Contract Manufacturing
in Pakistan: The Next Industrial Revolution
In pursuit of product diversification
of exports along with industrial and employment growth in
Pakistan, the Export Promotion Bureau has identified knowledge
based Contract Manufacturing Engineering sector. In order
to sensitize the related Pakistani industry and obtain feedback
the Export Promotion Bureau for the first time arranged
an “Engineering, Electronics and Electrical Contract
Manufacturing Seminar” on April 27, 2006. Mr. Pervaiz
Lodhie, an American entrepreneur of Pakistani origin, Mr.
Miguel Santos, Director, Boeing Company and Mr. Glen A.
Green, Vice President, Boeing addressed an audience highlighting
“The Next Industrial Revolution” which is outsourcing
and contract manufacturing of engineered products, electronics
and electrical parts by the developed countries to developing
nations like Pakistan.
The effect of outsourcing is of huge benefit for developing
countries like Pakistan by increasing our export base in
electronics and electrical field also thus diversifying
our export base from cotton based to manufacturing. The
world market is very large and growing fast as cost of production
increases in developed countries and technical capabilities
improve in the developing ones. The United States of America
alone out-sources annually over $600 billion worth of products
to the developing countries and this figure is growing rapidly.
This unique opportunity provides increased employment and
growth in Pakistan from the production and enhanced exports
when such goods are exported back to the buyer.
After the Seminar the Chief Executive of Phillips, Mr. Shahid
Zaki, Mr. Miguel Santos, Director, Boeing Company, Mr. Glen
A. Green, Vice President, Boeing had a meeting with Minister
of State and Chairman Export Promotion Bureau Mr. Tariq
Ikram to discuss this opportunity and outline the way forward.
Mr. Miguel Santos, Director, Boeing Company informed the
Minister of State that Boeing has placed electronics contract
manufacturing orders on Precision Engineering Company and
Pakistan Aeronautical Complex for around $100 million. Mr.
Santos expects that in the next two to three years, Boeing
could surpass one billion dollars for precision engineered
parts manufacturing companies. Boeing is not only placing
the orders but providing the technical know-how by deputing
their engineers to train Pakistani counterparts. Boeing
has even supplied the machinery needed to prepare these
parts used in their 777 Aircraft model series to be sold
globally.
After almost two hours of discussion, Mr. Tariq Ikram, Minister
of State and Chairman Export Promotion Bureau advised that
this opportunity be taken up very seriously as it not only
helps increase exports in value-added engineering sector
but also creates employment and skill development in Pakistan.
He constituted an action team comprising following persons
who are experts in their related fields.
Mr. Pervaiz Lodhie, President, LEDtronics based in Torrance,
California.
Mr. Miguel R. Santos, Director, Boeing Company based in
Seattle, Washington
Mr. Sultan ul Arfeen of Arfeen Group of Companies.
Mr. Shahid Zaki, Chairman & CEO, Philips-Pakistan Operations.
Mr. Mohsin Ali, Secretary General, The American Business
Council of Pakistan
Mr. Riaz Khan, Executive Director Marketing, Export Promotion
Bureau.
The Action Committee will develop proposals further. He
hoped that he will be able to have the final proposal presented
to the Prime Minister and the President of Pakistan in a
few months.
The line of action agreed was to first do a concept paper
on the nature and size of opportunity and broadly how Pakistan
could exploit this opportunity and the export and employment
opportunity that could be expected. Thereafter the would
identify the sectors where outsourcing would be possible
for Pakistan to cater to in the short and medium term. Thirdly
to develop a paper on the ‘Case for Pakistan’
which should identify the benefits that a company abroad
could expect if it outsources to Pakistan. Minister of State
suggested that because such an industrial venture was generally
high-tech, needed a different culture, had common vendors
etc it may be useful to request the Sindh government to
provide a 100 acre piece of land to set up a dedicated and
EECM City (Electronics and Electrical Contract Manufacturing
City). He agreed to discuss this further with the Governor
and Chief Minister of Sindh. The Minister of State suggested
that the State Bank should also include this contract manufacturing
industry in the Long Term Export Project Financing Scheme
which had been developed by the State Bank on the request
of the EPB to support innovative and new export initiatives.
In the meantime, Export Promotion Bureau will contact the
International Trade Center to get their technical expertise
in order to launch the project.
All the members of “The American Business Council
of Pakistan” are fully supporting this project and
have assured the Export Promotion Bureau to help the local
electrical and electronics manufacturers in helping them
get order from USA.
Later, such cities would be established in all major cities
of Pakistan.
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