Khyber Pakhtunkhwa industry’s blues

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Industry: Stalled at the start

Industrial sector in Khyber Pakhtunkhwa looks for relief in the budget 2011-2012

By Tahir Ali

Industrialists and traders in the Khyber Pakhtunkhwa, terming the federal budget as jugglery of words, have rejected it for having no package for the revival of the militancy-hit industrial sector in the province.

Industrialists had hoped the federal government would come to the rescue of sick industrial units in Khyber Pakhtunkhwa by announcing province-specific incentives and package, expanding the duration of the relief package and suggesting several mega hydel-power generation projects. They were disappointed.

The only thing they welcomed in the budget was the lowering of sales tax rate from 17 to 16 percent which, according to them, would decrease inflation a bit. The budget, according to them, had no long-term plan and, therefore, lacked the potential to ensure a robust economic and industrial growth.

The industrial sector in Khyber Pakhtunkhwa, mainly comprising the marble, furniture, pharmaceutical, match and cigarette and hospitality industries, has been badly affected by high power/gas tariffs, load-shedding, low voltage, insecurity and insufficient infrastructure besides long distance from seaport which increases cost of production and makes them less competitive.

Factories working in the iron, marble and furniture need latest training for capacity-building of their workers and machinery, marketing, and technical support from the government. The budget failed to provide any workable plan and programme for these problems.

Industries should have been given incentives such as discount in power and gas tariff, rescheduling of loans for two years, or suspension of mark-up thereon, rebate in other taxes and duties, and halting of audit of businesses and industries for two years. New investors should have been given tax exemption for a few years and relief in duties on import of machinery. All these issues have been neglected in the budget.

Soft loans, preferably interest-free ones, and separate industrial estates with modern machinery pool and common facility centres for different clusters and value addition, especially the mineral and furniture, are some steps that should have been taken.

Sharafat Ali Mubarak, president Markazi Tanzeem-e-Tajiran Khyber Pakhtunkhwa and former president of KPCCI, says prolonged power/gas load-shedding and terrorism have not only scared new investors away but also forced existing industrialists not to expand their businesses and many have shifted to other provinces.

“The extent of the damage to industrial sector in the province could be judged from the fact that off the 2200-plus total units working here, only 572 are functional these days and the number of industrial labour has decreased from around 200,000 in 1996 to a dismal 20000-plus these days,” he says.

“A couple of years ago Prime Minister Yousaf Raza Gilani had declared the province a war-hit zone and announced a relief package for industries but it, unfortunately, was not implemented in a letter and spirit. Bureaucracy continues to create hurdles in its implementation. For example, we had been exempted form general sales tax on electricity but it is being collected in the bills in clear violation of relief package. Industrialists and traders waited for another package or extension of the earlier one for a few more years but there is no roadmap for the revival of sick industrial sector in the province,” he complains.

“The problem of power-shortage, that has been afflicting the sector for quite some time, has been ignored once again and no emergency plan and mega projects have been suggested for the purpose. The target could be easily achieved by public-private partnership schemes in the sector,” Mubarak adds.

According to him, “We have over 40000MW of hydel-power potential which can be utilised by constructing power plants here. The government has unfortunately allocated around Rs50 billions for the Benazir income support programme. If funds form this and other wasteful initiatives are diverted to build power infrastructure, this would boost the economy and generate job opportunities, a requisite for permanent prosperity. Some mega projects for hydel power generation, gas exploration and exploitation, development of human capital and technology transfer must have been included in the budget for long-term sustainable economic growth.”

“Khyber Pakhtunkhwa produces about 4200 mega watt of electricity from Tarbela dam alone and its peak consumption is around 2300MW but it is subjected to 12 hours of loadshedding. Similarly, 341 million cubic feet (MCF) gas is produced here while its total requirement is 227 MCF. If Punjab is not ready to supply its wheat to other provinces unless its own wheat needs are met first, we have also right to demand non-stop and cheaper supply of gas and power before others,” he argues.

Usman Bashir Bilour, president of Khyber Pakhtunkhwa Chamber of Commerce and Industry (KPCCI), says that being adversely affected, the industrial sector in the province deserves a comprehensive package or at least, the package announced by the prime minister should be extended for another two years.

“The State Bank reports that industrial growth rate has been as dismal as 0.01 percent this year. The government should ascertain why most of the industries are closing one after the other. We have sent to the government a detailed strategy paper for the revival of industries but no one has bothered to contact us so far. We need to sit together to chalk out a 10-15 years’ plan for revival of industries in the province,” he says.

According to him, their businesses are ruined and the government is contemplating the imposition of reform general sales tax. “We would never tolerate it as it would increase inflation and overburden the people. The government had announced it will expand direct taxation base but it has once again reneged on this commitment. Special relief orders are regularly announced that exempt certain industries from taxes while other industries are subjected to additional tax burdens intermittently. This should be avoided and all those who earn money be brought into the tax net — there should be minimum tax but maximum taxpayers,” Bilour says.

“Credit is the basic requirement of industrialists but it has been made difficult for us as all leading banks have shifted their head offices to Islamabad. One will have to travel hundreds of kilometres to get a loan of even Rs10 million. How can we modernise our industries in this backdrop,” he asks.

Khyber Pakhtunkhwa is rich in oil and gas reserves. Official estimates suggest it has one billion barrel oil and four trillion cubic feet gas reserves, which, if utilised, will meet energy requirements of industries for a long time and give fillip to provincial and national economy.

Marble reservoirs in the province are estimated to be at four billion tons found in 30 varieties in the province. But most of the 2000 marble factories in the province and tribal belt, besides the factors cited above, suffer from use of outdated techniques, inconsistent supplies of raw material, lack of proper infrastructure, absence of value addition and of public-private cooperation.

Khyber Pakhtunkhwa is an ideal place for summer and winter tourism, adventure tourism, eco-tourism, culture/heritage tourism, spiritual tourism and sports and commercial tourism. This sector also needs hefty funds and public-private coordination to build tourism infrastructure and strong media campaign to attract tourists but no such thing has been announced despite promises in the 2009 tourism policy draft.


Marble resouces in Pakistan

Unused treasures

By Tahir Ali

(The News, 25-10-09)

Pakistan, especially NWFP, possesses huge marble reservoirs. The promotion and development of marble industry could bring prosperity and development for the country.

But industrialists and officials from Pakistan Stone Development Company (Pasdec) and small & medium enterprises development authority (Smeda) say that the sector suffers from several maladies.

“The marble industry is suffering from load-shedding, low voltage, law and order problem, use of outdated quarrying techniques, inconsistent supplies of raw material, lack of proper infrastructure, lack of value addition and absence of public-private cooperation/coordination,” they point out.

According to an official of Pasdec, that oversees the marble sector, Pakistan has approximately 300 billion tons of marble reserves scattered mainly in NWFP, the tribal belt and Balochistan.

“Around 98 percent of these reserves are believed to be in NWFP and FATA. Of late, work at several marble sites was stopped due to militancy in the area. Explorations in tribal-belt would be started once the security situation improved there and the figures could further improve. Much of the potential however hitherto remains to be exploited,” said the official.

He said nearly 30 kinds of marble were found in the province and the adjoining tribal belt. “The most famous of these are Ziarat marble, super-white, off-white, Badal, Zebra, pink, Nowshera, Jet-black, Bampokha and golden marble,” he added.

Swat, Buner, Chitral, Kohistan, Mardan, Hazara, Nowshera and Kohat divisions are high potential areas for quality marble in the province. Mohmand, Khyber, Bajaur, Orakzai and Kurram Agencies from Federally Administered Tribal Areas (FATA) have huge marble reservoirs.

In the next 15 years, Pasdec plans to upgrade 14 quarries, develop 20 marble cities and 2000 marble factories and establish 20 training centres of mosaic, inlays and stone masonry across the country.

Model quarries are being set up according to the best international practices for extracting stone and employing latest technology. Marble Cities are being established in the vicinity of mines all over Pakistan.

The Ministry of Industries has opened a machinery pool at the newly established marble city Risalpur with the help of Pasdec.

According to Shahid R Khan, former chairman all Pakistan marble industries association (APMIA), the marble city will have a common facility and training centres (CFTCs) for training local managers, workforce and technicians to cut square dimension blocks into slabs, then polish and cut them to size on the state of the art machinery. The centres will be run by both local and International experts. “CFTCs will also have a Mosaic Development Center to provide industrial training in marble mosaic, handicrafts and inlays from industrial waste. The common facility will provide cutting, polishing and sizing services as well on reasonable rates to private entrepreneurs. There would also be an industrial park on the site,” he said.

“It is heartening to see that the government has realised the need to develop the marble and granite sector on modern and scientific lines, which would collect huge amount of foreign reserves from international market,” said Khan.

He recalled there were only six marble factories when he started work in the marble sector in 1990. “Now, we have around 1700 of them in NWFP and FATA that provide 0.1 million direct and another 0.6 million indirect jobs to people. The sector generates an estimated millions of revenue annually for the government. We are gradually modernising the sector with support from the government. We know only dimension stone and square blocks have an international market and we are developing on those lines,” he said.

The official said that marble miners should stop method of blasting and get the latest machinery on rental basis for extracting marble. Standard wastage in the world is 45 percent for the marble sector. In Pakistan, he noted, blasting destroys 85 percent marble in mining. Wire-cutting-technology would be provided to the miners on rental basis to avoid wastage of marble.

The global trade in marble and granite was estimated at $45 billion a year. But marble exports from Pakistan were only about $33 million last year.

Pakistan offers big investment opportunities in mining, value addition and manpower development in the sector. Recent reports suggest that Saudi Arabia is interested in Pakistani marble to build its new cities with an expenditure of around $260 billion. Italy and other countries, it is learnt, want barter trade of their marble machinery & technology in exchange for the Pakistani marble. All this shows great investment potential in Pakistan’s marble and granite sector.

When this scribe expressed apprehension that Italy might market the marble products made from Pakistani marble, Shahid Khan said we should not be worried on this front and expand our trade with Italy for our benefit.

Khan, who is also a member of board of directors of Pasdec, said the marble reserves in Pakistan were enough to relieve it of its external and internal debts. “Experts even think that only Balochistan’s marble reserves would suffice for the purpose. On a recent visit to Turkey, I found that a single Turkish company exported marble products of about $48 million. It filled with me remorse on our own exports,” he said.

“The industry has huge potential in export sector. We want to increase exports up to $300 millions in coming years on our own. Exports could even touch one billions dollars if sustained efforts are made. The government and private sector would have to do streamline supply of raw materials as well as address the inability to cater to high volume orders from abroad,” Khan said.

Pasdec is committed to make the sector globally competitive and socially responsible dimension stone industry by ensuring extraction of “square blocks” through modern techniques. “This strategy will transform this industry in to a globally competitive industry and an engine of economic growth for the country. We hope to increase exports to $2.5 billion through the steps by the year 2016,” said a Pasdec official.

Khan said the government should open a mineral development bank for the sector. He said we intend to utilise the marble powder for building blocks if facilitated. “We also would be developing the mosaic marble industry in the province. Very beautiful pieces can be prepared from what once were considered waste of marble,” he said.

But insurgency and military operation in part of NWFP and FATA have dealt blows to the sector like other businesses.

Shamsul Wahab, President Marble Manufacturer Association Buner said that around 500 marble factories in Buner were closed in May making 0.2 million people jobless.

“Several factories and marble blocks were destroyed by shelling. Due to frequent curfews, supplying raw material and transportation of marble was impossible for months. We incurred billions of loss due to them. Now prolonged load-shedding, low voltage and non-availability of live ammunition used in blasting at marble sites are harming us,” he said adding that half of marble factories were still closed.

Mardan has the biggest public-income generating marble cluster of the province. According to Mohammad Younis, President of Marble Association, it generates revenue of around Rs 200 annually in income tax, royalty, GST, FED and power and gas bills.

“Most of the marble factories in the Small Industrial Estate Mardan (SIEM) are unfortunately working on 50 percent of their installed capacity. Hours of load-shedding and low voltage have compelled us to work only in one shift. This has reduced production as well as caused joblessness,” Younis said.

He lamented that around 75 percent of the industrialists time was consumed by the ten different types of departments he had to deal with for his business. How they could develop their industries in this back drop, he asked.

“The government must improve the power infrastructure, water, sewerage and road networks. It should ensure soft loans to the potential investors to enable them get modern quarrying machinery. It should also help establish training centres for workforce and a safe and healthy environment,” said Saleem Khan, a marble dealer.

Smeda, Pasdec, the ministry of industries and private sector should join hands to explore more marble sites, develop marble industry on modern lines and open marble processing units in areas where the treasures are located. This will help bring the transportation cost down, create job opportunities for locals and would develop most of these backward areas.

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