Wednesday, 20 July 2011

Role of private sector in the development of industrial sector in Pakistan or Describe the ups and down of private sector in Pakistan

Pakistan's economy is a mixed economy. The private and public sectors are walking side by side. If we examine history of Pakistan, we will find that private sector has played very effective role in the development of industrial sector.During the period of 1947-67 the private sector share in the investment was very encouraging in the 2nd five year plan the performance of private sector was appreciated and it is considered the golden period of industrial development. The country became self sufficient in most of the industries with the help of private sector. In order to encourage the private sector government of Pakistan also provide various facilities during 1947 to 1965.
1. Government provides tax concessions to the private sector.
2. Protection was given to infant industries against the foreign competition.
3. To provide basic facilities to the private sector ten industrial estates were set up.
4. Export Bonus Scheme was introduced to increase the exports.
5. Import licenses were issued to private sector to import machinery.
6. The commercial banks and insurance companies also helped the private sector.
7. Export processing zones were set up at Karachi and Lahore.

Downfall of Private Sector :-
In 1972, government of Pakistan nationalized the ten basic industries. This step of the government discouraged the private sector and it reduced the private investment. In 1970-71 the private investment was Rs. 1358 million. While in 1976-77 it decreased up to Rs. 650 million. Following were the main causes of its downfall.
1. The industrialist families were disgraced.
2. Fear of further nationalization created unrest in the private sector.
3. The nationalized industries were not paid real compensation
4. The social and political unrest reduced the level of private investment.
5. Fear of nationalization and political unrest discouraged the foreign investors.
6. The government devalued the currency up to 131%. It increased the cost f imported machinery and discouraged the private sector.

Revival of Private Industrial Sector :-
The government of Late Mr. Zia-ul-Huq adopted various measures to revive the private industrial sector.
1. The government adopted the denationalized policy to encourage the private sector.
2. For underdeveloped areas government announced the tax holiday for five years for the new industries.
3. Two heavy industries were returned to the former owners.
4. The government also issued ordinance for the protection of private investment.
5. The government also issued the industrial investment schedule for the guidance of private investment.
6. Overseas Pakistani were allowed to import machinery without custom duty.
7. There was also exemption from official sanction for industrial investment up to Rs. 10 million.
8. A tax free industrial estates around Lahore has been set up for new industries.
Due to these measures private sector had been encouraged but still industrialist is fearing from the new government policy. Tax survey has also created panic.

Fiscal Concessions in the 7th Five Year Plan 1988-1993 :-
In the 7th five year plan government has decided to allow the establishment of private commercial banks to promote industrial sector.
All the country is declared a tax free zone for the next four years for new industries. This concession is for eight years in the backward areas.

Budget :-
In present budget liberal policy is adopted for the private industrial sector. One window system has been started to obtain the various infrastructure facilities.

Present Govt. Policy :-
The present government has also assured the private sector that there will be no more nationalization. The government has also decided to provide various incentives to the private sector. The government has also allowed the establishment of private investment companies and banks. The foreign investors are also invited for investment.
We hope that now private sector will play its role more effectively without the fear of nationalization. Privatization process is continue to privatize the various units.


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