Public-private partnership in defence production

At a recent seminar in Islamabad, the president made a convincing case for the virtues of engaging the private sector in defence production. The Minister for Defence Production was equally enthusiastic about a close relationship developing between the public and private sectors. Serving and retired senior military officers also endorsed this viewpoint and General Tanveer, who recently retired as secretary of Defence Production, read an elaborate paper on the merits of this partnership. It is heartening to know that there is a major shift from the mindset of the past and a growing realisation regarding the advantages of this partnership. I distinctly recall that as chairman of the Pakistan Ordnance Factories Board and later as secretary of Defence Production, there was a lot of resistance from the top brass with respect to involvement of the private sector in defence production. There was a mistaken belief in the military hierarchy that by involving the private sector, it would lose control over state-owned defence installations. To some extent, that impression still persists.

Indeed, Pakistan has come a long way in indigenous defence production, considering that at the time of Partition, it did not have any defence industrial units. All the defence industries built by the British to serve their war machine were located in India. To add to the challenges of a young nation, we had practically no civil industries either, apart from a few sugar mills and textile spinning units. The technological and industrial base was extremely weak and the military was dependent on weapons and equipment inherited from the British or imports from Western sources. But soon after the major skirmish with India in Kashmir in 1948, Prime Minister Liaquat Ali Khan decided to set up an ordnance factory to produce small arms. Initially, it was located in Rawalpindi, but later shifted to Wah where it has developed into a huge complex. Over the years, Pakistan’s defence industries have grown significantly and boast of a wide range of military hardware. This includes major weapon systems, such as armoured fighting vehicles, fighter and trainer aircraft, frigates, patrol boats, cruise missiles, intermediate range missiles, electronic and optronic devices and communication equipment. Pakistani products command the confidence of our military and have also found limited markets abroad. However, there are still major challenges that confront defence production.

The most glaring weakness of our leadership is that it lacks a clear vision regarding the integration of the private sector as a partner. Pakistan clearly needs an internationally competitive private sector participation to ensure a reliable domestic supply of technology and systems, and to contribute to the country’s overall industrial and technological development. Involvement of the private sector will also help in sustaining political support for defence production. Pakistan’s military industrial complex needs to work more closely with the private sector and build on some of its strengths. That would include employing a more rigorous methodology in production processes, as well as better costing, accounting and budgeting methods. This should be accompanied by stronger oversight and quality assurance and a concentrated effort to translate best practices into the makings of a more export-oriented defence production sector. Research and development is another critical area that the defence sector has ignored or given scant attention to. It is a short- sighted approach to merely rely on transfers of foreign technology and base the entire indigenous production on drawings and specifications supplied by foreign countries. The most critical areas for domestic research and development are communications and related equipment, explosives and propellants, the manufacture of specialised materials (such as carbon fibre, exotic alloys and hardened steels), avionics, electronics, lasers and computation.

Strategic vision demands that our leaders comprehend the importance of the defence economy in the context of the national economy and exploit its potential. This, however, would only be feasible provided our defence organisations undergo a major restructuring, become more quality sensitive, financially cost-conscious and fully utilise the potential of the private sector, which can play a major role in introducing the latest technologies, modern management practices and contemporary financial management.

The private sector should also benefit from a cross-flow of technologies from the public sector defence industries. The military spends precious foreign exchange to acquire cutting-edge technologies or spends considerable state resources in generating them in-house. Most of these technologies have common usage, but remain quarantined and the civil sectors of the economy fail to benefit fully from them. All this is only possible if there is a change in mindset in the military bureaucracy, wherein the private sector is treated as an equal partner.

Current procedures for participation of the private sector are archaic and a major revision is necessary. There are several countries that have integrated the private sector in defence production and have institutionalised interaction at regular intervals. The US, Sweden and Germany are classic examples of the success of the private sector. In these countries the private sector is producing highly sophisticated weapon systems, making these nations leaders in research and development. Singapore, Malaysia, Indonesia and India also have robust defence industries, producing fairly advanced military hardware and software. Most of these foreign firms are producing both military and civilian products and thereby optimising their output and reducing overhead costs. The defence economy should be directed in a way that it becomes the engine of growth rather than a drain on the already emaciated national economy.

Another major weakness in our system has been that at times, the top postings in defence production entities have not been on the basis of individuals’ suitability, but more so as a parking place before retirement. This practice, obviously, has had a corrosive effect on the organisations. I am confident that the present military leadership fully realises the key role defence production and procurement plays in strengthening national defence. Career prospects of civilian technical and administrative cadres in Pakistan’s defence industrial establishment also need to be revisited. Many of these civilians are highly professional and have devoted their lives to defence production. Recognition of their merit will attract better talent to defence establishments. The future of Pakistan’s defence industrial and technological capability lies in addressing these multiple problems satisfactorily, so that we can move towards maximum self-reliance.

Published in The Express Tribune, December 9^th,  2015.

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