LAHORE – “The National Industrial Policy 2011 – Implementation Framework” has recommended drastic changes in the state’s approach towards infrastructure and industry. The authors of the critical report have urged the complete overhaul of public sector enterprises, including PIA, Railways, NHA, Port & Shipping, Pakistan Steel Mills, State Engineering Corporation, Engineering Development Board, Small and Medium Enterprise Development Authority, and industrial sectors to induce greater competitiveness.
The report has been prepared by the Ministry of Industry and Production (MoIP) which was authored by a three-member core team, including Professor Abid Burki, Professor Kamal Munir and Usman Khan along with Masud Akhtar, Dr Shaukat Hameed Khan and Tasneem Noorani. The draft of the National Industrial Policy 2011 – Implementation Framework made available to Pakistan Today reveals that the report has proposed several interventions in the aviation industry and particularly some which pertain to the national flag carrier.
The report suggests major restructuring in Pakistan International Airlines (PIA) to improve management and operational efficiency.
It recommends major effort in improving the operating environment by eliminating conflict of interests between regulator and operators. The report also advocates a cut in landing costs and fuel surcharges, competition among domestic and foreign carriers, improved airport management, cut in manpower and expansion of fleet to achieve the objectives of increased share and profitability of domestic carriers. Discussing the Pakistan Railways (PR), the draft paper suggests PR has to increase its share in both passenger and freight traffic.
It believes that to achieve competitiveness PR passenger traffic share should be increased from four percent to eight percent by 2015 and 20 percent by 2030. In addition, freight train should be increased from one to five trains daily and long-haul freight traffic share should be enhance from 10 to 30 percent in next five to twenty years. It also recommends halving the travel time by acquiring high speed rolling stock, engines and modern signaling system in the next five years.
National Industrial Policy 2011 – Implementation Framework also suggests policy inputs in port and shipping sector, including enhancement of ports’ efficiency, reduction in port charges by half to compete with rates at regional rivals, reinvigorate national shipping and freight lines, rebuild and add berths to accommodate larger ships up to 8,000TEU and for greatly increased containerisation. It advocates strengthening of speedy and automated customs clearance system and establishment of bulk cargo handling facilities by private sector for goods like coal, cement and LNG. It also stresses to activate the Gawadar Port facilities.
The draft paper recommends that the government should introduce professional management at Pakistan Steel Mills (PSM) and set targets for the white elephant. It proposes the establishment of two steel and metallurgy institutes in conjunction with the PSM, universities and a downstream industrial sector. It estimates that the total cost for overhauling the steel industry would be around Rs 85 billion, which should be spend in next 10 years. It proposes Pakistan Steel Mills production should be increased by five million tonnes by 2020.
In addition, the government should encourage further steel production with a goal of producing 12 million tonnes of steel indigenously by 2020. It also proposes development of local ores and their beneficiation. The draft paper also recommends Implementation of restructuring the National Highway Authority (NHA), implementation of the recommendations for the National Trade Corridor, incentives for fleet operations and warehousing by private sector, establishment of logistical parks and dry ports at major industrial and agriculture hubs.
It proposes creation of National Road Fund for road maintenance, road building and modernizing the trucking fleet, implementing the Auto and Trucking Policy (2007) regarding multiaxial trucks and compliance with Euro 2 and Euro 3 emission standards and the International Transport Carnet system. The draft paper estimates that reforming the logistics sector will incur expenditure of Rs 240 billion in the next ten to fifteen years. The report also underscores the need for foreign enterprises to be engaged in infrastructure (development /operation of ports, wharves, energy and traffic) projects with duration of over 15 years.
An incentive to be introduced will be five years of corporate income tax exemption from the profit-making year and 50 percent reduction for the next five years. While foreign-invested manufacturing enterprises may be given two years of corporate income tax exemption from the profit-making year and 50 percent reduction for the next three years and export-oriented enterprises at the expiry of tax exemption and reduction period, enjoy a reduced rate of 10 percent for income tax provided the export volume accounts for 70 percent of the total industrial output.
