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Energy crisis most chronic constraint for Punjab industry: report

The most chronic constraint to Punjab industry is the energy crisis, as industrial sectors in Lahore suffer the highest loss due to electricity outages, according to a report titled “Constraints faced by industry in Punjab” released by the International Growth Centre, a research institute based jointly at the London School of Economics and Oxford University.

The report identified main impediments to investment and industrial productivity in Punjab, which have contributed to unprecedented decline in growth. In the Lahore zone, industrial sectors that suffer the highest loss included food processing, plastics, pharmaceuticals, printing and chemicals.

These sectors have lost up to 15 percent of their annual sales due to power outages and unscheduled power cuts, it said.

A sudden unannounced tripping of electricity can result in wastage of raw material and increased time of operation due to cleaning and restarting of the process.

This is not a Lahore-specific issue but is also present in other industrial hubs of Punjab. In Faisalabad, food and machining sectors suffer most due to electricity outages. In Gujranwala it is the electronics and cutlery sectors that are worst hit, while in Sialkot it is the leather garments industry. Food processing suffers the most due to electricity outages in Sheikhupura and Wazirabad, according to the report. Other factors hampering industrial growth in Punjab included corruption in almost all the industrial sectors.

In Lahore, pharmaceutical and chemical sectors complain the most about undue contact with government officials. They receive the most visits by labour inspectors and drug regulatory inspectors. All these contacts with inspectors entail some form of gift or even a direct payment to the inspectors, as a bribe, the report revealed.

In Faisalabad, textile industries receive the highest number of visits by labour inspectors and boiler inspectors. On an average, the industry loses anywhere between three-seven days resolving a single issue with the government officials, it said.Given that the provision of finance and managing the banking sector falls under the purview of the State Bank of Pakistan (SBP), the Punjab government can take some direct measures and also strongly advocate measures, which would improve and enhance the provision of finance to its industry.

The Punjab government should strongly advocate to the State Bank the following regulatory changes to improve access to finance, it suggested.

Textiles, garments and leather are the three main sectors across all the seven regions that have identified inadequate workforce as a key constraint to industrial growth.

All these sectors are labour intensive and also require specific levels of skills. Inadequately trained workforce has become a more serious problem over time. Without appropriately trained workforce, the Punjab industry will find it increasingly difficult to remain competitive internationally, it said. In total there are seven industrial zones / clusters in Punjab, these are, Lahore, Gujranwala, Faisalabad, Sialkot, Sheikhupura, Wazirabad and Islamabad/Rawalpindi.

Manufacturing industries in Punjab contribute almost 58 percent to the overall industrial production of the country and account for around 60 percent of the value-added in the manufacturing sector. The overall industrial structure in Punjab is dominated by Small and Medium Enterprise (SME) clusters. Almost 90 percent of the private enterprises are SMEs, which employ 78 percent of the non-agricultural workforce and contribute approximately 40 percent to the GDP, it added.

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