Page 43 - CMA Journal (Sep-Oct 2025)

Focus Section
Regulators Turn Facilitators

for Reviving Industry

Necessity is the mother of invention. This saying was which gave rise to
made true during 1750, when the Industrial Revolution inefficiency and low
started, and thereafter, with no looking back, evolution private investments.
continued—from the steam engine to electrical-based
Some stability returned
mass production to the digital age to smart factories with
during the 1980s, but
AI, and still counting. Countries with innovative, hard-
again, the 1990s obser-
working, and sincere people have a strong industrial
ved a slowdown due to
base, making them progressive, developed, rich, and vice
political issues, external
versa. Industry remains the backbone of any economy to
deficits, and low
help it flourish. Pakistan could not focus well on its
remittances. Then,
factories and missed the benefits of its multiplier effects.
during 2005–08, the
The country now carries a huge debt burden of over Rs.
GDP growth rate
80.0 trillion by the end of June 2025.
touched up to 8%, and
During the 16-month period from March 2024 to June industry grew by Syed Shamim Ahmed, FCMA
2025, the government borrowed Rs. 13.1 trillion. On the 12.5%, mainly due to Former General Manager Finance
other hand, budget revenues for FY 2025 were Rs. 17.8 large-scale manufac- Karachi Port Trust (KPT)
trillion— not enough to meet rising expenditures—and turing and textile
the government borrowed Rs. 7.4 trillion during the year production. Thereafter, the sector faced continuous
to cover the gap. Debt servicing costs during FY 2025 challenges, bringing the growth rate down to 2.5%. The
stood at Rs. 8.3 trillion. Total debt has reached around steep decline has been caused by poor governance, lack of
80% of GDP, which legally must be brought down to 50%. vision, political chaos leading to varied policies, high
All this shows a very depressing financial situation. Such energy costs, a rising dollar, investors losing trust, overall
being the financial health of the country, economists high input costs, and corruption being at the top.
have kept warning that for a sustainable economy,
Industry plays a significant role in any economy through
forceful and vigorous reforms were inevitable to increase
job creation, especially high-paying positions, its role in
revenue collection and curtail expenditure.
exports, ease on the balance of payments, technological
The government has claimed early debt repayment, innovation, infrastructure development, and utilization
interest savings, and improvement in debt maturity, of local raw materials for value addition and facilitating
bringing the debt trajectory to a more sustainable level. import substitution. No doubt, the services sector
Conversely, for FY 2026, the government has planned to contributes the highest (57%) to GDP, and the agriculture
borrow Rs. 22 trillion for repayment of due loans and to sector also has its substantial portion, yet these sectors
meet the budget deficit (Jang, 8th October 2025). This are grossly dependent on industries as the total physical
shows the adoption of an easy course of action instead of facilities are provided by the manufacturing sector— be
demonstrating some grit, resilience, and endurance by it buildings and fixtures, machinery, equipment, comput-
pursuing some out-of-the-box ideas to turn around the ers, mobile phones, transport, and so on.
ailing economy.
Reforms
Industry Scenario
It is a process aiming at a positive change for improve-
Pakistan has been through many ups and downs in its ment. For success, it must be backed by willpower and
industrial sector. Speedy growth occurred during commitment; otherwise, it is a futile, expensive exercise
1958–69, especially in heavy industries like steel, cement, tantamount to reinventing the wheel. It is observed that
chemicals, and textiles, with infrastructure improve- the majority of reforms involving huge expenditure have
ments. The 1970s witnessed a downfall due to the nation- remained far from fruitful.
alization of banking, textiles, cement, and steel sectors,

ICMA’s Chartered Management Accountant, Sep-Oct 2025 41