Credit flow to industry down sharply in last nine years

LAHORE - The speakers on the second day of the Management conference organized by the Lahore School of Economics stressed the need for strengthening financial institutions to promote industrial growth in the country. The session was chaired by, Dr. Mathew MacCartney, Director of South Asian Studies, University of Oxford.
Imran Ahmad, Additional Director of Infrastructure Housing & SME Finance Development at State Bank of Pakistan, presented a detailed profile of flow of credit to the manufacturing based small and medium enterprises in Pakistan. The study showed that flow of financing to the manufacturing sector witnessed gradual and steady increase in absolute terms; however its share in total industry credit saw a sharp decline over a period of nine years.
The participants of the seminar explored the ingredients of a coherent industrial development program for Pakistan. According to them, an effective industry policy must focus on: (i) reducing the incidence of management failures (ii) creating and strengthening Pak firms’ links with the global value chains (iii) defining Pakistan’s strategic interests in regional trade and (iv) making domestic competition a force for enhancing firm-level productive efficiency. Dr Rajah Rasiah argued that Pakistan requires a dynamic industrial policy that should focus on technological up-gradation of the country’s existing manufacturing sectors and the creation of competitive advantage in high value added sectors in order to achieve sustained long term economic growth.
Dr. Akbar Noman examined the implications of recent theoretical and empirical work on leaning, industrial and technology (LIT) policies for Pakistan’s economic revival.  Dr. Khalil Hamdani argued that there is a need for Pakistan to be actively engaged in globalization. Dr. SafdarSohail, Pakistan’s Economic Minister to European Union Brussels explored the reasons and implications of the popularity of geo-economic narratives in the context of the country’s trade policy.
He concluded that a successful trade policy must keep a fine balance between the geo-strategic environment in the region and market considerations while making regional integration choices.