Pakistan’s Large Scale Manufacturing (LSM) sector registered growth of 4.26% during the July-March 2012-2013 period, as compared to only 1.49% in the comparable period of last year.
According to the Economic Survey of Pakistan 2012-13, released here on Tuesday, production data received from the Oil Companies Advisory Committee (comprising 11 items), Ministry of Industries and Production (36 items) and the Provincial Bureaus of Statistics (65 items) revealed that each sector contributed 0.73%,1.35% and 2.18% respectively to the total growth figure.
Industry-specific data shows that many sub-sectors performed well over the period: the paper and board sector grew 21.97%; rubber products grew 17.61%; pharmaceuticals 16.35%; coke and petroleum products 13.31%; food, beverages and tobacco 7.30%; non-metallic minerals products 5.86%; and textiles 0.92%.
Some sectors, mainly those that are energy-intensive, recorded negative growth over the period. These include engineering products, which contracted 15.60%; wood products 18.98%; automobiles 11.84%; electronics 6.43%; fertilisers 5.03%; leather products 2.33%; and chemicals 1.08%.
The survey stated that manufacturing output rebounded owing to better gas and power supply to industrial units, coupled and supportive government policies – particularly with respect to the revival of Pakistan Steel Mills (PSM). A restructuring plan for PSM has been approved by the Cabinet Committee on Restructuring, under which PSM’s board has been reconstituted and a new CEO has been appointed. Its immediate needs have been addressed, and a bailout package of Rs14.6 billion had been granted to PSM in fiscal year 2013, stated the survey.
In addition, some industries like paper and board and steel production eased out of their energy constraints by investing in alternative energy arrangements. However, consumer durables continued to struggle with competition from imports, and the production of automobiles and electronics declined.
In the rubber products group, automobile tyres and cycle tubes were the main contributors to growth, both sub-sectors expanding 18.12% and 12.62% respectively. Growth in iron and steel products was on account of 45.53% growth recorded in the production of H/CR sheets/plates. Three steel plants were commissioned in Karachi during 2012, which are joint ventures with Saudi Arabia, Japan and the International Finance Corporation. These improved steel production in the country.
In the petroleum refining sector, higher margins improved the cash flows of local refineries. In addition, the partial resolution of circular debt also enabled firms to import more crude oil and increase capacity utilisation.
In the non-metallic mineral products sector, the cement subsector managed to grow 6.08% because of the timely release of public sector development funds during the period, which stimulated construction activities in the country.
The food, beverages, tobacco and textile group, which account for about half of LSM, posted modest growth during the period under review. The soft drinks sub-sector recorded 15.58% growth; juices, syrups and squashes recorded 14.05% growth; the cooking oil sub-sector grew 14.75%; and the blended tea sub-sector grew 18.99%.
Restaurants and fast food chains seem to be flourishing in the country, the data shows. At the same time, the demand for dairy products, processed foods and beverages has increased manifold, contributing to overall growth under the foods head.
In the textile group, sub-sectors which registered positive growth in production include cotton yarn (1.27%), cotton cloth (0.22%), knitting wool (14.89%) and woollen and worsted cloth (2.20%).
The presence of cheap smuggled goods in the market for electronics pushed out local manufacturing, with the production of TV sets, air conditioners, electric bulbs and electric tubes all registering a decline.
In the automobiles sector, 34.52% higher tractor production on account of a reduction in general sales tax could not arrest the negative growth in the sub-sector of buses, cars and jeeps and LSVs, which contracted 8.88%, 22.93% and 30.28% respectively.
Published in The Express Tribune, June 12th, 2013.
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