De-industrialisation in fiscal 2001-2002

Pakistan's manufacturing sector reels from a multitude of external and self-inflicted setbacks. Cotton, textiles, ghee, automobiles, sugar, cement, fertiliser…

The performance of Pakistan's corporate manufacturing sector was far from impressive in fiscal year 2001-02, recording modest growth of just 4 percent against the 8.6 percent achieved the year before. The situation is not expected to improve in the near future. The forecast for the next fiscal year is that the current declining trend or a flat rate of growth will continue. Despite visible signs of recovery in the world economy, the adverse impact of post-9/1 1 events on Pakistan's industrial sector has not yet been overcome prompting fears that the country could be experiencing de-industrialisation. While new petroleum refining, fertiliser and automobile units were being established till just few years back, some of these, like the Fauji Jordan Fertiliser Company, have ceased operation this year. As a financial executive put it, "we do not hear of any new industrial projects coming up except those few with start ups in the late 1990s that are now coming into production". He adds, "There is not much demand from corporates for capital expenditure funding and commercial banks are diverting their liquidity towards consumer banking, particularly car lease financing, which, from a larger perspective, is nonproductive compared to export-oriented manufactures".