ISLAMABAD: The manufacturing sector gained a milestone growth rate of 5.55% in the fiscal year 2013-14 which was 1.2% higher than that of the previous fiscal year as manufacturing sector could achieve a growth rate of 4.53% in 2012-13.
Manufacturing sector refers to industries making chemical, mechanical, physical material transformations, substances, and components into consumer and industrial goods. This is known to be an uncoordinated and highly competitive collection of industries and Agglomeration of industries engaged in chemical, mechanical, or physical transformation of materials, substances, or components into consumer or industrial goods.
“Manufacturing sector includes large scale manufacturing (LSM) and small scale manufacturing (SSM) and slaughtering,” a source in the Finance Ministry told this scribe.
He said that LSM covered the establishments registered under factories Act 1934 or qualifying for registration (having 10 or more employees) including Repair and Service Industries while SSM covered all such manufacturing establishments not covered in Large Scale manufacturing.
However, the source said that the modern manufacturing includes all intermediate processes required for the production and integration of a product’s components because some industries, such as semiconductor and steel manufacturers use the term fabrication as the manufacturing sector is closely connected with engineering and industrial design.
The source said that Pakistan Bureau of Statistics (PBS) had informed the Finance Ministry that annual figures regarding growth rate of manufacturing sector for the fiscal year 2014-15 would be provided in by May 2015, as per laid down procedure, figures collected by PBS were required approval of National Accounts Committee (NAC) meeting, usually held in the month of May every year,” the source added.
“Manufacturing takes turns under all types of economic systems and in a free market economy, manufacturing is usually directed toward the mass production of products for sale to consumers at a profit,” the source said, adding that in a collective economy, manufacturing is more frequently directed by the state to supply a centrally planned economy while in a mixed market economies, manufacturing occurs under some degree of the government regulation.
The source said that reduced power and gas load-shedding, renewed confidence of business community/ industrialist on the economic policies of the present government as well as slightly improved in law and order situation in country’s business hub Karachi were main causative factors and reasons for the increasing trends of the growth rate.
“The sector grown due to political and macroeconomic stability, rationalisation of tariffs, increase in investments, improved utilisation of productive capacity, and growth in demand for manufactured products, resulting from higher exports and consumer financing have been the major factors leading to this growth,” the source observed.
The source added that country’s manufacturing sector was heavily dominated by food, textiles and apparel, and leather industries to the extent of over 50% while other major segments in manufacturing include chemicals and pharmaceuticals, basic metal industry, non-metallic mineral products, machinery cement, automobiles, electronics, cement, fertilizers, engineering and textiles.
The source said that due to emerging technologies worldwide, the world manufacturing sector had geared up and had incorporated several new technologies within its purview as economists considered the world manufacturing sector as a sector which generated a lot of wealth, employment, introduction latest techniques, real earnings from shipments etc which had put the world manufacturing industry in a favourable position.
However, the source said that local manufacturing sector still revolved around the traditional low value added industries, whose share in world trade is either declining (resource based and low technology goods) or nearly constant (medium technology goods).
“An efficient, international quality supply chain, which is so essential for local industry to flourish, is missing, partly due to insufficient scale economies, and partly due to bundling of raw material, parts and modules by the multinationals in their assembly oriented companies, which discourage a local vendor industry” the source observed.
On the other side the source said that a major global re-structuring was underway in manufacturing sector which had has taken the form of re-location and shifting of manufacturing, design, and service activities from older industrialized countries to developing countries where cost reduction can be affected without compromising reliability such activities had generated major global players and conglomerates, which offered complete end-to-end services in the supply chain, whether as manufacturers of piece parts and systems, or providers of manufacturing related services in some newly industrialised Asian countries too.