Pakistan’s Industrial Landscape
The Islamic Republic of Pakistan is a South Asian nation that has progressed well in various industries. It is an emergent country with a diverse profile of industries that disseminate the domestic economy. Specifically, its vast natural resources, favourable geographical location, and skilled and large population have allowed the country to gain the status of a major player in the international market.
Currently, Pakistan is among the 40 largest economies in the world based on nominal GDP and 55 in terms of factory output. The shares for different industries of Pakistan’s GDP output are as follows, and the total contribution of the industrial sector is almost 4.7%.
In this blog, Cometinsure will explore the different industries in Pakistan, their role in the economy, and the problems they encounter.
Textile Industry
Textiles remains Pakistan’s largest manufacturing sector and also its largest employer. It is among the significant segments of the national economy and contributes significantly to exports. This particular sector is made up of subsectors like cotton growing and marketing, weaving, spinning, and garment processing.
Pakistan is in the fifth position globally in the production of cotton essential for textile industries. The nation’s spinning and weaving facilities also produce high-quality yarn and fabrics. The upward-trending garment industry, which is downstream of the textile industry, exports goods such as denim jeans, knitwear, and home textiles across the world.
Textile Industry Challenges
The industry faces challenges such as energy shortages, outdated machinery, and competition from other countries with lower production costs.
Information Technology
Pakistan’s IT sector is still relatively new and expanding quickly. It boasts a large pool of skilled workers who can advance the sector. The sector is important and plays a significant role in the development of the economy since its GDP increases each year. The industry includes software development, electronic commerce, and IT-enabled services like business process outsourcing.
Government incentive policies, such as the formulation of technology parks and tax reliefs, have compounded these and boosted growth. Other well-known organizations that have managed to capture the international market include Systems Limited and NetSol Technologies.
IT Industry Challenges
Challenges touching this sector include inadequate infrastructure, cyber security issues, and skills development.
Agriculture Industry
Agriculture or farming is considered among the most crucial sectors of the Pakistani economy. The country is one of the largest producers of wheat, cotton, sugarcane, mangoes, dates, and oranges. These products, including wheat, rice, cotton, and sugarcane, constitute about 4% of the total area under irrigation and 9% of GDP, while minor crops increased to 2%.
Pakistan’s position in global production of some crops is sugarcane, mangoes, guava (4th), citrus (15th), maize (16th), cotton (5th), potatoes (13th), onions, dates, tobacco (6th), rice (9th), chickpeas (7th), and wheat (8th).
Agriculture Challenges
The agriculture sector faced challenges, including water problems, a need for proper technology, and a need for proper facilities.
Pharmaceutical Industry
Currently, there are about 759 authorized pharmaceutical manufacturing firms in Pakistan, out of which only about 25 firms are multinational ventures. This sector provides approximately 1 % of the gross domestic product annually.
The mid-2023 market is worth Rs. 748 billion and has a 5Y CAGR of 15%. More than 70% of industry players are local firms that manufacture both normal and patented drugs and drugs for local consumption and exportation.
Pharmaceutical Industry Challenges
Challenges include regulatory, control quality, and competition from imported drugs.
Food Processing Industry
Food processing is an important area of the global economy, and it is responsible for creating millions of employment opportunities. Other food processing industries include dairy products, fruits, and vegetables. Milk is produced abundantly in Pakistan, and thus, the dairy industry is prevalent in the country.
The meat sector is also growing as there are exports of different meat products. One of them is fruits and vegetables, where products such as mangoes, oranges, guavas, etc., are exported to different countries.
Food Processing Industry Challenges
Some of the problems include food safety regulations, the inability to access cheap supplies, and inadequate and expensive refrigeration.
Chemical Industry
The chemical industry in Pakistan is broad, with divisions such as fertilizers, pesticides, and pharmaceuticals. It is a vital economic sector that provides many people with jobs. Pakistan also has a large-scale fertilizer manufacturing industry and synthesizes several pesticides for agricultural purposes.
The chemical sector, especially the pharmaceutical segment, is expanding in exporting generics & herbal products on the global level.
Chemical Industry Challenges
It faces challenges like regulation of the environment, variability of raw material prices and competition with other global industries.
Engineering Industry
The engineering sector is one of the biggest in Pakistan in terms of employment. It is vital to the nation’s economy. This division consists of subsectors like automobiles, steel, and heavy equipment manufacturers. The automobile industry is expanding with the manufacture of products such as cars, buses, and trucks.
Additionally, they are producing more pipes, sheets, and steel bars. The construction equipment sector also establishes and manufactures large machinery, including excavators, bulldozers, and cranes.
Engineering Industry Challenges
The industry’s challenges include the high cost of production, the emergence of new technologies, and rivalry from imported products.
Construction Industry
Currently, the construction industry in Pakistan is experiencing a high growth rate due to the increase in population and expansion of urban areas. It is expected to grow at around 10% annually. It is attributed to the capital and infrastructure of roads, bridges, and buildings.
Construction employment accounts for about 7% of the total workforce and contributes roughly 2.8% to GDP.
Construction Industry Challenges
Legal restraints, a scarcity of human resources, and the expense of building materials affect the sector.
Cement Industry
The cement industry is among Pakistan’s oldest industries and belongs to the manufacturing sector; however, it is now the second-largest manufacturing sector and plays a significant role in construction activities.
Subsectors include packing, cement grinding, and clinker production, for instance. A number of firms in Pakistan manufactures excellent cement. The industry has been growing fast and has impacted the economy as construction has enhanced the demand for cement products.
Cement Challenges
Energy shortages, environmental effects, and fluctuating market behavior are some of the industry’s challenges.
Automotive Industry
The automobile industry is one of the rapidly developing industries in Pakistan, adores 4% of the GDP, and has straightway given job opportunities to more than 8 million people. As for the more promising trend, it will also strengthen the economy of the nation in the future. Though having more than 3,200 manufacturing plants, the industry blends out 1.4lac motorcycles and 20 thousand vehicles per year with an investment of around US $570 million.
It provides direct employment to over 3/4 people and remits about US $310 million to the national exchequer. In addition, it has reached 5 million people, creating more vendor opportunities in the industry.
Automotive Challenges
Some issues affecting the industry include high import tariffs on components, the absence of component assembly, and the rivalry of imported cars.
Challenges Faced by Industries in Pakistan
Despite the significant contributions made by different industries to the country’s economy, they face several challenges:
- Energy Crisis: Unreliable supplies of electricity and gas result in abrupt blackouts, slowing down industrial growth as well as rising expenses.
- Inadequate Infrastructure: Transport infrastructure, which includes a lack of adequate transport networks to transport the raw materials and finished products, ensures high transport costs and lowers the export front.
- Lack of Skilled Labor: Lack of vocational training in different fields makes the training standards of human resources costly to organizations and reduces their competitiveness in the international market.
- Corruption: It increases the overall cost of conducting business, lowers product quality to meet international standards, and discourages foreign investors.
- Political Instability: Political instability leads to unpredictability in economic activity, decreases in its rates, and discourages investments.
Summary of the Top Major Industries in Pakistan
Each business in Pakistan is important in the progression and development of the country’s economy. The prominent industries are the textile industries, which are considered the most vital; the other industry is the agriculture industry, which supports the country’s economy.
The technology sector, specifically information technology, is a developing sector, and so is the construction industry. However, recently, it has been improving. Nonetheless, finding ways to overcome the problems experienced by these industries is critical to maintaining growth and improving competitiveness in the global arena.
