Chemical Industry Of Pakistan

Pakistan needs to develop the chemical industry’s potential, which can contribute substantially more than it has over the last sixty eight years since 1947. The chemical industry provides key linkages in terms of products and technology solutions to a wide host of downstream industries including engineering goods, automotive, consumer durables, construction materials and food processing.

To place the scale in perspective, the chemicals industry is the largest market sector globally, with annual sales of well over $2.5 trillion. Pakistan’s limited success in the chemicals industry is due to a number of factors including the lack of a coherent national strategy, fragmented infrastructure, limited R&D and poor supply chain systems. In view of this, modernizing a National Innovation System (NIS) has become an imperative. The history of industrial development suggests that that the advanced economies like the U.S., U.K, France and Germany achieved critical mass after several centuries of consistent and focused effort. 

Japan took a shorter time than the EU and America, while other Newly Industrialized Countries (NICs) of Southeast Asia including South Korea, Singapore, Taiwan and Hong Kong have demonstrated similar remarkable progress in an even shorter time. Other nations like Indonesia, Malaysia, Thailand, China, India and Brazil have demonstrated noteworthy progress in selective chemicals, and are fast building sustainable positions in international marketplace.

The global chemical industry forms the fabric of the modern world. It converts basic raw materials into more than 70,000 products, not only for industry, but also for all consumer goods that people rely on in their daily life. Apart from this, the chemical sector contributes in several other major areas like agriculture, mobility, infrastructure, and housing. In addition, it provides the basic raw materials for thousands of commercial products like paper, paint, plastics, soaps, detergents, perfumes, varnishes, pharmaceuticals, dyes, and so on.

To address environmental concerns, chemical companies are increasingly working towards reducing energy intensity of their operations, minimizing effluent discharge/pollution, increasing the share of recyclable products in their portfolio, diversifying their material base to include feedstock. Over the last ten years, the Asian share of the global chemical market has increased by about 14%. 

In the subcontinent, the chemical industry is one of the oldest, which involved the manufacturing of basic chemical products to fulfill domestic market’s needs. With liberalization in Pakistan in the 1990s, the local industry was exposed to global competition, reduced role of the government, insulation of high tariffs, import substitution policies, regulations, trade defense laws, intellectual property rights, patents etc. Further, there continues to be a fairly well defined shift towards petrochemicals, pharmaceuticals, specialty chemicals, construction chemicals, dyestuffs, paints and agrochemicals. Returning to the journey of the more developed economies, these continue to be exceptional. These countries paid special attention to their NIS development, which constituted an important part of their economic structure and institutional arrangements, which had a materially favorable impact on human resource development. Further, it also enhanced their manufacturing systems, marketing and associated systems. These systems formed the basis of their innovative technologies.

In Pakistan, R&D institutions, universities and industry are largely disconnected. There is no real effort so far to build public and private partnerships, in order to integrate these organizations. Various models for the utilization of local and foreign technologies for commercialization have been proposed. However, the diffusion model is considered the most appropriate first step for chemicals development, given the industry’s present position in Pakistan. 

One aspect of this model is designed to facilitate learning, train the labor force to understand the high technology standards, absorb locally developed and imported technology, and to resolve production problems related to energy and productivity. The performance of various elements of this system is being critically examined and an intelligible strategy for the integration of available facilities has been proposed. Though Pakistan’s technological infrastructure is weak and not suitably developed, its scope is being widened, modernized and strengthened. The objective is to make the country more self-reliant, thus limiting its heavy reliance on foreign technology, licensing and engineering organizations. In-turn, this will facilitate the acquisition of technology and process know-how.

In order to take these steps and convert the strategy into a workable plan, the scope of the Engineering Development Board should be broadened, with additional responsibility for chemical technology development. R&D institutions form the baseline of national innovation, and Pakistan is no exception. These institutions make a vital contribution towards technological transformation and enhance Pakistan’s capacity to invent, absorb, adopt and deploy technology through laboratories and pilot plant development work. 

Research plays a decisive role for innovative solutions, which generate dialogue between users and developers. This dialogue is the central concern for developing relationships between universities, industry and research institutions. At this stage, these affiliations are not well developed in Pakistan’s scientific culture.

Chemical industry’s development can produce high value-added products and is essential if Pakistan is to take its rightful place in international trade, remain competitive, reduce its trade deficit and establish a sustained record of economic expansion. Currently, Pakistan’s major exports represent low technology and labor intensive products. The share of medium and high technology products is actually low. This is despite trade liberalization policies that have been adopted over the past fifteen years. Foreign engineering firms are involved in industries’ development, and have been awarded turnkey contracts for the commercialization of local and imported technologies. This must change and transform rapidly, in terms of national policy, public-private partnerships, resource mobilization and a clear focus towards driving the most desirable outcomes. Pakistan is capable of doing this and so much more.