Innovation
in informal sector: Lost opportunity to industrialize indigenously (JR120)
Introduction
Pakistan since its inception in 1947 has
been focused upon nation building and security issues. This mostly because a
large powerful aggressive neighbor presented real or imagined threats ( real I
would say as the bad boy of South Asia , India, did plan , mastermind and
actively participate in the separation and creation of Bangladesh, Indians
have not given up their quest to
destabilize Pakistan and have interfered in Baluchistan and elsewhere) This attention upon survival has meant that
other aspects have been ignored, development issues and economic process has
received less than deserved attention. This has resulted in an lost
opportunity. There was and still is considerable ability and talents in the
country and had these been recognized, nurtured and assisted Pakistan may well
have been able to industrialize by means of locally developed technology. This
opportunity still exists and can be harnessed to indigenously industrialize and
modernize.
Early
history
Pakistan did not process much industry,
Pakistani agriculture produce was processed by industries located in Bombay and
Ahmadabad or was exported to England for processing. There was however the
famous Mughalpura Railway works (MRW) which were at that point in time state of
art. This facility was manned by Pakistani talent and had ability to
manufacture machinery and structures. By 1940 MRW had over 4000 machine tools,
some were more advanced than any other available, in the sub continent. there
were about 1500 machine tools in workshops in Sukkar, Karachi and
Rawalpindi Bridge making and fabrication
facility was developed at Jhelum, which provided structures for many bridges in
the sub continent railway system..Even more importantly these works were manned
by Muslim technicians and workers and were subsequently joined by Muslims who
migrated to Pakistan after 1947 this ironically was the result of the strict
caste system followed by the Indian society. The lohars or blacksmith was
almost exclusively Muslim. This is why Muslims had an -edge over Hindus in the
engineering profession. . At partition about 14000 skilled workers were
available in the Railway engineering system in Pakistan.
BECO
The company was named Batala
Engineering Company after the name of C.M. Latif's home town. During the year
1932 the idea of what is now known as BECO or PECO first flourished in Latif's
mind (he was 25 years old).
When it was certain that Batala
was going to the Indian side Muslims started mass exodus from the town. Though
Latif had no difficulty crossing over to Lahore, long lines of people on the
small road from Batala to Kalanor could be seen. Some were also trying to cross
river Ravi at that point. There was a horrifying blood-bath through which the
Muslims of the Indian Punjab had to go. Batala and its surroundings were struck
with a greater fury as it was a Muslim majority area which was treacherously
handed over to India under the Radcliff Award. The hearts and homes of
innumerable innocent Muslims were destroyed ruthlessly. They were attacked
again and again as their refugee caravans trekked towards Pakistan for security
and safety. The distinction was only between the frenzied killers and the
helpless victims. BECO engineers, workers, Muslim citizens and villagers around
Batala became BECO's evacuation concern. This is how the BECO family came to
Pakistan leaving all their machines, plants and financial assets behind.
BECO
begins from scratch.
From here began the second phase
of BECO's development. It was a beginning from scratch all over again. When the
family arrived in Lahore, Latif fell sick. He was bed ridden with fever for ten
days. As soon as he was well, he went to the Mall road branch of Bharat Bank.
He had an account with their branch at Batala. At the very moment of his visit,
the bank staff was loading their registers, etc, into a lorry to take them to
Delhi. The manager could only offer Mr. Latif a cheque for Rs 20,000, which
could be encashed at Grindlay's Bank in Karachi. He sent it promptly to brother
Siddiq for encashment. That is how they started again. After a few months they
were allotted a house and also the Mukand Iron Works at Badami Bagh. This was
located almost in a bed of water as the Ravi had over-flowed and the flood
waters had reached up to the General Post office. At that time there were no
bunds around the city of Lahore.
The business of the company was
commenced by purchasing scrap. The first wagon arrived with cast iron and old
railway sleepers. It was bought from a scrap dealer Mr. Maquand Lal. The rate
at which the 20 tons of caste iron was between Rs 20-22 per ton (in September,
2005 the rate of this commodity in Lahore, was being quoted as Rs 20,000/- per
ton, giving an inflationary ratio of almost 1:1000).After much hard work the
company's works at Badami Bagh became a beehive of manufacturing activity.
BECO capability at time of nationalization
By the time BECO was nationalized in 1972
BECO had developed capability to manufacture: bicycles, pumps, diesel engines,
cement mixers, lathes and other equipment and machine tools. BECO also was able
to export some of their products to the developing and developed world. At that
point in time BECO had a team of trained engineers including foreign engineers
and about 6000 trained workers. BECO was
manufacturing a variety of metal engineering goods including various types
of machine tools, engines, pumps, structural’s, textile looms, agricultural
implements, etc. in Badami Bagh Works. BECO was manufacturing bicycles,
electric motors and heavy structurals at new works at Kot Lakhpat
Sharif was born in 1919.[Sharif
was born in a small village in Punjab province near Amritsar (now in the Indian
part of Punjab) . In 1936, the family relocated to Lahore, the then capital of
Punjab, for business reasons. With his 6 brothers, Mian Sharif founded a
foundry in 1939 , which was gradually developed into a large corporate empire.
His operations became the nucleus of the steel company Ittefaq and Sharif
became the largest industrial tycoon in the country. Unlike Mr. Latidf Sharif
was not educated as an engineer but He acquired the services of a German
engineer at a very high salary, who managed the establishment of the steel
works the family owned.
Industrial activity in Punjab
The earliest known production of
machine tools in India was in 1890, workshops in Punjab had started to
manufacture machine tools. The diesel engine manufacturing industry made a
beginning in 1900. Other products manufactured were : machine tools; electric
fans(Muhammed Din) ; surgical instruments ; cinema projectors (Shafi) ; flour
grinding machines ;Other notable products were : cane crushers(Ramzan and
Subhan). Fly presses (Ilam Din of Lahore) ; oil expellers (K.B>Chisty and
Sons)Diesel engines ( in 1920 Abdul Majid); carding engines; ginning machines
rice hullers . When Pakistan came into being there were : thirteen machine tool
manufacturing units ; sixty diesel manufacturing units ; four fan manufacturing
units ; one cinema projector manufacturing unit; ten surgical instrument
manufacturing units ; and about twelve units manufacturing a number of products
Surgical Instruments
Scottish surgeon broke his instrument
in 1908, this was repaired by a lohar from Kotli Loharan, near Sialkot, The lohar
was commissioned to repair and manufacture these instruments. The industry started
and slowly shifted to Sialkot.
Capability
at Partition
Pakistan inherited a significant number of
manufacturing units manufacturing equipment and products that were competitive and
more importantly a large number of engineers, technicians and workers who was
skilled and trained. This was a very significant legacy.
Opportunity
squandered
The Pakistani leadership was clueless as far as
economic development was concerned and the possibility of utilizing the
manufacturing industry and skilled professional never entered into the
political plans for Pakistan. PIDC (Pakistan Industrial Development
Corporation) under Ghualm Faruque did manage to partially industrialize the
industry but after he left PIDC went into stagnation and eventually became
totally ineffective. President Ayubs government also made efforts, which were
successful, in developing the industrial base (most was the result of the green
revolution which gave a surplus to the farmer who diversified into small
implement manufacture) . The Bhutto government with their nationalization
killed most industries, BECO (now PECO) never returned to its former glory, and
other industries that were taken over discouraged their owners who refused to
invest in Pakistan anymore.
Government Failures
The Government could have helped by setting up training
institutes and by establishing research facilities. Technology appropriate to
the country could have helped .Few, largely ineffective steps were taken, but
by and large the small industry was left to its own, even foreign exchange earning industries such as cutlery, surgical
instruments and sports good was provided with little assistance. These and
other industries progressed almost entirely on their own.
The diesel industry
could not survive, diesel engines demand was for high speed engines, the conversion
required investments which the small manufacturers could not afford .The last
nail was driven by the labor reforms of 1972 that completely discouraged the
struggling small diesel manufacture owners, who eventually closed down and this
aspect of our manufacturing niche went into terminal decline.
The electric fan industry
did not devolve into a large export oriented section of our industrial
assets. With a little investment and
training Pakistan could have developed into a fan export hub. Investment and
training could have assisted this farm industry to evolve into a significant
electric motor manufacturing player.
The surgical
instrument industry performed brilliantly, but this was not due to any
government assistance, they had no assess to bang sector funds and were able to
survive and grow on their own. Germen and Dutch help was made available though,
but this resulted in reverse technology transfer as the technology was passed
on to surgical manufacturing industry in Ludhiana in East Punjab India.
The Darra Adam Khel arms industry was self developed with no assistance, help in form
of testing facilities, metallurgical knowledge, testing facilities would have
enabled this sterling effort to blossom into a export oriented industry
Bicycle
industry
blossomed and Pakistan was able to produce a large number of bicycles in small
manufacturing plants around Lahore and elsewhere. Pakistan could have emerged
as a bicycle exporting country but this opportunity was squandered. Instead the
technology -was stolen by Indians who managed to establish Hero Industries in
Ludhiana, India.
Proficient pickup was developed
during the mid-1980s, by a local engineer Mr. Khalil ur Rahman (late) and was
Pakistan’s very first locally assembled 1,000cc pickup. Proficient trucks were
as good as most of the foreign brands and were cheaper as well. It competed in
the small pickup and medium truck market, primarily against the Suzuki. However,
the Proficient project suffered badly due bureaucratic hurdles and lack of
support from the government, which then introduced an untimely policy of
concessionary rate on CBU imports of Suzuki pickups (then known as ‘Ravi’ ), same capacity as the locally conceived
Proficient The problems faced by the
manufacturers of the Proficient, the country’s first locally produced
automobile, are typical of those faced by other entrepreneurs in Pakistan —
proving yet again that a bureaucracy committed to red tape-ism and inefficiency
is the biggest deterrent to industrial growth and self sufficiency From a
distance the pickup looks like any one of the many Suzukis that ply the roads
of Karachi. A closer inspection indicates that the headlights and front grill
are slightly different. It is only after the proud manufacturer lifts up the
front seat to reveal the engine hidden beneath, that disbelief turns to awe at
the boldly lettered ‘Proficient’ that proclaims the vehicle’s name. Despite a
number of advertisements in the press, very few people actually realize that
this vehicle has been manufactured entirely in Pakistan. “Speaking from his
Winmark Industries office in PECHS, however, the manufacturer of this vehicle,
Mr KhaliIur Rehman, sounds a little unenthusiastic about showing visitors
around his factory in the remote North Karachi industrial area. He keeps saying
that most people are quite taken aback when they see the primitive setup in
which the automobile is manufactured. Indeed, after a grueling journey through
city traffic and the narrow lanes of the katchi abadis, the factory is still
a quarter of a mile away, without even a dirt track leading up to its
entrance.” Mr Rehman is no longer alive
but his sons carry on with his work.The factory is a two thousand yard plot
with a boundary wall and a three storeyed, unpainted brick structure in the
middle. The front courtyard could easily be any one of a thousand denting and
painting shops that litter the city. A chassis is cut and welded in one corner,
while the shape of the driver’s cabin is hammered out in another. All the
moving and lifting is done manually, and the rest of the work is also
accomplished without the use of any tools that are more sophisticated than a blow-torch.
The makers of Proficient pickup van also developed a small car, 800cc, but they
were not given permission to manufacture this at all.
Pakistan
was the the First Islamic Country in the world which made a 4 Wheel Drive Jeep
of its own in late 60's called NAYA DAUR
in collaboration with WILLIS jeep. Pakistan was the First Islamic Country in the world which was about to
manufacture its own Motorcycles in
early 70's with the collaboration of JAVA motorcycle but the process was soon abandoned.
Pakistan was the First Islamic Country in the world which had made its own
prototype Diesel Engines by the
Lahore based company called BECO
(Battala Engineering Company. Pakistan really was the First Islamic Country in
the world which actually made a Motor Car of its own in early 70's with the
collaboration of SKODA Motors. It was named SKOPAK. The prototypes had been
made, the production was about to be started soon, but alas. This was not to be.
During the 195 war the Army realized the need
for locally manufactured vehicles. An EME Officer took up the challenge. A
Karachi based importer of “Jeep” had started assembling these vehicles, he was
invited to undertake assembly of these vehicles from locally manufactured
parts, he agreed .and was given the order to manufacture four vehicles, called NISSAN. IN about three years some if
these vehicles were assembled , these were tested and finally 115 prototypes
were manufactured .All expenses were borne by the contractor, each vehicle cost
Rs. 27,500 whereas the imported Jeep had a cost attached of Rs., 44000.J.A
Rahim the then Minister unfortunately put a stop to this and the project was
wound up.
Ice making plant were manufactured in Pakistan these were used by cold storages and ice making plants, now
defunct MAS were manufacturing these in Lahore . Air conditioning plant manufacture was started in 1980s in
Rawalpindi, these were even exported. Haji Shafi was able to manufacture a automatic loam, this was tested and
found to be as good as imported loams.
Present
Status
Rising demand for mist fans on the
international market has helped Pakistan earn at least 18 per cent more foreign
exchange from exports during 2016-17 as compared to a year ago. the
number of electric fans exports from
Pakistan has decreased by 4pc, but in terms of market value the share has
increased by some 17.96pc in 2016-17 as compared to 2015-16. According to the data issued by
Pakistan Bureau of Statistics, as many as 1.273 million fans were exported
during 2016-17, highlighting a 4pc decrease as compared to 1.326 million fans
in 2015-16. However in terms of
value of these exported fans, the country earned foreign exchange worth $30.168
million (Rs3.15 billion) as compared to previous year’s value of $25.681m
(Rs2.678bn). United Arab Emirates has imposed restrictions on Pakistani fans to
meet European standards and this could be a reason for decline in quantity, he
added. Pedestal fan exports have
increased, particularly mist fans that spray water in the air leading to a
cooling effect. Pakistani mist fans are sold of $90 per piece as compared to
normal pedestal fans which are priced at around 20 dollars in the global
market, he said. Price of
Pakistani fan is higher than the Chinese ones but these are also more durable
and heavy duty in terms of quality, he explained. . The turmoil in Yemen and
Iraq for the last few years has also been a cause of decline in the export of
Pakistani fans. These countries have always been a good market for
Made-in-Pakistan fans
Surgical goods and medical instruments worth US$ 221.298 million were exported from the country
in first seven months of the current financial year as compared the
corresponding period of last year. During the period from July-January, 2017-18, the exports of medical
goods and surgical instruments grew by 15.27 percent as above mentioned
commodities worth $221.298 million exported as compared the exports of $191.979
million of the same period last year. Meanwhile,
cutlery goods valuing $52.200
million exported in last seven months as compared the exports of $46.224
million, showing an increase of 12.93 percent during the period under review,
said data of Pakistan Bureau of Statistics (PBS).
In 2010, a record 1.8 million motorcycles were manufactured in the country. Its production is
still on the rise. For instance, Honda’s Sheikhupura plant plans to produce
900,000 units by April 2017 under the first phase of its expansion project. The
company’s two manufacturing facilities have the capacity to manufacture 1.35
million units a year in Pakistan against the current production level of
750,000. The company is currently exporting up to 5,000 units to Afghanistan,
Bangladesh and Sri Lanka. Afghanistan, Bangladesh and African countries are the
markets for Pakistan’s low cost bikes. The illegal exports of two wheelers to
Bangladesh and Afghanistan are reportedly thriving due to hurdles in legal
exports and problems in getting export rebate. The low cost Chinese bike makers
have been facing suspension in bike exports to regional countries due to
bureaucratic hurdles and influence of a power lobby of Japanese-based
automotive association. The government should remove all hurdles and announce
incentives to encourage exporters. Pakistan
lacks a comprehensive automobile policy covering two-wheelers. The present
automobile policy only covers four-wheelers, hence making it ‘not feasible’ for
any foreign company to manufacture bikes in the country. The country is likely
to lose a proposed investment of $150 million by Japanese giant Yamaha Motors
because of its unclear automobile policy. Yamaha
had reportedly submitted the proposal with Board of Investment three years ago,
but it was facing delays due to confusion about Islamabad’s automobile policy.
Japanese company not only wanted to assemble and manufacture motorbikes and
engines in Pakistan, but also planned to export these to the Middle East,
Africa, Afghanistan and other countries. In the wake of the investment, 25,000
Pakistani engineers and technicians could get jobs in the automobile industry.
Besides, many small industries could get a chance to produce auto parts.
The
exports of sports goods from the Country witnessed an increase of 7.83 percent
during the fiscal year 2017-18 as against the corresponding period of last
year, Pakistan Bureau of Statistics (PBS) reported. The Country exported sports
goods worth $332.516 million during July-June (2017-18) against the trade of
$308.361 million during July-June (2016-17), showing growth of 7.83 percent,
the PBS data revealed. Among the sports products, the exports of footballs
increased by 9.38 percent by going up from $152.565 million last year to
$166.881 million during the fiscal year under review. The exports of gloves
increased from $107.918 million to $111.740 million, showing growth of 3.54
percent while the exports of all other sports products went up from $47.878
million to $53.895 million, witnessing increase of 12.57 percent. Meanwhile, on
year-on-year basis, the exports of sports products during June 2018 increased
by 3.89 percent to $29.275 million when compare to the exports of $28.180
million during June 2017.On year-on-year basis, the exports of footballs
decreased by 2.59 percent while the exports of gloves and other sports products
increased by 11.44 percent and 8.78 percent respectively.
|
EXPORT RECEIPTS BY SPORTS GOODS (Thousand US $)
|
||
|
Details
|
Jul-Jun
|
Jul-Jan
|
|
Sports Goods
|
539,115
|
313,362
|
|
A)
Footballs
|
221,569
|
112,966
|
|
B) Gloves
|
120,944
|
68,50
|
Conclusions
There was and still is considerable talent,
innovation and ability in the Pakistani masses. There was and still is almost
illiterate workers who have the ability to manufacture complex machines,
products and systems. This ability has not been recognized by Pakistani
leadership. Economic planning has side stepped this extraordinary ability . The possibility to industrialize using
indigenous technology still exists but this talent needs to be nurtured and
assistance provided. Such assistance need to be provided very carefully so as
to avoid dampening of the innovative talents that the country possesses.
Intervention needs to be soft and carefully crafted.
