Large Scale Industries

8/3/2019 Large Scale Industries

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THE UNIVERSITY OF LAHORE

2011

Large, small and cottage

industries of Pakistan

Growth and impact analysis report

Waqas Mehmood BS.O3

E C O N O M I C S O F P A K I S T A N


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Large scale industries:

Pakistan, which had almost no large industrial units at the time ofpartition in 1947, now has a fairly broad industrial base and

manufacturing accounts for about 24 percent of GDPA.Cotton textile production is the single most important industry,accounting for about 19 percent of large-scale industrialemployment.Cotton yarn,Cotton cloth,Made-up textiles,Ready-made garments and knitwear collectively accounted for nearly 60

percent of Pakistan's exports in 1999-2000. Other important industriesare:

1. Cement

The cement industry of Pakistan entered the export markets a few yearsback, and has established its reputation as a good quality product.

The last few years have been a golden period for cement

manufacturers, when the government increased spending oninfrastructure development.

Analysis of cement in financial years

During the financial year-06Cement sales registered a growth of 13.5million tones sold in FY 2006 year.

During the financial year-07Cement sales increase by 31 percent to 17.53million tones

During July-February-08 Cement sales showed an increase, both indomestic and regional markets to 18.17 million tones.


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The domestic sales registered an increase of 7.2 percent to 14.4million tones and exports stood at 3.7 million tones as against,showing an increase of 110 percent.

The cement sector is contributing Rs 30 billion to the national

exchequer in the form of taxes. There are four foreign companies, three armed forces companies

and 16 private companies listed in the stock exchanges.

The northern region has over 87 percent share in total cementdispatches while the units based in the southern region contributes13 percent to the annual cement sales.

Demand of cement in Pakistan last few years

The cement demand grew 19 percent and 13 percent during FY05 andFY06 respectively.

During FY07-08, production increased by 30 percent as compared tolast year.

The demand for cement was forecasted to grow by 26 percent duringFY07 and 17 percent in FY08.

The per capita consumption of cement has risen from 117 kg in FY06 to131 kg in FY07.

The main factors behind increase in demand of cement were:

60 percent higher Public Sector Development Projects (PSDP)allocation,

seven percent GDP growth,

The operating capacity of cement in FY05 and FY06 was 18million and 21million tones, which rose to 37 million tones bythe end of FY07.

The cement manufacturers added eight million tones to thecapacity and the total production was expected to be 45 milliontones by the end of 2010.


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The export may reach to $ 500 million increase during 2008. Theexports for FY08 have already surpassed the last whole yearsexport of 3.19 million tones and are likely to reach to 6.67million tones in 2008.

2.Automotive industry

Pakistan is an emerging market for automobiles and automotive partsoffers immense business and investment opportunities. The totalcontribution of Auto industry to GDP in 2007 is 2.8% which is likely

to increase up to 5.6% in the next 5 years. Auto sector presently,contributes 16% to the manufacturing sector which also is expected to

increase 25% in the next 7 years. Car ownership in Pakistan has risen by40% per annum since 2001.

3. Textiles

The Textile Industry is dominated by Punjab. 3% of United States

imports regarding clothing and other form of textiles is covered byPakistan.

Textile exports in 1999 were $5.2 billion.

Textileexports managed to increase at a very decent growth of 16% in2006.

In the period July 2007 June 2008, textile exports were US$10.62

billion. Textile exports share in total export of Pakistan has declinedfrom 67% in 1997 to 55% in 2008, as exports of other textile sectorsgrew. The major reason of decline of textile export of Pakistan is theGovt unhealthy policies. Sui Northern Gas Pipelines Ltd. (SNGPL)notified the textile mills to reduce the supply of gas for five months.Monthly loss the textile industry because of interruptions in gas supply


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could reach about U.S. $ 1 billion, or 4$ 5 billion for the fiscal yearending June 20 next year.

4. CommunicationAfter the deregulation of the telecommunication industry, the sector hasseen an exponential growth.

The mobile telephone market has exploded fourteen-fold since2000 to reach a subscriber base of 91 million users in 2008, one ofthe highest mobile tele densities in the entire world.

In addition, there are over 6 million landlines in the country with

100% fiber-optic network and coverage via WLL in even theremotest areas.

As a result, Pakistan won the prestigious Government Leadershipaward ofGSM Association in 2006

The contribution of the telecom sector to the national exchequerincreased to Rs 110 billion in the year-end 2007-08 on account of thegeneral sales tax, activation charges and other steps as compared to Rs100 billion in the year-end 2006-07.

By March 2009, Pakistan had 91 million mobile subscribers 25 million more subscribers reported in 2008.

In addition to the 3.1 million fixed lines Pakistan is on the vergeof a telecom revolution

.

Pakistani telecom sector has attracted more than $9 billion inforeign investments.

During 2007-08, the Pakistani communication sector alone

received $1.62 billion in Foreign Direct Investment (FDI)about 30% of the countrys total foreign direct investment.

Pakistan was amongst the top five ranker with one of thehighest SMS traffic with 763 million messages.
http://en.wikipedia.org/wiki/Deregulationhttp://en.wikipedia.org/wiki/GSM_Associationhttp://en.wikipedia.org/wiki/GSM_Associationhttp://en.wikipedia.org/wiki/Deregulation


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Pakistan is ranked 4th in terms of broadband Internet growth

in the world, the rankings are released by Point Topic Globalbroadband analysis, a global research centre.

Pakistan has more than 20 million Internet users in 2009. The country have a potential to absorb up to 50 million mobile

phone Internet users in the next 5 years

There are six cell phone companies operating in the country with

nearly 90 million mobile phone users in the country.

Telecom industry created of 80,000 jobs directly and 500,000 jobs

indirectly.

The FADRAL BUREAU OF STATS provisionally valued this sectorat Rs.982,353 million in 2005 thus registering over 91% growth since2000.

5.Banking, finance and insurance

RANKING

Pakistan has been ranked 34 out of 52 countries in the WorldEconomic Forum's first Financial Development Report, whichwas released in December, 2008by (CSF).

Under Factors, Policies and Institutions pillar, Pakistan ranks 49thin institutional environment, 50th in business environment and37th in Financial Stability.

In the Financial Intermediation Pillar Pakistan ranks 25th inbanks, 42nd in non banks and 17th in Financial Markets

.Under Capital Availability and Access, Pakistan ranks 33rd.

The credit card market continued its strong growth with sales crossingthe 1 million mark in mid-2005. Since 2000 Pakistani banks have begunaggressive marketing of consumer finance to the emerging middle class,


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The provisionally valued this sector at Rs.311, 741 million in 2005 thusregistering over 166% growth since 2000.

steel,

machinery,

tobacco,

paper and paperboard,

chemicals

Food processing.The government is attempting to diversify the country's industrial base

and to increase the emphasis on export industries. Small-scale andcottage industries are numerically significant but account for a relativelysmall proportion of the GDP at about 6 percent.

Small scale and cottage industries:

In wholesale trade, a small-scale company employs up to 100 workers,

while in most manufacturing and mining activities, that number is

between 500 and 1,500. In the services sector, a small-scale company is

defined also by the annual turnover of up to $7 million.

cottage industry: An industry where the creation

ofproducts and services is home-based, rather than factory-based. While

products and services created by cottage industry are often unique and

distinctive given the fact that they are usually not mass-

produced, producers in this sector often facenumerous disadvantages when trying to compete with much larger

factory-based companies.
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Types of cottage and small-scale industries in

Pakistan

There is a large variety of handicrafts available in Pakistan. Theyare not only aesthetically pleasing items, but they are also servethe needs of local people.

These are as fallows:

Carpets

Carpets are by far the most in economic terms and the make asignificant contribution to export earnings. They are generallyhand-woven and hand knotted and made of wool and silk or a

mixture of the two.

Embroidery

Embroidery has developed to a fine art with distinctive regionaldesigns and patterns.

Cutlery

Wazirabad is the city of cutlery industry in Pakistan. This industryis growing day by day and has share of 65 million US dollars inExport for 2010. High Quality Damascus Steel (Pattern WeldedSteel) is manufactured in this city and 95% of world needs areproduced here.

Sports Goods

Sports goods earn about 3.7% of our total exports. The main rawmaterial for the sports goods industry is leather andmulberry wood that are available in Punjab, but also

imported PVC. Football

Hockey ball

Cricket bat and

rackets


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are mostly manufactured by hand. The skilled workers areavailable in Sialkot and Lahore. In the industry large and mediumsize factories contract work out to small scale and cottageconcerns.

Surgical Instruments

Sialkot and Lahore are also noted for the manufacture and exportof surgical instruments. The most important raw materialis stainless steel which has to be imported. In this industry, also,medium scale factories contract work out to small scale andcottage concerns. Also like the sports goods industry, most of theoutput is exported.

Cottage and small-scale industries contribution to

the gdp is only 5%

Gov policy for small and cottage industries

The following organizations have been established to develop thissector of economy.

Pakistan Small Industries Corporation (PSIC)

Punjab Small Industries Corporation (PSIC)

Sindh Small Industries Corporation (SSIC)

The Small Industries Development Board NWFP (SIDB)

The Directorate of Small Industries Baluchistan (DSIB)
http://en.wikipedia.org/wiki/Surgical_instrumenthttp://en.wikipedia.org/wiki/Stainless_steelhttp://en.wikipedia.org/wiki/Stainless_steelhttp://en.wikipedia.org/wiki/Surgical_instrument

Large Scale Industries

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