SHIFTING OF CAPITAL AND INDUSTRIES FROM PAKISTAN

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SHIFTING OF CAPITAL AND INDUSTRIES FROM PAKISTAN A CRITICAL ANALYSIS

INTRODUCTION

In Pakistan, the overall economic situation is not encouraging as the opportunities for long term investment are being curtailed. Businessmen and industrialists are not showing interest in long term investment and they have started shifting of their capital outside Pakistan because of energy crisis, law and order situation and uncertain political conditions. Negative balance of trade has affected the local industry and the country is facing shortage of foreign exchange reserves.

Pakistan textile industry is relocating their business to Bangladesh due to better opportunities for profit earning. Bangladesh has offered Pakistan textile manufacturers special incentives and ideal environment for setting up their industries.. In southern Punjab 60,000 workers has lost their jobs due to this crisis. More than 40% of the textile industry and around 200,000 power looms have been shifted to Bangladesh in the last five years, causing unemployment in Pakistan.[1]

In Pakistan the power shortage has damaged the country. Industrial production is declining and the national economy is suffering. There is hardly any improvement in the power supply which is getting out of control. The energy crisis is hitting industry causing unprecedented unemployment and production loss of billions of rupees every day. Negative industrial growth has reduced output, decline in export and revenue collection.

Due to load-shedding of electricity and gas all the sectors have shown negative growth resulted in increase of trade deficit and causing an estimated loss of Rs 230 billion annually, besides depriving about 0.4 million people of jobs. Energy and power crisis have crippled the industry while interest rates and inflation are also increasing and causing serious problems for the industry. Besides this high electricity tariffs have put a negative impact on manufacturing and industrial sector due to high costs of production.[2]

SBP reports that textiles, the country’s biggest industry, the largest employer and accounting for more than 60 percent of overall exports, recorded a 10.2 percent decline in output in the first four months, July-October of FY2011. Besides, load-shedding has badly hit daily-wage workers who are frustrated of starvations and discontinuation of education of their children.[3]

Statement of the Problem

The Government lack of interest in economic reforms coupled with higher electricity tariffs, energy crisis and law & order situation in the country has forced massive capital flight from Pakistan. The business community has started shifting their assets to comparatively more investment protective countries. Shifting of capital and industries from Pakistan is a serious issue which needs immediate attention. If concrete measures are not taken the situation will further deteriorate.

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