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Or developing countries, industrialization is not just the path to prosperity, it is a need. It is one of the most important pillars of economic development. Industrialization pushes exports, produces jobs, increases government tariffs and reduces trade deficit.
Countries such as China, Vietnam, Bangladesh and South Korea have used manufacturing as a step for sustainable growth and global competition. In Pakistan, the need for industrial is more important than ever. With a population of over 240 million and more than 20 million youth entering the manpower every year, the country needs massive employment production. Agriculture and informal services cannot provide it.
By 2024, the industry contributes about 20.7 % to Pakistan’s GDP. This section has been stagnant for more than two decades. On the contrary, the industrial sector of Bangladesh supports more than 34.6 % of its GDP, which is widely driven by export -based manufacturing. Vietnam is 37.12 % in the industry. Despite setting up special economic zones and industrial property, Pakistan has failed to attract enough investment.
According to the World Bank, in 1980, Pakistan’s per capita income was 7 287.4 and China had $ 194.8. By 2023, China’s per capita income increased to $ 12,614 and Pakistan’s 3,365. Clearly, Pakistan can learn from the Chinese experience to change its economy.
Pakistan’s economy is caught in the cycle of low exports and high imports. In 2024, the country’s trade deficit exceeded $ 24 billion. Industrial development is an important factor in this. Local manufacturing of solar panels, power appliances, auto parts and agri machinery can significantly reduce the import bill and support small businesses. It will also encourage allied sectors such as logistics, finance, education and construction, which will have a widespread impact.
Pakistan’s strategic location at the confluence of South Asia, Central Asia and the Middle East allows it to become a regional manufacturing and logistics center. However, it needs to strengthen its industrial foundations. Poor infrastructure, contradictory policies, expensive energy and bureaucratic obstacles have stopped its ability.
The success of the special economic zone introduced under the CPEC is limited to the success, inadequate utility, the weak access of investors and the speculation rather than real industrial activity. Take a hitter. After allotment of 106 plots, 12 industries have become operational and six are nearing completion. Several upper tear industrial groups have placed land in SEZ but their factories have yet to be set up.
Rashkai Seas has seen a similar speed. Although it was initially sold as a destination for Chinese investors under the CPEC, only three of the 24 plots were allotted to belong to the Chinese business in Phase 1. Only 12 factories are under construction. These examples show an important challenge: When critical basic principles disappear, even attractive policy framework struggles to attract serious investment. A major misunderstanding that needs to be addressed is the impact on tax privileges.
Although exemption and duty may be appealed, research has shown that investors ‘behavior significantly affects investors’ behavior only after crossing the threshold of $ 5,100 per capita income. In Pakistan, attention needs to be transmitted to the basics: reliable infrastructure, affordable energy and access to market. Coca -Cola’s recent decision to build a million of 50 million plants outside the Hutter Seas due to delay in power supply is an example of how to relieve tax with certainty.
Long -term industrial investment increases stability. Pakistan will have to create an environment where investors feel safe that their capital and effort will flow through political or economic tsunamis.
Regulatory uncertainty can prevent many potential investors. According to the World Bank’s Business 2022 report, business in Pakistan is subject to 34 taxes, which is significantly higher in South Asian countries at an average of 26.8. Repeated changes in tax policy, SEZ regulations and compliance procedures make long -term planning difficult. Many industrialists have stated that navigating the strict needs of the SEZ Act is complicated. Investors seeking tax concessions should be allowed to operate within the zone under the developer’s rules, which are less complicated.
Another serious drawback in Pakistan’s SEZ strategy is that the plots are allocated before the necessary infrastructure – electricity, gas, water and roads. It not only disappoints investors but also encourages property speculations, where plots are bought cheap and sold for profit. The SEZ Act clearly noted that the plots should be allocated on the basis of the turnkey. This clause should be implemented by the authorities so that serious investors are ready to build and run instead of speculation.
Marketing and Outreach is another weakness. Pakistan’s investors’ engagement, especially at the SEZ level, is weak. The Board of Investment and SEZ developers have struggled to attract large -scale multinationals. In today’s competitive global economy, foreign firms – who are already cautious about Pakistan’s economic challenges – need clear, active engagement.
To attract investors, targeted road shows, legislative -backed investors are essential and confidence building. Even a flagship project, CPECs, has not been fully provided in this regard. Several Chinese firms are withdrawing due to Pakistan’s uncertain economic climate.
However, just fixing SEZS will not be enough. Structural matters also need attention in the business environment. For example, judicial delay creates uncertainty for trade agreements and disputes. It may take years to solve them. This discourages both local and foreign investors who require assurances that their legal rights will be protected in a timely and fair way. High energy costs, poor logistics and excessive bureaucracy also prevent industrial development.
The long delay in obtaining unreliable power supply, delayed road and rail network and licenses or cleaning delivery is expensive and disappointing. At the same time, smuggling and low -moving imports are flooded in the local market, which has damaged domestic manufacturers. These systemic issues make a playground so uneven that even some extremely determined manufacturers withdraw.
Long -term industrial investment increases stability. Pakistan will have to create an environment where businesses feel safe that their capital and effort will not be eliminated through political and economic tsunamis. Pakistan also needs to tap in its domestic capital for industrial expansion. Careful taxes can encourage people to first invest in unannounced wealth. A strictly monitored tax forgiveness, especially associated with industrial investment, can help Pakistan formulate its economy and accelerate development. However, it should avoid past mistakes. In the absence of strong checks, it is at risk of becoming another period of legal tax evasion and speculation.
It is also important to include stability in industrial planning. Pakistani industries will have to prepare for the future where green behavior, climate adaptation and environmental standards will explain competitiveness.
Pakistan can no longer afford to delay the industrial. Jobs, exports and financial health depend on a strong manufacturing base. SEZS can still prove to be a powerful vehicle for industrial development, but only if they are focused on preventing barriers.
The current model, which is to control tax concessions by neglecting infrastructure, rules and investors, has to be changed. The time has come to consider industrial strategies not only for factories and exports, but also the economic future of millions of Pakistanis. For the economic future of Pakistan, it is essential to be industrial. It is now time to prioritize and reset industrial policy, before the country’s population and economic challenges are organized.
The author is the Zone Manager of the Hitter Special Economic Zone.
