Q-39= Why industrial sector of Pakistan is backward.
The industrial backwardness is due to the following reasons: -
REASONS OF INDUSTRIAL BACKWARDNESS
1 Shortage of investment capital
2 Shortage of infrastructure facilities
3 Lack of technical knowledge
4 Lack of by-product and subsidiary industries
5 Insufficient spare parts and repair workshops
6 Racial disturbances and political instability
7 Non-cooperative behavior of general public
8 Lack of industrial research
9 Poor and unskilled level of management
10 Over capitalization
1. SHORTAGE OF INVESTMENT CAPITAL
Establishment of industries requires huge capital whereas our businessmen do not
have sufficient funds at their disposal. There is non-availability of industrial
finance. The procedure and requirements of loan giving institutions are very
complicated and their formalities are too much. They demand properties
documents for mortgage purposes in order to have security of their funds. Since
such formalities cannot be fulfilled hence industries could not be easily setup in
the country.
2. SHORTAGE OF INFRASTRUCTURE FACILITIES
Basic infrastructure facilities for setting up of industries are not available in the
country. For industrialization roads, railways, electricity, water, gas, etc. are a
must. Transport and communication facilities are vital for progress, development
and expansion of industries but the Govt. does not adequately provide these.
Whatever transport facilities are available they are very expensive. Power supply
is short and expensive and the re are too much breakdowns in its supply, this
increases cost of production, hence prices of final product increases.
3. LACK OF TECHNICAL KNOWLEDGE
Workers are not skilled and trained. They do not know how to operate machines
properly. They are inefficient and incapable for doing jobs in industrial sector.
They are neither hardworking nor they adopt industrial way of life. Their
background is agrarian and they want to go back to their villages after earning
some money from industries of the cities. This results in the reduction of output
and increase in cost of production of final goods.
4. LACK OF SUBSIDIARY & BY-PRODUCT INDUSTRIES
In order to reduce cost of production a policy of specialization should be adopted
and different processes of production should be carried out in different industrial
units. This is however not done in industrial sector of Pakistan rather the entire
process of production from the beginning up to the final product is done in one
factory. They produce raw material, semi-processed items and the final finished
goods. This policy is a negation of specialization. Similarly there is shortage of
by-product industries. By-product are those industries which use waste material of
large industries as their input and produce final goods. Automobile industries
should be divided into spare parts industry and tyre and tubes industry. This
results in the reduction of cost of production of the main automobile industries. In
Pakistan there is short of by-product industries.
5. INSUFFICIENT SPARE PARTS & REPAIR WORKSHOPS
All most all industries of our country are based on imported machinery. In case of
any break down spare parts are not easily available whereas workshops do not
exist to repair them quickly. The production stops till the machines are not put
into operation, which increases cost of production of final goods.
6. RACIAL DISTURBANCES & POLITICAL INSTABILITY
Industries are located in main cities whereas labor force from different regions of
the country to work. Due to difference in regional languages, casts, traditions and
race they make their own groups. These groups do not work in harmony rather
they clash with each other on petty matters. This results in strikes and lockouts
and industrial disturbance, which ultimately increase cost of production. Similarly
there is no political stability in the country. No firm industrial and economic
policy is adopted. Every time when Govt. changes the economic and industrial
policies change hence businessmen are always hesitate to invest in industries.
7. NON-COOPERATIVE BEHAVIOR OF GENERAL PUBLIC
Pakistanis are generally poor people their income and purchasing power is very
low, therefore their demand for industrial goods is also very low. Those people
who have purchasing power, do not support local industries due to their
demonstration effect, they prefer to purchase and use the imported industrial
goods. Thus the narrowness of demand hampers the development of industries
8. LACK OF INDUSTRIAL RESEARCH
Industrial research results in the new methods and techniques of production of
good quality products at the lowest cost. Local raw material is used for
production of goods. Since there is dearth of industrial research in the country the
improvement in production techniques and the use of local raw material could not
be possible. This ultimately increases the cost of production
9. POOR AND UNSKILLED LEVEL OF MANAGEMENT
Industries are not managed, supervised and controlled by the experienced,
talented and professional persons. They lack quality of decision-making and
leadership. Some time delay in decisions increases cost of production and industry
suffers a lost. There is also lack of marketing and industrial consultancy firms in
the country who could guide and advise prospective investors for setting up the
gainful and profitable industries.
10. OVER CAPITALIZATION
Industries of Pakistan are generally based on the imported machinery and raw
material. Industrialists not only import machinery but they also import excessive
quantity of spare parts and raw material so that they may not face any production
problem due to non-availability of spare parts and raw material. This situation of
over- stocking results in capitalization of funds that ultimately increases cost of
production and hence prices of final products.