The views expressed in this paper are the views of the author and do not necessarily reflect the

views or
policies of the Asian Development Bank Institute (ADBI), the Asian Development Bank (ADB), its Board of
Directors, or the governments they represent. ADBI does not guarantee the accuracy of the data included in
this paper and accepts no responsibility for any consequences of their use. Terminology used may not
necessarily be consistent with ADB official terms.

Neelofur Hafeez
Pakistan

REGIONAL WORKSHOP ON ECO-INDUSTRIAL CLUSTERS

Country Paper-Pakistan
Pakistan emerged as an independent sovereign state on the 14th of August 1947 and is the sixth-most populous
country in the world having a population size of 164 million in 2008-09.Pakistan symbolizes the land of pure
and has been the centre of the great Indus Valley civilization dating back at least 5,000 years. The historical
excavations of historical sites at Taxila, Harappa, and Mohenjo-Daro dating back to 3,000 B.C speak volumes
about its rich cultural heritage.

Industrial Clusters of Pakistan

Pakistan ranks forty-first in the world and fifty-fifth worldwide in factory output. Pakistan's industrial sector
accounts for about 24% of GDP. Cotton textile production and apparel manufacturing are Pakistan's largest
industries, accounting for about 66% of the merchandise exports and almost 40% of the employed labour force.
[1Cotton and cotton-based products account for 61% of export earnings of Pakistan. The consumption of cotton
increased by 5.7% over the past five years while the economic growth rate was 7%. By 2010 the spinning
capacity increased to 15 million spindles and textile exports hit 15.5$ billion. Other major industries include
cement, fertilizer, edible oil, sugar, steel, tobacco, chemicals, machinery and food processing. The government
is privatizing large-scale parastatal units, and the public sector accounts for a shrinking proportion of industrial
output, while growth in overall industrial output (including the private sector) has accelerated. Government
policies aim to diversify the country's industrial base and bolster export industrial development.

The history of industrial estates in Pakistan goes back to 1947when the first industrial estate was established in
Karachi. Thus Pakistan embraced the concept early. While small industrial estates
were introduced in the 1960s and the Punjab Small Industries Corporation (PSIC) responsible for establishing
industrial units was established in 1973.

Eco-Industrial Measures taken by Pakistan

To control the spread of pollution and dangerous chemicals, Pakistans industrial park development company
established special areas for boiler-based industrial units. Pakistanis have become more aware about the effects

Neelofur Hafeez
Pakistan

of pollution, as dust and smoke particles reported there are two times the world average and five times that of
the developed world.
Rachna Industrial Park, as well as the Combine Effluent Treatment Plant facility, were established to present
hazardous chemicals from polluting drinking water. The park is being set up to supply uninterrupted power and
quality drainage infrastructure for the region.
The Pakistani government for supporting this eco-friendly park putting the needs of its people and environment
first. Not only will Rachna Industrial Park utilize sustainable operations, but the nearby treatment plant will
ensure all industrial wastes are properly treated before disposal.
SME Cluster Development
Worldwide, one of the most widely used practices to support industrial clusters is provision of Common Facility
Centers (CFC). The establishment of CFCs is an integral part of SMEDAs Cluster Development activities. So
far SMEDA has been able to establish following CFCs with Chambers of commerce and industry and
industry/trade associations: SME Clusters in Pakistan have huge potential and critical to SME growth. SMEDA
has always been fully cognizant of the significance of Cluster Development and has taken several initiatives.
These initiatives includes Technological Up-gradation, establishment of Common Facility Centers(CFCs) ,
access to Formal Finance for SME clusters, Marketing support, Improving HR skills and Awareness on
International Certification & Regulations.
Computer
Pattern
Designing
in
Sialkot
This CFC has facilitated 300 SMEs to get their patterns developed, 122 participants trained & 28 are
under training and 95 employments generated.
Light
Engineering
Sector
in
Gujranwala
The center has provided testing services to 206 SMEs 130 students have completed Auto Cad training.
Artificial
Insemination
Training
Center
in
Burj
Attari
More than 1100 technicians have been trained and 900 self employments generated under this program.
Credit is life line for any running business including SMEs and realizing the potential in SME sector and its
importance, SMEDA has successfully launched following financing schemes in Punjab:

Power Loom Up-gradation, Faisalabad (Rs.226 million to 150 entrepreneurs)

Support Services for Agri Credit (SSAC) (Rs.77.45 million to 252 farmers)
Lending Scheme for Cutlery Manufacturers, Wazirabad (Rs.5 million to 10 SMEs)

The proposals for following CFCs were prepared and submitted to Govt. of Punjab. The Planning &
Development Department-Punjab has approved these CFCs and allocated Rs.100 million for the year 20052006. The construction of buildings ad procurement of machinery and equipment are under process.

Auto Parts Design & Inspection Center, Lahore

Electrical Fittings Industry Support Center, Sargodha

Neelofur Hafeez
Pakistan

Wooden Furniture Support Center, Chiniot

Composite Material Based, Sialkot

Besides above program SMEDA is also working in cluster profiling, marketing support to cluster stakeholders
and training to skills enhancement for SMEs as well as rural clusters.
SMEDA in collaboration with PSIC and UNIDO has started Cluster Development Program for SMEs in
Punjab. The objective of this program is to help in developing seven different SME clusters of Punjab. The
Diagnostic Study of these seven clusters has been completed. In the next year action plan would be
implemented. Besides these clusters, SMEDA is also working exclusively with UNIDO in four clusters i.e.
Sports Wear Sialkot, Auto Part Lahore, PVC Pipes & Plastic Products Lahore and Marble & Granite
Rawalpindi/Islamabad.

Foreign and Domestic Investment

Foreign direct investment (FDI) has emerged as a major source of private external inflows for
Developing countries. During more than last two decades most of the countries have liberalized their FDI
regimes and pursued investment-friendly economic policies to attract investment.FDI has triggered technology
spillovers, assisted human capital formation, contributed to international trade integration, helped in creating a
more competitive business environment and promoted enterprises development. These developments
contributed positively to higher economic growth, which is the most effective tool for alleviating poverty.
There seems to be huge scope for investment in hydel and coal based power projects, alternative energy like
wind power, and natural gas transmission from foreign lands. The country also needs infrastructure, world class
education systems, exploration of its natural resources and mechanization of industries. Foreign investors can
exploit all such opportunities .Foreign Direct Investment (FDI) in Pakistan stood at$ 853.5 million during JulyApril 2012-13 as against$ 658.2 million last year, posting an increase of 29.7 percent. Oil & Gas Exploration
remained the major sector for foreign investors .Pakistan will undoubtedly attract foreign direct investment with
the resolution of the energy shortages and improvement in the law and order situation.
The Board of Investment (BOI has approved new investment policy recently to provide more
investment friendly environment to investors. In particular, efforts are also going on to encourage the setting up
of fruit processing industries and more export processing zones in the country, so that sustained high economic
growth through exports may be achieved and series of investment opportunities may be generated.

A case Study of Sunder Industrial State :

Sundar Industrial Estate (SIE) was developed on the principles of offering outstanding infrastructure and
services to entrepreneurs thus setting a precedent in planned industrial activity in the province of Punjab.
Established in 2007, it spreads over an area of 1602. The largest number of firms belong to the engineering
sector followed by plastic, textile & garment,food & beverage and pharmaceuticals respectively. However, the
biggest expansion is expected in the pharmaceutical sector.The distinguishing feature of the Sundar Industrial

Neelofur Hafeez
Pakistan

Estate is its infrastructure. Three features stand out; first, a large and well built road network, second, an
underground electrification system and third, a water supply, sewerage and gas supply system1. But despite this
excellent infrastructure it is disturbing to note that some components of original plan have yet to be
implemented, particularly those that deal with environmental protection. The
two main missing infrastructure components are the Combined Effluent Treatment Plant (CETP) and a landfill
site, which are crucial for disposal of industrial waste and environmental protection. Developing countries like
China and India have experienced and witnessed adverse effects of environmentally hazardous industrial
production and have progressed to the idea of Eco-Industrial parks which incorporate all environmental
protection aspects. Additionally, a number of commercial areas and services provision which were part of the
initial plan have not been built. A Technical Training Centre leads this list as most industries are already short
of skilled labor with the demand expected to grow as the number of industries rise in the estate.
Steps Required to be taken for ECO-Industrial Development
Overall, the pace of Eco- industrial progress has been slow due to various factors most
important being the lack of energy.

Government may give due importance to environmental factors by ensuring construction

of the CETP and solid waste landfill site, and regulation of air pollution.

Financial support is required for establishment of Eco-industrial clusters and technical training centre.
Ensure continued energy supply including gas and electricity,

Assist in exploring alternate forms of energy to fulfill long term energy demands and sustainable
industrial development.

Develop a policy framework to support a labor intensive industrial strategy for economic growth by
encouraging small enterprises and by facilitating a cluster strategy at the SIE.