Dreaming industrialisation

LAHORE: Federal and provincial governments must work in tandem to boost industrial production. After the 18th amendment, the responsibility of industrial development lies with provinces, but taxation and import duties levied by the federal government determine the viability of industrial projects.

The system is the same in India where it is working satisfactorily. Its provinces compete with each other by offering incentives to the investors.

They announce their own textile or engineering policies that provide additional attraction over the policies announced by the federal government. They offer free land for the projects or offer industrial land at subsidised rates. They waive stamp duty and reduce provincial taxes.

Unfortunately, we have not seen any healthy competition between our provinces. The smaller provinces in fact are averse to encouraging industrialisation. Balochistan for instance fears that its small population could turn into a minority as industrialisation would result in immigration from other provinces.

The 18th amendment has paved the way for healthy competition between the provinces in economic fields and investments. But this opportunity has not been availed by the provinces even 12 years after the passage of this amendment.

Even otherwise industrialisation was slow in the rest of the provinces. The lack of interest on part of the provinces was because they were handicapped by energy and power shortages, high inflation, and declining rupee that comes under the federal domain. The federal government would have to ensure macroeconomic stability, adequate supply of power and energy to facilitate the provinces to formulate industrial policies.

The provinces on their part should start mapping their districts documenting the skills and expertise of the human resource of each district. They could then devise policies to facilitate investors to establish relevant industries in each district.

Provinces would have to make zoning laws and ensure that clusters are developed in a way that districts in each province act as industrial corridors. This would ensure creation of jobs at the local level. Another advantage would be that it would relieve pressure on big cities.

Provinces must also give priority to infrastructure development needed in each district for establishment of industries. In education, the focus must now be on technical education to enhance the skills of human resource.

Now that they are authorised to generate their own power, the provinces should establish dedicated power plants in industrial estates of each district through the private sector. The policy frameworks of the provinces should be announced after taking all industrial experts and stakeholders on board. The agreed policies should be protected for longer periods of 10 -15 years.

Moreover, improving trust relationship with the people would go a long way in ensuring the sustainability of provincial development programmes. Transparency and institutional integrity would boost industrial growth.

Provinces must implement the social contract with citizens. Citizens must be given equal rights to education, health care, and access to opportunities. The province ensuring these rights would be the winner. Law and order is also a provincial subject and it should also be given top priority to foster industrial growth.

To make industrialisation a reality, both the federal and provincial government must work in tandem to balance the tax burden. Taxation should be rationalised and the para taxes like workers welfare fund, and other similar taxes collected from industrialists should be eliminated.

These para taxes provide no benefit to the workers and are wasted in corruption. The actual tax burden on the corporate sector increases by 8 percent.