Blue economy: an unexplored heaven!

Hassnain Javed

January 31, 2019

 

 

Blue economy is the efficient use of sustainable ocean resources for economic growth, improved livelihood, jobs and ocean ecosystem. The concept is relatively new, it talks about the stewardship of the world’s blue resources and oceans. The idea goes beyond just utilizing marketing opportunities alone. In fact, the blue economy is a mechanism for securing and providing more intangible blue resources by carbon sequestration, and coastal resilience to facilitate and educate developing nations or ‘Big Ocean States,’as the Small Island Developing States (SIDS) sometimes call themselves. These SIDs are mostly dependant on marine life and diesel economy to survive and thus are the worst-hit by climate change and sea-level rise.

According to the 2018, report of the Commonwealth, the worldwide ocean economy is valued at a total of US$1.5 trillion per year. It is estimated, that by 2025, thirty-four percent of the total crude oil production in the world would come from offshore field. Currently, the World Bank estimates that eighty percent of the global trade is carried via sea routes and aquaculture is the fastest growing food sector. Moreover, approximately 350 million jobs world-wide are linked to fisheries. The concept of ‘Blue economy’ is very similar to the green economy, as it aids in the wellbeing of humans, social equity as well as concern for environmental degradation and scarcity of natural resources.

The downturn in Pakistan’s economy is steepening with the trade deficit rising to approximately 371.6 Billion in November 2018 from 246 Billion in the corresponding month last year. Although the exports have improved to 18.7 percent but the effect is marred by a jump in imports to 23.2 percent from the last fiscal year. Many debates have surfaced, regarding the worsening condition of the economy, since the Pakistani rupee has devalued against the US dollar. According to World Bank the inflation in Pakistan is expected to remain high till the fiscal year 2020. In such times of instability in the economy, adopting blue economy can reap unsurmountable benefits to Pakistan. A major opportunity lies in the forward plans of China to built oceans-based passages as a part of its Belt and Road Initiative. As a major recipient of this initiative under the China Pakistan Economic Corridor, Pakistan can capitalise on the maritime cooperation and mutually promote beneficial “blue partnerships” and forge a “blue engine” for the growth of this region. According to the Belt and Road Forum for International Cooperation held in May, three blue economic passages are already under way, including ‘China-Indian Ocean-Africa-Mediterranean Sea blue economic passage, will run westward via the South China Sea to the Indian Ocean, and link with the China-Indochina Peninsula Economic Corridor, and connect with the China-Pakistan, and Bangladesh-China-India-Myanmar economic corridors.

Makhdoom Khusro Bakhtiar- Minister for Planning, Development and Reform, said that CPEC project will facilitate socioeconomic development and poverty alleviation programs in the Gwadar region. Therefore, the subject was the topic of major discussions in Prime Minister, Imran khan’s recent visit to China. The creation of Gwadar would help Pakistan capitalize on its potential in building a blue economy. The government has planned new infrastructure projects like the New Gwadar International Airport, a vocational center, China-Pakistan Friendship Hospital and a host of socio economic uplift projects. Additionally, a smart city program by the name Gwadar Smart Port City is ready to set its course for transforming Gwadar, in a well-planned urban city. However, in order to fully transform Gwadar, into a sustainable blue economy more effort is needed in activities like fisheries, maritime transport, renewable energy and waste management.

One such opportunity underlying the concepts of Blue Economy sector is the sustainable harvesting of the living food resources, marine biotechnology and generation of fresh water beds, all of which requires a heavy amounts of investment. Along with fish farming techniques, an efficient shipping industry is essential for the safe, cheap and quick transport of goods. The International Maritime Organization (IMO), has launched a concept of Sustainable Maritime Transports which provides the building blocks of efficient and environmentally friendly techniques to develop the necessary infrastructure.

As stated earlier a concept of energy transition for SIDs can be revolutionary for Pakistan since they can play a vital role in reducing carbon emissions and pollution. Also considering the energy shortages in Pakistan, the fishing units would require large amounts of freezing units to store and transport the items. Therefore, green economy concepts would allow a development framework that would allow biodiversity and other ecosystem services. Some of the major blue energy resources are from the wind, wave, tidal, ocean thermal energy conversion (OTEC) and salinity gradients and biomass sources. However, offshore wind could be a major resource, generating approximately 6GW in 2012, with a possible rise to 175 GW by 2035.

As far as the solid waste is concerned the Waste to Energy (WTE) seems to be the most popular option for recycling, applied in 93.2 percent of the cases and biological treatment 6.8 percent. Composting, which is although the most cheapest organic method, is not feasible at a large scale. The reason why this method is particularly cheap is because composting produces an organic by product of a fertilizer that can be sold or used for residential or commercial purposes. Highly chemical or toxic solid mass like the wastes from hospitals has to be treated in an incineration plant before it can be dumped in landfills. However, the process is very costly with a price tag on average of $125/ton. Studies around the world prove that 95 percent of all solid waste could be recycled one or another way as mentioned above. Moreover, as compared to burning wastes, innovations which shape blue economy would provide thousands of jobs in Pakistan and revenue along the process, without compromising the environment.

Another golden opportunity for Pakistan lies in the concept of branded waste which is gaining attention around the world. For example, chip bags from Frito Lay are recycled into garbage cans and beverage coolers. Previously, companies used to hide their names from waste or recycled products but now it is a major social marketing highlight for big multinationals. Similarly, Pakistani companies can also dwell on the idea and utilize their resources to reduce costs and contribute towards the goal of a sustainable and green Pakistan.

Small is beautiful: revitalizing the SME sector of Pakistan

Dr. Hassnain Javed

January 25, 2019

 

 

In many countries around the globe, and in particular the developing economies like Pakistan, the governments are facing low growth in foreign investment, trade deficits and unemployment. With the increase in economic disparity, citizens are in a state of dissatisfaction with the current affairs of the state. Most importantly, there is a lack in the extent of globalisation and technology as compared to developed nations. Against this backdrop, the digital transformation and restructuring of industries in Pakistan is essential for promoting economic growth and providing a more inclusive globalisation. One such opportunity lies in developing the cottage industry or Small Medium and Enterprises (SMEs), in Pakistan.

Many industries ( like the cotton weaving, textiles, surgical instruments, carpets, leatherwear industries etc) rely on SMEs for the generation of new ideas or value addition in the current product lines. Pro-poor governments in the growing economies have introduced subcontracting policies to integrate the industries along their size and scope. One such example is of the automobile industry that has integrated almost 60-70 percent of its component part supply from SMEs. This is perhaps one of the best examples of efficient collaboration of large corporations with SMEs. Forward integration, with showrooms and repair shops are further examples of how large firms can cover the vast geography of the countries by the extensive network of small enterprises. Likewise, Pakistan can develop its own petrochemicals and mineral industries by collaborating to ensure that the benefits are not only reaped by Punjab or Sindh but also to underdeveloped regions of Balochistan and Khyber pakhtunkhwa. Such a move would provide inclusive growth opportunities, through interdependencies of the region.

The growth of cottage industries is imperative for the sustainable growth and development of the economy of Pakistan. Firstly, the cottage industry boosts economy by creating jobs in the market. Generally small firms are more labor intensive than larger firms that rely more on automation for reaching economies of scale. According to Pakistan Poverty Reduction Strategy Paper, SMEs have a huge potential for the alleviation of poverty in Pakistan after agriculture and construction of housing schemes. Secondly, SMEs have the potential for participating and creating previously unsought benefits of a globalised and digital economy. As inferred from the success stories around the globe major breakthroughs in technology are mostly brought about by innovative ideas put forward by SMEs. For instance, in China Small-medium sized enterprises (SMEs) contribute 60 percent of China’s industrial output and create 80 percent of its jobs. Breaking down the statistics, China’s Bureau of Statistics (CBS)’s 2013 report, revealed that approximately 97.9 percent of all registered companies are SMEs, that contributes to 53.4 percent of all assets in China and 62 percent of all it profits, building this amount to a whopping 4.26 billion Yuan. Moreover, the economic surveys show that SMEs also contribute to nearly 58 percent of the GDP and 68 percent of exports. According to the listing of SMEs in the National Equities Exchange and Quotations (NEEQ) system net profits have increased from about 26.29 percent in 2016. Additionally, their annual reports presented an increase over 25 percent of the annual business revenue.

Despite of the discovery of the scope of SMEs in Pakistan, the sector faces many constraints hindering its growth to the full extent. Some of these impediments include lack of skilled labor, energy crisis, poor marketing and management especially regarding exports and most importantly lack of financial capital. According to the World Business Environment survey conducted on a sample from 54 countries and 4000 SMEs, one of the major problems cited by the businesses was the lack of capital. Due to the small size of these businesses, the management lack economies of scope and therefore an information asymmetry which consequently increases the search and processing costs. Moreover, in some situations these costs may often exceed profitability of the business thus further creating panic in the investor’s mind. Mostly, banks also avoid extending small venture firms to avoid the risk of default hence further increasing the costs of credit searching for SMEs. The inability of these firms to provide a collateral renders the banks unable to identify the earning potential of the SME.

Recently, SMEs have also been seen contributing rapidly towards a green economy because small firms transition more quickly to more sustainable patterns of production and consumption. Following the examples of the Malaysia around 98.5 percent of business establishments in Malaysia are all SMEs. This totals to an amount of 907,065 establishments of SMEs in Malaysia which contributed to 36.6 percent of Malaysia’s GDP in 2016. In terms of geographical locations, Malaysia has set up most of its cottage industries of apparel and textiles, along the previously underdeveloped West Coast in Johor, due to the availability of cheap lodgings. Similarly in the case of China Pakistan Economic Corridor, the initiative intends to develop the west of China’s for an inclusive economic development of the country. These trends from developed economies may serve as blueprints for expanding Gwadar as a hub for sustainable growth of the often overlooked treasure that is Balochistan.

Once the scope of the cottage industry in Pakistan is realised the next challenge for the government lies in the need to fill the gap in the demand and supply of skilled labor in Pakistan. This can only be achieved through relevant industry experience to the new working class by providing them with internship opportunities and apprenticeship programs. Moreover, educational institutions and polytechnics should be advised to implement a revised curriculum which is relevant to business today and hire professionals from the industry.

Conclusively, Pakistan is recovering from a growth which was fueled by short term debt and declining investments. The economy is in a bad shape, and by the end of year 2018 Pakistan was almost on the verge of bankruptcy. Unemployment and poverty challenges to Pakistan are major setbacks for its vision of development in future. Especially the situation in Balochistan has always been of political and economic exclusivity with post-9/11 issues in Afghanistan. With the beginning of 2019, Pakistan would be entering into the the second phase of China Pakistan Economic Corridor which promises the start of an era of development for the province. However, in Balochistan doubts have started to ebb, with a cautious optimism. The government should focus on trade policies and industry development moving on from infrastructure that is inclusive of all the provinces in Pakistan. Large multinational companies are already interested in setting up industries in the automobiles, telecommunications, energy and electronics industry, but in order to truly tap the undiscovered potential of the people of Pakistan, promotion of SMEs would be integral. A well-targeted government action plan should be set in motion provided such interventions do not intervene with the private sector.

Applied entrepreneurship and regional connectivity

Hassnain Javed

January 19, 2019

 

 

 

Currently, the youth of Pakistan is facing exasperating challenges. According to a survey by the World Bank there is a need of about 600 Million jobs in the global economy over the next ten years, in order to retain the current employment rates. Moreover, reports from the International Labour Organisation reveals that approximately 36% of people amongst the unemployed are represented by the youth. Now talking about underemployment, more than 169 Million of the youth are paid less than US$2 per day, in the developing countries. Keeping these stats in mind, it is reasonable to conclude that the youth today is exposed to increased amounts of competition, making job search more difficult day by day. At the moment, Pakistan has a growing labour force of 1.7 million young people reaching working age each year, and the estimated unemployment rate is expected to rise to 8.6 million by 2020. This places a risk of exclusion, income inequality, reduced prospects and represents a challenge to Pakistan’s productivity and economic potential.

In this regard, ‘Youth Applied Entrepreneurship’ can play a pivotal role in relevance to job creation in Pakistan. Characteristically, applied entrepreneurship would encourage the development of new innovative technologies that would further give rise to productivity and efficiency. The platform acts a catalyst to transform economies and implementation of new solutions for increased profits. Instead of finding new jobs elsewhere, entrepreneurship would facilitate the youth to become self-sufficient and develop the skills of critical thinking, decision-making, leadership, teamwork and innovation-which would benefit them in all walks of life.

There are multiple advantages of youth driven entrepreneurial venture. Firstly, the creative expertise of the youth not only incorporates traditional areas of research but also unique selling ideas that lie outside the ambit of academia. Secondly, these young leaders have the ability to attract and extract new talent from their peers which further helps them in fostering a positive community. Lastly, a recent trend amongst young entrepreneurs of the world is the idea of ‘social entrepreneurship’- the main goal of their businesses is to create incentives for social and economic change. Apart from a profit motive, such a business focuses on addressing different social issues that exist in the country like malnutrition, infant death, education, environment etc.

Currently, the government is planning two sets of strategies: firstly, to provide interest free loans to the youth via university entrepreneurship development programs and departments and secondly, to provide equal opportunities to both the youngsters from rural and urban areas. The youth from rural areas that have the ability but lack the skills to compete are being given scholarships for short term courses at vocational institutes. Furthermore, targeted and merit based scholarships are at the heart of both these strategies. By utilizing the enthusiasm and talent of the youth the government would be able to tap onto the potential of Pakistan’s youth. Also, such initiatives would encourage the creation of small and medium enterprises that would in turn propel Pakistan towards a better economy.

One such initiative is the up and coming ‘Applied Entrepreneurship: Think and Grow International Conference 2019’ organised by the Pakistan Industrial and Technical Assistance Centre, under the Federal Ministry of Industry and Production, Government of Pakistan along with a support of academia-industry partners. This year young entrepreneurs are encouraged to submit their innovative ideas, research papers, case studies and projects with a societal impact. At the heart of the conference are five main themes: Role of Technical Vocational Entrepreneur Training (TVET) in Applied Entrepreneurship, Belt and Road Startup Accelerator Innovative Entrepreneurship, Opportunities and Challenges for Entrepreneurial Start-Ups at China Pakistan Economic Corridor (CPEC), Information Technology and E-commerce and lastly, Industry, Innovation and Infrastructure Entrepreneurial Ventures. Since the creation of Special Economic Zones (SEZs) under CPEC can facilitate the process of micro-investment in this region, by facilitating innovative entrepreneurial ventures at a small and medium size level.

This platform aims at guiding young individuals from a vision to venture. All participants would be invited to present their big idea and benefit from the expertise of top notch industrialist and successful entrepreneurs via a one-to-one mentorship process. Also, the platform would support the business ideas of the winning teams by awarding them a seeding fund. On top of that, industrial and academic research papers will also be presented and they will be award money for best research paper in every theme classified.
The idea behind the conference is to empower the youth all over the region to discuss interregional challenges and connectivity hurdles. Representatives from Russia, China, Turkey, Iran and Afghanistan are all encouraged to participate in the conference. The five themes of the conference thus reiterate the importance of development corridors like One Belt One Road initiative by China, and how the region can benefit by setting up entrepreneurial ventures along its route. In addition to generating new creative ideas and improving regional ties for the countries, the conference would also provide a shared platform for participating countries to delve in the global markets. The mutually beneficial assistance amongst nations can be in the form of shared knowledge, transfer of technology, component parts or supply partnerships. Therefore, such cooperation would also enable big Multinational companies to identify the talent of youth and provide them with business and job opportunities. This environment of conductive learning would trigger a snowball effect and enable other corporations in the region to reap benefits from the advancements in technology.

Conclusively, the tool of youth employment is of paramount importance, for stimulating the growth in the region’s economy. The reason for this spurt is that entrepreneurs not only bring welfare for themselves but also the municipality, country and region as a whole. Self-employment brings the youth more satisfaction and job security for their peers as well. Most importantly, such ventures can stimulate economic development in the rural regions where the youth can guide the natives to utilize their locally produced materials into finished goods for domestic use and consumption.

Given the right opportunity and mentorship, the youth has the ability to deliver outstanding performances. These pathways to progress would especially be beneficial by enabling them to thrive in today’s economy. Thus the objective of such a programme is essentially to reduce youth unemployment and increase sustainable economic development through entrepreneurship and leadership training.

Directionless Directions!

Dr. Hassnain Javed

January 14, 2019

 

 

The issue of privatization of industries in Pakistan has been a long standing debate. One view point of economists is that running industries and business is not the task of the government. Contrary to this belief is that privatization means that the government is no longer eligible to fulfill its responsibilities and has hence transferred them to the private sector. The idea is not far-fetched since the main motive behind a public-owned business is the welfare of people where services and products are offered free or at a subsidized rate. In contrast, the private sector is driven by profits and monetary benefits.

Generally, the trends in privatization of industries in Pakistan show that the rich and elite have always benefited from this policy however, the working class has always suffered. Despite of government promises, workers have lost permanent jobs and they have not been given legal protection against downsizing.
Although there have been no recent studies on the impact of privatization on Pakistan’s economy but a 1998 report by the Asian

Development Bank revealed some shocking results. Statistics show only ’22 percent of the privatized units performed better than in the pre-privatization period; 44 per cent performed the same whereas approximately a third (34 per cent) performed worse’. In light of the mentioned results many economists argue that the privatization did not contribute to the growth of the GDP [gross domestic product], investment and employment.

Keeping in view the case of KESC privatization, Dr Akhtar Hasan Khan, former federal minister called it an ‘unmitigated disaster’ and ‘the biggest blunder’ of Pakistan’s economic policy. He argues that the initiative failed due to the fact that the government had invested 147 Billion rupees during 2002-2010. Out of which 109 billion were given before privatization and 38 billion rupees after its privatization. Moreover, Water and Power Development Authority was instructed to supply 700MW to KESC despite outstanding payments of 81 billion rupees. The motive behind privatization has been to rid the government of the loss making company, however the funding to pull the company off debts continued even afterwards.

Another lesson for policy makers lies in the case of the privatization of Pakistan Telecommunication Limited during Pervez Musharaf’s era. The company was sold to Dubai-based Etisalat by giving away a 26 percent stake with a full managerial control. The decision makers saw PTCL as incompetent and outdated but a few knew that before the privatization PTCL was ranked amongst the biggest telecoms in South Asia. Even looking at its financial position at the time of its privatization in 2005 the company reported revenue of 84 billion rupees, with earnings before interest, tax and depreciation of 54 billion. But due to government’s lack of a long term strategy, the company was sold out instead of using these funds to invest in telecom abroad. What is even worse is the fact that after almost 10 years, the government still has not been able to recover the 800 Million dollars in outstanding payment and in fact, itself paid the amount it had received in technical fee and other charges.

Previously the government had promised that a privatization policy would reduce debts on the Pakistan economy by improving the performance of tertiary and banking industry. The improved performance was expected to increase quality, reduce costs and accelerate production. Many believed that this policy would exacerbate foreign direct investment, local investment and export but the reality has been far from expected. Debt tolls have accelerated to record levels and there has been an accumulation of wealth in a few hands. The prices of commodities and prices have risen to the point that even the basic necessities are out of the reach of a common man in Pakistan.

Looking at Britain’s example one of its government’s largest contractors Carillion, announced bankruptcy, leaving 20,000 of its employees without any jobs. The company is £1.5 billion in debt. This is what happens when governments outsource the tasks what should have been under their control. Similarly, in the United States the system is heavily privatized with $3.3 trillion being spent in 2016.

Currently, the government claims to have been following China’s model of economic development however, if that is true then why there are new talks about privatizing state owned companies. Another thing that must be noted over here is that a common thing amongst these world renowned Chinese companies like Temasek (which also controls majority shares in Singapore Airlines and SingTel), China National Offshore Oil Corporation (CNOOC), Haier, Emirates airlines, Dubai Ports, and Petronas (Malaysia), is that they are wholly or partly state-owned. The reason behind this is that China harbors its country’s assets with a long term vision towards success and strong desire to produce national winners.

After analyzing at all the good, the bad and the ugly of the policy of privatization in Pakistan and around the world it is safe to conclude that privatization creates a divide in the society where the elite are encouraged to pay more and the working class instigated to opt out of even the basic of necessities. Critics also argue that state owned monopolies have been conveniently turned to private monopolies as the transfer of wealth was used to enrich only certain ruling elites. Therefore, the history of privatization of industry in Pakistan has been littered with corruption allegations, political patronage, manipulation and cartelization. Thus, public-private partnerships should be encouraged but to an extent that masses benefit at large

Pakistan Economy 2019: A Beacon of hope!

Dr. Hassnain Javed

January 08, 2019

 

 

 

Currently, Pakistan is recovering from a growth which was fueled by short term debt and declining investments. The economy was in a bad shape, and by the end of year 2018 Pakistan was almost on the verge of bankruptcy

After taking office, the new government was faced with the challenge of the devalued currency, increasing import bills and huge amounts of debt obligations. Therefore, there was a need for radical reforms in the economic policy of the county. The first agenda was to service the debt obligations of USD 9 B due in the year 2019 and second, to reduce current account deficit to USD 11-13 Billion from the current 19 Billion. Also the last government’s fiscal deficit of 6.6% is not sustainable and needs to be revised.

Fortunately, the government has already began to set their plan in motion, by instructing the State Bank of Pakistan to adjust the exchange rates from 26% to negative figures and lowering regulatory duties on non-essential items. This move has dramatically reduced Pakistan’s import bill but, some critics argue that the decline was a steady decline that might hurt the market sentiments. However, such a steep decline was essential considering that a real adjustment has not been made since four to five years. The exchange rate decline has also fuelled remittances to 12.5% and improved exports. The government is also planning to launch a program in 2019 to encourage overseas Pakistanis to send their remittances via a formal channel by promising them improved speed, security and reduced administrative issues that are surrounding the formal channel procedures at the moment. A good foreign policy has also supported Pakistan in securing fruitful bilateral relations like deferred oil payment facilities from countries like United Arab Emirates and Kingdom of Saudi Arabia. Generally the focus of this government is to raise capital by encouraging foreign direct investment in the country, fostering exports and productivity rather than imports and consumption. An increase in exports would help Pakistan in gaining self-sufficiency and reduced reliance on debt financing. Previously, the governments were funding their projects from the withholding taxes of the entrepreneurs, which had significantly hurt their business. Reducing exchange rates to actual rate has therefore enabled Pakistan to boost its export trade, and release tied up working capital of the businessmen.

Moreover, in order to further encourage business in Pakistan the government has been making efforts to reduce the costs of energy. For instance, the LNG costs have reduced to a regional average rate of USD 6.5 per MMBTU and the electricity tariffs will be notified at 7.5 cents/KWH for the export sector.

Despite of these positive economic indications, the challenge is not over for the government yet. As mentioned earlier, the government has increased interest rate which is generally followed by a decrease in investment since the cost of borrowing increases. This effect will contradict the current government’s agenda to boost investments. However, the action was a necessary evil, since inflationary pressures from the rupee devaluation made it inevitable in order to control prices. It should also be noted that the new 4% rate is approximately the average rate prevalent in the whole region. Moreover, since the move has been taken, there was a 400% increase in private sector’s credit take off. This can be attributed to the fact that the overcrowding of the provision of loans from the previous government was cleared after the interest rate increase.

Other challenges currently looming over the administration are the excessive taxes and security problems. The security issue has been improved by the efforts made by the Pakistan Army in the mission ‘Zarb e Azab’. However, the problem of taxes, still remain very relevant. According to recent statistics, Pakistan is ranked at the 136th position in the ‘ease of doing business’ index, and 173rd in terms of complicated tax systems. In order to cater to the tax problem, the government has set up a Tax Reform Implementation Committee in order to separate FBR duties from Tax Policy Division. This move would reduce costs of doing business in Pakistan, and encourage businesses and SMEs to operate freely. The power of government departments are proposed to be redistributed in order to reduce redundant and precarious steps that businesses need to get through in order to get government approvals.

With the beginning of 2019, Pakistan would be entering into the second phase of China Pakistan Economic Corridor. This means that the government would focus on trade policies and industry development, moving on from infrastructure. Large multinational companies are already interested in setting up industries in the automobiles, telecommunications, energy and electronics industry, in order to tap the undiscovered potential of the people of Pakistan.

Conclusively, the prompt and timely measures taken by the new government has impeded the immediate crisis of the balance of payment however, much more effort is needed to bring the proposed plan to life. Not only macroeconomic indeed – microeconomic – indicators have to be stabilized in order to encourage steady foreign direct investment in Pakistan.

Amendments in the role of Pakistan ministries: a viable soultion

Dr. Hassnain Javed

January 04, 2019

 

 

 

Pakistan is an economy which needs to experiment with new themes and policies in the existing ministerial structure and departments to face both the domestic and international competition. The main mandate – indeed cure – to major economic ills of the economy is to focus on export, export and only export based policies and reforms. For that it is suggested to have industrialization and structural transformation with the main policy goals of creating markets and access to trade with product diversification. This policy should primarily focus on import substitution, infant domestic industry protection and the sector development especially the promotion of small scale and cottage industry which will gradually lead to selective opening of competitive environment. But, for the implication of the stated policy it is required to have high political legitimacy to form national development strategies.

Once, the above policy is achieved then Pakistan industrial sector could move towards stabilization, liberalization and laissez faire features. This will lead to the main policy agenda of market led modernization and limit the government involvement. It will actually lead to implementation of more horizontal policies with the Foreign Direct Investment (FDI) opening and forming the base of having exposure to competition. Under this scenario favorable policy environment would be to have low political legitimacy and limitations to policy space through international commitments.

After achieving the first two goals Pakistani Industries can further move towards modern industrial policies by having the knowledge economy and Global Value Chains (GVCs) with key policy agendas of specialization and increased productivity. Additionally, there would be a need of sustainable development that will capture the policy goal of modern industrial ecosystem development. It will translate into technical capabilities developments, innovation in production, learning economy, sustainable goal development sector; public-private knowledge-tech-development institutions, acquisitions of foreign technology and most importantly will provide a platform for entrepreneurship development. This stated policy will require having more policy space in new fields with more emphasis on inclusiveness.

The major amendments are proposed keeping in view the emerging and developed economies like China (Merger of Ministry of Industries and Production with Ministry of Science and Technology);Malaysia (a separate branch for International Trade), Europe; and Japan (A strong liaison between Ministry of Economy, Trade and Industry).

In China, the industrial catalogue is the policy transmission method being utilised by the government to be fully integrated by 2025, in the lower level of the institution as well.

Moreover, the new ministry can serve as a guide for the construction of information system to capitalize on the capacity cooperation policy to develop Pakistan’s global reach; and Internet of Things (IOT) and cyber security upgrades.

In Malaysia, the Ministry of International Trade and Industry is responsible for the international trade development, investment and productivity in the industry, as well as, the management of small and medium enterprise, development finance institution, halal industry, automotive, steel, strategic trade. The vision of the ministry is to “make Malaysia the preferred investment destination and among the most globally competitive trading nations by 2020”. (Portal for the Ministry of International Trade and Industry) Governments all over the world, are employing market intelligent Business Process Softwares, as a part of their Strategic Plan to enable the industry best practices in their manufacturing units and expedite the much-anticipated Fourth Industrial Revolution.(Portal for the Ministry of International Trade and Industry).

Similarly, many countries in the European Union generate and implement, macroeconomic policies for the growth of its overall economy. Europe has created a strong liaison between its Ministry of Economy, Trade, Industry and Business Environment, thereby employing the use of market economy principles and supporting economic agents’ initiatives, to manage the mineral resources, energy, trade, small medium enterprises, cooperatives and the business sector.

During 2001, the Japanese Central Government Reform Ministry of International Trade and Industry has also merged with agencies from other ministries related to economic activities, such as the Economic Planning Agency. The move has proved to be quite beneficial as the ministry has since been transformed into a “human resource agency” as per the leaders of politics, business and academia. The Ministry of Economy, Trade and Industry mission is to “develop Japan’s economy and industry by focusing on promoting economic vitality in private companies and smoothly advancing external economic relationships, and to secure stable and efficient supply of energy and mineral resource.”

Following the model used in Europe and Japan, adopting a similar policy in Pakistan, will lead to effective strategic policy making, regulation and implementation of internal market development. Therefore, it will help enable the internalization of economic growth by defining the National Strategy for Competitiveness, National Export Strategy and development of support scheme for the increasing competitiveness of industrial products.