 6.5 4.6 4.2 9.3 9.5 3.4 6.01. Agriculture 5.4 4.4 4.1 2.4 6.5 1.6 5.0 - Major Crops 3.4 3.5 6.8 1.7 17.7 -4.1 7.6 - Minor Crops 4.1 4.6 1.9 3.9 1.5 0.4 1.1 - Livestock 5.3 6.4 2.6 2.9 2.3 7.5 4.3 - Fishing 7.3 3.6 3.4 2.0 0.6 20.5 4.2 - Forestry 6.4 -5.2 11.1 -3.2 -32.4 -43.7 -3.8 2. Mining & Quarrying 9.5 2.7 6.6 15.6 10.0 4.6 5.6 3. Manufacturing 8.2 4.8 6.9 14.0 15.5 10.0 8.4 - Large Scale 8.2 3.6 7.2 18.1 19.9 10.7 8.8 - Small Scale * 8.4 7.8 6.3 6.2 6.3 8.3 7.7 4. Construction 4.7 2.6 4.0 -10.7 18.6 5.7 17.2 5. Electricity & Gas Distribution 10.1 7.4 -11.7 56.8 -5.7 -23.8 -15.2 Services Sector 6.6 4.6 5.2 5.8 8.5 9.6 8.0 6. Transport, Storage and Comm. 6.2 5.1 4.3 3.5 3.4 6.9 5.8 7. Wholesale & Retail Trade 7.2 3.7 6.0 8.3 12.0 8.7 7.1 8. Finance & Insurance 6.0 5.8 -1.3 9.0 30.8 33.0 18.2 9. Ownership of Dwellings 7.9 5.3 3.3 3.5 3.5 3.5 3.5 10.Public Administration & Defence 5.4 2.8 7.7 3.2 0.6 10.0 6.9 1 1.Services 6.5 6.5 6.2 5.4 6.6 6.3 8.5 12.GDP (Constant Factor Cost) 6.1 4.6 4.7 7.5 9.0 6.6 7.0 13.GNP (Constant Factor Cost) 5.5 4.0 7.5 6.4 8.7 6.4 6.9* Slaughtering is included in small scale

Source: Economic Survey of Pakistan 2006 - 2007


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Sectoral Share in Gross Domestic Product (GDP) (At Constant Factor Cost) (In %) 1969-70 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07

Commodity Producing Sector 61.6 47.9 47.6 48.4 48.7 47.2 46.7 1 Agriculture 38.9 24.1 24.0 22.9 22.4 21.3 20.9

- Major Crops 23.4 8.0 8.2 7.8 8.4 7.5 7.6- Minor Crops 4.2 3.1 3.0 2.9 2.7 2.6 2.4- Livestock 10.6 12.0 11.7 11.2 10.6 10.6 10.4- Fishing 0.5 0.3 0.3 0.3 0.3 0.3 0.3 - Forestry 0.1 0.7 0.7 0.6 0.4 0.2 0.2

2 Mining & Quarrying 0.5 2.4 2.5 2.6 2.7 2.6 2.63 Manufacturing 16.0 15.9 16.3 17.3 18.3 18.9 19.1

- Large Scale 12.5 10.4 10.6 11.7 12.9 13.4 13.6- Small Scale 3.5 5.6 5.6 5.6 5.4 5.5 5.6

4 Construction 4.2 2.4 2.4 2.0 2.1 2.1 2.3 5 Electricity & Gas Distribution 2.0 3.0 2.5 3.7 3.2 2.3 1.8

Services Sector 38.4 52.1 52.4 51.6 51.3 52.8 53.3 6 Transport, Storage and 6.3 11.4 11.4 10.9 10.4 10.4 10.3 7 Wholesale and Retail Trade 13.8 17.8 18.0 18.2 18.7 19.1 19.18 Finance and Insurance 1.8 3.5 3.3 3.4 4.0 5.0 5.6 9 Ownership of Dwellings 3.4 3.2 3.1 3.0 2.9 2.8 2.7

10 Public Admn. & Defence 6.4 6.4 6.6 6.3 5.9 6.0 6.011 Other Services 6.7 9.8 9.9 9.7 9.5 9.5 9.6 12 GDP (Constant Factor Cost) 100.0 100.0 100.0 100.0 100.0 100.0 100.0 P Provisional

Source: Economic Survey of Pakistan 2006 - 2007


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B. MARKET DEVELOPMENT SCHEMES In the present time of fierce competition, the industries will have to explore all the avenues for the promotion of their products in the market, which will include the export markets. The Government should realize the difficulties of small and medium enterprises to reach to the international arena, as this calls for participation in trade fairs and exhibitions abroad which is perceived as an expensive proposition. The Government should therefore, must adopt multi-pronged approach to tackle this issue as under: Common Branding In order to promote the products manufactured by specific clusters, the Government should create a Common Branding which all the products manufactured by the clusters would be promoted and marketed under a Common Brand name. Developing Virtual Exhibition Portals for products Virtual Exhibition Portal should be developed to facilitate boundary-less and barrier-less trade between the buyers all across the world and sellers from Punjab. The basic aim is to make communication easy by local traders with their customers, business partners, associates and other users spread all over the globe. Such portals can offer various kinds of services online like promoting brand, creating product catalogues, legal services, buy/sell exchange, etc. The portal can also enable a trader to create business presentation online. Developing Product-Country Matrix ‘Product-Country’ matrix should be prepared by the research and development cell, for products having export potential and the countries, which offer maximum advantages in terms of prospective markets and tariffs. The concerned industries will be encouraged to export their production in those countries. Participation in International Trade Fairs The Government’’' should encourage participation of the industries in the small and medium sectors in international trade fairs, exhibitions and seminars. The Government should facilitate active participation of relevant and growing sectors. This would enable them the small and medium sector to approach the international buyers and would also allow opportunities to industries to have exposure to the developments in their respective fields in other countries. Assistance for sending product samples abroad The Government should also provide assistance for sending product samples abroad to the prospective buyers for approval. Setting up permanent exhibition-cum-convention centers The Government should support setting up of permanent exhibition cum convention centers in major cities. For the purpose, the Government should offer land at concessional cost.


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Patent Registration Quite a few entrepreneurs are developing new products or designs ingeniously but, their interests are not guarded and as a result, they fail to protect their rights on the product or design, they have developed. This is especially true in the case of small and medium enterprises. Government should therefore, extend assistance to such units for patent registration, the scope of which should be broadened by including product registration as well.


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C. HIGHLIGHTS OF GLOBAL INCENTIVES TO PROMOTE R&D DEVELOPMENT

Incentives/Policies Country

Fiscal Non-Fiscal � Selective technology programs used to

finance projects of companies, research institutes and universities with subsidies and loans.

� Various non-fiscal support measures provided by Tekes, through its use of technology programs, incubators, etc.

� Incubator programs financed through TEKES

� Facilitation of R&D partnerships locally and internationally.

Finland

� Research funding for research institutes and universities

� Range of tax and other fiscal incentives to encourage R&D

� Focused on and highly successful in attracting foreign companies, and building from this influx of Foreign Direct Investment (FDI). Irish R&D for local adaptation.

� Considerable funding to be allocated for basic research in Information and Communication Technology (ICT)

� Facilitation of R&D partnerships locally and internationally

Ireland


� Yozma venture capital program � Focus on wide diffusion of ICT � Technological Incubators Program � Intense promotion of academic research

capabilities � MAGNET program, for funding of

generic research; promotion of incremental innovation. Competitive selection.

� Facilitation of R&D partnerships locally and internationally

Israel


� Advisory council to advise on R&D

� Grants and tax incentives Facilitation of R&D partnerships locally and internationally

� Promoting Finance and Investment for new enterprises

� conducive environment for ‘technopreneurship’

� Primary emphasis on improving quantity and quality of scientific and technological manpower, both at the tertiary level, and for science and engineering courses.

� Making greater use of international cooperation, including new operations in overseas hi-tech nodes

Singapore


� Strengthening the Technology Infrastructure

� Host of fiscal incentives for R&D/ICT development, largely channeled through technology parks.

� Highly successful in development of IT Parks, which foster development by offering, companies a host of fiscal and non-fiscal benefits.

India

� Through "single-point contact" for all regulatory functions, the sponsor can get duty-free imports of equipment, custom-bonded warehouses for materials, income-tax exemptions for

� Government support of venture capital initiatives


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Incentives/Policies Country

Fiscal Non-Fiscal five years, repatriation of know-how fees and royalties, in order to develop and export software (domestic sale up to 50 % of software exported).

� Global connectivity also provided � Facilitation of R&D partnerships locally and internationally


� Strengthening tax breaks for R&D spending

� Reform of the governance framework for public R&D

� Expansion of the venture capital market � Additional support for innovative SME

� Improved allocation of research funding � Strengthening of science-industry links.

Czech Republic



� Solid innovation programs, including the Fundacion Chile and Economic Development Agency (CORFO) programs

� Various incentives supported through programs including Fundacion Chile, CORFO and FONDEF.

� Offering both fiscal and non-fiscal incentives.


� Fiscal and non-fiscal incentives.

� Successful fund, FONDEF that aims at encouraging business innovation and fostering competitiveness in joint ventures with universities and technological institutes.

Chile



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D. THE BEST PRACTICES FOR SURVEY Have specific goals for the survey. The objectives of a high quality survey or poll should be specific, clear-cut and unambiguous. Such surveys are carried out solely to develop statistical information about the subject, not to produce predetermined results, nor as a ruse for marketing, fund-raising, changing voters' minds, or similar activities. Select samples that well represent the population to be studied A replicable or repeatable plan should be developed to randomly choose a sample capable of meeting the survey's goals. Critical elements in an exemplary survey are: (a) to ensure that the right population is indeed being sampled (to address the questions of interest); and (b) to locate (or "cover") all members of the population being studied so they have a chance to be sampled. Train interviewers carefully on interviewing techniques and the subject matter of the survey For high quality data to be collected, interviewers in telephone or in person surveys must be carefully trained to do their work properly through face-to-face ("classroom") or telephone training, self-study, or some combination of these. Time should be spent going over survey concepts, definitions, and procedures, including a question-by- question approach to be sure that interviewers can deal with any misunderstandings that may arise. Construct quality checks for each stage of the survey To assure that the proper execution of a survey corresponds to its design, every facet of a survey must be looked at during implementation. Maximize cooperation or response rates within the limits of ethical treatment of human subjects Non response occurs when members of the sample cannot or will not participate in a survey. Careful sample management and control to ensure that a large proportion of sample members provide the information requested is essential to good survey practice. A low cooperation or response rate does more damage in rendering a survey's results questionable than a small sample, because there may be no valid way scientifically of inferring the characteristics of the population represented by the non respondents. Proper sample management and control entails such things as adding sample in correctly formulated replicates, tracking the disposition of all cases, monitoring the sample while in the field for potential problems, and "metering" or rationing resources to ensure the collection of data from harder-to-reach respondents. Interviewers must also be carefully equipped through training with effective responses to deal with concerns that reluctant respondents might express. Specific procedures designed explicitly to stimulate survey cooperation or participation should also be considered, such as (where possible) sending advance letters to sample households or individuals to inform them of the pending survey, offering monetary (i.e., cash) or non-monetary (some other valued reward) incentives to encourage participation, and sending reminders or


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making follow-up calls to those who do not respond initially. Failure to follow up non respondents and refusals, in particular, can severely undermine an otherwise well-designed survey. To deal with this possibility: (a) visits or calls to sample households are scheduled with careful attention to such considerations as the best time of day to call or visit; (b) allowance is made for repeated attempts (e.g., callbacks at different times and days) to thoroughly work the selected sample in not-at home and related situations; and (c) special efforts (i.e., reworking refusals with an experienced interviewer) are made to persuade persons who are inclined not to participate to respond. In mail surveys, it is usually necessary to send reminders and conduct several follow-up mailings, and at times to contact at least a sub-sample of the remaining non respondents by telephone or personal visit. Where possible, specific efforts to directly observe or measure the characteristics of non respondents should also included in the overall survey design. Use statistical analytic and reporting techniques appropriate to the data collected. Excellence in the practice of survey and public opinion research requires that data analysis and interpretation be competent and clear, and that findings or results be presented fully, understandably, and fairly. The information collected should be critically examined in a search for meaning processed, refined, and thoroughly analyzed. Routine reliability studies should be conducted for all key measurements. Special codes should be provided for missing items, indicating why the data are not included. And, ideally, the "filling in" or imputation of these missing data items (based on rigorous and well validated statistical methods) should be undertaken to reduce any biases arising from their absence. Statistical tables should be clearly labeled, including identification of questionnaire source, and the (un-weighted) number of cases forming the base for each cross-tabulation. Sampling errors should be included for all statistics presented, rather than only the statistics themselves. Findings and interpretations should be presented honestly and objectively, with full reporting of all relevant findings, including any that may seem contradictory or unfavorable. Sampling and non-sampling errors including coverage, measurement and reporting errors, response variance, interviewer and respondent bias, non response, imputation error and errors in processing the data should explicitly be taken into account in the analysis of survey data and interpretation of survey results, in a comprehensive effort to assess error from each perspective. Conclusions should be carefully distinguished from the factual findings, and great care should be taken to be sure that the conclusions and the findings presented are consistent. Carefully develop and fulfill pledges of confidentiality given to respondents Establish clear intentions and meticulous procedures to assure the privacy of respondents and the confidentiality of the information they provide. Interviewers and other research staff must be carefully trained and indoctrinated to uphold and maintain the confidentiality of respondents. Exemplary survey research practice requires that one literally do "whatever is possible" to protect the privacy of research participants and to keep collected information they provide confidential or anonymous. One must establish clear intentions to protect the confidentiality of information collected from respondents, strive to ensure that these intentions realistically reflect one's ability to do so, and clearly state pledges of confidentiality and their realistic limitations to respondents. That is, one must ensure that the means are adequate to protect confidentiality to the extent pledged or intended, that procedures for processing and use of data conform to the pledges


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made, and that appropriate care is taken in dealing with directly identifying information (i.e., using such steps as destroying this type of information or removing it from the file when it is no longer needed for inquiry). Interviewers and other research staff must be carefully trained and indoctrinated to uphold and maintain the confidentiality of respondents' identities and the information they provide and take/sign an explicit oath or pledge of confidentiality to do so before beginning work. In the verification of information, one must protect the identity of respondents from outside disclosure. One should also assure that appropriate techniques are applied to control for potential statistical disclosure of respondent data. Individual respondents should never be identified or identifiable in reporting survey findings: all survey results should be presented in completely anonymous summaries, such as statistical tables and charts, and statistical tabulations presented by broad enough categories so that individual respondents cannot be singled out.


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E. MAPPING OF TERMS OF REFERENCES WITH THE REPORT

Reference

Detailed Analysis Report Final Report TOR

Section Page Section Page

1) To evaluate current status and suggest measures for strengthening Industries Department to:-

IV. Gap Analysis 17-20

a) Carrying out industrial surveys, their analysis and development of policy recommendations for the government for industrial growth.

9.7. Economic Analysis and Statistical Cell

65-70 3.6. Improve Survey Mechanism 46-47

b) Organize chambers, associations and Stakeholder dialogue for future policy measures, collate and advocate to the government.

9.3. Planning Cell

45-52 2.1. Participation In Strategic Planning Of The Province, 2.2. Develop Comprehensive Industrial Policy, 2.3. Develop Industrial Master Plan

28-31

c) Advise the industrial sector on the opportunities and challenges to operate efficiently in WTO and ISO dominated environment in the global economic village.

8.1.5. Assistant Economic Advisors (AEA)

39-40 2.4. Improve Inter-Departmental Liaison And Coordination

2.9. Establish Research And Development Cell

3.3. Promotion of R&D Intensive Industry

31, 37-40, 42

d) Help small industrial units to achieve higher technical values for international competition.

e) Organize young potential entrepreneurs in rural areas and

13. Punjab Small Industries Corporation (PSIC)

100-102 Covered in separate report of PSIC


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Reference



slums to generate economic activity at the grass root level for alleviation of poverty.

f) Facilitation, effective monitoring and evaluation of functioning of various attached and autonomous institutions & coordinate with the district offices and their activities.

6. Overview Of The Structure And Functions Of The Industries Department

17-20 2.4. Improve Inter-Departmental Liaison And Coordination

31

g) To identify bottlenecks to the industrial growth in the province & propose measures for a comprehensive & sustainable industrial growth in the province.

- - 2.9. Establish Research And Development Cell, 3.7. Entrepreneurship Training And Advisory Services

37-40, 47


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Reference



2) To re-define provincial role in promotion / support of industry through:

3.1. Market Development And Promotion

40-41

a) Master planning and up-gradation of industrial estates by provision of efficient services.

15. Punjab Industrial Estate Development & Management Company (PIEDMC) 16. Faisalabad Industrial Estate Development & Management Company (FIEDMC)

109-166 2.3. Develop Industrial Master Plan 3.8. Infrastructure Development

29, 47-48

b) Infusion of new technologies. 13.2. Cluster Development

101 3.3. Promotion of R&D Intensive Industry, 2.9. Establish Research And Development Cell

42, 37-40

c) Provision of skilled manpower. 17. Technical Education And Vocational Training Authority (TEVTA)

170-191 2.10. Linkages Of Educational And Vocational Training

40

d) Elimination of departmental interferences.

3.2. Establish Investor Promotion And Support Centre

3.4. Develop It Infrastructure And Presence On Web

3.8. Infrastructure Development

41-42, 43-45, 47-48

e) Public-private partnerships.

15. Punjab Industrial Estate Development & Management Company (PIEDMC) 16. Faisalabad Industrial Estate Development & Management Company (FIEDMC)

109-168

III. The Best Practice Framework 12-15


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Reference



3) To carry out Training Need Assessment (TNA) of key personal & various wings of the Industries Department with view to achieve the capacity to advice on the opportunities and challenges in the emerging international competitive business scenario.

2.8. Training Of Personnel Within Industries Department

36-37


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Reference



4) Effective liaison with the federal government for sharing information on industrial sector relating to:

a) Formulation of Federal Government policies (Industrial Investment and trade).

9.3. Planning Cell

45-52 1.1. Prioritization and Focus on Core Activities 1.2. Inclusion of Service Sector in Purview of Industries Department 2.1. Participation In Strategic Planning Of The Province, 2.2. Develop Comprehensive Industrial Policy, 2.3. Develop Industrial Master Plan

24-31

b) Foreign trade opportunities (global/regional/bilateral agreements).

c) Issues relating to WTO and environmental compliance.

8.1.5. Assistant Economic Advisors (AEA)

39-40 2.3. Develop Industrial Master Plan, 2.9. Establish Research And Development Cell

29-31, 37-40


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Reference



5) To assess the role of Investment Facilitation Centre (IFC) of the Industries Department in the promotion of investment, especially foreign investment, in the province by:

a) Reviewing and benchmarking current role and performance of IFC.

b) Defining its role for;

smooth implementation of investment policy of the Federal and Provincial Governments,

identification of investment opportunities and priority areas for attracting local and foreign investment, and

Coordination with other provincial departments and district governments in the promotion of investment.

9.8. Industrial Promotional Center (IPC)

71-75 3.2. Establish Investor Promotion And Support Centre

2.5. Establish Key Performance Indicators for Performance Evaluation

41-42


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Reference



6) To carry out an appraisal of the role and functions of the Directorate of Industries by shifting its focus from regulation to facilitation and suggest improvements in its working with regard to:

9. Directorate Of Industries

42-84 4.1. Industrial Safety And Inspection

48

a) Industrial planning and development. 9.3. Planning Cell

45-52 2.1. Participation In Strategic Planning Of The Province, 2.2. Develop Comprehensive Industrial Policy, 2.3. Develop Industrial Master Plan

28-31

b) Survey, collection and up-dating of all industrial statistics/data in the province.

9.7. Economic Analysis and Statistical Cell

65-70 3.5. Directory Of Industries And Services

3.6. Improve Survey Mechanism

45-47

c) Reviewing laws, rules and regulations impacting industrial development and promotion of trade & investment.

- - 2.6. Review Of The Legal Framework

32-33

d) Maintaining close liaison with professional bodies of industries & federal government.

2.4. Improve Inter-Departmental Liaison And Coordination

31

e) Holding of industrial exhibitions in the province.

9.3. Planning Cell

45-52

3.1. Market Development And Promotion

40-41

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F. RESOLUTION MATRIX

a – Resolution of Assistant Economic Advisor’s comments b – Resolution of Directorate comments

c – Resolution of comments from Project Management Unit - Punjab Resource

Management Program (PRMP)

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a – Resolution of Assistant Economic Advisor’s comments Comments Resolution After the separation of the department, the new / revised role to facilitate industries in Punjab has not been defined / proposed in the DFR. Similarly the assignment to be undertaken by the newly created departments and the role of Commerce and Investment Department has not been discussed in the said report as regard to trade related policies.

The new / revised role is discussed throughout the recommendation given in the Chapter V of the Final Report.

It is also added that the methodology to implement these recommendations proposed / given in the report has not been explained. The consultant may be advised accordingly.

The implementation strategy is not part of this study.

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b – Resolution of Directorate comments Comments Resolution 1.T Scope of jurisdiction of department.T 1.1 TPrioritization and focus on core activities.T

• TPrinting and Stationery. T Does not relate to the Directorate of Industries.

No resolution required.

• TCertificate of Boiler Engineer.T The observations contained in the study are not based on factual position. The Boiler Engineer Competency Examinations is being conducted by Competent Board under the Punjab Boiler Act 1923 and rules of 1926. The Directorate of Industries does not agree with the recommendations of the consultant firm for outsourcing this activity to TEVTA.

Appointment of competent board has been mentioned in section 9.6 of the Detailed Analysis Report. In our opinion the function is not inline with the core practices of the Industries Department. The capacity should be more appropriately utilized in core activities of the department i.e. industrial facilitation and promotion. Possibility of placing the board under the umbrella of TEVTA may also be considered.

• TLand Acquisition Cell.T Do not agree with the recommendation in the study because the Land Acquisition Cell of the Directorate is already functioning well separately already in line with Government Policies. There is absolutely no synergy problem with this office as functions are being performed exactly in accordance with provision of the existing law, Land Acquisition Act 1894. Land acquisition for the Industrial Estate, Industrial Zones or private Sector prospective Entrepreneur is processed in collaboration with the Board of Revenue in accordance with the procedure laid down in law swiftly along with ascertainment of suitability of the land for the proposed purpose.

Our suggestion was merely to place the Land Acquisition Cell under the Industrial Promotion and Support Center (IPSC) to provide one-window facility to the industrialists.

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Comments Resolution 1.2 TInclusion of service sector in purview of Industries Department.T

The exercise can not be carried out by the Directorate with existing Infrastructure/facilities and staff. In order to conduct survey of service sector i.e. Franchising, Restaurants, News Media, Leisure Industry / hotels, Consulting , Health Care / hospitals, Waste disposal, Real Estate, Personal Services and Business Services and inclusion of its data on yellow pages in the Industrial Directory, this needs more manpower, expert personal and trained staff, transport faculties and huge funds. However this can be done in collaboration with the private sector more effectively provided necessary funds and adequate additional staff is provided. Recommendations as given in the study regarding improvement in the survey mechanism are supported. The Directorate of Industries takes necessary steps to improve survey mechanism in collaboration with Bureau of Statistics. IT expertise will also be used to display the results of the Industrial surveys on the website of Industries Department. However consultant firm may indicate or identify the CBMs separately in order to facilitate the Directorate in retrieval of information/data from private sector industries.

The need for inclusion in of this sector in the ambit of the Industries Department cannot be ignored due to capacity constraints with in the department. Recommendations for capacity building have specifically added in section 2.7 of Final Report.

2. TEfficiency and effectiveness of the Department T.

2.1 TParticipation in strategic planning of the Province.T

Idea given in the study is supported however Industries Department in collaboration with Investment & Commerce Department can better comment on this recommendation jointly.


2.2 TDevelop Comprehensive Industrial PolicyT

The recommendations made regarding industrial policy is supported however formulation of the industrial policy and Investment Policy or in the purview of Federal Government. Provincial Government follows the Instruction and guidelines issued by the Federal Government. Rests of the recommendations are supported.


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Comments Resolution 2.3 TDevelop Industrial Master Plan.T

The recommendations regarding preparation of master plan is supported however this issue can be taken up with the various stake holders / departments keeping in view the priorities and development Project according to the Vision 2020.


2.4 TImprove Inter Departmental Liaison and CoordinationT,

Recommendations given in the study are supported.


2.5 TEstablished Key performance indicators performance evaluation.T

Recommendations are supported. No resolution required.

2.6 TReview of the legal frame work.T The recommendation given in part–b of this section is supported.


2.7 TAlignment of the organizational structure and roles.T

The role of the District Offices (E&IP) as well as the Directorate of Industries is to act as facilitator only. As already intimated to the Government that in the post devolution scenario 35 District Offices in the Districts namely District Officers (E&IP) are administratively controlled by the District Coordination Officer of the respective districts. These District Officers (E&IP) are operating as independent entities in the District. In these circumstances the Directorate of Industries faces great hardships in collection of information / data from District Government through District Officers of E&IP. In this view there is dire need to create effective and workable linkage between the Directorate of Industries and District offices of the Districts through some amendments in the law and regulatory frame work .So that District Offices (E&IP) are made more functional and responsive.

Relevant change “Roles of District Government Officials specifically District Offices (E&IP) should be clearly laid down and enforced through appropriate legislations to support the Industries Department in its revised facilitative role” is incorporated in section 2.7. Alignment Of Organizational Structure And Roles, in the Final Report.

1. TConsumer Protection.T

Does not relate to Directorate of Industries.


2. TPrice controlling of essential commodities.T Does not relate to Directorate of Industries.


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Comments Resolution 3. TPlanning and Policy formulation. T Does not relate to Directorate of Industries.


4. TInvestor Promotion and Support Centre. T

District Officers (E&IP) are already performing the role of IPSC and providing the guidelines to the prospective entrepreneurs.


2.8. TTraining of personnel of Industries Department T.

Idea / recommendation for training of personnel are fully supported.


2.9. TEstablish Research and Development Cell. T Idea / recommendation are supported. No resolution required. 2.10 TLinkages of Educational and Vocational Training T.

Investment advisory committees comprising of the stakeholders such as representatives of academia, chambers or commerce and industry and manufacturing sector may be constituted with focused TORs in order to achieve the targeted results.

Change is incorporated in section 2.3 of the Final Report.

TChapter No .3 FACILITATION OF THE INDSTRIALISTS. T

3.1 TMarket Development and PromotionT. Idea / recommendation are supported. No resolution required.

3.2 TEstablish Investor Promotion and Support CentreT.

Idea / recommendation are supported. No resolution required. 3.3 TPromotion of R&D Intensive Industry T. Idea / recommendation are supported. No resolution required. 3.4 TDevelopment IT Infrastructure and presence on WEBT.

Idea / recommendation are supported. No resolution required. 3.5 TDirectory of Industries and ServicesT. Idea / recommendation are supported as comments already given at point 1.2.


3.6 Improve T Survey MechanismT. Idea / recommendation are supported. No resolution required. 3.7 TEntrepreneurship training and advisory servicesT.

Does not relate to Directorate of Industries. TEVTA can play its role here.


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Comments Resolution 3.8 TInfrastructure DevelopmentT. Does not relate to Directorate of Industries.


TCHAPTER NO. 4 INDUSTRIAL REGULAIONS. T

Does not relate to Directorate of Industries.


4.1 TIndustrial Safety and Inspection. T Certification of Industrial Boilers is being carried out by the Boiler Wing of the Directorate under the Boiler Act 1923.The Inspection of Boiler from insurance agencies is being examined by the Federal Government and the matter is yet to be finalized.

Already covered above under the comments of TCertificate of Boiler EngineerT.

The observations contained in the study are not based on factual position. The Boiler Engineer Competency Examinations is being conducted by Competent Board under the Punjab Boiler Act 1923 and rules of 1926.

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c – Resolution of comments from Project Management Unit - Punjab Resource Management Program (PRMP)

Comments Resolution The consultant needs to focus more on development of linkages among environment, labour, industries and C&I departments.

The linkage between Industries Department and other departments is covered in section 2.3 of Final Report.

The consultant shall give recommendations on the split of Industries, Commerce and Investment Department.

The recommendation on split of Industries, Commerce and Investment Department is discussed in 2.4 of Final Report.

It is pointed out that the TORs required a clear suggestion of enhancing the possibility of Public Private Partnership. A clear understanding needs to be established if the Industries Department is geared for this approach, what and where the weaknesses are and what specifically can be done to make Industries Department ready for this change.

The recommendations on various functions to be performed by the Industries Department have been classified according to the responsibility of Public and /or Private sector in line with The Best Practice Framework given on page 14-15 of the report. Impact of the recommendation on the current organizational structure has been discussed in detail in section 2.7- Alignment of Organizational Structure and its Roles. Recommendations that require capacity building in the current structure has also been highlighted. The recommendations have been listed overleaf, identifying where the function has been proposed to be carried out by the Public Sector, Private Sector and / or in Public Private Partnership (PPP) Mode.


Final Report


Mapping of Recommendations to The Best Practice Framework

Public Sr. No. Sec. Ref.

Page Ref. Recommendation

Within the Department

Outside the Department

Public Private Partnership Private Comments

1 1.1 24 Government Printing Press Detail has been covered

in a separate report 2 1.1 24 Certification of boiler engineers TEVTA 3 1.1 24 Land Acquisition Cell IPSC 4 1.2 25 Inclusion of service sector in the purview of

the Industries Department

- Planning and policies - Surveys It has been proposed in

section 3.5 and 3.6 that public private partnership should be encouraged

- Compilation of Directory of Services - Provision of Information It is proposed that such

activities are carried out by IPSC.

- Promotion It is proposed that such activities are carried out by IPSC.

5 2.1/2.2/2.3 28 - 31 Planning To be performed at strategic levels

P&D 6 2.4 31 Improve Inter-department Liaison and

coordination


Final Report


Public Sr. No. Sec. Ref.





P&D 7 2.6 32 Review of legal framework Both options have been

analyzed in detail in section 2.6

8 2.7 35 Consumer protection 9 2.7 35 Price Control of essential commodities Function should be made

part of the consumer protection council

10 2.7/3.2 36/41 Investment promotion and support center IPSC should work under the ambit of C&I department with Industries Department playing a supportive role

IC 11 2.9 37 Research and Development 12 2.10 40 Linkages of educational and vocational

training Possibility of compiling

a Human Resource Management System (HRMS) in collaboration with the Department of Labour should also be considered.

TEVTA 13 3.1 40 Market development and promotion 14 3.3 42 Promotion of R&D intensive industry 15 3.4 43 Develop IT infrastructure Not clearly mentioned in

the report 16 3.5 45 Directory of industries and services 17 3.6 46 Improvement of survey mechanism


Final Report


Public

Sr. No. Sec. Ref.





18 3.7 47 Entrepreneurship training and advisory

services

TEVTA 19 3.8 47 Infrastructure development 20 4.1 48 Industrial inspections

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