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INDUSTRY in PAKISTAN Industry: Pakistan ranks forty-first in the world and fifty-fifth worldwide in factory output. Pakistan's industrial sector accounts for about 24% of GDP. Cotton textile production and apparel manufacturing are Pakistan's largest industries, accounting for about 66% of the merchandise exports and almost 40% of the employed labour force. Other major industries include cement, fertilizer, edible oil, sugar, steel, tobacco, chemicals, machinery, and food processing. The government is privatizing large-scale parastatal units, and the public sector accounts for a shrinking proportion of industrial output, while growth in overall industrial output (including the private sector) has accelerated. Government policies aim to diversify the country's industrial base and bolster export industries.

Definition: An industry or sector (from Latin industrius, "diligent, industrious") is the manufacturing of a good or service within a category. Although industry is a broad term for economic activity and trade, in economics and urban planning industry is a synonym for the secondary sector, which is a type of economic activity involved in the manufacturing of raw materials into goods and products.

Types of industries: There are four types of industries a. Small scale industries b. Medium scale industries c. Large scale industries d. Defense industry Small Scale industries: Small-scale industries are those industries in which 2 to 9 people work together to make some product. It is is usually less capital intensive and is more consumer-oriented than business-oriented Small Scale Industries are providing large-scale employment next to Agriculture in Pakistan. It have played a vital role in the economy by providing large scale employment opportunities at relatively low capital cost, a wide entrepreneurial base, easy dispersal of industries in rural areas and concentration of certain industrial groups at specific areas. Examples of small-scale industries are i. Handicrafts industries ii. Shampoos (Herbal)

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Pickle manufacturing

Medium scale industries: Medium scale industries are those industries in which numbers of workers are up to 100. Medium scale industries are producing number of quality products. Through medium scale industries many people get employment so unemployment decrease and economy moves in a positive direction. And people get quality products at relatively suitable prices. Examples of medium scale industries are: i. Fan industries ii. Gas cylinder industries iii. Auto pins industries

Large-scale industries: Large-scale industries are also known as heavy industries Heavy industry does not have a single fixed meaning as compared to small scale industries It can mean production of products which are either heavy in weight or in the processes leading to their production. heavy industry projects can be generalized as more capital intensive or as requiring greater or more advanced resources, facilities or management. Heavy industry is often defined by governments and planners in terms of its impacts on the environment. These definitions concentrate on the seriousness of any capital investment required to begin production or of the ecological effect of its associated resource gathering practices and by-products. In these senses, the semiconductor industry is regarded as "heavier" than the consumer electronics industry even though microchips are much more expensive by weight than the products they control. Heavy industry is also sometimes a special designation in local zoning laws.because for it special and wide places are required. Examples of large scale industries are: i. Textile industries ii. Chemical industries iii. Electronics industry

Defense industry: It plays an important role in the safety of any country. In this type of industry all the weapons are formed which are necessary for the defense of a country. Examples of defense industries are: Pakistan ordinance factory 501 Pakistan ordinance factory 502 Kahota research laboratories

IMPORTANCE OF INDUSTRIES

3 of 10 The mot important feature of a modern developed country is its strong industrial base. Industrial development plays a very important role in economic development. Industrialization is the key for economic development. If a country lags behind in industry, it cannot hope to make progress in other fields such as agriculture, transport, energy or education. It is the manufacturing sector, which can provide employment opportunities to rising population. Following are the main advantages of industrial development. Economic development Increase in national income Increase in employment Increase in investment Development of agricultural sector Utilization of natural resources High living standard Economic stability Specialization Increase in foreign exchange reserves

Economic development Industrial development is the key of economic development. Industrial development improves the other sectors such as transport, construction, and agriculture etc.

Increase in national income In order to increase national income, the industrial development is essential. Industrialization makes possible the optimum utilization of scarce resources.

Increase in employment Unemployment is the common feature in pakistan. The industrial growth increases job opportunities and in this way unemployment is removed.

Increase in investment Industrialization increases the incomes of the people. Due to increase in income, their savings and investments also increase.

Development of agriculture The deveopment of industry is nessasary to develop the agricultural secter because with the development of industry, modern agricultural implements and furtilizers can be produced.

Utilization of natural resources Through industrial development, the unutilized resources can be utilized. Such as coal, oil, and gas resources are available in our country but due to lack of industrializaton we can not use them.

High living standard Through industrialization, the incomes of people are also increased. The rise in incomes raises the living standard of people.

Economic stability

4 of 10 Industrialization plays very important role for economic stability of a country. Through industrialization, exports of goods provides a better chance of economic stability and prosperity.

Specialization Industries require specialized labour for operation of plants and machinary. So industrialization promotes specializatin of labour. In this way the overall output of the workers increase.

10. Increase in foreign exchange raserves Through industries, foreign exchange earnings are increase due to increased in exports and decrease in imports

SOURCES OF INDUSTRIAL FINANCING There are two sources of financing Internal financing External financing

INTERNAL SOURCES IDBP The Industrial Development Bank of Pakistan (IDBP) was established in August 1961. it is one of the oldest and leading financial institution of Pakistan. The Bank infact replaced the Pakistan Industrial Finance Corporation created in 1949. The bank provides finance to the new industrial conceren and modernization of the existing units. It provides the loan both in local and foreign currencies for setting up the new industrial units. So main objective of this bank is the industrial development. It issued the loan on the behalf of the government. It also encourages the establishment of industries in the less developed areas. It pays the due regard to the export oriented industries and to thoe which are based on dmestic raw material. The bank also provides the advisory services to clients in updating their production process.

PICIC Pakistan Industrial Credit and Invstment Corpoation (PICIC) was established in 1957 as a public limited company. It was established for the purpose of raising fixed capital for large scale industrial projects. Functions : PICIC provides medium and long term loans to the industrial sectors in the following ways: It helps in expansion of industral units. It extends loans for the establishment of new industries. It encourages and cooperates with the foreign investors to set up joinprojects in Pakistan. It invested directly by purchasing the share capital of join stock companies.

5 of 10 It creates and expands investment shares and security markets. It has started general banking functions It provides manageial, technical and administrativ services.

3. ICP Investment Corporation of Pakistan (ICP) was established in February, 1996. Its main objectives are: To improve the growth of small and medum size business. To encourage and develop the capital markt in the country. To advance loans for investment purpose. To protect the rights and interest of the shareholders. ICP opens and maintains the investment accounts. ICP keeps the values of shares stable by buying and selling shares. ICP started the sharing account schemes for investors on PLS basis. ICP collects the savings of people.

4. NDFC National Development Finance Corporation (NDFC) was established in 1973. its main objects are To provide the finance to the industries in public sector. To encourage the establishment of new industries. To assist in modernization and expantion of existing of existing enterprises in public sector. To provide the finance to private sector under certain condition. To provide the technical assistance. To offer higher rate schemes in the country with maximum safety and security.

5. SBFC Small Business Finance Corporation (SBFC) was established in 1972. its objects are: To provide financial aid to small businessmen. To increase the rate of production and employment in the country. To provide the finance to those people who have technical how but are financially poor. To provide the finance to cottage and small scale industries.

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EXTERNAL SOURCES 6. SAARC South Asian Association for Regional Cooperation (SAARC) was set up in 1981. It includes seven countries namely Pakistan, India, Sri Lanka, Bangladesh, Maldives, Nepal and Bhutan. Its objectives are 1) To promote the industrial development. 2) To provide the finance of industries. 3) To reduce the debt burden over the economy. 4) To provide the training and research facilities.

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SAUDI PAK INDUSTRIAL INVESTMENT COMPANY

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AGRICILTURAL

This company was incorporated in 1982 as a private limited company. The objective was financing industrial as well as agricultural projects in private sector in Pakistan. This company maintains its resources in foreign exchange to avoid adverse fluctuation in the exchange value projects.

SMEDA Pakistan Small and Medium Enterprise Development Authority (SMEDA) is a state owned subsidiary of Pakistan Industrial Development Corporation and is based in Lahore, Punjab, Pakistan.

History Pakistan Small and Medium Enterprise Development Authority was formed under section 42 of the companies ordinance 1984 Ministry of Industries and Production of Government of Pakistan.

Introduction Premier institution of the Govt. of Pakistan under Ministry of Industries and Production, SMEDA was established in October 1998 to take on the challenge of developing Small & Medium Enterprises (SMEs) in Pakistan. With a futuristic approach and professional management structure it has focus on providing an enabling environment and business development services to small and medium enterprises. SMEDA is not only an SME policy-advisory body for the government of Pakistan but also facilitates other stakeholders in addressing their SME development agendas.

Mission Statement To function as the promoter & facilitator of SME sector in Pakistan by creating a conducive and facilitating environment as well as providing and facilitating service delivery to SMEs for enhancing their capacities and competitiveness.

SMEDA Objectives 1. Formulate Policy to encourage the growth of SMEs in the country and to advise the Government on fiscal and monetary issues related to SMEs 2. Facilitation of Business Development Services to SMEs.

7 of 10 3. Facilitate the development and strengthening of SME representative bodies’ associations/chambers. 4. Set up and manage a service provider’s database including machinery and supplier for SMEs. 5. Conducting sector studies and analysis for sector development strategies. 6. Facilitation of SMEs in securing financing. 7. Strengthening of SMEs by conducting and facilitating seminars, workshops and training programs. 8. Donor assistances for SME development of SMEs through programs and projects. 9. Assist SMEs in getting international certifications (such as UL, CE, DIN, JIS, ASME, KS, etc.) for their products and processes. 10. Identification of service opportunities on the basis of supply/demand gap.

Exports through industry: Nowadays we hear a lot about deficits and surpluses. Exports or Imports both have their pros and cons. By exporting more we can make use of our excess capacity and reduce our opportunity costs. Bulk exports can reduce the cost per unit and help us attain economies of scale. Exporters can get high markup ratios from international markets as compared to their local, domestic shares. At the same time governments can also gain from these markup receivables. The cautious exporter may reduce his risk by spreading it over different demand conditions thereby, if demand of a particular item falls in one country it rises in another. There are many factors that help and hinder in making a country competitively attractive. Some countries have access to natural resources or climatic conditions. In the same way Pakistan's overall climate is good for growing Cotton, Wheat, Rice etc. Natural Resources may also include certain acquired resources like, skilled labor, which can make that little bit of difference that hangs between a developed, and an underdeveloped country. Pakistan's exports stood at $17.011 billion in the financial year 2006-2007, up by 3.4 percent from last year's exports of $16.451 billion We maintain a large portfolio of products. In Value added or Export industries we have Leather, Textile, Footwear, Surgical Goods

8 of 10 Sports Goods, Carpets, Frozen Concentrated Citrus, Juices, Sea -food, Marble. Raw cotton

Imports through industries: Imports on the other hand are not bad altogether. Through imports we can get cheaper and better quality goods. For example, Japan imports rice because; its locally produced rice is relatively more expensive. We can increase our supplies and make additions in our product line. By choosing the right mix, we can achieve a harmonious blend. Where, we get the fruits of both, the exports and the imports. The main reason that Pakistan has to import many things and even it has the resources is Skilled workforce, leave Pakistan. Pakistan is adding value to their skills and others are reaping the fruits. Pakistan invests in them, help them go through the initial growth stage and when the momentous point is reached these finished value-added products are shipped out. Pakistan's imports stood at $30.54 billion in the financial year 2006-2007, up by 8.22 percent from last year's imports of $28.58 billion. The major imports of Pakistan for industry are: Textile machinery Electrical machinery Agricultural machinery Fiber Silk yarn Insecticides Plastics Medical products Iron Steel

Tendency of industries Since independence, Pakistan has faced many problems in the development of its industrial sector. These difficulties was mainly due to the wrong and biased policy of the British Government in the United India. The British Government deliberately ignored the indstrial development of Muslim majority areas. Thus on partition, Pakistan received only 34 industrial units out of 921 operating in the United India. As a result of this policy Pakistan

9 of 10 had to take a fresh start to build up its industrial sector on stable foundations. Pakistan’sindustrial sector was very weak after partition. The industrial development was very low. However the industrial sector received a little boost during 1960-70. By 1983-84 the industrial sector’s contribution reached 20% in the national products which made it the secound largest sector, after agricultre, in the national economy. In 1959 the Government devised a new policy by which emphasis was lid on the establishment of those indutries gor which the material was available within the country. A number of corporations were set up to render assistance for the rapid industrial development of the country. Due to these steps Pakitan has beenable to achieve a fairly broad base in manufacturing. Pakstan is now producing chemicals, steel, heavy engineering machinary and tools. Pakistan has also produced the items of domestic use like cement, sugar, fertilizer and steel items. A Steel Mill with Rusian assistance have been establshed at Pipri near karachi.

Employment through industry Employment People aged 16 or over are classed as employed by the Labor Force Survey (LFS) if they have done at least one hour of work in the reference week or are temporarily away from a job (for example, if they are on holiday). The number of people in employment is different from the number of jobs in the economy, because some employed people hold more than one job. A measure of the number of jobs in the workforce can be found in other surveys, such as the Workforce Jobs series. Unemployment is a central problem because when unemployment is high, resources are wasted and people's incomes are depressed; during such periods, economic distress also spills over to affect people's emotions and family lives. But now due to the number of increasing industries the situation is changing and people are getting work. Many people are now working in some industries and those who do not get jobs, government and NGO’s are providing them finance so they can open there own industries, small or medium. Through small and medium scale industries the unemployment rate is coming downwards and employment rate is increasing through which our economy is progressing and economy is developing.

Capital output ratio: Capital Output Ratio is the ratio that shows the amount of units of capital that are needed to produce a certain level of output.

10 of 10 A high capital output ratio means a large amount of capital is needed for production as economic growth increases, and therefore exaggerates the trade cycle . The Accelerator Theory suggests that the level of net investment will be determined by the rate of change of national income. If national income is growing at an increasing rate then net investment will also grow, but when the rate of growth slows net investment will fall. There will then be an interaction between the multiplier and the accelerator that may cause larger fluctuations in the trade cycle. The Incremental Capital-Output Ratio (ICOR), is the ratio of investment to growth which equals to 1 divided by the marginal product of capital. The higher the ICOR, the lower the productivity of capital. The ICOR can be thought of as a measure of the inefficiency with which capital is used.