NWFP needs support to strengthen industrialisation

Zahid Ullah Shinwari

The people of NWFP are the most unfortunate lot as they face a plethora of problems despite dwelling in a land of many splendours and opportunities. This province is blessed with a vast land of 74500 square kilometres with huge potential for unlimited business and economic development opportunities for the whole region.

The NWFP is bestowed with abundant natural resources. The snow-covered mountains, rushing and gushing streams, rivers, precious mineral wealth, fertile lands and hardworking manpower are all that could turnaround the destiny of a nation being resource potential for this geo-politically important region of the globe.

Unfortunately no comprehensive planning was made in the past to utilise these resources in an efficient manner to benefit the country in general and this area in particular. The persistent economic deprivation culminated into worst kind of law and order problem in the area, which posed a serious risk to the integrity of the country.

The deprivation and criminal neglect on the part of those who matter made this area one of the most backward and under-developed parts of the country. While investigating the reasons responsible for hindering economic growth of NWFP, one found several multidimensional aspects being identified by different quarters from time to time. Being a stakeholder and an actual sufferer of the callous attitude of the successive governments towards these problems, I am better placed to summarise it in a few lines.

The federal government’s biased and rapidly changing policies and distortions in the national economic policies are some of the major reasons that massively contributed to the industrial backwardness and economic meltdown of NWFP. These policies were always discriminatory in nature and formulated according to whims and wishes of a strong anti-NWFP lobby, which always remains active in presenting negative and one-sided picture to policy-makers.

Due to these wrong policies industrialisation concentrated in some parts of the country, which resulted in uneven geographical industrialisation and imbalanced economic growth. This biased attitude in turn badly affected fiscal concessions and investment incentives available to industrial units in this part of the country.

The economic policy distortions included over-regulations, high tax rates, poor tax administration, trade restrictions, poor credit accessibility and inadequate infrastructure in addition to biased and rapidly changing industrial policies.

In these circumstances market forces were allowed to operate in such a manner that led to concentrate industrial production, commercial activities, banking system, insurance network etc in certain localities and regions leaving the rest of the country in a state of backwardness.

In this respect disparities between regions increased resulting in capital and labour flow from the backward to the relatively more developed regions. It is a fact that entrepreneurial culture and commercial experience could not flourish in this province. Secondly, the locational disadvantage of NWFP being far away from the Karachi sea port resulting in higher transportation cost makes it difficult to compete with the industries located in the main cities of the country.

We are not allowed to take benefit from our hydropower potential nor are other agricultural and mineral deposits put to sensible use besides the geo-political advantage of NWFP being located at the gateway of Afghanistan and Central Asia.

In these circumstances, if any incentive was given, it was also made dysfunctional and redundant by the implementing agencies by creating hurdles and associating a lot of ifs and buts with it. The Export Policy Order 2008 is a classic example of this case. Export to Afghanistan is allowed but is subjected to certain conditions and these conditions are almost impossible to comply with rendering export to Afghanistan and Central Asian Republics impracticable.

Another fatal blow to the existing industries of NWFP is decision of PEPCO, which prescribed higher electricity tariff for the province instead of offering some relief. This is despite the fact that cheapest electricity is produced in the province and the cost of transmission is very low.

If policies were formulated in a prudent way and level playing field was provided, these shortcomings could be easily overcome. If a down-to-earth industrial policy is introduced in the backward areas, the problem of locational disadvantage and higher transportation cost can be easily tackled in view of the availability of comparatively cheaper land and labour resources in these areas. The formula of freight equalisation has been successfully implemented in certain countries to compensate for the extra overheads in the movement of raw materials and finished products. In this way the problem of entrepreneurial skill and trained workforce can also be checked. One case in point is Gadoon Amazai Industrial Estate in district Swabi where after the withdrawal of incentives most of the industrial units had closed down but it did bring successful entrepreneurs into limelight besides producing a large number of skilled manpower.

The NWFP industries desperately need some concessions in utilities and taxes just to survive and compete with the other developed areas of the country. Unfortunately, the incentives are not given to the industries of NWFP but dolled out to Sindh units without any justification.

We have great potential in a few industrial sectors like safety match, marble and granite, cigarette and furniture. These industries can be easily helped in reducing unemployment and poverty alleviation if a little bit support from the federal and provincial governments is provided.

Impediments in export to Afghanistan and Central Asian Republics are to be given a serious thought and immediately removed if we mean to bring industrialisation to this area. The proposal and suggestions submitted by SCCI can help in identification and solution of the problems in this regard.

The Sarhad Chamber of Commerce & Industry played a vital role in highlighting the plight of local entrepreneurs and the revival of industrial sector but still the dark shadows of gloom are hovering over the horizon as the matter is getting out of control.

If policy-makers and rulers did not realise the gravity and sensitivity of the economic backwardness of this area, the next generation will never forgive their indifferent and callous attitude towards NWFP. Time is running out and if we did not move, we will have no time to reverse the damage being done by imprudent industrial policies.