SHIFTING OF CAPITAL AND INDUSTRIES FROM PAKISTAN

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2.9       In a statement issued by the Mr. Abdul Basit former senior vice president of Lahore Chamber of Commerce and Industries (LCCIs) published in the daily Nation on 3rd July, 2012, he said that the economic slowdown was causing unemployment but also creating law and order situation in the country and the government would have to evolve a well thought out strategy to cope with the situation. He said that in the year 2003 , industrial growth rate was 2.9 % that reached 13.10% in the year 2005 but in the year 2010 , negative growth rate was registered with -3.6%. He feared that the fiscal deficit could touch the staggering figure of RS 1.2 trillion (about 8% of the GDP) if the situation remained the same for quite some time and resultantly the government would have to print billion of rupees that would trigger hyperinflation.[11]

2.10     As already highlighted industrialists have shifted their business to other countries like Bangladesh, China, Dubai, Sri Lanka and India due to worse energy crisis, economic and political instability, and lawlessness situation while a large numbers are planning to shift their industrial business to the other countries because of the prevailing conditions which are not conducive for the carrying out of business in the country. Several countries of the region are on making rapid economic growth while situation in Pakistan is not encouraging. The government has to handle the situation in the best national interest of the country because if urgent measures were not taken it would be great loss to the nation.

2.11     The government is needed to overcome the problems which are hampering the progress especially the energy crisis which is the biggest hurdle in the way of economic growth. Because of electricity shortage the cost of doing business has increased a lot and the business community is facing problems to fulfill their commitments for timely supply of goods. The government is required to involve Pakistani mission abroad to search the market for Pakistani merchandise in the international market. The government has to take such measures on war footing basis failing which Pakistan would become only a trading place instead of manufacturing hub.

2.12     A report published in the daily Nation on April 23, 2012, states that India allows Pakistani industrialist to set up industries in India.[12] India has offered lots of incentives to Pakistani businessmen for establishment of their business in India. Therefore the investors are availing this opportunity to get more profit especially due to the unfavourable working environment in the country. This will be in the interest of India because in the long term, due to establishment of these industries more job opportunities will be created in India. On the other hand, it will be a great loss for our country because many industrial units will be closed down and shifted to India creating more unemployment in Pakistan which will increase terrorism, extremism and the crime rate in the country. At the same time India will be benefitted from the export related production which will boost Indian trade, where as Pakistan economy will go further down.

 2.13    The government has no accurate information and exact data regarding flight of capital and industries from Pakistan. According to unofficial record, 40 per cent textile units have been shifted from the country. The flight of capital has also resulted negative impact on the fixed investment. Statistics show that fixed investment declined to 10.9 per cent of the GDP during the financial year 2011-12 as compared to 11.5 per cent of GDP during the financial year      2010-011. Because of better opportunities, market access and incentives businessmen have shifted their business to other countries. In Punjab 53 industrial units were closed due to power crisis. In KP 1500 industrial units were badly affected due to power crisis. Another 2,000 industrial units in the province were closed down due to war on terror.[13]

2.14     If immediate measures were not taken by the government to ensure uninterrupted supply of electricity and gas to the industrial sectors besides reduction in tariff and fuel prices and to improve the law and order situation, industrial sector will collapse and it will result more flight of capital and industries from the country.

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