80% sick units paralyse key sectors

Millions unemployed, Karachi is struggling; addressing economic woes is vital

KARACHI:

The toll from over 80% of sick units has significantly impacted all key sectors nationwide. The escalating closures of these units have left millions of skilled and semi-skilled workers, along with professionals, jobless due to the high costs of doing business, including steep gas and electricity tariffs.

The proliferation of sick units has stunted industrial growth and eroded the quality of life for workers, particularly in Karachi, a vital economic hub. This situation has contributed to a surge in street crimes and worsened law and order, exacerbating unemployment, particularly among Karachiites.

Public organisations are failing to initiate mega projects, while the private sector grapples with soaring energy tariffs, making it less competitive globally compared to neighbouring countries like Bangladesh and India.

The substantial cost of doing business has left industrialists and investors frustrated, as they struggle to prevent the closure of thousands of Small and Medium-sized Enterprises (SMEs), crucial for local job creation. Meanwhile, large manufacturing units have reduced shifts and laid off workers.

Workers and professionals from all corners of the country migrate to Karachi in pursuit of a decent livelihood, often referring to it as the “mother” of the underprivileged. However, this economic powerhouse seems powerless in current times.

The seven industrial zones in the port city, grappling with a severe economic downturn, include the Site Association of Industry (SAI), Site Superhighway Association of Industry (SSHAI), Korangi Association of Trade and Industry (KATI), Landhi Association of Trade and Industry (LATI), Federal B Area Association of Trade and Industry (FBATI), North Karachi Association of Trade and Industry (NKATI), and Bin Qasim Association of Trade and Industry (BQATI).

There are three types of sick units. Firstly, some habitual industrialists secure loans for sick units and mismanage them. Secondly, incompetent management fails to sustain operations, while businesses continue to produce products for which demand has declined in the market. For instance, with the ban on polythene bags, factories producing such items face closure unless provided with alternative business opportunities.

When considering government organisations, Pakistan Railways (PR), Pakistan Steel Mill (PSM), Pakistan International Airlines (PIA), along with the country’s research and development institutions, are all struggling entities.

Railways was initially established by the East India Company (EIC) to primarily serve cargo transportation, with a minor portion for passenger commute. Following Pakistan’s inception, the railways were divided between Pakistan and India. However, successive governments have prioritised revenue generation from passenger trains, neglecting improvements in goods services. Addressing this would require hiring an additional 50,000 staff, which is deemed surplus by the department.

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Overloaded trailers and trucks further deteriorate road infrastructure, which is a costly affair. Rail tracks, on the other hand, can last for centuries with minimal maintenance. Approximately 50,000 people die in road accidents in the country, while another 0.5 million received multiple injuries throughout a year. Given that a single engine can pull 72 carriages, increasing rail traffic could alleviate road accidents, reduce air pollution, and cut import bills for petrol, spare parts, tires, Completely Built-Up (CBU) units, or Completely Knocked Down (CKD) kits of goods and passenger vehicles.

The land assets of PSM could help alleviate the country’s debts significantly. Moreover, by focusing on exporting fresh horticulture and floriculture produce to the Gulf Cooperation Council (GCC) countries, such as Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, United Arab Emirates (UAE), Iran, Iraq, and others daily, along with enhancing local cargo services, PIA’s cargo traffic could see a substantial increase, possibly up to 40%. In the event PIA is unable to provide this service, the country could explore the option of chartered planes.

In the healthcare sector, rather than solely focusing on building hospitals, the government should prioritise preventive healthcare measures such as ensuring access to clean water and sanitation. With over 75% of Pakistan’s population lacking access to pure drinking water, implementing a proper water system could reduce the need for healthcare professionals and alleviate overcrowding in clinics and hospitals. Currently, there are more medical stores than grocery shops in the country.

Regarding the education sector, the country’s reliance on expensive foreign testing systems like the Cambridge system and the International English Language Testing System (IELTS) is unsustainable for a developing nation. Pakistan boasts a robust network of public universities and colleges, although they often operate for limited hours compared to universities worldwide. There is a need to develop an indigenous testing and education system while implementing continuous shifts to produce skilled manpower and fully utilising faculty resources in every institution.

“Nearly 70% to 80% of units across the country remain closed, reflecting a widespread economic downturn. The Korangi Association of Trade and Industry (KATI) alone houses over 5,000 industrial units, with approximately 65% of them currently non-operational. Similar situations are observed in industrial zones like Faisalabad, Lahore, Gujrat, Gujranwala, Rawalpindi, and Nooriabad. However, some sectors such as textiles and various manufacturing units in Sialkot, including surgical, leather, and hosiery industries, continue to operate despite the prevailing challenges. In Karachi, the rampant lawlessness exacerbates unemployment, leading to a surge in street crimes. Fresh graduates struggle to secure employment, and thousands of workers have been laid off, with those lucky enough to find new jobs often receiving significantly lower salaries than their previous positions. This economic instability inflicts severe psychological stress on individuals, families, and even children due to financial hardship,” remarked Tahir Mahmood Chaudhry, Founding President of the Turnaround Management Association (TMA) Pakistan Chapter and the sole chartered member of TMA Chicago USA in Pakistan.

Chaudhry highlighted that his team has successfully addressed significant issues in approximately 100 industries across the country. However, the prevalence of struggling units remains a pervasive issue.

He proposed a dual solution to address two pressing concerns: Firstly, by exporting raw food products on time, the country could reduce food wastage by 40%, the highest in the world, while simultaneously bolstering foreign exchange earnings through the struggling PIA.

Moreover, despite significant annual allocations, the country’s research and development institutions have failed to deliver notable innovations, indicating systemic inefficiencies.

“We must focus on packaging, selling, and exporting already-produced products,” he stressed. “As the saying goes, ‘Har Shaakh Pe Ullu Baitha Hai Anjaam Gulistan Kya Hoga’ (An owl is perched on every branch, what will be the consequence for the garden),” he added, underlining the importance of addressing existing challenges.

He proposed that industrialists could offset high energy prices by reducing unit costs, scaling up production, and diversifying their product offerings. Additionally, efforts should be directed towards modernising the agriculture sector, raising awareness, and fostering engagement with commercial attaches and chambers of commerce both domestically and internationally. Hiring retired competent officers, establishing collaborative bodies like TMA, and forming think tanks dedicated to reviving struggling units are also crucial strategies for industrial growth.

THE WRITER IS A STAFF CORRESPONDENT

Published in The Express Tribune, May 13^th, 2024.

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